by Judith Curry
In pondering what might happen in 2012 in terms of energy and climate policy, oilprice.com suggests that stove-piped analysis of individual strategic sectors (e.g. energy) is inadequate, and we need to consider the broad global strategic environment.
The oilprice.com piece is entitled Eight Strategic Factors to Consider for 2012. Some excerpts are provided here, selected for relevance to energy security:
1. Global Economic and Financial Trends: Economic fragility is everywhere, even in fairly robust and growing economies.
2. Global Energy Supply and Demand: 2012 will see the start of a transformation in fossil fuel supply and demand patterns, driven to an increasing extent by technological capabilities (such as the increasing possibility of delivering fuels derived from shale deposits in Europe, North America, and elsewhere). Changing strategic power reach (such as the decline in US influence in the Middle East, Central Asia, and, increasingly, Africa; and the rise in the PRC’s and India’s acquisitiveness) will also change control and logistical patterns for oil and gas distribution. The US has the ability to move much of its fossil fuel dependence away from the Middle East and Africa through transforming political approaches to the exploitation of domestic oil and gas fields and through cooperation with Canada in the exploitation of Alberta’s shale deposits, but is unlikely to make headway in this arena in the short term, due to political inertia. Based on present evidence, the US energy dependence pattern will remain slow to change in 2012, and significant change is only likely to occur with a change in US political leadership, which could occur at the beginning of 2013. As a result, the US will continue to face high costs, and high security vulnerability, because of its ongoing dependence on the maritime delivery of its oil and gas imports. This dependence comes at a time of declining US ability to project power to protect or — through strategic influence — ensure security of supply from, say, the Gulf of Guinea or the Middle East. Declining US strategic reach has already ensured the loss of control over, for example, Central Asian/Caspian oil and gas supplies.
Part of the changing fossil fuel logistical framework which will affect the strategic balance — apart from the exploitation of shale deposits in Europe, North America, and elsewhere — will be the clarity which will begin to emerge during 2012 in the future importance of oil and gas fields being developed in the Eastern Mediterranean. This will be a major driver in determining the economic creditworthiness (and therefore eurozone reliability) of the South-Eastern European countries such as Cyprus and Greece and, potentially, Italy. This will be a significant factor in the strategic behavior of Turkey, which is now seen as being outside the European Union bloc, and which is struggling to retain a major role in the energy marketplace. It lacks control over viable energy fields, and its influence over Central Asian/Caspian energy transportation to European markets (or even to the Mediterranean transshipment market) is, in relative terms, declining. Turkish economic fragility is, as a result, beginning to show, and this has generated an “equal and opposite” rise in Turkish strategic adventurism, designed to ensure a re-growth of neo-Ottoman influence over the Levant (particularly Syria and parts of the Palestinian Authority) and even Egypt. This adventurism seems likely to come to a head in 2012, even though the current Turkish Islamist political leadership is unsure how to effectively realize its adventurism given its concern over the reliability and loyalty of the Turkish Armed Forces to support an approach which goes so strongly against the secularist Kemalism of the Armed Forces.
The growing uncertainty of hydrocarbon supplies from the Persian Gulf, North Africa, and the Gulf of Guinea has sent the EU into an even greater reliance on Russia-origin and Russia-dominated for its energy supplies. What started as an economic driven default option will keep evolving in 2012 into a grand-strategic transformation. Brussels’ ambivalence about continued reliance on the NATO-based Euro-Atlanticism versus shift to the Mackinderian “Common Eurasian Home” doctrine advocated by Berlin and Moscow will be decided in favor of the latter, primarily on energy supply grounds and irrespective of the brewing political instability in Russia. Cognizant, the Kremlin will increasingly trade artificial lowering of energy price for Europe’s political-strategic pliability. This realignment will have major impact on the EU’s policy in key issues outside the immediate bilateral relations such as interventionism in third-party conflicts on the European periphery.
The strategic impact during 2012 of new energy-related technologies, apart from shale cracking, which will be worth watching are those related to energy transmission and storage. On the one hand, fixed, terrestrial electricity grids will become more efficient through interactive energy management computing, but at the same time they will become strategically more vulnerable, as noted repeatedly by this writer. On the other hand, 2012 will see a growth in the development to strategic scale (a significant change) of viable storage devices — batteries — which can act as stand-alone support for increasingly efficient local communications and computing networks, and be sustained by the newly-strategic-scale solar power technologies. It is the growth of these self-sustaining local networks which will serve as the guarantor of stability in the event of widespread interference with conventional terrestrial grids by natural disasters or human-sponsored disruptions.
3. Strategic Recovery by the US. The US will not, in 2012, show signs of any recovery of its global strategic credibility or real strength. Its manufacturing and science and technology sectors will continue to suffer from low (even declining) productivity and difficulty (for political reasons, primarily) in capital formation. A significant US recovery is not feasible in the timeframe given the present political and economic policies and impasse evident.
4. EU/Eurozone Prospects. The unwillingness of eurozone leaders Germany and France to decouple economic and financial issues within the currency zone will continue to extract a growing cost on the Continental European economies. All that this will do will be to further reduce the EU’s diplomatic influence on Turkey, the Middle East, Africa, and on global issues. that engagement and to reduce military
5. Iran-US-Israeli Military Engagement.
6. The Arab “Spring Break”. Concerns over the positive or negative prospects for “democracy” in the Middle East as a result of the rash of examples of popular unrest (Egypt, Tunisia, Libya, Yemen, Bahrain, Syria) should be seen in the light of the removal of a firm superpower authority figure in the region following the collapse of the Cold War and subsequent decline of the US. They should also be seen in light of the reality of the maturing and stagnation of some of the political systems which did not have the flexibility and legitimacy of traditional systems.
The US penchant to encourage and exploit the ascent of Sunni-Islamist blocs in the Middle East (Turkey-Saudi Arabia-Egypt) and South Asia (Pakistan-Afghanistan) in order to stifle Iran might pressure Tehran but would also result in the radicalization of Central Asia and the soft underbelly of Russia to the detriment of vital Western interests such as what remains of its access to the region’s energy resources.
7. A Return to Chaos in Nigeria. What happens in Nigeria affects the global energy market, and the strategic stability of the EU and the US, and other states. By the beginning of 2012, Nigeria was falling rapidly toward civil war, or at least uncontrollable insurgency, and there seems little which Nigeria’s major trading partners can do to prevent the slide.
