Smart Economy

When will the Recession End? Part 141 Growth of world hydrocarbon prices can no longer help Russia - Editorial expects budget deficits to continue despite rising oil prices

Russian editorial expects budget deficits to continue despite rising oil prices> [Nezavisimaya Gazeta editorial]

Anonymous. BBC Monitoring Former Soviet Union. London: Feb 2, 2011.

Abstract (Summary)

"At the same time, investments - the guarantee of successful and stable development - continue to decline, despite all of the world market conditions that are favourable to Russia. While in 2006, at 67 dollars per barrel, the influx of capital comprised over 40bn dollars, and in 2007, when a barrel cost an average of 75 dollars, 81bn dollars came into the economy, in 2010 - at oil prices of 85 dollars per barrel, we are seeing an outflow, which the Central Bank and Rosstat [State Statistical Service] appraise at approximately 38bn dollars. This year, oil prices have already reached the mark of 100 dollars per barrel, but predictions for influx of capital and growth of the country's GDP remain sooner in the minus zone."

Full Text

Nezavisimaya Gazeta website, Moscow, in Russian 1 Feb 11/BBC Monitoring

[Nezavisimaya Gazeta editorial: "Oil problems"]

Growth of world prices on hydrocarbons can no longer help Russia.

It has long been known that oil is our all. When the world price of a barrel increases, the prosperity of the country also increases: Export deliveries of gas become more expensive, the state gets surpluses with which to fill the reserve funds, etc. It would seem that this is good for everyone, and there are no problems to be seen on the horizon... But there is a problem: In recent times, the dependence between expensive oil and prosperity of the country, which had taken years to build, is suddenly beginning to falter.

Not too long ago, the head of Minfin [Ministry of Finance], Aleksey Kudrin, complained that, even back in 2007, at oil prices of 70 dollars per barrel, the Russian budget had a surplus, but now, with a predicted price of 75 dollars, a deficit is inevitable. Meanwhile, Minfin has already estimated the country's budget for the next 3-year period. Its specialists proceed from the fact that, in 2011, the average price of oil will comprise 75 dollars per barrel, in 2012 it will be 78 dollars, and in 2013 - 79 dollars. That is, the planned budget deficit for the current year will comprise 3.6 per cent of the GDP [gross domestic product], or slightly over R1.8 trillion.

 In order to cover the shortfall in the treasury which will arise, plans call for entering the international loan market. This is fine, as long as the market situation allows us to do so without any particular losses.

However, the country had achieved a "proficit" - that is, a surplus of income over expenditures - even at a price of 40 dollars per barrel. But today, there is talk of the fact that the budget deficit will not be overcome even in the next few years, no matter how hard we may try. And the stored reserve - the Reserve Fund - may be spent rather quickly, in the next year or two.

At the same time, investments - the guarantee of successful and stable development - continue to decline, despite all of the world market conditions that are favourable to Russia. While in 2006, at 67 dollars per barrel, the influx of capital comprised over 40bn dollars, and in 2007, when a barrel cost an average of 75 dollars, 81bn dollars came into the economy, in 2010 - at oil prices of 85 dollars per barrel, we are seeing an outflow. Which the Central Bank and Rosstat [State Statistical Service] appraise at approximately 38bn dollars. This year, oil prices have already reached the mark of 100 dollars per barrel, but predictions for influx of capital and growth of the country's GDP remain sooner in the minus zone.

The main reason why the situation is drastically changing in the negative direction for us is the collapse of investment hopes. While several years ago, when the authorities spoke of undertaking a radical struggle against corruption, revising the imperfect judicial system, overcoming bureaucratic barriers in the way of business, protecting it against various encroachments, etc., investors believed these promises, today the situation is the opposite. Unfortunately, no radical changes took place, and none are taking place, and investors feel this most acutely.

On the other hand, the authorities need not trouble themselves by building plans: In and of itself, oil - which, again at the predictions of analysts, will continue to go up in price in the foreseeable future - guarantees an influx of additional capital. Which, in turn, can always be spent, among other things, on fulfilment of social obligations that are burdensome for the budget. Especially since the elections are just around the corner, and there will surely be a temptation to give the population another ration of benefits or subsidies. However, we may also direct part of the funds into state investments - especially since there are more than enough places to put them: The APEC-2012 forum, the 2014 Olympics, the World Cup soccer championship in 2018, etc. But the problem is that state funds are not always spent for their direct intended purpose and do not always go to those sectors that push t he country's economic growth upward.

The continuing growth of state expenditures - that is the reason why all of the supplemental oil profits are burning up. And the growth of oil prices is a temptation to reject the implementation of necessary reforms and to fulfil previously made promises. We do not need to worry too much about energy effectiveness, and we can leave other projects until later - until the next crisis hits.

Credit: Nezavisimaya Gazeta website, Moscow, in Russian 1 Feb 11

related links:

1)     Thirty Seven (37) early warning signals of the collapse and decay of the Russian Federation (Putinism) and Ukraine (Yanukowych Regime)  

Similar conditions and circumstances existed just before the collapse of the Soviet Union 20 years ago.  

2)    Is Ukraine Hitching Its Economic Cart to Collapsing Horse? Russia?  

