perceptions_now wrote on Feb 24^th, 2013 at 11:42pm:


So, it would seem you didn't have anything of substance to say, you were just playing SPIN games, as usual!

Maqqa wrote on Feb 25^th, 2013 at 10:47am:


As I said, I don't play games, so either you have something of substance to say or you don't, it's entirely up to you!
If you don't, then obviously you were just playing SPIN games, as usual!

SHALE AND WALL STREET:
WAS THE DECLINE IN NATURAL GAS
PRICES ORCHESTRATED?

In 2011, shale mergers and acquisitions (M&A) accounted for $46.5B in deals and became one of the largest profit centers for some Wall Street investment banks. This anomaly bears scrutiny since shale wells were considerably underperforming in dollar terms during this time.

As prices plunged, Wall Street be gan executing deals to spin assets of troubled shale companies off to larger players in the industry. Such deals deteriorated only months later, resulting in massive write-downs in shale assets.

As documented in this report, emerging independent information on shale plays in the U.S. confirms the following:

Wall Street promoted the shale gas drilling frenzy, which resulted in prices lower than the cost of production and thereby profited [enormously] from mergers & acquisitions and other transactional fees.

U.S. shale gas and shale oil reserves have been overestimated by a minimum of 100% and by as much as 400-500% by operators a ccording to actual well production data filed in various states.

Shale oil wells are following the same steep decline rates and poor recovery efficiency observed in shale gas wells.

The price of natural gas has been driven down largely due to severe overproduction in meeting financial analysts’ targets of production growth for share appreciation coupled and exacerbated by imprudent leverage and thus a concomitant need to produce to meet debt service.

Due to extreme levels of debt, stated proved undeveloped reserves (PUDs) may not have been in compliance with SEC rules at some shale companies because of the threat of collateral default for those operators.

Industry is demonstrating reticence to engage in further shale investment, abandoning pipeline projects, IPOs and join t venture projects in spite of public rhetoric proclaiming shales to be a panacea for U.S. energy policy.

Exportation is being pursued for the
differential between the domestic and international prices in an effort to shore up ailing balance sheets invested in shale assets.

It is imperative that shale be examined thoroughly and independently to assess the true value of shale assets, particularly since policy on both the state and national level is being implemented based on production projections that are overtly optimistic (and thereby unrealistic) and wells that are significantly underperforming original projections.

Unconventional oil and gas from shales has been claimed to be a game changer, revolutionary, “a gift and national treasure”. Resource estimates for the U.S. have been giddily referred to as larger than “two Saudi Arabias” by Chesapeake Energy CEO Aubrey McClendon. It has even been said that shale oil and gas will provide energy independence for the U.S. While such statements are expected from an industry which stands to gain monetarily, a careful, thorough and independent examination of shale production data and company filings demonstrate that shale promises have been vastly overstated, leading to troubling prognostications for the shale industry as a whole and for those regions exploited or planning to be exploited for this resource.

Shale development is not about long-term economic promise for a region. Such economic promise has failed to materialize beyond the first few years of a shale play's life in any region of the U.S. today that has relative shale maturity.

Shale development is not about the long-term financial viability of shale wells. The wells have not performed up to expectations. Well decline curves are precipitously steep in shale gas and even steeper in shale oil based on historical production data filed by the operators in various states.

Shale development is not about vast reserves or “100 years of gas.” A recently published report reviewing production data of over 60,000 shale gas and oil wells observes that U.S. shale gas has been on a plateau since December 2011, and that 80 percent of shale gas production comes from five plays, several of which are in decline. Further, according to a recent report by the Oil and Gas Journal, and industry publication, it is confirmed that the recovery efficiencies of shale plays are truly dismal.

The energy context
For the past 100 years fossil fuels have held the primary position as the drivers of the U.S. and western economies. Nevertheless, fossil fuels are finite. New deposits of hydrocarbons have proven harder and harder to replace. 