Here we see the fate of the stability of the Gulf of Guinea — emerging as perhaps the most important fossil fuel export zone in the world after Russia and the Middle East — hinging on the inability of a single man, Goodluck Jonathan, to make a decision: a corrupt and inept politician in fear of an honest and capable figure.
8. Stability on the Korean Peninsula. All indicators point to the probability that the new leadership of the Democratic People’s Republic of (North) Korea (DPRK), under Kim Jong-Un, will pursue a cautious (albeit with strong propaganda) policy toward adventurism on the Korean Peninsula for much or all of 2012.
PRC Pres. Hu Jintao will step down from the Presidency in 2012, and this will trigger a new era in Chinese politics. The watershed changes — such as transforming energy patterns, or the changes in the way most wars are likely to be fought over the coming decades — are, however, the ones which should figure strongly when analyzing global risks and opportunities.
It is worth bearing in mind that 2012 is not expected to be a year of “big wars”, largely because most societies in the world are at a point where they lack the basic resources to sustain such activities on an inter-state scale. This will not prevent “short, sharp wars”, or clashes between sovereign powers, and the danger always exists that these can escalate, regardless of the preparedness levels or economies of the parties.
JC comment: read the whole article, its very interesting, but most of it isn’t relative to energy. Any thoughts on what all this portends for the UNFCCC negotiations, and for national energy policies?
For the US, Since the EPA MACT is doable with existing technology, I would say that coal gets shoved down warm and fuzzy throats until they get off the stick about over regulation. Sorry to say, but that is hardball politics.
I think Obama’s, “They can build coal, but we will bankrupt them.” I going to bite his butt.
Energy security is an oxymoron:
a.) Security requires knowledge of reality.
b.) Reality is now ignored by leaders of science.
c.) Conversion [E = mc2]: Mass (m) => Energy (E) powers the Sun.
d.) CSPAN even recorded the release of data hidden to avoid this fact.
e.) DOE/NSF/NSA/NAS still ignore nuclear rest mass data shown on the cover of a symposium proceedings that Noble Laureate Glenn Seaborg and I organized in 1999 to bypass groupthink roadblocks [“Origin of Elements on the Solar System . . . “, Kluwer/Plenum Publishers, New York, NY (2000)].
Seaborgium (Element 106) honors this great scientist and public servant who understood nuclear energy and served as Chairman of AEC under Presidents Kennedy, Johnson and Nixon. His 1951 Nobel Prize lecture:
http://www.nobelprize.org/nobel_prizes/chemistry/laureates/1951/seaborg-lecture.pdf
Energy, national and world security are impossible if politicians make decisions based on misinformation of the a.) Origin; b.) Composition; and c.) Source of energy for the Earth/Sun system.
Information on a & b are in Proceeding of the above symposium; The key to c.) is on the front cover.
Energy security will elude us if DOE/NSF/NSA/NAS continue to ignore information in nuclear rest mass data.
The energy policy of this administration transcended absurd prior to them coming into office. How anyone could have voted for Obama with his “we’ll bankrupt them” line will always be a mystery to me.
He said it late and it was unreported by the medjah.
=======================
http://ourhydrogeneconomy.blogspot.com/2012/01/did-epa-give-us-coal-for-christmas.html
Calling Robert and Webby, I think Joshua the bacon eater and future pellet stove owner may be on my side of this particular issue :)
BOO!
Are you scared yet?
No.
(1) BOO!
(2) BOO!
(3) BOO!
(4) BOO!
(5) BOO!
(6) BOO!
(7) BOO!
(8) BOO!
Are you scared yet?
(1) No.
(2) No.
(3) No.
(4) No.
(5) No.
(6) No
(7) No.
(8) No.
Now if an eight point opinion piece had come from within our own military, I would certainly listen. Sans any biased political election year scare tactics.
This particular eight point opinion piece, as written, is so filled with political election year motives and overtones, so as to render it to the intellectual equivalence of a babbling cretin.
OPNAPOCPFDC!
I kinda agree on the BOO aspect. I kinda don’t agree with about 6 of the 8 points made here.
Whaa?
What have these boyz been smokin’?
http://2.bp.blogspot.com/-EvJi6GYy8VI/TfgKgUnrUoI/AAAAAAAAPZ8/JvfgITSnHGU/s1600/mfgprod.jpg
Do you realize what that chart is? It is productivity per employee. Cut your workforce by 30% and only drop production by 15% it goes up. Outsource your production to China, it goes up. Looks pretty though.
Cap’n –
What measure do you want to use to measure manufacturing productivity? Value of what we produce? Gone up.
http://www.nytimes.com/2009/02/20/business/worldbusiness/20iht-wbmake.1.20332814.html
Manufacturing as a % of GDP has gone down steadily in the U.S., but it has gone down similarly around the globe. That decline has contributed to a stagnation in real wages, but what evidence do you want to use to determine a loss of productivity? Employment #’s?
From that article:
Not sure what the recent figures are exactly, but I’d say that they’re in line with those above.
Some more pretty, sciency-looking pictures for you:
https://www.esa.doc.gov/sites/default/files/blog/images/durable_goods_blog_chart_3-22-11.jpg
https://www.esa.doc.gov/sites/default/files/blog/images/durable_goods_blog_chart_ii_3-22-11.jpg
http://www.esa.doc.gov/Blog/2011/03/22/growing-appetite-american-made-goods-overseas
Did you notice that #1 and #3 are the same graph?
#1 is the graph.
#3 is the article.
Nice save.
Joshua, What measure would I like to see of manufacturing productivity? One that is a complete picture. $/worker versus Workers and total production. A growing industry would be hiring more workers, have lower productivity per worker but increases product sales. A declining industry would have higher productivity per worker and plateaued or reducing sales.
Manufacturing productivity should also mention where the manufacturing took place. Garmin international makes a US$200 GPS. The GPS costs US$20 at the production facility in China. Dollar wise and volume wise, the productivity of the US portion of the manufacturing is very efficient since they are not manufacturing anything.
It would also be nice to compare productivity to employment. California has one of the highest unemployment rates in the nation and one of the highest productivity per workers.
South Dakota has one of the lowest unemployment numbers and also not a very impressive productivity.
So are you trying to impress on me that the divide between the rich and poor is growing because high regulation of manufacturing is promoting outsourcing of the dirty work? I already knew that.
Like most things Joshua, you have to concentrate to see the real picture statistics paints.