3)   When will the Recession End? Part 133 Why Russia doesn't fit into BRIC

4)  When will the recession end ? Part 134 What could trigger a Global Double Dip Recession in 2011? Russia

5)   When will the Recession End? Part 139 Russia admits it's dead and falling apart

6)  When will the Recession End? Part 140 Who's next after Egypt? Russian editorial says Russia, Kazakhstan may be hit by "Tunisian syndrome"

7) When will the Recession End? Part 141 Growth of world hydrocarbon prices can no longer help Russia - Editorial expects budget deficits to continue despite rising oil prices

Walter Derzko

 

When will the Recession End ? Part 138 Forty one (41) early warning signals of the collapse and decay of the Russian Federation (Putinism) and Ukraine (Yanukowych Regime)

Here's my preliminary list of early warning signals that point to the decay and collapse of  both Russia and Ukraine.

(N.B. I'm not anti-Russian or anti-Ukrainian, I actually feel quite sorry for most Russian and Ukrainian people, who have to struggle under the current oppressive regimes. I sincerely hope this scenario doesn't pan out, because many ordinary people are not prepared and will suffer again like they did in the late 1980's, but the odds of it not happening are against it --wd)

[N.B....Back in the 1970's and 80's,Cybernetic experts using system dynamics modeling  in Kyiv and Moscow, predicted the collapse of the Soviet Union by 1990 plus or minus one or two years-not a popular notion at the time, but key people did pay heed. Two years before the collapse of the FSU,   Russian and Ukrainian oligarchs started to move their wealth off-shore in 1988-89. These predictions were spot on.

Similar systems dynamics modeling shows that Putinism in Russian and president Yanukowych regime in Ukraine will suffer a similar fate as did the former Soviet Union--Walter Derzko]

According to many Soviet expats that I talk to, similar conditions and circumstances that we see today, also existed before the collapse of the Soviet Union exactly 20 years ago (ie in 1989 and 2001).

Former Russian acting Prime Minister Y. Gaidar admits that the key reason why the Soviet Union collapsed was # 27 in my list below-the USSR just went broke due to artificially low oil prices, encouraged by the USA and Saudi Arabia. Most people don't realise that the KGB and Communists supported and funded Arab terrorists starting in the 1970's to raise the price of oil-unsuccessfully. (see Gaidar quote at end of blog post below)

So, here's my list-41 early warning signals indicating the collapse in Russia's Putinism and the Yanukowych regime in Ukraine. (Randon order)

1)     Ubiquitous Institutionalized corruption and widespread bribe taking, kickbacks, covered up by double entry book keeping systems....I never understood  why even every street kiosk had to have an accountant

UPDATE: ....[..]...People in Russia & Ukraine are encouraged to be bribe-takers by the "system" that stretches back to Soviet days. Bribes compensate low pay. It’s a control mechanism. Corruption is tolerated by the state, until that person steps out of line and then the  authorities have evidence in hand to charge you…the higher ups and inner circle of Medvedev, Putin and Yanukowych never get charged…just look at the evidence....(well unless you fall out of favour like Berezowsky, Mikhail Khodorkovsky and other Russian oligarchs).(Russia and Ukraine)

2)      Theft of state property and funds via selective privatization (to your inner circle of friends) and crony capitalism. (Russia and Ukraine)

3)      Unrestrained money laundering. (Russia and Ukraine)

UPDATE: Russian Bank official charged over laundering of 17m dollars a day; Interfax news agency, Moscow, in Russian  14 Mar 2011

4)      Off shoring of assets and oligarch profits; Cyprus,  Switzerland (est. over  $100B from Ukraine), Belize, Virgin Islands and UK. (Russia and Ukraine)

5)      Capital flight; $25B from Russia $30B from Ukraine in 2010 alone. (Russia and Ukraine)

6)      Growing nepotism. (Russia and Ukraine)

German Daily Reports on Nepotism at Russia's Gazprom Frankfurt/Main Frankfurter Rundschau (Russia)

7)      Exported corruption to EU, Canada and the USA (Russian and Ukrainian mafia) (Russia and Ukraine)

8)      Condoned / Endorsed mafia activity and banditism at home.

ie No Jail Possible for Thieves, Managers in Russia >  (Russia and Ukraine)

9)      Tacit government support of contraband, narcotics  and human trafficking ie 7Km Market in Odessa, Ukraine. (Russia and Ukraine)

10)   Demographic collapse. (Russia)

UPDATE: Russia is in civilizational decline, new nations emerge-Siberians see themselves as separate nation from Russia  http://bit.ly/lSzxZm

11)   Weakened military control at the periphery of the empire. (Russia)

12)   Conflicts on the periphery.

UPDATE ie Extremist calls increasingly common in blogs, social networks - Russian police; RIA Novosti > Feb 1, 2011 (Russia)

Russian paper fears conscripting postgraduate students could trigger Russian brain drain  Vedomosti website, Moscow, in Russian 12 May 2011 (Russia)

Russia is in civilizational decline, new nations emerge-Siberians see themselves as separate nation from Russia  http://bit.ly/lSzxZm  (Russia)

13)   Army can't afford to pay utilities or conscript salaries, hunger strikes over wages (Russia)

14)   Government worker salaries withheld. (Russia and Ukraine)

15)   Lack of independent police and widespread corruption. (Russia and Ukraine)

16)   Lawlessness, police focus on extremists and political opposition instead of bandits who run free.

