EUCOM Economic Analysis - Part I

[Fuchs]

Concerning the German housing data; keep in mind

(1) rents are regulated and cannot grow quickly, so it would make sense to look at whether rents grow too slowly rather than houses rising too quickly in price.

(2) always be careful about graphs of this kind, with indexing at a specific date

(3) house property may rise in value due to restricted ground for construction - especially in those cities. City councils know about demographics and do not develop many new areas for settlement any more. A rising price as reflection of a scarcity is fine and not a bubble.

(4) the interest rate data is about requested loans, not granted ones

(5) housing in cities such as Munich, Frankfurt and Berlin is not only very different to housing in towns nearby, but also very atypical for German housing in general.

(6) Income levels in business are higher in Frankfurt and Munich than elsewhere, in order to compensate for higher cost of living there.

(7) a short-term look back only to the beginning of the crisis is a dubious choice. I'd rather ask for data reaching back to '90.

[Surferbeetle]

The difficulties of assembling and steering an effective organization/bureaucracy during turbulent times...

Can the EU satisfactorily and sustainably address today's issues of concern for it's own citizens via an integrated financial framework, an integrated budgetary framework, an integrated economic policy framework, democratic legitimacy and accountability? What is it's current sphere of influence as compared to the hopes and dreams of 'the elite'? Is there a significant deficit of democracy? What about privatization and the application of market forces?

Some of today's reading...

TOWARDS A GENUINE ECONOMIC AND MONETARY UNION Report by President of the European Council, Herman Van Rompuy, Brussels, 26 June 2012, http://consilium.europa.eu/uedocs/cm.../ec/131201.pdf

The REAL Eurozone Crisis Is About Much More Than Debt, Business Insider, http://www.businessinsider.com/europ...#ixzz2A3AgZ2Jf

Welcome to Berlin, Europe’s new capital, By Gideon Rachman, October 22, 2012 4:48 pm, Financial Times, www.ft.com

Berlin does not feel like an imperial city. The new government buildings – the chancellor’s office, the Bundestag and the foreign ministry – have all been designed with plenty of glass and natural light, to emphasise transparency and democracy. The finance ministry is, admittedly, housed in the old headquarters of the Luftwaffe. But most of the grandest architecture – Unter den Linden and the Brandenburg gate – is a legacy of the Prussian kings. Modern Berlin presents a more welcoming face, and has become a magnet for tourists and teenagers.

Yet while the German capital has deliberately eschewed the trappings of imperial power, the fact is that Berlin is increasingly the de facto capital of the EU. Of course the EU’s main institutions – the commission and the council – are still based in Brussels. But the key decisions are increasingly made in Berlin.

High fiscal multipliers undermine austerity programmes, October 21, 2012 3:25 pm by Gavyn Davies, Financial Times, www.ft.com

Much therefore hinges on whether Blanchard and Leigh are right. Their methodology is certainly not watertight. Cross-sectional country studies are notoriously unreliable. As demonstrated by Chris Giles in the FT, if we exclude Greece and Germany from the 28 countries in their study, then their result largely melts away. It is also sensitive to the time period chosen, and does not appear to work for other similar periods. It is surely asking a lot to change the entire course of global economic policy on the basis of a result as flimsy as that.

Having said that about this particular study, there are other, stronger, reasons for believing that fiscal multipliers are higher than many governments have been assuming. In the 1950s and 1960s, when Keynesianism was at its height, the multiplier was generally assumed to be around 2. Then in the 1990s and 2000s, these estimates gradually dropped, leaving the consensus range around 0.5-0.7 by 2009.

European Bank For Reconstruction And Development 2011 Annual Report, http://www.ebrd.com/pages/research/p...s/annual.shtml

The Annual Report 2011 shows how the EBRD continued to provide strong, sustained support across sectors from central Europe to central Asia, as well as Russia and Turkey, during turbulent times. At the same time as supporting its existing countries of operations in 2011, the EBRD began to lay foundations for future investment in the southern and eastern Mediterranean (SEMED) region and to assist those countries affected by uprisings to make the transition to open, democratic market economies.