Cap’n
My point initially was that this article Judith linked is bogus. EFS_Junior said it much better than I, but you can bet that the authors weren’t considering your argument of what “productivity” should measure, but mistakenly reporting on the metric I described – and building predictions on a faulty premise. Hence the question about what they were smokin.’
High regulation causing a decline in % of GDP in manufacturing output? A factor I don’t doubt, but explanatory? Talk about needing to concentrate. Sheece!
As opposed to a decline because it is easier to make more profit in the service and financial sectors: in part because of inherently lower labor requirements, in part because in the financial sector short-term investments can bring magnificent short-term returns as opposed to the manufacturing sector where, long-term returns are what you get, and they rely on a long-term ability to produce a quality product at a competitive price? Do you think GM devoted so much of its resources to becoming a financial institution because manufacturing has such “high regulation,” in contrast to the lucrative nature of finance?
And Cap’n – take a look:
http://1.bp.blogspot.com/-Ro10Em4QgtA/TwIFUit8EGI/AAAAAAAAQo0/V5Ex9JbR0ZU/s1600/mfg.jpg
http://www.tradingeconomics.com/chart.png?s=/germany/manufacturing-value-added-percent-of-gdp-wb-data.html&d1=19670101&d2=20120107
http://investing.curiouscatblog.net/wp-content/uploads/2010/06/manufacturing_output_as_percent_of_gdp_1980-2008.png
http://datamarket.com/data/set/15a5/#!ds=15a5|hb1=o.j&display=line&f=index&s=487
Must be Obama’s fault, right? It’s all because of he’s created “uncertainty” (because, you know, prior to Obama investors only invested when they were certain about the future).
The manufacturing sector in the U.S. has declined more rapidly, relatively speaking, than in any other large, wealthy country, but there is more at play there than simply “high regulation.” It always astounds me when people capable of sophisticated scientific analysis have such a restricted approach to analyzing political issues with sophistication.
Sorry – that graph that came through untitled (2nd link) is value added as a % of GDP of manufacturing in Germany. The last link works if you cut and paste the entire link.
Joshua, “The manufacturing sector in the U.S. has declined more rapidly, relatively speaking, than in any other large, wealthy country, but there is more at play there than simply “high regulation.”
There is always more at play. Regulation is a MAJOR player though and counter productive. It reinforces the NIMBY attitude instead of take care of your own mess attitude. That take care of your own mess is a major industry that in the US is a where can we hide our mess industry. New technology waste to energy is always a battle because of how things used to be, New technology coal can never be clean because of how it used to be. So if you think that over regulation is insignificant because there is more at play, think again.
GM BTW shifted into financial services to make money and sell cars. In the 1980s, because of the US auto industry making poor choices to meet clean air standards, (remember the EGR valve?), GM had to offer zero percent interest loans. So there was more at play with their diversification into financial sector. The Auto makers also had to finance dealer repainting with the VOC regulation changes.
Reasonable regulation allows reasonable time to develop replacement technology instead of forcing business to pass the buck. Think of the penalties imposed for not using cellulose ethanol that is not available because of the regulation and potential regulation on the technology to make that cellulose ethanol. You don’t invest in technology when there are threats to bankrupt you. That was an Obama mistake.
As for the overall decline in US manufacturing, there are quite a few administrations that can share the credit..
Cap’n –
Sorry – misplaced comment:
http://judithcurry.com/2012/01/06/energy-security-eight-strategic-factors-to-consider-for-2012/#comment-156702
And I’ll add this:
This must be “Throw Anything on the Blog Wall to See if it Sticks” week here at Climate Etc.
OK, I know science is fraking nuts, too.
http://www.msnbc.msn.com/id/45903873/ns/technology_and_science-science/
What a difference a few days make, right?
Oh, now I know that I Left out a see, too.
Heh, if true, Tom, what a great way to defuse the Big One.
==============
Golly. A real sciency-looking graph.
You need to go to the Bureau of Labor Stats for that data, joshy:
http://www.bls.gov/lpc/prodybar.htm
The rate of growth in productivity in the manufacturing sector has been declining for two decades. The trend is not our friend, joshy.
“The rate of growth in productivity in the manufacturing sector has been declining for two decades.”
Make that declining for the last decade
Quick, Don. Hide the decline.
The rate of growth is declining. Which means that the productivity is increasing, albeit less than it was previously. Compare that to:
The U.S. ranked first in the world in manufacturing value added in 2008 – again, not sure how that looked over the last year, but the trend for value of manufacturing exports looks positive over that period.
http://www.nytimes.com/imagepages/2011/02/11/business/20110212_CHARTS_graphic.html?ref=economy
Whatever, joshy. The point is that the rate of productivity growth has declined, and I am not going to bother to check (because I have a life) but there have been recent quarters that have seen declining productivity. The trend, joshy, the trend.
You still haven’t read Item #5. There is really some stupid stuff in there, if you really want to squawk.
Cap’n –
I sometimes use a case study of Emerson Electric when working with students.
The study describes how, after decades of outperforming the S&P 500 on dividend returns to investors; having very solid metrics in profitability, growth, and other metrics; adapting successfully to changes in the market; and years of outperforming other companies in the same market sector, financial advisers told the company to take on more debt because their share price was at a slight discount compared to other companies in the same sector.
The point wasn’t that they were being told to increase their debt by investing to diversify, or to anticipate market changes – they already had a long-established track record of doing all of that. The point was to adjust what the cash flow looked like and to increase tax leveraging advantages. The president was reluctant to take on debt simply to attract investors – over years and years the company had been successful by focusing on efficiency, management competence, and long-term business plans to build quality products at a competitive price. But financial advisers (it’s not like they had a vested interest, right?) told the company to take on more debt and that’s what they did (stock buy backs).
Not being a business expert, I thought that the case study was astounding. How could taking on debt needlessly, essentially just for the purpose of taking on debt, be considered a good thing? Isn’t debt bad? The executives got out their calculators and explained how and why additional debt would be attractive to investors.
The case study is instructive because it’s a good example of a larger phenomenon. Short-term ROI and attracting investors became prioritized in the publicly-traded manufacturing industry. Check out the trends in the metrics of debt accumulation among American companies.
High regulation? Sure, a factor. A major factor? Ok, a major factor – you know, because idiots think that protecting the environment ain’t such a terrible idea. Solutions need to balance the need for protection of the environment, protection for workers, protection against fraud, etc., against potential dampening effects of regulation It doesn’t help, however, when there is so much extremist libertarian, binary-mentality rhetoric injected into the debate, and when there is so little counter-balance against the influence of financial institutions on policy development.