UPDATE: ie Russian police said putting social, political activists under surveillance in Yezhednevnyy Zhurnal website, Moscow, in Russian 2 Jun 2009; Extremist calls increasingly common in blogs, social networks - Russian police in RIA Novosti, Feb 1, 2011; Crackdown on dissenters, not corruption, seen as Russian police's priority> [Article by Aleksandr Podrabinek: "The Main Enemy for Starters"] in Yezhednevnyy Zhurnal website, Moscow, in Russian 9 Jun 10 (Russia and Ukraine)

17)   Lack of independent judiciary (pocket book justice where verdict can be bought directly or drawn out/extended) and corruption.   (Russia and Ukraine)

UPDATE: "The legislature and the judiciary have stopped executing their functions. The government is de-facto non-existent in Ukraine. All the decisions are made in the presidential administration. The last bulwark that we have is fair elections. But there is a threat that the current authorities will deprive the Ukrainian people of this right," said Tymoshenko in Brussels. --Ukrainians may be deprived of right for fair elections - former premier  ; Ukrayinska Pravda Online  Thursday, March 24, 2011

UPDATE: Russian court refuses to order arrest of prosecutor in illegal gambling case Moscow, 8 June 2011: Moscow's Basmannyy court has refused to order the arrest of the prosecutor of Ozery in Moscow Region, Anatoliy Drog, who is suspected of "protecting" illegal casinos in Moscow Region. Moreover, the court studied confessions from Drog's driver, Ruslan Tankiyev, who said he personally handed over the money received by Ozery's prosecutor as a bribe.

18)   Dictates from above to; pressure on parliament, the police, tax enforcers, the  judiciary and the interior ministry staff. (Russia and Ukraine)

UPDATE: The press secretary of Moscow's Khamovnicheskiy Court, Natalya Vasilyeva, maintains that pressure is being exerted on her boss, judge Viktor Danilkin. Earlier, she said that the verdict in the second Yukos trial was not Danilkin's independent decision. (Source: REN TV, Moscow, in Russian 1630 25 Feb 11);

 "The legislature and the judiciary have stopped executing their functions. The government is de-facto non-existent in Ukraine. All the decisions are made in the presidential administration. The last bulwark that we have is fair elections. But there is a threat that the current authorities will deprive the Ukrainian people of this right," said Tymoshenko in Brussels. --Ukrainians may be deprived of right for fair elections - former premier  ; Ukrayinska Pravda Online  Thursday, March 24, 2011

19)   Illegal Use of Administrative resources. (Russia and Ukraine)

20)   Cyber attack, info wars, online provocateurs to protect the status quo, false flag terrorist operations for excuse to declare marshal law.

UPDATE: ie Extremist calls increasingly common in blogs, social networks - Russian police; RIA Novosti > Feb 1, 2011 (Russia and Ukraine)

21)   Political opposition and critics branded as extremists and terrorists. Journalist critics murdered (Russia and Ukraine)

22)   Intelligence arms of government -FSB (formerly KGB) and SBU growing  in power.

UPDATE: ie Editorial says Russian security service protects regime, not people or state > Gazeta.ru April 10 2010 (Russia and Ukraine)

23)   Growth of religion as a political weapon ie Moscow Patriach Kirill,  Russki Mir and  the Compatriots Abroad progarm run by the FSB etc.

UPDATE i.e.  Azarov believes that government should not interfere in the union of churches ; Russian Moscow  Patriarch Kirill likley to take over Kyiv Patriarch Ukrainian Orthodox Church and church property in Eastern Ukraine by July 1, 2011-Walter Derzko (Russia and Ukraine)

24)   Politics of denial  game. (Russia and Ukraine)

25)   Food price fixing.

UPDATE: ie [Russian prosecutors uncover food price-fixing in several regions from  RIA Novosti News Agency 4 Oct 2010; Azarov: There are lobbying groups in Ukraine who want food price rises Interfax : Ukraine General Newswire. Kiev: Mar 1, 2011; Ukrainian president urges regional governor to prevent bread shortage  in Lviv; Unian, March 15 2011.]  (Russia and Ukraine)

26)   Commodity price fixing, specualtion. 

UPDATE ie. Antitrust agency could fine fuel traders up to UAH 1b, says energy minister Anonymous. Interfax : Ukraine General Newswire. Kiev: Mar 14, 2011; Ukrainian president urges regional governor to prevent bread shortage  in Lviv; Unian, March 15 2011 (Russia and Ukraine)

27)   Low (below $100 per barrel) or reversal of oil / gas and commodity prices that are /will bankrupt the government again. (Last year Russia said it needs oil at $100 per barrel for the next 5 year just to break even-now even that price may not be enoough. At $85 a barrel, Russia is going broke-- just like the straw that broke the camel's back in 1989 and 1991)

UPDATE: Will Russia and Gazprom go broke again?  and How high can oil go before it derails economic growth? 'spike and crash' scenario likely-similar to 2008 and 1970's    (Russia)

UPDATE: Quality of Russia's crude reserves deteriorating admits Russian ministry http://bit.ly/f8w1F1

28)   Behind the scenes support  to oligarchs and big business, ignoring  general public and small and medium business (ie [..] "small business, squeezed between the public-hygiene inspectorate demanding bribes and  rattled banks, where money is left hanging, can only smile at this." [...] ) (Russia and Ukraine)

29)   Uncontrolled Sovereign wealth fund spending, government going broke, no reserves. (Russia)

