Saudi Aramco: The Company and the State | Al Jazeera English (February 2019)

For the past two years, Saudi Arabia has prepared to place its national oil company on the stock market. Officials talked up the Saudi Aramco initial public offering (IPO) with international exchanges and global banks. It seemed like a great idea that the world's largest oil producing company, valued at $2 trillion, would become the world's largest ever traded stock.

There are many companies in the world which move and shake markets but perhaps no other organization essential to running a country. Aramco is unique and it runs no ordinary country. Saudi Arabia plays a key role in moving global oil prices. The oil market affects everyone on the planet directly or indirectly. Oil prices have developed and destroyed economies – Sudan and Venezuela being the most recent examples. So that company shedding its cloak of secrecy and deciding to go public is a huge deal. Specially for Saudi Arabia which is run by a monarchy and its affairs cannot be publicly evaluated or scrutinized.

The proposed listing of the national champion was a central part of the young Crown Prince Mohammed bin Salman's Vision 2030, a reform drive aimed at restructuring the kingdom's economy and reducing its dependence on oil revenue.

"I think there was a strong case for the IPO and there still is for the selling of a stake of Saudi Aramco and there are lots of reasons for it," explains Jim Krane, an energy researcher at Rice University’s Baker Institute for Public Policy. While Saudi Arabia, like other Gulf states have been trying to move away their economies from oil dependency for years, "the specter of climate action has finally made the Saudis get serious about it. And really the only way to diversify is through Aramco and Aramco is the source of revenues that the Saudi state needs to build other economic sectors."

The Kingdom holds about 16 percent of the world’s oil reserves and is the largest exporter of petroleum among OPEC countries. Nearly half of the country's GDP comes from oil and Aramco itself employs 65,000 people.

The concerns about radical changes in strategy put a spanner in the works for Saudi Aramco's public listing. For the first time in its history, an IPO would bring full public disclosure of Aramco's financial details, a feat that has never been made public.

"Probably the biggest downside is the transparency that would have resulted around Saudi oil reserves," says Krane, a number that doesn't move beyond 260 billion barrels. "If Saudi Aramco would have listed shares on the NYSE or the London stock exchange, the regulators would have forced Saudi Arabia to come clean on all of its reserves, how much of that is proven probable or otherwise."

A lot has changed since Mohammed bin Salman's international public relations drive such as the imprisonment of top Saudi businessmen, the murder of journalist Jamal Khashoggi, the continued war on Yemen, and the Saudi-led blockade on neighbouring Qatar. That has resulted in a flight of capital, reduced foreign investment, increased Saudi borrowing and a halt on Saudi Aramco's IPO.

This is not the first time reforms have been promised in Saudi Arabia. "In many ways, Mohammed bin Salman resembles his grandfather Abdul Aziz al-Saud," according to Chas Freeman, former US Ambassador to Saudi Arabia. The late leader united the country "with tribal marriages...conducted a war in the Saudi south, which took land from Yemen...suppressed religious uprisings and it worked." Whether his grandson's current ambitions will work is "unknown," says Freeman.

Aramco owns the largest refinery in the US, Motiva, and hundreds of facilities across the globe and funds universities, think-tanks, lobbying firms and controls a vast media empire. That money shapes policy and perceptions while also covering up criticism of the kingdom.

Saudi Aramco's failure to launch and a young leader's stumble from one crisis to another are directly linked. There is an urgency to rush into things but also a lack of experience. "That is really like planning for the growth of a nation, not the exit of an IPO," says Chad Brownstein, a hydrocarbon investment analyst and CEO of Rocky Mountain Resources. "And the growth of a nation takes a lot more planning than a couple of months."

Saudi Aramco: The Company and the State examines the reasons behind the ambitious offering, the politics of Saudi oil, the strategic importance of Aramco, a faulty evaluation, the challenges of transparency and what it means for an ambitious Prince's 'Vision 2030'.