I forgot to stress that the main purpose of financial engineering (to attract investors) was imply to increase stock prices. Gee – I wonder why advisers from the financial industry were recommending actions that would increase stock prices even though they entailed increasing debt?
What you just made clear, is that you do not have a clue about corporate finance and investment. Yet you expound on the subject at great length. You are a putz.
“Financial engineering”?
P.E. –
I don’t get your point:
You’ve never heard the term before? You want an explanation of what it means? You doubt that it is an established term?
Emerson Electric most certainly did go out on a buying binge, picking up good performers (Rosemount), so-so performers (Fisher) and misfits (Micromotion). It may not have worked out well, but they certainly got extra income out of the deal. Fisher and Rosemount in particular were venerable companies, though Fisher was probably ruined by Monsanto.
They fact that they didn’t work together as a package that well only goes to show that companies have to actually be managed. Strategic alignment by itself doesn’t make a money maker.
None of any of this supports you point. In fact, I don’t even know what your point is.
Sounds like a journalism term. Like social engineering.
P.E. –
Investing in other businesses – taking on debt for a specific purpose other than just to increase stock prices – is decidedly not what I’m talking about. Emerson had a long history of doing such – and they were being told to change their behavior – to perform financial engineering specifically for the purpose of addressing a slight discount in their stock price relative to the S&P. The point is that there was a shift in the private sector away from viable long-term business plans to a focus on short-term ROI by virtue leveraging debt and more specifically through of stock prices. Focusing on “high regulation” as an explanation for the drop in manufacturing as a % of GDP neglects the massive-scale forces that led to massive growth in the financial and service sectors. It is another example of confirmation bias: you decide that you hate regulation and that it kills the economy and then you confirm that belief by creating fantasies about how “high regulation” killed the manufacturing sector.
P.E. –
I assume that you Googled the term?
P.E. –
Just to clarify – the “you” there wasn’t you specifically. I could have said “one” or “an extremist libertarian.” I have no idea what you, personally, think does or doesn’t kill the manufacturing sector.
Management of publicly held companies are supposed to maximize the value of the enterprise for the benefit of shareholders. This reveals your naivete:
“The study describes how, after decades of outperforming the S&P 500 on dividend returns to investors”
You think that is necessarily a good thing. Anyone who has a clue about corporate finance knows that is a sign that management has very likely failed to maximize the value of the enterprise. Why couldn’t they find a use for those funds in expanding the business? Similarly, why not borrow funds to take advantage of opportunities to expand the business. If you can borrow money at 5%, and you have a project that has an expected return of 10%, borrow the money and go for it. Or don’t borrow the money and stagnate.
This stuff is not rocket science. You are basically ignorant, josh.
Joshua, this is warm, fuzzy and evasive, “– you know, because idiots think that protecting the environment ain’t such a terrible idea.” Protecting the environment is not a liberal only idea. Quite a few conservative organization have done a lot more protecting the environment without poorly thought out regulation and government monies. Ducks unlimited and a number of outdoors groups, aka hunters, have spent a great deal of money restoring wetlands and preventing development. The treehuggers in the PNW were very efficient at fighting the logging industry. A good deal of timberland was sold and now is being developed into suburbs. Sometimes good intentions go awry.
Oregon BTW promoted “Clean” technology manufacturing in their state. There are quite a few solvents and dopants used in building computer components that under very scientific linear no-threshold modeling have been proven to cause something. Proper storage and use of those solvents and dopants would never change the results of those scientific studies. Like Ajax Cleanser, huffing Ajax cleanser can cause cancer because it contains that toxic ingredient silica.
You probably have one or more of the 12 cancer causing products in your home, http://smartklean.wordpress.com/2011/02/23/the-top-12-cancer-causing-products-in-the-average-home/
Lord help us if people start dumping silica into our sensitive environment :)
They had a long-established track record, over decades, of very successful expansion. Far better than their competitors. The advise they were getting was in spite of that long-term track record.
in virtually every metric related to long-term growth, sales, etc. that you can think of, they had a long track record of success.
And they weren’t being told to take on more debt in order to “expand the business.”
They were being told to take on more debt for the (basically) singular purpose of manipulating stock price.
Gee – I wonder why financial advisers thought they should have so much focus on stock prices even thought it was only at a slight discount to competitors?
I just can’t quite figure that one out.
Cap’n –
touché
Noting that you said “only” there, I will point out that try to avoid binary thinking. I don’t assume that all regulation is good and I don’t assume that all conservatives have an agenda for us all to tie in vast toxic pools. Sometimes my rhetoric gets in the way.
My point is that a simplistic attribution of the decline in manufacturing as a % of GDP to “high regulation” misses other, very important, factors.
You are an idiot, josh. You made up that part about manipulating the stock price, because you are a little prisoner of left-wing ideology. It’s a good thing that you liberal arts pansies aren’t running the economy. You must have a government job.
Oh, I forgot to add one thing on over regulation. The EPA has a 15 millirem per year maximum standard for radiation exposure at Yucca Mountain. How many Brazil nuts exceed that standard?
Quiz question number two, which is worse, ingesting a serving of Brazil nuts daily for a year or 1 microgram of Plutonium once a year?
I don’t remember Emerson Electric making any significant acquisitions after the big binge in the ’90s that multiplied the size of the company several times. I do remember some hare-brained wireless instrumentation scheme that got nowhere because it didn’t address any real problems that the customers had. It seems like their claim to fame in the 0’s was pushing gee-wiz tech that nobody wants. I’m surprised Josh doesn’t love it; it’s just like green tech.
I just reached over to my bookshelf and pulled out the first thing I could put my hand on. William F. Sharpe, Investments. Get it and read it, if you have the guts to find out how ignorant you are.
You never know whether a case study is a completely accurate representation of a situation (this case study was prepared by highly credentialed instructors and used at top-level business schools with very high-ranking international executives), but there are quotes from the named principles involved (financial advisers, company executives, etc.) as well as tables and graphs that track metrics, stock performance over decades, profiles of competitors, etc.
I made nothing up. Further, it was not a particularly unique situation.
I reached over again. Weston & Brigham, Managerial Finance.
P.E. –
The time frame I references was ’70’s to ‘@ 2000.
Edwin Mansfield. Microeconmics Theory and Applications.