30)   Rising Russian nationalism and provoked ethnic tensions. (Russia)

31)   Potential Tax revolt 2011. (Russia and Ukraine)

32)   Protests demos and possibly a national strike 2011. (Russia and Ukraine)

33)   Deceptions and provocations, (Tabachnyk and Demjanjuk in the case of Ukraine. etc) (Ukraine and Russia)

34)   Endless empty promises and no action, or reforms or new governance business models. (Russia and Ukraine)

35)   Imbalances, paradoxes and contractions (ie Putin's $B dollar  palace vs. poverty rates;  oligarchs avoid taxes by off shoring profits vs. tax squeeze on SMB, Russia plans to upgrade its Navy/Black Sea fleet but it can't afford the basics- hoses, fire trucks and pumps to fight forest fires in the summer of 2010; Police and Interior Ministry told to concentrate on dissenters, not bandits, rapists, thieves, and corruption; Russian Official puts [future] Russia's arms exports portfolio at 30bn dollars (10 bn dollars in 2011), yet there is no money for social basics http://www.unian.net/ukr/news/news-419648.html etc   

Nearly nine million of Ukraine's 14 million pensioners live on $120 a month, while as many as a third of Ukrainians are mired in abject poverty. All of this is happening in a nation that is one the world’s top exporters of steel, ore, grain, chemicals and arms (Russia & Ukraine)                                                   

36)   intelligence service failures (Russia)

37) Loss of FDI confidence

UPDATE: Investors pulled a net $38.3 billion out of Russia last year, according to central bank data. > http://www.bloomberg.com/news/2011-01-23/bond-buyers-oppose-fitch-rating-as-spreads-widen-russia-credit.html) (Russia)

38) Wild unrealistic growth expectations based on debt financing (Russia & Ukraine)

 UPDATE: i.e. Ukraine’s reliance on foreign loans has raised its public debt to $54 billion, even as the government still hopes to tap up to $12.1 billion more in loans from the International Monetary Fund.

UPDATE: ie Russia’s economy may grow 5 percent this year, fueled by domestic consumption, construction and capital inflows, Yaroslav Lissovolik, Deutsche Bank chief Moscow economist, told a conference in London on Friday. (Bloomberg)http://www.themoscowtimes.com/business/article/for-the-record/429475.html

What  capital inflows?  (see 37 above ) Investors pulled a net $38.3 billion out of Russia last year, according to central bank data.  http://www.bloomberg.com/news/2011-01-23/bond-buyers-oppose-fitch-rating-as-spreads-wider-russia-credit.html

39) Disenfranchised unemployed  youth grows more militant leading to demonstrations, clashes and riots. Nashi out of control in Russia (Russia and Ukraine)

40) former "Cash Cow" industries become inefficient, debt laddened (Russia and Ukraine)

UPDATE i.e. Pundit says Russian defence exports not making profit, merely keep plants busy Anonymous. Ekho Moskvy radio, Moscow, in Russian  16 Mar 2011

41) Wild Card-flu outbreak in Russian military (Russia)

 

UPDATE:  see Ten Years of Putinism http://www.putin-itogi.ru/putin-what-10-years-of-putin-have-brought/  (Russia)

UPDATE: Statistics on Russian Crisis, Decay and Collapse (in Ukrainian or use Google translate)

UPDATE: Slow decay of Russia> http://www.youtube.com/watch?v=sRSOljlCj3s&feature=related 

(russian and English  dubbing)

UPDATE: Why did the Soviet Union Collapse? (lessons for Russia today)

According to Yegor Gaidar, who  was the acting prime minister of Russia, minister of economy, and first deputy prime minister between 1991 and 1994.

"The timeline of the collapse of the Soviet Union can be traced to September 13, 1985. On this date, Sheikh Ahmed Zaki Yamani, the minister of oil of Saudi Arabia, declared that the monarchy had decided to alter its oil policy radically. The Saudis stopped protecting oil prices, and Saudi Arabia quickly regained its share in the world market. During the next six months, oil production in Saudi Arabia increased fourfold, while oil prices collapsed by approximately the same amount in real terms.

As a result, the Soviet Union lost approximately $20 billion per year, money without which the country simply could not survive. The Soviet leadership was confronted with a difficult decision on how to adjust. There were three options--or a combination of three options--available to the Soviet leadership.

First, dissolve the Eastern European empire and effectively stop barter trade in oil and gas with the Socialist bloc countries, and start charging hard currency for the hydrocarbons. This choice, however, involved convincing the Soviet leadership in 1985 to negate completely the results of World War II. In reality, the leader who proposed this idea at the CPSU Central Committee meeting at that time risked losing his position as general secretary.

Second, drastically reduce Soviet food imports by $20 billion, the amount the Soviet Union lost when oil prices collapsed. But in practical terms, this option meant the introduction of food rationing at rates similar to those used during World War II. The Soviet leadership understood the consequences: the Soviet system would not survive for even one month. This idea was never seriously discussed.

Third, implement radical cuts in the military-industrial complex. With this option, however, the Soviet leadership risked serious conflict with regional and industrial elites, since a large number of Soviet cities depended solely on the military-industrial complex. This choice was also never seriously considered.

Unable to realize any of the above solutions, the Soviet leadership decided to adopt a policy of effectively disregarding the problem in hopes that it would somehow wither away.  Instead of implementing actual reforms, the Soviet Union started to borrow money from abroad while its international credit rating was still strong.  It borrowed heavily from 1985 to 1988, but in 1989 the Soviet economy stalled completely...