Economic Update: Capitalism in Denial

The Last Time Banks Did This, They Caused a Financial Crash with Richard Wolff

Banks make their money from depositors by lending to others. Banks lend out almost all the money they have on deposit and this means that there could be a bank panic if a lender can’t retrieve their deposits.

The banks are supposed to hold a percentage of every dollar in reserves, which means they have a large pile of money. What happens if the government wants to stimulate the economy, by telling the banks they can lend out part of their held deposits or all of it? The last time the banks were able to lend out their reserves... we found ourselves in a global financial crash!

Dr. Richard Wolff explains to Thom how all this works.

Brexit: Singapur an der Themse

ZEIT ONLINE: Auch Boris Johnson erwartet im Falle eines ungeordneten Brexits chaotische Zustände. Doch die nimmt er in Kauf, um ein marktradikales Wirtschaftmodell zu etablieren.

Auch wenn der britische Premier derzeit häufig bekundet, einen No-Deal-Brexit vermeiden zu wollen: Seine Regierung will den klaren Bruch mit der EU. Den würde sie sich einiges kosten lassen. Die Regierungspapiere Yellowhammer zeigen, was dem Land im Fall eines ungeordneten Brexits droht – ernste Verzögerungen an der Grenzabfertigung, Lieferengpässe beim Import von frischen Lebensmitteln und Medikamenten, im Zweifel gar Ausschreitungen.

Das alles nimmt Johnson in Kauf, denn ihm geht es um eine viel größere Frage: Mit welchem Wirtschaftsmodell kann sich das Vereinigte Königreich außerhalb der EU am besten positionieren?

Hier folgt der Premier den extremen Kräften in seiner Konservativen Partei. Schließlich waren sie es, die ihn protegiert haben, bis er Regierungschef wurde. Die Brexit-Hardliner, die in der European Research Group (ERG) zusammengeschlossenen radikalen Marktwirtschaftler, haben für Großbritannien schon lange ein ökonomisches Konzept. Sie lehnen die EU mit ihren vermeintlich protektionistischen Handelshemmnissen ab. Die meisten dieser EU-Gegner plädieren für starken Wettbewerb, freie Märkte und so wenig Regulierung und Einflussnahme durch den Staat wie möglich. Ihr Motto: keine Handelshemmnisse, keine Handelsquoten, keine Zölle. » | Eine Analyse von Bettina Schulz, London | Donnerstag, 12. September 2019

Central Banks Were Always Political – So Their ‘Independence’ Doesn’t Mean Much

THE GUARDIAN: The separation of monetary and fiscal policy serves the neoliberal status quo. It won’t survive the next crash

Independent central banks were once all the rage. Taking decisions over interest rates and handing them to technocrats was seen as a sensible way of preventing politicians from trying to buy votes with cheap money. They couldn’t be trusted to keep inflation under control, but central banks could.

And when the global economy came crashing down in the autumn of 2008, it was central banks that prevented another Great Depression. Interest rates were slashed and the electronic money taps were turned on with quantitative easing (QE). That, at least, is the way central banks tell the story. » | Larry Elliott | Thursday, September 12, 2019

Merkel Warns of Danger to EU of Singapore-style UK on Its Border

THE GUARDIAN: UK poses threat if it fails to match regulation standards of bloc, says German chancellor

Angela Merkel has highlighted the economic danger posed by Britain if it is allowed to become a Singapore-on-Thames as Boris Johnson’s Brexit envoy outlined a plan to ditch the UK’s commitments to stay aligned to the EU’s social and environmental standards.

