Odds and Ends
Some notes from a backlog of Stratfor reading.
Recession concerns for the American, European and Japanese economies could ripple into China, who depends on these markets for its export-based growth.
The larger article provides a compelling assessment of the relative vulnerability of these major economies to recession.There already are signs of capital flight from China, and the economy is oerloaded with nonperforming loans. Six percent inflation is causing Beijing concerns about social unrest. If exports to the US and Europe fall too far or for too long, the fragile Chinese economy could break.
The article concludes with a brief bit on Bahrain, which just concluded bidding for offshore oil exploration contracts. Its last large-scale oil exploration effort? 70 years ago.
Back to China for a moment. Following up on the toy recall drama, Stratfor concludes that:
if US toy importers ever feel their control over Chinese supply networks slipping, the US buyer exodus from China could be completed within a few years.
Back to oil again. President Calderon’s agenda to reform Mexico’s constitutional rules regarding Pemex illustrate some of the wild inefficiencies that operate in the global oil market:
Currently, Pemex is completely reliant on its own financial resources — participation in the Mexican energy industry by foreigners (as anything more than contractors) is flatly unconstitutional. In the energy business, this does not work especially well, as companies providing technological expertise generally want to own a piece of the project as well. The limitation has further crippled Pemex’s ability to expand exploration and production, as the company’s technological skills are a generation behind those of the wider world.