Don –
Allow me to fix that for you:
That’s cute josh. You shall remain ignorant.
As I said. The growth was all in the ’90s.
Oh, and BTW, I think we can expect to see more of this kind of leveraged consolidation as long as the government continues its policy of discouraging startups and growth, and keeping interest rates at practically zero. No wonder Buffet loves hopenchange. That’s his thing.
P.E. –
It was in the ’70s, ’80s, and ’90s
The financial engineering (btw, you can get an advanced degree in financial engineering at Columbia, Berkeley, etc.) started in the late 90’s and into the ’00’s. Which is my point – the company had a long history of expansion through acquisition and other means of growth – and was advised to alter it’s strategy. This type of mentality had an impact on manufacturing as a sector of our economy.. Don’s knee-jerk response – without considering the facts that I had already given him – that long-term stability might be a bad thing (necessarily a result of overly conservative policies or disregard for bringing a return to investors/shareholders) is a perfect example what has become a prevalent mentality in the private sector of today. Some “conservatives” like to blame some minimum wage worker for insufficiently weighing the downsides of debt against short-term gain, when it happens on an exponentially greater scale in business and finance – with exponentially greater impact.
You are an ignorant clown, joshy, You know about a case where they allegedly told them to take on debt to manipulate the stock price and blah…blah…blah. You then extrapolate your vague BS to make the ridiculous claim that this alleged malpractice became prioritized in the publicly traded manufacturing industry. Where is your evidence that any significant number of manufacturing companies took on debt to manipulate their stock prices? All kinds of businesses take on debt to do things like build factories, buy equipment and raw materials, hire people, pay for R&D, etc. Where is your proof that trends in debt accumulation among American companies were the result of decisions taken to manipulate stock prices? Put up, or shut up.
Of course, it’s just a coincidence that through stock buybacks, share prices rise. I mean I’m the only one who sees that there might be a connection there that lies beyond any long-term business viability explanations:
http://www.investorplace.com/2011/12/stock-buybacks-an-investors-friend-or-foe/
http://dividendmoney.com/stock-buybacks-who-benefits-the-most/
And, of course, the explosion in financial engineering (there are 40 graduate programs in financial engineering in the U.S. alone) is just a pure coincidence also. The explosion in the financial sector and the decrease in % of GDP in the manufacturing sector are completely unrelated.
If only I had your business acumen, Don, I’d be able to realize that.
Joshua, You need to read up on your history.
All of this stuff is old hat.
Quod si quis
http://books.google.com/books?id=9VBWAAAAYAAJ&pg=PA4&lpg=PA4&dq=quod+si+quis&source=bl&ots=yiusa84tWg&sig=K7DirTY72HNNjQ8MXD8R1Bc1erk&hl=en&sa=X&ei=97oIT5mRL4WXiAKKttWvCQ&ved=0CB4Q6AEwAA#v=onepage&q=quod%20si%20quis&f=false
Try to have a good one.
You are pathetic, josh. I almost feel sorry for you. If you had actually attended a business school, instead of taking poli-sci, sociology or some other foolishness, you would know that a casual perusal of a single case study is not an eduction in corporate finance. Your ignorance is too apparent. What you need to do to redeem yourself, is to prove that the single case you cited actually did involve a company going into debt to manipulate it’s stock price. Then to back up your stupid extrapolation to the universe of manufacturing companies, you have to address this question:
Where is your evidence that any significant number of manufacturing companies took on debt to manipulate their stock prices?
What you copy/pasted about stock buybacks is a foolish attempt that is way off the mark. The market cap of the S&P 500 stocks, is about $11 trillion. You are talking about modest increases in stock buybacks, and you have not shown what it has to do with your wild story about a class of companies taking on debt to manipulate stock prices.
Many US companies have a lot of cash that they are reluctant to plow back into their companies, because they are worried about the health of the world economy and what the activist in the White House will do if he gets four more years to screw them. They can sit on the money, or put some of it in the pockets of shareholders. Whether they pay a dividend, or buyback stock doesn’t make a whole lot of difference. If they pay a dividend, shareholders have to pay taxes, even if they would prefer to have a higher priced stock instead of the cash. If the company buys back shares, shareholders can sell some stock and pay taxes on any profits, or let it ride and defer taxes. If the activist succeeds in repealing the Bush tax cuts, dividends will go back to being taxed at the ordinary income rate. Obviously dividends don’t make any sense at all, when they are taxed at a higher rate than capital gains. If you want to point to a corporate management practice that is questionable, yammer about dividends for a while.
You can’t support your ridiculous claims, joshy. You should shut up now.
The Kiwis love to claim that migration from there to Australia raises the average IQ in both countries. Shifitng the lower-productivity jobs from the US to ex-rural China would lift productivity in both countries.
I wonder if Stephen Chu has become dumbfounded by the madness he signed onto. We haven’t heard much from him lately.
============
He is up to his nose in budget issues so his mouth is covered.
I am worried about one economic reality:
As can be seen here:
http://paul.kedrosky.com/archives/2009/03/us_total_credit.html
US total credit market debt to GDP ratio stands at 350%. This is higher than it was prior to the Great Depression. This metric will return to a more normal value. The two most obvious ways this can happen is via a credit contraction such as occurred during the 1930s and resulted in debt being reduced via defaults, or debt can be inflated away such as happened in Germany, Mexico and Latin America at various times in the past. Neither of these options is particularly appealing.
We are not the only ones in this situation either. Much of the world is heavily leveraged.
Personally, I think the long, detailed treatment of Iran-US-Israeli Military Engagement as posted by Judith above is the most insightful portion of the analysis. lol!
Judith – how would you quantify your certainty about their predictions?
Cut the lolz, pretty please with sugar on it.
Yeah, I can see that would get pretty annoying. Consider it done.
She gave you a link to the actual article, putz. Here I will help you:
5. Iran-US-Israeli Military Engagement. 2011 drew to a close with Iran, the US, and Israel posturing themselves confrontationally over the question of Iran’s pursuit of an indigenous nuclear weapons production capability. All parties to the disagreement have postured themselves badly, through diplomatic bluster, and find the search for face-saving difficult. Equally, there is a distinct lack of understanding of each of the players by each other. The reality, however, is that military solutions to the crisis are not feasible given the lack of sufficient military and economic resources available to any of the parties, including the US. By withdrawing unconditionally from Iraq and turning against Bahrain at the height of the Iran-sponsored turmoil, the US effectively demonstrated to friends and foes alike that, rhetoric to the contrary notwithstanding, that Washington was no longer committed to the Greater Middle East as a zone of vital interests.