The money was suddenly gone. The Soviet Union tried to create a consortium of 300 banks to provide a large loan for the Soviet Union in 1989, but was informed that only five of them would participate and, as a result, the loan would be twenty times smaller than needed.  The Soviet Union then received a final warning from the Deutsche Bank and from its international partners that the funds would never come from commercial sources.  Instead, if the Soviet Union urgently needed the money, it would have to start negotiations directly with Western governments about so-called politically motivated credits.

In 1985 the idea that the Soviet Union would begin bargaining for money in exchange for political concessions would have sounded absolutely preposterous to the Soviet leadership.  In 1989 it became a reality, and Gorbachev understood the need for at least $100 billion from the West to prop up the oil-dependent Soviet economy.

Walter Derzko

Quantum or not? Mathematical equations resolve nanostructures behavior

 
In a game of billiards, the path of each ball is determined by the classical laws of motion. At the microscopic scale, equivalent objects may be governed by quantum mechanics, such that their exact path of movement could take several directions.

Understanding the transport of electrons in nanostructures and biological molecules is crucial to understanding properties such as electrical conductivity or the biochemical behavior of molecules. However, determining whether the electrons are behaving according to the classical laws of motion or the quantum mechanical regime at the nanoscale is challenging because many nanostructures fall in a grey area between both regimes. Japanese researchers from the RIKEN Advanced Science Institute in Wako, with colleagues from Germany and Taiwan, have now devised a set of mathematical equations that can distinguish classical from quantum mechanical behavior of electrons in nanostructures.

On a macroscopic scale, objects follow the classical laws of motion. Golf or billiard balls, for example, will follow exact, predictable paths. On a microscopic scale, objects such as electrons move according to the laws of quantum mechanics, where processes occur in a probabilistic manner. Measuring the properties of quantum mechanical systems, however, is challenging.

“In microscopic systems, it is very difficult to perform ideal measurements without disturbing the system,” explains Neill Lambert from the research team. As a consequence, measurements on quantum mechanical systems are difficult to distinguish from invasive measurements on classical systems, says Franco Nori from RIKEN and the University of Michigan, who led the research team. “It is important to be confident that experimental results are not originating from a classical effect, giving a false impression of quantum behavior.”

As a model system, the researchers chose the transport of electrons through vanishingly small pieces of matter known as quantum dots. “Even measuring the current passing through a quantum dot represents an invasive measurement of the system,” Lambert notes. To identify quantum effects, he and his colleagues developed a set of criteria expressed as a mathematical inequality relationship for experimental data from these quantum dots. Any excess over a critical threshold in the formula by a parameter represents a clear sign of quantum behavior. In their simulations the researchers found several regimes at low temperatures where quantum effects in the dynamics of electrons in the quantum dots should occur.

The inequality relation derived by the researchers is based on fundamental principles and therefore applies not only to the transport of electrons through quantum dots, but also to many open, microscopic electron transport systems, says Nori. He believes that it will soon be easier to determine whether electrons in nanostructures follow the rules of quantum mechanics or take the classical route of their billiard-ball counterparts.

More information: Lambert, N., et al. Distinguishing quantum and classical transport through nanostructures. Physical Review Letters 105, 176801 (2010) .  See here

http://prl.aps.org/abstract/PRL/v105/i17/e176801

Rare Earth Elements in U.S. Not So Rare > Significant Deposits Found in 14 States

Approximately 13 million metric tons of rare earth elements (REE) exist within known deposits in the United States, according to the first-ever nationwide estimate of these elements by the U.S. Geological Survey. This estimate of domestic rare earth deposits is part of a larger report that includes a review of global sources for REE, information on known deposits that might provide domestic sources of REE in the future, and geologic information crucial for studies of the availability of REE to U.S. industry.

The report describes significant deposits of REE in 14 states, with the largest known REE deposits at Mountain Pass, Calif.; Bokan Mountain, Alaska; and the Bear Lodge Mountains, Wyo. The Mountain Pass mine produced REE until it closed in 2002. Additional states with known REE deposits include Colorado, Florida, Georgia, Idaho, Illinois, Missouri, Nebraska, New Mexico, New York, North Carolina, and South Carolina.

“This is the first detailed assessment of rare earth elements for the entire nation, describing deposits throughout the United States,” commented USGS Director Marcia McNutt, Ph.D. “It will be very important, both to policy-makers and industry, and it reinforces the value of our efforts to maintain accurate, independent information on our nation’s natural resources. Although many of these deposits have yet to be proven, at recent domestic consumption rates of about 10,000 metric tons annually, the US deposits have the potential to meet our needs for years to come."

REE are a group of 16 metallic elements with similar properties and structures that are essential in the manufacture of a diverse and expanding array of high-technology applications. Despite their name, they are relatively common within the earth’s crust, but because of their geochemical properties, they are not often found in economically exploitable concentrations.

Hard-rock deposits yield the most economically exploitable concentrations of REE. USGS researchers also analyzed two other types of REE deposits: placer and phosphorite deposits.  Placer deposits are alluvial formations of sandy sediments, which often contain concentrations of heavy, dense minerals, some containing REE.  Phosphorite deposits, which mostly occur in the southeastern U.S., contain large amounts of phosphate-bearing minerals.  These phosphates can yield yttrium and lanthanum, which are also REE.