European Bank For Reconstruction And Development Search at Bloomberg, http://topics.bloomberg.com/european...d-development/

Putin Balks at Pension Threats as Aging Russians Hold Trump Card, by Henry Meyer - Oct 21, 2012 4:01 PM MT, Bloomberg News, http://www.bloomberg.com/news/2012-1...rump-card.html

Sultankina -- and the legion of Russians who grew up with the cradle-to-grave state care of the Soviet Union -- are holding Putin, 60, hostage to his election promise to keep the retirement age unchanged six months after he returned to Russia’s presidency.

Pension spending will rise to 14 percent of gross domestic product by 2030 from 9 percent, Standard & Poor’s said. There is an “urgent need” for measures to curb the rise in retirement costs, according to VTB Capital. Government debt may rise to 70 percent of GDP by 2030 from about 10 percent this year, if the pension deficit is financed through borrowing, it said.

[Firn]

Back for a quick view at very important topic of the Keynsian multiplier.

First of all I should say that one really has to beware of the law of small numbers and sheer complexity of the issue. Our world gives you just a certain amount of countries, even fewer with good enough and accessible data and even our timeframe is sadly restriced by nature. Economist are said to have a deep envy for physicists with their elegant math and relative experimental ease but this is the way the cards were dealt. Good old Carl might have told us quite a bit about a foggy game of cards full of friction.

From the same blog

...

The opposite is also true. Now that interest rates are stuck at the zero lower bound, central banks cannot reduce policy rates when fiscal policy is tightened, and the multiplier is correspondingly increased.

Kudos to the Keynesians for predicting this in advance, but in many ways this is a fairly standard result from dozens of econometric simulations and it should not really have come as a total surprise to policy makers.

So how high should we assume the multiplier is today? [2] That will always be subject to great uncertainy. A very important paper earlier this year by Summers and DeLong, analysed in this earlier blog, argued that the multiplier should be assumed to be a minimum of 1.0 under present circumstances. It explains very clearly why the multiplier should be much higher than normal when the economy is stuck in a recession with interest rates at the zero lower bound. [3] Another noteworthy empirical paper, by Auerbach and Gorodnichenko, says that the multiplier during recessions might be around 1.5-2, while in expansions it drops to zero

No-one really knows for sure. However, what does not seem plausible is that the multiplier, in the current recession, is as low as governments assumed when they embarked on their austerity programmes in 2010. And that will make austerity much harder to sustain.

Now economy is a science and a successful prediction is a bit of the holy grail. Einstein got his nobel, strangely enough his only one, mostly for this paper containing a key prediction which was later found out to be true.



So I'm a bit shocked by one observation in this blog which almost makes the following sound like it is no big deal:

Kudos to the Keynesians for predicting this in advance, but in many ways this is a fairly standard result from dozens of econometric simulations and it should not really have come as a total surprise to policy makers.

Wasn't and isn't that our key problem? That standard economists using standard theory with standard models predicted that under certain circumstances there is a strong negative multiplier attached to austerity and that still policy makers acter later as if it was a total surprise?

[Firn]

@Fuchs

Points 2), 3) and 7) are especially important and are usually the exact questions I usually ask.

[Fuchs]

Originally Posted by Firn

That standard economists using standard theory with standard models predicted that under certain circumstances there is a strong negative multiplier attached to austerity and that still policy makers acter later as if it was a total surprise?

There are more problems, incompetent politicians are just a standard problem that persists.

I myself was not an advocate of stimulus, but then again as a German that's a sensible position even as of now - for Germany. We export and import so much that our stimulus would largely be exported, too. We depend on foreign demand because our relatively huge manufacturing is not oriented at covering our demand, but at world-wide demand for certain goods (steel, chemicals, cars, machinery mostly - far in excess of our own demand for these).
Our own stimulus (~cash for clunkers, but earlier than the U.S. program by several months) was a mere gift to the industry, and again not even well-aimed (most cars disposed of this way were replaced by small cars, which play a minor role in German automotive production).


I did (in 2009) point at the possibility to get a long-term debt-neutral stimulus, though.
The idea had quite a career in the months thereafter (in variations), albeit no doubt totally independent of my text.

This '09 opinion of mine addresses one concern that applies to Keynesian counter-cyclical spending: Politicians cannot be trusted to pay down debt in good times (any more - this was realistic only until the 70's afaik). So Keynesianism cannot really work on the macro level. On top of that, people are dumb. A stimulus working wonders in a crisis would no doubt lead many to believe it's good economic policy in general and to demand one even during weak per capita growth.
Remember, people are dumb enough to buy into Laffer curve, trickle down economics, the "huge trade surplus = good" nonsense, for leaning more capital-based pension schemes in a country with an already large trade surplus etc etc. Human stupidity is reliable.