In talks with European commission officials, the prime minister’s negotiator, David Frost, insisted that the UK is seeking a “clean break” from an array of the bloc’s regulations, a policy choice from the new British government that has caused alarm in other EU capitals. » | Daniel Boffey in Brussels and Jon Henley in Paris | Wednesday, September 11, 2019

The Guardian View on the Brexit Economy: The UK Risks Recession

THE GUARDIAN: There is no good time to be leaving the EU but this might be the worst – as a failure to learn the lessons of the 2008 crash leaves the country exposed to another downturn

There is more than a little truth in the idea that those who do not learn from history are condemned to repeat it. The global financial crisis was meant to lead to an economic and political reckoning for neoliberals carried away with their own ideology. They made all sorts of unrealistic promises that even a brief reflection would have shattered. Yet more than a decade on, the reckoning is far from over. This is especially true in the United Kingdom, whose prime minister peddles a sunny optimism in the merits of splendid isolation to fuel his Brexit fantasies. History ought to be a protection against this stripe of reckless utopianism. Yet in a world of instant headlines and short-term hits, who has time to dwell on the inconvenient truths? Still, dwell we must. David Blanchflower, the US-based economist, points out that thanks to a short-sighted austerity policy this has been the slowest economic recovery for 300 years. While politicians trumpet near-record levels of unemployment and wage growth, they fail to mention that the latest figures show that average earnings, when adjusted for inflation, stands today at £525 a week in total pay, £22 lower than in February 2008 » | Editorial | Tuesday, September 10, 2019

Opinion: BoJo and This Brexit Nonsense

Three defeats in one day! Not bad going.

It appears that the prorogation of Parliament is backfiring – big time.

It is clear that the Conservatives have lost their way. Despite being a pro-business party, it was generally moderate, at least until Thatcher. But this band of shysters is making even Thatcher look moderate. That takes some doing.

But for all Thatcher’s faults, she did feel it was her duty to look after savers and pensioners. She also had an understanding of the cost of living. But that was because she rose through the ranks. As we know, Thatcher’s father was a successful grocer, and through that experience, she was able to relate to the needs, aspirations, and fears of the ordinary person.

One of the problems with today’s Tories is that the majority of them have been raised in great privilege. Many of them have never had to do a proper day’s work. They have certainly never had to earn a crust. As a result, they are totally and utterly out-of-touch with ordinary folk. What do they care about the prices of foods in supermarkets?

Furthermore, BoJo is under the influence of the ERG. That is not a good thing. JRM is a member of the ERG. What the hell does he know about real life? I understand that he has been advising his clients to take their money out of the UK because of Brexit. Such hypocrisy! Most of the 1% who are hell-bent on Brexit see our departure from the EU as a cash cow. They’ll impoverish the little people whilst enriching themselves – the 1%.

Brexit was supposed to be about regaining sovereignty. Personally, I never bought into the lie. And a lie it has turned out to be. We shall regain not an iota of sovereignty; rather, we shall be relinquishing the modicum of sovereignty regained to the US. We will fall right into the clutches of Washington. It will not be a partnership of equals––it cannot be because of the sheer differences in size and influence of the two countries––but an exercise in poodledom. It will also turn into a bonanza for US corporations: they’ll will come and buy up what is left of UK industry and commerce.

Brexit is not a game I wish to play; it must be thwarted at each and every turn. Moreover, the mere thought of coming out of the EU in the era of Trump fills me with dread and foreboding.

Our place is in Europe: we must take our full part in its continuing development; and we must fashion it in the image of our liking.

People seem to think that the US is a WASP country. It no longer is. The demographics of the US have changed a lot since the 40s and 50s. The growing communities in the States today are the Hispanics, many of whom are turning to Islam, and Blacks. We British have far more in common with Europeans, with the French and Italians and Germans. Their languages are different, but their worldview and culture are very similar. We might eat different foods and parlay in a different language, but we share the same Weltanschauung. Indeed, having spent a lot of time with Europeans over the years, I can honestly say that I have more in common with a German, Frenchman or Italian than I do with an Englishman. The English are far too insular for my liking.

There! Now I have said it.

These are strange times.