Ninety-six percent of REE produced globally now comes from China. New REE mines are being developed in Australia, and projects exploring the feasibility of economically developing additional REE deposits are under way in the United States, Australia, and Canada; successful completion of these projects could help meet increasing demand for REE, the report said.

REE are important ingredients in high-strength magnets, metal alloys for batteries and light-weight structures, and phosphors. These are essential components for many current and emerging alternative energy technologies, such as electric vehicles, photo-voltaic cells, energy-efficient lighting, and wind power. REEs are also critical for a number of key defense applications.

This report is part of a larger, Department of Defense-funded study of how the United States, and the Department of Defense in particular, use REE, as well as the status and security of domestic and global supply chains.  In addition, the USGS National Minerals Information Center maintains statistics on global mineral production, trade, and resources that include rare earth elements.

The new USGS report, which provides an overview of domestic REE resources and possibilities for utilizing those resources, is available on line at http://pubs.usgs.gov/sir/2010/5220. To learn more about REE, please visit the National Minerals Information Center’s REE webpage

###

 

When will the recession end? Recovery start ? Part 94 Is Russia going broke again?

Trend> Sign of Russian Bankruptcy?  Or just plain old Embezzlement? 

Military unit conscripts in Russian region not paid since January & military can't even pay phone bills.

Trends are made up of weak signals and emerging insights.  Connecting these dots, and you may get a major driver or trend.

The military is Russia's key strategic resource, to which they will divert money from other social spheres to keep it running.  This weak signal/insight that they can't afford to pay the phone bills and  troops (both conscripts and officers) is a sign of a growing trend > pending soverign collapse. The last time we saw these similar circumstances was the the late 1980's, before the Russian soverign debt crisis in the old Soviet Union and before its ultimate collapse--Walter Derzko

Military unit conscripts in Russian region not paid since January - paper Anonymous.  BBC Monitoring Former Soviet Union.  London: Jul 11, 2010. Novaya Gazeta website, Moscow, in Russian 7 Jul 10/BBC Monitoring/(c) BBC

Text of report by Russian newspaper Novaya Gazeta's website, often critical of the government, on 7 July

[Article by military commentator Vyacheslav Ismailov: "The Army and Poverty"]

For six months the servicemen of our Russian military unit have been living, serving, and working without receiving money

A letter has arrived at Novaya Gazeta addressed to me (the [return] address on the envelope is Vologda Oblast, Babayevskiy Rayon, postal department Zapolye, military unit 87256).  The letter is from a group of army conscripts.

The soldiers complain that at the end of June they are to be discharged from the Army, but they have not received their monetary allowance since January.  Moreover, the letter says: "We appealed to the courts and won our case, but no measures were taken."

The gist of the matter is: For six months the servicemen of our Russian military unit have been living, serving, and working without receiving money

I call the General Staff Organizational and Mobilizational Directorate - it is responsible for army conscription, and is even discussing in the Federal Assembly the question of extending the draft until August and increasing the call-up age to 30 years.  That is to say, the situation with the draft is such that we do not have enough kids aged between 18 and 27, and if guys aged 30 join the Army, that will be just perfect.

[...]

I phone the Defence Ministry press service.  The person on duty invites me to redial to the Main Directorate of Educational Work.  I phone there.  They tell me: "We do not handle this."

[...]

I phone Zapolye postal department, which is in Vologda Oblast's Babayevskiy Rayon.  The local employee keeps no secrets from me: "We do have a military unit no.87256, but you will not be able to phone there, the unit has been completely cut off for nonpayment of telephone services.  And the soldiers have indeed not been paid for six months."

The mail worker (the world is not without good people) gives me the mobile telephone number of one of the servicemen.  The latter confirms: Conscripts were indeed discharged at the end of June, without having received a kopeck for the past six months, and officers are receiving only part of their monetary allowance.

All the officers whom I contacted one after the other confirmed: Discharged conscripted servicemen have simply not been paid their monetary allowance, and officers are receiving at best only half their monetary allowance.  They went to court.  They won their case, but nothing has changed.

Officers scraped together from their own empty pockets money for travel and food for the discharged soldiers.

I do not give the names of the officers with whom I spoke so as not to get them into trouble.  As though things were not bad enough already...

Credit: Novaya Gazeta website, Moscow, in Russian 7 Jul 10

New ways of anticipating, measuring and managing catastrophic risks or black swan events

New ways of measuring catastrophic risks may enhance Air Force efforts

US Air Force Office of Scientific Research-funded researcher, Dr. Graciela Chichilnisky is pioneering a new approach for measuring, anticipating and managing catastrophic risks, sometimes called "Black Swans" or natural catastrophes like hurricanes, tornadoes, tsunamis and floods that may possibly enhance the Air Force's capabilities of preparing for disasters.

"This research is important because it will provide solid foundations to help the Air Force and the public better prepare for the impact of catastrophic risks, communicate to experts and make decisions that can enhance national security," said Chichilnisky from her office at the Columbia University Consortium on Risk Management where the research is occurring.