Further, there are various grades and types of hydrocarbons, some much more efficient as fuels than others. Additionally, some hydrocarbons simply require such an expenditure of energy to extract and produce that their use becomes questionable. This measure is referred to EROI (energy returned on investment) and is often seen as a ratio. For
instance, it is estimated that in the early days of the U.S. oil industry, the EROI for oil was 100:1 (that is, 100 units of energy recovered for every one unit of energy invested) but this has since declined to an EROI of under 20:1.
Because unconventional hydrocarbons like tar sands and shales are by definition more challenging (i.e., more energy-intensive) to produce, they generally have very low EROIs:  ikely well under 5:1.

Link -
http://shalebubble.org/wp-content/uploads/2013/02/SWS-report-FINAL.pdf
=========================
In short, this field is high on HOPIUM!

Squaring Up To A Low Growth World

There wasn't much of an outcry in the media when the U.S. Congressional Budget Office told the Senate Budget Committee and the House Budget Committee that instead of achieving 3.0% growth in 2013 as had been widely reported, the CBO expected the U.S. economy to grow by no more than 1.5% by the end of this year. That is way below trend for the U.S. economy.

Reduced Federal spending and the expiration of the 2% point cut in the Social Security payroll tax, plus increases in tax rates on income above certain thresholds, will all have a dampening effect of around 1.5% in total on the economy, the CBO says.

As a result, unemployment in the U.S. will continue to run at around 7.5% through 2014, giving the U.S. its sixth consecutive year with unemployment at or higher than 7.5%, the worst performance in terms of jobs for 40 years.

This would be depressing enough as a view of the likely course of the U.S. economy, but Jeremy Grantham, co-founder and chief investment strategist at GMO (Grantham, Mayo Van Otterloo), with $97 billion in assets under management, argues in a November 2012 Newsletter that the good old days of

"Going forward GDP growth conventionally measured for the U.S. is likely to be only 1.4% a year, and adjusted growth about 0.9%," he says.

But

Grantham points out that

the U.S. population growth is set to "bob along at less than half a percent" instead of the 1.5% a year seen in the 1970s. This means that man-hours worked annually are likely to be growing at only 0.2%, hardly a massive boost to GDP. Moreover productivity improvements are seen at their best in manufacturing, and manufacturing now only accounts for around 9% of the U.S. economy. Not good

.

The following paragraph from the GMO newsletter on the impact of demographics on growth is worth pondering:

   

The demographic inputs peaked around 1970 at nearly 2% a year growth

(there are many ways to do these calculations, each yielding slightly different results). a year increase in man-hours where they are likely to remain until 2050, with possibly a very slight downward bias.



Link -
http://seekingalpha.com/article/1291761-squaring-up-to-a-low-growth-world?source...
==============================
A few observations -

1) "Demographics is destiny" ― Arthur Kemp
2) I would suggest that large boosts to immigration in the US or elsewhere is unlikely for various reasons and as the Boomer generation is set to start dying in ever increasing numbers, over the next 5-20 years, it is likely that the average Growth attributable to Demographic effects will actually go negative over the next 5-10 years & it will then continue that trend for some time!
3) In isolation, this Demographic time-bomb would provide some formidable Economic obstacles!

However, on this occasion, with diminishing resources, including Energy & Water Resources (although some areas may get too much water), plus the effects of Climate Change gathering pace, THE COMBINATION OF THESE 3 MAJOR ECONOMIC FACTORS ARE VERY LIKELY TO CREATE A ONCE IN HISTORY SET OF ECONOMIC PROBLEMS, WHICH WILL PERSIST FOR DECADES. 

As I have said previously, THIS TIME IS DIFFERENT & NO AMOUNT OF POLITICAL RHETORIC WILL CHANGE THESE FACTORS.

This puts an entirely new perspective on Bill Clinton assertion that, "IT'S THE ECONOMY, STUPID"! 

Dollar "defying gravity" as forecasts lift

Treasurer Wayne Swan says the Australian dollar is “defying gravity” as commodity prices fall and analyst forecasts lift.