So even a multiplier like 2 does not prove in itself that a huge stimulus is a good idea.
Then again, the argument that government would hardly squander the money so hard that it wouldn't pay off despite the really small interest rate for inflation-indexed U.S. bonds holds water.


Krugman -the loud proponent of stimulus- is a short-term-only economist. He is a true Keynesian in that he doesn't care about the long term. What he wants is to set the U.S. economy back on track ASAP, sans the bubble.
Too bad that this track has still walls ahead, and picking up steam on this route will only lead to the next crash.

The U.S. needs to get back to its natural GDP per capita trajectory, but in a sustainable way. And I don't mean green stuff or energy.
I mean savings and investment. There is no way how the U.S. economy can justify and sustain the material standard of life in the U.S. without a vastly higher level of capital investment (both private and public) enabling a vastly higher manufacturing output per capita.
This in turn means a higher savings rate is a must, for this higher level of investment will not be possibly enabled by even much higher trade balance deficits (=net capital import).

Right now the U.S. is living off its fat, foreign generosity - and forgets to sustain itself. The financial market crisis was but a symptom of the inherently ####ed up allocation of resources in the U.S..
The financial sector was able to siphon a lot of resources for itself and proceeded to waste them with its inherent incompetence.

The real problem looming in the background was that the resource allocation was ####ed up. Income distribution sucks, capital investment sucks, savings rate is ridiculous.

Bad news; neither candidate has a clue, nor do their parties and most likely even their advisors have no real sensitivity for the issue.

Finally some more EU context; the UK did the same, ever since Reagan/Thatcher, but much more so since Blair.

[Surferbeetle]

Reducing things to a binary choice, i.e. economics is or is not science, is perhaps a form of fast versus slow thinking?

Ya'll already know this, but for my own edification I'll restate it: Science and philosophy are interlinked; science is about formulating and testing hypotheses while philosophy is the study of problems relating to mind/existence/reality/values. Both rely on systematic approaches to characterization of the subject at hand.

With respect to the science component of economics we have come further than from where we started but we have some distance yet to travel, I think, before we can conclusively hang our hat on the predictions resulting from many of our models and theories...Keynesian or Hayek-ian.

Let's run a quick compare/contrast between physics and economics and see what we can see from this particular armchair...

Newtonian physics models commonly encountered systems (human scale) in states of equilibrium and in motion via the study of statics (sum of all forces x,y,z equal zero) and the study dynamics (sum of all forces x,y,z equal mass x acceleration), respectively. Quantum mechanics/physics is focused on atomic scale phenomena.

As I understand economics, commonly encountered systems are modeled at equilibrium via microeconomics and macroeconomics. This is not to say the associated math is any simpler than the math associated with physics as my Springer-Verlag series on financial engineering (stochastic calculus for finance I & II, stochastic differential equations, and monte carlo methods in financial engineering) attests .

Both physics (applied) and economics attempt to describe the how to of conservation/efficient allocation of energy/resources. In general, large groups of folks tend to get 'touchy' when there is a discussion regarding prioritization and allocation of resources, but hopefully us science types can stick to science side of things and teach each other more than we know individually?

[Fuchs]

Modelling isn't the whole of economics. Many insights exist only quantitatively, or have normative character.

The quantitative models deserve criticism for their inability to create breaks over the timeline (such as a financial crisis), but it's doubtful whether they were ever meant to simulate such things.

The Keynesians of today still argue a lot with ultra-simple models such as IS-LM which already offer almost all insights without any quantitative input (such as the angles or curves of the lines).

Economics so far are good enough at pointing out that something is not sustainable and in which direction the change is gonna happen sometime *wink*equilibrium models, thank you*/wink*. There will probably never be an economic model that predicts the timing of the crash.

Much blame has to be applied to economists in practice, some to people who have inflated expectations of what economic science has on offer and only a little bit of blame is actually deserved by the economic models.


One of the tricky things in economics is that you can get 36 of 37 influence factors right and still be 180° wrong in your conclusions. Economists who get ambitious predictions right were lucky to err on influences that did influence the outcome much into the other direction. Apparently nobody can get everything right these days with so many influence factors at work, dozens of models relevant to a specific question.
Just look at Mankiw; whenever his conclusion sounds a lot like right wing positions, he omitted at least one, more often about half a dozen influence factors.