@Mark Alexander

All Rights Reserved

The Developed World Is On The Brink of a Financial, Economic, Social and Political Crisis

Donald Amstad from Aberdeen Standard Investments delivers a sobering assessment on the state of developed market economies.

US Debt Clock.org »

US and China Begin Imposing New Tariffs as Trade War Escalates

THE GUARDIAN: Chinese exports worth $125bn will face new taxes from 1 September, while China places levy on oil as agreement becomes more distant

China and the United States have begun imposing additional tariffs on each other’s goods in the latest escalation of their bruising trade war that has sent shockwaves through the global economy.

A new round of tariffs took effect from 0401 GMT on Sunday, with Beijing’s levy of 5% on US crude oil marking the first time the fuel has been targeted since the world’s two largest economies started their trade war more than a year ago.

The Trump administration will begin collecting 15% tariffs on more than $125bn in Chinese imports, including smart speakers, Bluetooth headphones and many types of footwear.

In retaliation, China started to impose additional tariffs on some of the US goods on a $75bn target list. Beijing did not specify the value of the goods that face higher tariffs from Sunday. » | Martin Farrer | Sunday, September 1, 2019

Trump's Incomplete Trade Deals

On the campaign trail, US President Donald Trump boasted that no-one strikes a trade deal better than he does. But, after more than two and a half years in office, Trump has negotiated only one major deal and even that has not been approved.

In 2018, he withdrew the United States from North American Free Trade Agreement or NAFTA. A deal to replace it, known as the USMCA, has been signed but has still not been passed by the US Congress; and at the recent G7 meeting, Trump announced a deal with Japan on agriculture and e-commerce. But, until signed, even in Trump’s words, it remains just an agreement.

China and the US have raised tariffs on one another in a back-and-forth trade dispute that continues to escalate and threatens the global economy. As Washington prepares to sit down with Beijing for more trade negotiations in September, Al Jazeera's Kimberly Halkett looks at Trump’s trade deal record.

The Guardian View on Trump v the US Fed: The Bully Pulpit

THE GUARDIAN: The US central bank spent $29tn to stop the last financial crash. Donald Trump now wants it to bail out his presidency

Earlier this month Donald Trump accused the man he had appointed to run the United States Federal Reserve, Jerome Powell, of being an “enemy”. His public dressing down of the central bank chair, who is supposed to be independent, was accompanied by further escalations of the US–China trade war. Mr Trump wants Mr Powell to lower rates to spur growth in the sputtering US economy and give him the upper hand with Beijing. This incompetence and bluster is hardly inspiring global confidence. It was a coincidence, however, that on the same day the Bank of England’s governor, Mark Carney, warned the annual gathering of the world’s central bankers that the global economy was becoming over-reliant on the dollar. That may have been fine when the US was viewed as a responsible leader of the world economy. Mr Carney plainly thinks that is not the case today. » | Editorial | Friday, August 30, 2019

The Koch Brothers Tried to Build a Plutocracy in the Name of Freedom

THE GUARDIAN: The Kochs have always believed that rich people had the right to rule over everyone else, democracy be damned

It is the hope of every rich megalomaniac that they will “leave a legacy”. David Koch, who died last week aged 79, left a significant legacy indeed. In fact, along with his brother Charles, he can probably claim to have changed the world. Unfortunately, he changed it by setting it on fire.

It’s hard to describe just what a negative force the Koch brothers have been in United States politics over the past several decades. They have used every means at their disposal to subvert democracy. They funded academic posts, thinktanks, lobbying groups, fake grassroots operations, and political campaigns. They used their tremendous wealth to push a radically far-right economic vision in which government protections and welfare programs would essentially cease to exist. They may even have been directly responsible for the election of Donald Trump, the Koch-backed Americans For Prosperity having hired 650 staffers to make millions of phone calls and knock on tens of thousands of doors in Wisconsin and Michigan during the 2016 election. » | Nathan Robinson | Wednesday, August 28, 2019

Lawrence: The Presidency Is an Oral Exam That Trump Fails Every Day | The Last Word | MSNBC

Lawrence looks at the lowlights from Donald Trump’s performance at the G7 in France.