It comes as the trade-weighted index for the Aussie reached its highest level since 1985 yesterday, spurring analysts to reverse course after cutting year-end forecasts for the currency.

Policymakers and executives at the Bloomberg Australia Economic Summit in Sydney yesterday singled out the local dollar’s strength as the biggest challenge for business, while conceding there’s little that can be done to restrain it.

“The global economy requires the big economic engines to grow so we can all grow together, and if that requires expansionary monetary policy because fiscal policy has reached its limits or can't be implemented then so be it,” the treasurer said.

The economy expanded 3.6 per cent in 2012, the fastest pace in five years, while employers added 71,500 jobs in February, the most in almost 13 years, government data showed last month.

But clouding the outlook, BHP Billiton chief financial officer Graham Kerr told a Bloomberg economic summit yesterday he expects annual economic growth in China to moderate toward 6 per cent, and that prospects in its largest customer present the company's main business risk.

The dollar was at $US1.055 this morning and has remained above $US1 for a record nine-month stretch.

The RBA's trade-weighted index climbed to 79.9 yesterday, the highest level since 1985.

'Decimating' manufacturing
Australia’s defiance of the global slowdown is now backfiring on manufacturing after the currency soared 75 per cent against the US dollar and 87 per cent versus the yen from its low in October 2008.

Terry Davis, managing director at Coca-Cola Amatil Ltd., said the Aussie is “decimating” manufacturers, while Robert Mead, head of portfolio management in Sydney at Pacific Investment Management Co., said businesses are deferring spending.

The government and Reserve Bank of Australia say the cash flowing into the economy - fueled by quantitative easing in the US and Japan - is beyond the control of policy makers in a small nation.

“That’s the hand that the world has dealt us,” RBA Assistant Governor for economics Christopher Kent said at the summit, reiterating that the central has no plans for intervention to weaken the Aussie.

AAA Rating
UBS Global Asset Management expects the Aussie to stay high as investors "just love" the yields it offers.

Australia is one of eight nations that hold stable AAA grades from all three main credit-rating companies.

With $270 billion ($US285 billion) in sovereign debt, Australia has the second-largest government bond market among stable AAAs.That compares with $US11.6 trillion for the US, which Standard & Poor's reduced to AA+ in 2011, and $US9.2 trillion for Japan, graded AA- by S&P.

Aussie 'Floor'
"Ongoing demand for AAA rated credit may put a floor under the Australian dollar," said Darcie Sunnerberg, a vice president and sovereign analyst at Boston-based Loomis Sayles & Co. "Overall, fundamentals would suggest a weaker Australian dollar in the short-term," she said..

'Quality Place'
"The main theme is that China's still got this diversification bid out there for the Australian dollar and that has limited declines in the currency above the parity level," said Adrian Foster, the Hong Kong-based head of financial- markets research for Asia at Rabobank.

Rabobank, the most accurate firm at picking the Aussie over the past four quarters according to data compiled by Bloomberg, forecasts it will end the year at $US1.06.

Link -
http://www.smh.com.au/business/dollar-defying-gravity-as-forecasts-lift-20130411...
===============================

This has nothing to do with defying gravity!

As per my earlier posts, I suggest the OZ$ will continue to appreciate, against some other major currencies, such as the Japanese Yen, the US$ & the Euro.
perceptions_now wrote on Jan 9^th, 2013 at 8:23am:


There are several major reasons, why the OZ$ will go up, not down, against these currencies -
1) There is a race to the bottom, with a number of major currencies, as governments & CB's continue to throw away mountains of money.
These governments/CB's (Japan, US & Europe) are not  throwing away Billions, they are into Trillions, many Trillions AND the likely result is Currency wars, Trade Wars & Wars!

2) In comparison, the OZ Economy looks like a Paragon of virtue, with Real Growth still existing, albeit on its way out & returns on invested $'s that far outweigh what is available under the zero interest rate of  regimes of Japan, US & Europe!

As for the “The global economy requires the big economic engines to grow so we can all grow together and therefore this sort of "expansionary monetary" is ok, all I can say is CRAP!!!