[Firn]

Well it is certainly an interesting discussion with quite a livid mix. Personally I see Quantum physics pretty much as the base of our knowledge and the fundamentals of our world. Apart from other issues it deals with the smallest parts/elements/? we know, Higgs&Co. A science like chemistry takes over some of the matter in a different way and it does so because it makes scientific and practical sense. Just like you don't have to worry about Heisenberg if you want to hit a ball chemistry operates at certain levels of abstractions and does most of the time don't have to worry about other not so relevant things. Biology and other physical sciences work in a similar way mostly in a field with only the necessary level detail. In the end it is just a smart way to operate as long as there is enough interaction and everybody obeys the laws of scientific research. Actually this sounds almost like an old German principle of war to make our mess complete

From the Wiki I can see that there are quite a bit of different maps on the issues, in this case organized in different and certainly more sensible way.



Anyway it is not a surprise that we have both a Micro and a Macro field in economy with quite a bit of effort to integrate both fields, mostly by putting Macro on a firm Micro basis.

What surprised me, to be honest, was the fact that how good really simple, well-known macro models worked out in our current crisis. It is so obvious that we have to think METT-TC, taking the circumstances into considerations that I really should not need to write it. But if Kahnemann and personal experience have showed me anything then it is all to often so that sometimes our intuition moves too fast in complex situations and we take too much intellectual liberty, trying to free us to some degree from the dreadful chains of science. *

On a sidenote, Fuchs, what can we do if the people which always seem to lead us are "dumb"? Leaving apart my observation that in this case there is not much hope anyway there remains a key question: Should we be fearful to do the right thing now only because there might be a good chance that people take the wrong lesson from it?


*see the first paragraph

[Fuchs]

Originally Posted by Firn

On a sidenote, Fuchs, what can we do if the people which always seem to lead us are "dumb"?

It would be nice if they got some smart competition, for starters.

Current republics use a wrong path to power: Those who are in power are so not for their expected utility in this position, but because they won power struggles by gaining allies, pushing back opponents and getting the timing of their actions right.
The election that gives them executive or legislative powers in the end is merely a confirmation.
Such a scheme leads to top politicians with great skill in political infighting and little skill that's of actual use to their constituency.


The German constitution mandates that all parties are democratic inside, that is power flows upwards. The practice is the opposite; the elites decide and the pawns nod. It's not by pure chance that the newest party, Piraten, is quite radical about basis democracy (for example, their party conventions are online conferences where every member has a vote). A speaker of theirs has also criticised the Berlin parliament well for its nodding, and proposed to delete the passage which empowers the cabinet to propose laws from the state constitution. His complaint was that bureaucrats write the laws, and parliament merely nods.
The reactions from the other parties were dismissive and provoking early on and became increasingly silent during the speech.
So forcing real bottom-up power flows could at least push from power-mongering elites towards more populism 8maybe good, maybe bad - it depends).

Another possibility would be to force more specialisation on politicians in order to encourage at least specialised competence. A newspaper chief editor (of one of our top 30 newspapers) once bluntly stated to me that all journalists are universal dilettantes. I suppose most politicians are the same.


In the end, we cannot expect better performance if the principal doesn't supervise and discipline the agent more thoroughly.

[Surferbeetle]

Isn't it interesting that the 'law' of one price does not apply to EU interest rates (north only, south only, EU-10, EU-17, EU-27 etc)?

Economics, although very cool, is not yet at a point/distance in it's evolution equivalent to that of the field of chemistry or physics. For example chemistry concepts such as stoichiometry, equilibrium constants, reaction quotients, and the Gibbs Free Energy Equation are able to describe and predict 'reality' more consistently than economic concepts can. Similarly physics concepts such as gravitation (both the newtonian and the einstein-ian/relativity approximations), electromagnetism, strong and weak nuclear forces are able to describe and predict 'reality' more consistently than economic concepts can. Humanity is fortunate that we are hardwired to continually strive and explore the 'boundaries', and so I believe that the field of economics will continue to move forward and improve it's descriptions and predictions.

As to the centrality of models, is not everything but a representation/shadow of reality/truth?

Perhaps Spaten Optimator (thank you economics and globalization), Bertrand Russell on the 'reality' of a kitchen table, and Kipling get us closer to seeing truth...