Her team has developed new tools in probability and statistics for ranking risks, giving realistic prioritization to catastrophic events, making decisions under unpredictable conditions preceding an event and evaluating the economic after-effects of a disaster.  They have also been conducting research, experiments validating theories and finding that decisions made under uncertainty do not always match up with classic treatment of Black Swans.  Using their current findings as well as historical research, the team is rewriting the foundations of probability, statistics and decision-making for Black Swan events that better fit the observations.

"Our goal is to link our latest results, analytical tools and experimental efforts with other new theoretical and empirical strands of the literature in this area," she said.

The emerging statistics and probabilities will provide a new foundation, changing the field of research in a way that is more appropriate for Black Swans, which are now occurring with more regularity because of climate, migration and coastal changes.

"We need to organize and protect ourselves against natural hazards in a way that increases our capabilities to anticipate, mitigate and respond to catastrophes as was never done before," she said.

From the CCRM web site:

"Over the past decade there has been an increased awareness of risks for which actuarial data quickly lose their validity due to rapid change in both natural and economic environments.  These risks are exemplified by market risks in global markets, risks associated with natural catastrophes and new technologies, business interruption risks and climate variability such as El Nino events, and global climate change.  These risks have a more complex structure and are less understood potentially more dangerous than traditional types of risk.  To face this challenge, new technologies are needed, including: new mathematical and statistical approaches for evaluating and managing risk, new tools involving scientific and financial information for decision making under uncertainty, and new financial instruments including securitization and pricing techniques for hedging risks.  CCRM has been created to address this challenge.  The Consortium is unique in combining the latest scientific knowledge of the prediction and management of climate and other natural hazards, with cutting-edge research in financial engineering and the mathematics of risk.  Its knowledge is leading to new instruments and governmental policies for managing natural hazards.

Walter Derzko, The Opportunity Clinic, Smart Economy, Toronto

New ways of anticipating, measuring and managing catastrophic risks or black swan events

New ways of measuring catastrophic risks may enhance Air Force efforts

US Air Force Office of Scientific Research-funded researcher, Dr. Graciela Chichilnisky is pioneering a new approach for measuring, anticipating and managing catastrophic risks, sometimes called "Black Swans" or natural catastrophes like hurricanes, tornadoes, tsunamis and floods that may possibly enhance the Air Force's capabilities of preparing for disasters.

"This research is important because it will provide solid foundations to help the Air Force and the public better prepare for the impact of catastrophic risks, communicate to experts and make decisions that can enhance national security," said Chichilnisky from her office at the Columbia University Consortium on Risk Management where the research is occurring.

Her team has developed new tools in probability and statistics for ranking risks, giving realistic prioritization to catastrophic events, making decisions under unpredictable conditions preceding an event and evaluating the economic after-effects of a disaster.  They have also been conducting research, experiments validating theories and finding that decisions made under uncertainty do not always match up with classic treatment of Black Swans.  Using their current findings as well as historical research, the team is rewriting the foundations of probability, statistics and decision-making for Black Swan events that better fit the observations.

"Our goal is to link our latest results, analytical tools and experimental efforts with other new theoretical and empirical strands of the literature in this area," she said.

The emerging statistics and probabilities will provide a new foundation, changing the field of research in a way that is more appropriate for Black Swans, which are now occurring with more regularity because of climate, migration and coastal changes.

"We need to organize and protect ourselves against natural hazards in a way that increases our capabilities to anticipate, mitigate and respond to catastrophes as was never done before," she said.

Walter Derzko, The Opportunity Clinic, Smart Economy, Toronto

New ways of anticipating, measuring and managing catastrophic risks or black swan events

New ways of measuring catastrophic risks may enhance Air Force efforts

US Air Force Office of Scientific Research-funded researcher, Dr. Graciela Chichilnisky is pioneering a new approach for measuring, anticipating and managing catastrophic risks, sometimes called "Black Swans" or natural catastrophes like hurricanes, tornadoes, tsunamis and floods that may possibly enhance the Air Force's capabilities of preparing for disasters.

"This research is important because it will provide solid foundations to help the Air Force and the public better prepare for the impact of catastrophic risks, communicate to experts and make decisions that can enhance national security," said Chichilnisky from her office at the Columbia University Consortium on Risk Management where the research is occurring.

Her team has developed new tools in probability and statistics for ranking risks, giving realistic prioritization to catastrophic events, making decisions under unpredictable conditions preceding an event and evaluating the economic after-effects of a disaster.  They have also been conducting research, experiments validating theories and finding that decisions made under uncertainty do not always match up with classic treatment of Black Swans.  Using their current findings as well as historical research, the team is rewriting the foundations of probability, statistics and decision-making for Black Swan events that better fit the observations.

"Our goal is to link our latest results, analytical tools and experimental efforts with other new theoretical and empirical strands of the literature in this area," she said.

The emerging statistics and probabilities will provide a new foundation, changing the field of research in a way that is more appropriate for Black Swans, which are now occurring with more regularity because of climate, migration and coastal changes.

"We need to organize and protect ourselves against natural hazards in a way that increases our capabilities to anticipate, mitigate and respond to catastrophes as was never done before," she said.

Walter Derzko, The Opportunity Clinic, Smart Economy, Toronto

The moon, earth tides and earthquake forecasting

Interesting correlation: Decade long Geo-markers (earth's daily heart beats)that predict giant mega (8.0+) earthquakes. With the recent quakes in Haiti and Chile, this story has some direct applications. 