This may mean that any “military confrontation” between any of the players would — ideally for all parties — be limited to a short, sharp jab or series of jabs, without getting into major strikes against significant land targets. Symbolism in engagement would be the order of the day, allowing honor to be satisfied on all sides. Indeed, a US naval confrontation with an Iranian naval element in or near the Straits of Hormuz might even obviate any need for an Iranian-Israeli spat. Iran has been careful to ensure that any provocation of Israel in direct terms up to this point has been via HizbAllah elements in Lebanon, and even this option is less secure for Iran in the opening months of 2012 given the instability of Iran’s major conduit to HizbAllah, Syria.
Any engagement of forces between any of these players is high-risk, however, given the prospect of a misstep, or over-reach, by a politician for whatever reason.
The matter is further dampened by the knowledge in US policy circles — tangentially confirmed by the US Director of National Intelligence (DNI) at the beginning of 2011 — that Iran already had a number of nuclear weapons acquired since about 1991 from a number of international sources. Given that the US and Israel have “pledged” never to allow Iran to acquire nuclear weapons, any open acknowledgement of the reality of Iranian nuclear weapons possession either invites the US or Israeli governments to take decisive military action against Iran, or look foolish. The answer has been — as it was with the US denial of North Korean nuclear weapons possession for so many years — to pretend the evidence does not exist, but to act cautiously nonetheless.
That is so not even wrong…
I read the link, Don. I also found this that Judith didn’t post.
Ignoring the ideologically-oriented last sentence: “…declining U.S. workforce productivity?” Really?
But I’m glad that Judith has posted a certain analysis of future events in the Middle East. I mean politics in the Middle East is so easily predictable – unlike climate change.
You don’t understand what workforce productivity is, joshy. The statement you bolded is wither right or it is wrong, got nothing to do with ideology. You really need some Econ 101. Try Paul Krugman. He ‘s on your side. Read item #5, joshy.
“resulting in a 0.9 percent increase in productivity.”
You think that’s good/ If Bush were President, you would be screaming your pointy little head off.
You need to study up on what ‘comparative advantage’ means. If any other country had a growth rate that exceeded 0.9 percent, then we are falling behind them. You do some research on that.
I am not going to defend every little phrase in that article, because it is mostly plagiarized BS, if not outright nonsense. But you really don’t know wtf you are on about.
uh….OK.
Have a nice night, Don.
I just told you I am not defending every phrase in that stupid article. The rate of growth in manufacturing productivity ain’t what it used to be, period. It’s lagging. It should be higher at this point in the business cycle. It’s got something to do with capital investment, you dope. Us capitalists don’t trust you socialists. You don’t even know what it is that you are copy/pasting about. Econ 101. Try some of it.
“The attractiveness of a low dollar value in comparison to other currencies in making US manufacturing investment more feasible than in recent years is offset by declining US workforce productivity”
This is really stupid, and bass akwards. US workforce productivity is not increasing as much as it would otherwise, because US manufacturers are not keen on investing in R&D, innovation, and new equipment. They don’t know wtf Obama is going to do to them if he get’s re-elected. The socialistas, like joshy, think that productivity growth comes from the poor working man doing more work for less money. Naive little dopes.
Joshua,
Change the channel.
Judith
Thanks for the article. It has some key insights relating to energy issues.
Some further items:
Here is a person with some of the best access to the data and future trends:
Oil will decline shortly after 2015, says former oil expert of International Energy Agency
That affirms what Lloyds of London and the US DOD have predicted.
You can explore oil production, exports and imports at Mazama Science Oil Export
Mazama’s Oil Futures which shows US oil prices will remain about $100/bbl for the next few years.
Since US unemployment doubled from 4.5% to > 9% as oil prices quadrupled from $25/bbl to $100/bbl, I don’t see a major decline in unemployment any time soon. Unemployment about lags oil prices by 12 months.
With WTI prices rising from $35/bbl in January 2009 to $113/bbl in April 2011, I expect unemployment to rise again mid 2012.
Economist James Hamilton analyzes lots of data. Oil Prices, Exhaustible Resources, and Economic Growth.
U.S. net exports of petroleum products
David,
Your links are much more informative and authoritative than the article that Judith gave us. Sometimes I don’t know about that girl :)
There is potential for a top level global energy emergency:
Exclusive: West readies oil plan in case of Iran crisis
If nothing else, with sanctions beginning to bite, Iran is probably trying to push up the price of oil to counter strong declines in government revenue.
PS Thanks Don for the encouragement.
Contrary to the silly scenario outlined in item #5 of this goofy article, any conflict that resulted from an Iranian attempt to close the Straits of Hormuz would be brutal and decisive. This is just plain stupid:
“The reality, however, is that military solutions to the crisis are not feasible given the lack of sufficient military and economic resources available to any of the parties, including the US.
…
This may mean that any “military confrontation” between any of the players would — ideally for all parties — be limited to a short, sharp jab or series of jabs, without getting into major strikes against significant land targets. Symbolism in engagement would be the order of the day, allowing honor to be satisfied on all sides.”
The reality is that the US still has a 400 ship fleet featuring 11 supercarrier battle groups carrying 700 aircraft. Not to mention our other stuff. The Iranians are not crazy enough to believe that they can launch symbolic sharp jabs against our vital interests and that kind of firepower, without suffering major strikes. It would be Mother of All Battles II. They are bluffing. We are not.
And that claim that everybody knows that Iran already has nuclear weapons is purely unfounded speculation. It’s a really dumb article.
Re Global supply
See the graph of Countries Past Peak Oil 2007
Fuel supply risks – from ice – see Nome AK
Tanker encounters ice near Bering Sea island
Pakistan built nuclear bombs – but not enough power plants or fuel supplies. It is in a systemic energy crisis of shortages of fuel and electricity.
This example will be multiplied around the world in the coming decades for lack of available fuel to transport goods.
Any thoughts on what all this portends for the UNFCCC negotiations, and for national energy policies?
This article says what everyone already knows. Wait until the end of 2012 when the adults get elected and things will get better.