Rudyard Kipling, If

If you can keep your head when all about you
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;
If you can wait and not be tired by waiting,
Or being lied about, don’t deal in lies,
Or being hated, don’t give way to hating,
And yet don’t look too good, nor talk too wise:

If you can dream—and not make dreams your master;
If you can think—and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two impostors just the same;
If you can bear to hear the truth you’ve spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build ’em up with worn-out tools:

If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breathe a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: ‘Hold on!’

If you can talk with crowds and keep your virtue,
Or walk with Kings—nor lose the common touch,
If neither foes nor loving friends can hurt you,
If all men count with you, but none too much;
If you can fill the unforgiving minute
With sixty seconds’ worth of distance run,
Yours is the Earth and everything that’s in it,
And—which is more—you’ll be a Man, my son!

[Firn]

This trial is a bit of a summary of the problem Italy has with rules. Usually, often wrongly and somtimes rightly myriads of rules are sidestepped and soften in daily use and not too rigidly enforced. On other occasions they are taken as a judical weapon. Even a honest guy can have a hard time to avoid any error when dealing with our terribly complicated laws and if there is a combination of interest and power it can have dire consequences.

In this case I get the feeling that some had to be the scapegoat and it is certainly not the first time it happened. The result are often surprisingly harsh punishment, especially compared to the usual stuff.

[Surferbeetle]

Originally Posted by Firn

This trial is a bit of a summary of the problem Italy has with rules.

"...eppur si muove."

It's 10 P.M. In Frankfurt. Do You Know Where Your Gold Is?, by Lam Thuy Vo, October 25, 2012 3:24 PM, http://www.npr.org/blogs/money/2012/...e-your-gold-is

Just this week, Germany's federal court told the Bundesbank to prove that the country's massive gold reserve actually exists.

This isn't as random as it seems; more than half of Germany's gold reserves are held at the New York Fed, and hasn't been inspected by the Germans for decades. This dates back to the '50s and '60s, when foreign governments could still exchange dollars for gold, and often parked their gold reserves in New York.

So over the next three years, 150 tons of German gold will be shipped back to Germany for inspection.

Berlusconi Gets 4-Year Sentence for Tax Evasion, By THE ASSOCIATED PRESS, Published: October 26, 2012, http://www.nytimes.com/2012/10/27/wo...d.html?hp&_r=0

An Italian court on Friday convicted former Prime Minister Silvio Berlusconi of tax fraud and sentenced him to four years in prison.

In Italy, cases must pass two levels of appeal before the verdicts are final. Mr. Berlusconi was expected to appeal.

[Firn]

Originally Posted by Surferbeetle

"...eppur si muove."

Indeed, at last but sadly him going to jail will be the least likely outcome...

An uncle of mine, who was the head of a university institute of criminal law had and still has a rich treasure of stories about peculiar law matters. Sometimes fact is stranger then fiction although in Berlusconi case the outcome seems to be just too predictable.

[Surferbeetle]

Fitch raises Turkey to investment grade, by Daniel Dombey in Istanbul, November 5, 2012 12:57 pm, Financial Times, www.ft.com

Monday’s decision to upgrade the country’s long-term foreign debt to BBB- from BB+ is in effect a vote of confidence in Turkish officials’ efforts to rebalance the economy away from the breakneck growth of recent years and towards a more export-driven rather than domestic-led demand model.

In a nod to the political tensions facing Turkey over the fighting in its neighbour Syria – with which Ankara has frequently exchanged cross-border fire in recent weeks – Fitch said it was assuming the country would not be drawn into a “full-scale military conflict”, an event that could lead to a downgrade.

It also assumed that Turkey would not be suspended from its membership in the inter-governmental Financial Action Task Force in an ongoing dispute over Ankara’s failure to pass and implement terrorist financing legislation – or that if the country was suspended, that it would “not precipitate countermeasures that materially adversely affect the capacity of Turkish entities to access international financing”.

[Firn]

As usually there is much ado about rather random short-term movement of the stock markets. In this case the US elections are to be blamed for the poor performance of the European stocks.

At least we have a scapegoat lined up if things get not better, either way things turn out.

[Surferbeetle]

@Firn

Fair...some of us have been blaming you folks.

The volatility of late has been helpful for those of us surfing small short-term trades however, and the 18th National Congress on the 8th of November looks to be interesting as well.