Brexit: EU 'Would Block Trade Deal If Britain Reneged on Bill'

THE GUARDIAN: UK must honour its debts before starting to negotiate trade deal, say Brussels sources

The European Union would refuse to negotiate a trade deal with the UK if the government reneged on the Brexit bill, EU sources have said.

At the G7 summit in Biarritz, Boris Johnson said it was a “simple statement of reality” that the UK would withhold much of the £39bn financial settlement agreed by Theresa May, in the event of a no-deal.

Brussels sources have warned that future trade talks would be blocked until the UK agreed to a settlement.

The financial settlement was a “totemic” issue for EU member states, one official said. “The message will be ‘honour your debts, or we are not even going to start talking about a trade deal,” the source said, reflecting a widespread view among diplomats.

Responding to the prime minister’s comments, Jean-Claude Piris, a former head of the EU council legal service, tweeted: “If the UK refuses to pay its debts to the EU, then the EU will not accept to negotiate a trade agreement with the UK.” » | Jennifer Rankin in Brussels | Monday, August 26, 2019

Trump Asserts He Can Force U.S. Companies to Leave China

THE NEW YORK TIMES: BIARRITZ, France — President Trump asserted on Saturday that he has the authority to make good on his threat to force all American businesses to leave China, citing a national security law that has been used mainly to target terrorists, drug traffickers and pariah states like Iran, Syria and North Korea.

As he arrived in France for the annual meeting of the Group of 7 powers, Mr. Trump posted a message on Twitter citing the International Emergency Economic Powers Act of 1977, a law originally meant to enable a president to isolate criminal regimes not sever economic ties with a major trading partner over a tariff dispute.

“For all of the Fake News Reporters that don’t have a clue as to what the law is relative to Presidential powers, China, etc., try looking at the Emergency Economic Powers Act of 1977,” Mr. Trump wrote. “Case closed!”

The president’s threat to all but cut off one of America’s most important trading relationships could disrupt a global economy already on the edge of recession amid his trade war while further unsettling giant companies in the United States that rely on China in their production and sale of everything from clothing to smart telephones. » | Peter Baker and Keith Bradsher | Saturday, August 24, 2019

Aides “Alarmed” by Erratic President Donald Trump Behavior | The Last Word | MSNBC

Trump’s Days-Long Public Meltdown Has Moved from Words to Actions | Deadline | MSNBC

NBC News’ Heidi Przybyla, WBUR’s Kimberly Atkins, NYT’s Nick Confessore, former economic advisor for President Obama Austan Goolsbee, and MSNBC’s Ali Velshi on the president escalating his trade war with China and comparing his hand-picked Federal Reserve chair to the authoritarian president of China

Economist Reacts to Trump's Tweet: Nothing Like This Has Ever Happened Before

Austan Goolsbee, the former chairman of the Council of Economic Advisers under President Obama, reacts to President Trump's tweet asking if Federal Reserve Chairman Jerome Powell or Chinese President Xi Jinping is the bigger enemy to America.

Trump 'Hereby Orders' US Companies to Leave China after Attacking Fed Chair

THE GUARDIAN: President calls for US boycott after Jerome Powell warned central bank faces ‘new challenge’ ‘with Trump’s seesaw trade policies

Donald Trump ordered US companies to leave China on Friday after launching another blistering attack on Federal Reserve chairman Jerome Powell, asking “who is our bigger enemy, Jay Powell or [China’s] Chairman Xi?”

Moments after Federal Reserve chairman, Jerome Powell, warned the US central bank was facing a “new challenge” as it deals with the Trump administration’s seesaw trade policies and ongoing dispute with China, Trump went on a Twitter rampage calling for a US boycott. » | Dominic Rushe in New York | Friday, August 23, 2019