If this were in French, I would understand the perspective. As the piece comes from the Brits and their insatiable appetite for wind energy, the proposition #2, Energy supply and demand section lays out many mythical outcomes, three readily come to mind: 1) there will be harmony & energy cooperation between Berlin & Moscow; 2) energy technology will find the answer to energy storage which makes windmills and their considerable costs all worthwhile; 3) There will be restraint and good fellowship in Central Asia. History as a teacher: Teutonic Knights and the Prince of Novgorod escalated mini-spats into large scale military extravaganzas. These epic fights continued through WW II. Political and economic fights including the Russian Natural Gas pipeline are in evidence today. And now, according to Oilprice, there will be a historic mending of the ways between these two. Not. The Russians don’t trust (have I heard this word someplace in context of climate scientists before?) the Germans, historically and now. Energy storage has been a recurrent theme since the dawn of time. The most energy efficient fuel in transport is gasoline which some want to regulate away. There is no way to store electrons for any meaningful quantity or duration. The failure of the lead acid battery to evolve over the last 100 years or so is because no viable alternative has yet to be found. Much effort and money have been directed towards finding a solution, and now the editors and the three writers for Oilprice to rescue windmills from dilapidation, have clairvoyanced the breakthrough of which no one else seems to be aware. The US Military has been preparing for a flint/steel flash in the Turkey/Armenia/Georgia Central Asia Region.The military nightmare is in the TAG area as our naval fleet would be vulnerable cruising the Black Sea; men & material would not be able to be sustained in any fight. If the TAG area erupts in flames, then the Middle East becomes a disaster waiting to happen. In such a conflagration, there will be no oil, no gas except for North America and just a little West of the International Date Line. My sincerest hope that none of the above comes to past.
History is my rebuttal of Oilprice prognostications. As far as the UNFCCC and its intent to replace the Kyoto Protocol, global finances stand as a stark reminder that the UNFCCC, IPCC and other like-minded acronym outgrowths of a time of plenty, are precariously financed by governments who are confronted with the social larges of previous administrations. Finding places to cut will inevitably find backdoor cash exits which will be closed. I am particularly concerned that science in general will take a hit and studying the life cycle of a mosquito will be held up to scorn (One famous senator’s publicity stunt “Flying Fickle Finger of Fate award” for “useless endeavors.”) So the UNFCCC’s mission and intent, recalibrating a newer and better binding regulation of CO2, will succumb to financial starvation. I am not particularly concerned about its fate.
RiH008 – Agreed. The article author thinks that 2012 will be a breakthrough year for storage, which I find very hard to believe. If anyone has any tips on what these breakthroughs might be please pass them on.
Kim upthread – yes, I wonder that.
I have made the observation a few times, so far without response (maybe it’s a silly idea!) that if the US is really concerned about energy security, all it has to do is to guarantee a, say, US$100 per bbl price for 20 years for suitably qualified (including compliance with enviro standards) projects.
There are heaps of projects in the US that can produce oil – secondary & tertiary workover of depleted fields, oil shales, tar sands, coal to oil conversion, shale gas etc etc, but typically these projects are very capital intensive. Financiers are loathe to fund them, particularly since the first round of financing these projects ended in disaster when the oversupply generated resulted in prices down to US$10 per bbl.
The majors can finance projects from their balance sheets, but smaller companies struggle to get funds. Guaranteeing US$100 per bbl for 20 years will ensure that the projects get developed, thus ensuring energy security. Simple.
Mondo, the US is not a person so it has no concerns. Some people are concerned about energy security, but not many, certainly not enough to get what you describe done. The energy security issue tends to be just rhetorical, that is invoked to push other concerns. The funniest (saddest?) is when oil security is invoked to promote renewable electricity schemes, as we do not use oil to make juice. Moreover, the kinds of domestic projects you describe are disliked by the Greens, to say the least. So while you are technically correct, it is not going to happen.
mondo
Yes the strong decline in oil after the 1974-1981 oil crises did crash alternatives. Yes $100 guarantee would be effective. However, it is politically impractical given the rhetoric, even though strategically it would be very helpful. Now we have a completely different game with far higher marginal costs of production. Cheap alternative fuel production would have to displace more than half of global liquid fuel production to drop price below about $50/bbl.
For UNFCCC I would think the outcome of the US Presidential elections could be important. Depending on the winner the EU might find itself the only remaining enthusiastic supporter of direct action for the AGW scare.
Another outside bet could be the break up of the UK, Some of my Scottish compatriots are daft enough to support Scottish independence. If Scotland votes for independence then the Act of Union would be repealed ending the existence of Britain & the UK. Two countries would exist, Scotland and England. One country – Scotland – would be obscenely oil rich for its size.
You could get controversial and ask questions about the future role of the UK monarchy. The UK Royals are from the House of Windsor and are of German descent, but the UK/Great Britain was created by the House of Stuart which were the Scottish Royal family. The Germans being preferred over the Stuarts for religious reasons…eventually.
The future role of the Windsors as head of State for Commonwealth countries which include Pakistan, Nigeria, Australia, India could be debated!
I think that you need to study quite a bit more of British history before making such sweeping statements.
I think you may have been watching the very simplified Hollywood version. Like old westerns where the Good Guys wear White Hats and the Bad Guys wear Black Hats..so that we know when to cheer and when to hiss.
British history…and the future (or not) of the UK is a lot more complicated (and a lot less black and white) than you imagine.
Hi Latimer,
What did I say which is not correct?
Cheers
Paul
The US does not have a national energy policy (nor should it). Federal control of energy, to the extent it exists, is exercised primarily via national environmental policy (alas). There is a big new energy versus environment issue emerging and that is shale gas fracking.
As item #2 says: “2012 will see the start of a transformation in fossil fuel supply and demand patterns, driven to an increasing extent by technological capabilities (such as the increasing possibility of delivering fuels derived from shale deposits in Europe, North America, and elsewhere).”
Note however that a possibility is not a start. My prediction is that awareness of the fracking issue will grow in 2012, but no significant federal action will be taken. 2012 will be dedicated to political division.
[US] manufacturing and science and technology sectors will continue to suffer from low (even declining) productivity …
As it relates to the UNFCCC 2012 is highly likely to be a disappointing year due to the economic situation in the countries from which they hope to receive funds. It is also the critical year in regards to the US actions on climate change overall because there are philosophical differences in the current administration’s positions on climate change and energy security vs. the leading republican potential opponents.
If President Obama is reelected it is likely the EPA will be greatly encouraged to restrict/reduce CO2 emissions, and to be more aggressive in stopping fracking in his 2nd term. If the president is not reelected, it is likely that the policies of the EPA will be dramatically changed on both of these issues and that there will be less US funding for the climate change issue.