China's Communist Party faces change, BY: BILL SMITH From: AAP November 06, 2012 7:45PM, The Australian, http://www.theaustralian.com.au/news...-1226511747473

The party will use the highly orchestrated event to persuade the nation's 1.3 billion people that it can provide another 10 years of economic growth and social stability while curbing corruption and nepotism.

It must repair the damage to its public image from the scandal surrounding deposed regional leader Bo Xilai, once tipped for a top leadership post, and overcome a broad lack of trust and the public perception that all party officials are corrupt.

Its task became harder after the New York Times reported that the extended family of Premier Wen Jiabao, who was once seen by optimists as China's best hope for political reform, had amassed assets worth $US2.7 billion ($A2.62 billion).

James MacKintosh over at the FT mentions some US election trading & investing strategies in his 30 October 2012 article, US political stereotypes and investing. www.ft.com

I have made a small concentrated bet on what I think the outcome of the intersection of the US Election and Chinese National Congress will lead to for one section of the global economy. I used my reading, the IMF's most recent report, tangible book value (and the associated delta), balance sheet, 52 week high/low stats, as well as intersection points of the simple moving average and share price over the last year...oh yeah I also scattered some chicken bones and wore a voodoo top hat on while doing so...my b school teachers would not be amused

We will see...

[Dayuhan]

http://www.reuters.com/article/2012/...8M5BLF20121106

Europe needs a weak euro

...Data released last week shows euro zone manufacturing shrinking for the 16th month in a row, but the real horror show last week was in an ECB survey of bank loan officers. Compared to the second quarter, loan conditions were 15 percent tighter in July-August, with banks charging more, demanding more collateral and being especially tough on riskier loans...

[Fuchs]

That's BS.
A quick check for whether a country (or currency area) might have a too strong currency is the trade balance.
A substantial surplus would answer back "No".


http://www.tradingeconomics.com/euro...lance-of-trade
(retrieved today)


Economics : Reuters
1 : 0

[Firn]

@Surferbeetle:

Personally I find it always amusing when I read in the papers why the stock market has fallen or risen. In any case I blame the US for todays fall of European equity.

@Fuchs: Indeed the balance of trade as a whole is like it is. Still there are some areas/nations which would benefit from a weaker Euro and yes of course are there strings pulling downwards attached to this policy.

For example I don't like to suffer too much of a hit in purchasing power. From what I have heard, in short from more or less reliable stories, people in North Italy/Central Europe are slowly getting back or want to get back into equities.
If you look what you get from your local bank and from dividens from solid companies it is difficult to to find too many arguments against it, despite all current problems...

Til (europeiske?) ungdommen which is fortunatly not 'Kringsatt av fiender'.

[Surferbeetle]

Good to see that the healing continues and that Sissel is part of that process.

Norway Proposes to Raise $17 Billion in 2013 Long-Term Loans, By Josiane Kremer - Nov 9, 2012 5:35 AM MT, Bloomberg News, http://www.bloomberg.com/news/2012-1...s-in-2013.html

The increased bond sales “should be positive for the Norwegian krone,” Knudsen said. “We often hear that investors are telling us the market is too small, so everything that works in the opposite direction should be well received.”

The krone was little changed at 7.3006 against the euro by 12:22 p.m. in Oslo after reaching a two-month high earlier today. The currency, which has offered refuge to investors fleeing Europe’s debt woes, hit a nine-year high versus the euro in August. It fell 0.3 percent versus the dollar at 5.7388.

Statoil recently (this past spring/summer) sold it's Gas/Fuel Station business to Couche-Tard of Canada for around 2.8 billion USD. This seems to be offset by Johan Sverdup (North Sea), Skugard (Barents Sea), Havis (Barents Sea), Peregrino South (Brazil), and Zafarini (Tanzania) and perhaps funding some work in the Marcellus Shale deposit in the US along with some future work in China?

Along those lines (segueing to natural gas turbines and more) I note that Peter Löscher has presented and will soon implement an approximately 6 billion + USD restructuring plan at Siemens...it appears that China has been a fierce competitor in solar and so it's time to get back to basics. Although the volatility in the share price has been useful for some, as compared to that of GE for instance, it's always interesting to watch the engineering giants from just a pure business/adaptation/evolution/struggle/innovation vantage point as well.