The really sad thing Imo is that neither party (with the possible exception of Ron Paul), is actually working to balance the federal budget by the end of the next presidential term. Personally, I voted for Obama, but think he has done a very poor job as president in the areas of climate and energy security. I would not vote for Ron Paul, but many of the policies he advocates for the country are actually what is needed.
Personally, I voted for Obama, but think he has done a very poor job as president in the areas of climate and energy security.
What part of “we’ll bankrupt them” made you expect he’d do a good job? WTF?
In 2008 I didn’t think Mccain had any knowledge of economic issues and he simply disn’t seem all that bright. I hoped Obama would recobgnize the need to cut spending in a meaningfulway in order to help fix the long term economic situation. Instead, he made his highest priority the country giving more free services that we have no money to pay for away. I was wrong in my assessment in 2008.
and I clearly need to use spell check
As opposed to?
Any thoughts on what all this portends for the UNFCCC negotiations, and for national energy policies?
The UNFCCC negotiations have had their last rites read to them. While the world is in no danger of running out of fossil fuels anytime soon the idea that the price of fossil fuels will decline in real terms as they did in the 80’s and 90’s is deader then a doornail.
Even if I was to believe in ‘Climate Change’ the conditions that would require a global treaty intervention is ‘declining fossil fuel prices’. As the opposite is happening normal economic forces will accomplish far more then any ‘UN treaty’.
Bingo. When you need a manlift to get the apples at the top of the tree, people will start eating blackberries, even if it gets you all scratched up.
There is little in this that is relevant to the climate issue or the UN climate efforts. All of these problems are multidimensional and have extended through a great deal of time. CO2 concerns play minimal if any role in this.
Too bad, Hunter. Can’t manipulate the logical thinkers on this set of issues. Cheap energy is a strong driver for a debt-driven economy.
9, The collapse of honeybee colonies across America.
As it turns out global warming isn’t responsible for honeybee death afterall. It’s polar bears: they’re killing the bees. Yeah, that’s it!
You just don’t get it. Climate change didn’t cause this directly; it caused the cause. Climate change killed off the honeybees, you denier. The root cause of all non-positive things is climate change, one way or another. The root cause of all positive things is due solely to the tireless efforts of eco-organisations like greenpeace OR is a serendipitous and unexpected side-effect and just more evidence of man being incredibly lucky despite efforts to kill the planet.
10. There is no such thing as a free lunch and Energy Is Not Free Either nor is economic success. Capitalism works because success takes work .
Looking back 10 years from now those counries with a growing GDP over the period will have used more energy over that period not less.
OT
Dr. Curry
Anthony Watts, the great trailblazer in the climate blogging has just reached ‘unreachable’ 10^8 blog hits.
Let us whish him all the best.
I saw this, an amazing milestone
11. What is the one and only thing government can do to create a job? Fire a bureaucrat.
For every new government worker hired the free market economy loses 70 jobs.
12. GM is no longer in the car business. It is in the employ an union worker business.
There is no future for any economy that cannot produce goods and services that consumers desire and are willing of thier own volitioin to pay for with thier own earnings.
Interesting article. I see there are quite a few negative comments above and it leads me to ask – have you actually read the “full” report? I think not! The report is a list of geopolitical predictions, with energy being just one of them – so although you may say how poorly detailed the report is you need to understand this is for strategists who are looking at bigger picture geopolitical trends and should they go into minute details on every little point the report would be unreadable and of little value to their subscribers. Being a subscriber to the ISSA publications i have had the opportunity to see the authors work for many years and when compared to pop geopol sites such as Stratfor their analysis is truly in a different league. I advise reading the report in full – not just the snippets above and then you will see how their energy predictions fit into the big picture analysis they are offering.
In addition to the failure of a government planned economy we can participate in a global failure.
Intelligence based reports prepared for intelligence professionals are always clearly negative. They should be taken as ‘what could go wrong’ reports. Not what is likely.
The reports notes a drawdown of US presence in the Middle East, but they didn’t note that the GCC has been on an arms purchasing spree for the last 10 years and is in a better position to defend itself against an Iranian aggression then at any other time in history.
I think the Sunni Gulf Arabs are more worried about Iran stirring up Shiite in their countries than an outright attack. Iran does make interesting bed(ouin)fellows though, there’s almost certainly more communication and cooperation between the Gulf Arabs and Israel than anyone wants to admit.
2012 will see the start of a transformation in fossil fuel supply and demand patterns, driven to an increasing extent by technological capabilities (such as the increasing possibility of delivering fuels derived from shale deposits in Europe, North America, and elsewhere).
I doubt that. What we will see will be continuations of trends underway, with perhaps some punctuation. With or without the Keystone XL pipeline, for example, China will continue to invest in Canadian oil, and the US will continue to increase oil imports from Canada; however New York and Pennsylvania do or don’t change their laws, US development of natural gas using fracking will continue; businesses will continue to leave California; PV panel production and installation costs will continue to decline; the US will continue to earn money importing petroleum and exporting refined fuel.
The biggest abrupt change in the energy economy will occur when the expansion of the Panama Canal has been completed: then cargo ships and oil tankers will skip California and proceed straight to Texas. If Iran closes the Straight of Hormuz, there will be a short, intense military campaign, and the combined forces of the oil importing nations will clear the straight. N. Korea will continue as a headline-grabbing nuisance independent of the world economy (I don’t mean to be cruel, but a peninsular war would leave most of S. Korean economic productivity untouched, even were the NKors to nuke Seoul, and the follow-on effects to the world economy would mostly be a brief, intense, emotional shock.)
Pretty much. I don’t see a thing there that I disagree with.
I reread the feature paper, and the overwhelming impression is that nothing important will change much. It’s a fairly bland claim that the near future will be identical to the recent past. I am sure that they have more credibility than I have, but to a regular reader of energy news there isn’t much there.
I silemd when I read in this article that in 1982 Turkey became a democracy and before that in 1950. This is is an opinion that the USA has held for Turkey as it was a convenient ally because of its proximitry to the USSR during the cold war years and after for its help in the Middle East.The truth is that Turkey has never been a democracy in its short history although the opposite is true, and even when Turkey has breached international law, the USA has shamefully supported her. The USA, NATO and the UN have consistantly turned a blind eye to Turkey’s actions so as to keep useful relationships with her. This is also the case in Cyprus.