According to a AAAS press release:

"Tidal forces may have contributed to triggering the devastating magnitude 9.0 Sumatra earthquake of 2004 and other large earthquakes in the region.  Gravitational pull from the Sun and the Moon not only is responsible for ocean tides but also creates Earth tides, slight motions of the solid Earth (bulges and dips in the earth's crust and upper mantle) that can lead to stress buildup (or stress relief) along faults.

[N.B. The earth experiences about 1000 earthquakes per day, of which 800 are not perceptable - I call it the earth's many heart beats.(bet you didn't know that) --Walter Derzko]. 

Earth tides cause tiny variations in the stress on faults, but it isn't clear whether this stress could be enough to trigger an earthquake.  Although the motion due to tidal forces is small, small stresses can accumulate on a fault.  To determine whether earthquake occurrences off the coast of Sumatra correlate with an Earth tide phase, Tanaka carries out a simple statistical analysis.  The phase of the tide determines whether the Earth moves in a direction that adds stress to a fault or relieves stress.  The author finds a strong correlation between earthquakes and Earth tide phase in the decade before each megaquake, providing evidence that Earth tides can indeed induce an earthquake on a fault that is already critically stressed. 

In summary: more tremors occurred when the pull of daily "earth tides" was at its strongest than at other times ( as predicted by American geologist Jim Berkland).

She suggests that monitoring Earth tides might provide information that could improve earthquake forecasting.

So future weather forecasts might not only warn us of high tides but high earth tides too. 

See related post: Predicting or triggering earthquakes, volcanoes or other natural disasters.

Source: Tidal triggering of earthquakes precursory to the recent Sumatra megathrust earthquakes of 26 December 2004 (magnitude 9.0), 28 March 2005 (magnitude 8.6), and 12 September 2007 (magnitude 8.5) by Sachiko Tanaka: National Research Institute for Earth Science and Disaster Prevention, Tsukuba, Japan. Journal: Geophysical Research Letters (GRL) paper 10.1029/2009GL041581, 2009 http://dx.doi.org/10.1029/2009GL041581

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Walter Derzko, Smart Economy, Toronto

Author of the soon-to-be published book- Opportunity 45 Scenarios to Drive Your Business in Challenging Times, published by J. Wiley and Sons ISBN13: 978-0-470-73761-3 ISBN10: 0-470-73761-1

Contact us about the Opportunity Clinic workshop and to invite Walter Derzko as a keynote speaker at your next event

Re-emergence of Science and Technology in the Middle East

Western school children don't realize that most of the basic math and science (chemistry and physics) found in science high school textbooks comes from Arabic (Middle East) scientists, discovered even before the dark ages in Europe. Scientists from the Middle East were once world leaders in most scientific inquiry and discovery. Today, the romantic and "almost backward wasteland" image from TV and Hollywood that most people have of a typical "middle east" country is one of sand, and caravans of camel transportation and not advanced science and technology. And this misperception isn't the worst of it.

While, the west is trying to further demonize the "Middle East" in all of the media, because of real and perceived terrorist threats, it's not an image that the Arabic world deserves, when it comes to science. 

At this year's AAAS meetings in San Diego, we see an attempt to launch a S&T re-birth in a session called:  "Re-emergence of Science, Technology and Education as Priorities in the Arab World".

The above graph shows the contribution of Middle East science to the world science community over the past 30 years.

Source: Science Metrix report called 30 Years in Science Secular Movements in Knowledge Creation. Countries with a Growth Index (GI) =1 are at the world average, so Israel (GI=0.94) (bottom of the curve in reddish-brown) and Iraq (GI=0.47) are falling behind the average world pace, while the rest (GI> 1.0) all grew faster then the world average. (ie Turkey with GI =5.47 or Iran with the best GI in the world of 11.07 or eleven times the world average.

On a whole the Middle East scientific output, while uneven across countries,  grew four times faster than the average world level. 

From a AAAS press release:

"Nanotechnology could aid the future of development of the Arab region," says Mohamed H.A. Hassan, executive director of TWAS, the academy of sciences for the developing world, and president of the African Academyof Sciences. Hassan made his remarks at a panel session, "Re-emergence of Science, Technology and Education as Priorities in the Arab World," taking place at the AAAS's annual meeting in San Diego.

"The Arab region, home to some 300 million people, faces a host of daunting development challenges," Hassan notes. "Three of the most fundamental involve ensuring adequate supplies of water, energy and food." Advances in nanotechnology, he says, "could help achieve progress by helping to address each of these challenges."

For example, he notes that nano-filters could enhance the efficiency of desalinization plants, helping to ensure adequate supplies of water in the region. Similarly, nanotechnology could improve the capacity of solar panels. More abundant supplies of water and energy, Hassan adds, "would boost irrigation and help increase agricultural output."

But none of this is likely to take place, he cautions, "without a strong commitment to training the next generation of scientists." The Arab region has some inherent demographic advantages when seeking to address human resource issues related to scientific capacity building. "Sixty percent of the population is less than 25 years old," he says.

"Yet, the region has some glaring weaknesses as well," he says. "Arab countries spend just 0.3% of their gross domestic product (GDP) on science and technology, compared to 1% in a growing number of developing countries and 2% to 3% in many developed countries. Scientists in the region publish less than 1% of the world's peer-reviewed scientific articles.

Hassan points to some encouraging recent signs, however.

"A growing number of countries have invested in high-profile projects designed to quickly build scientific capacity in critical areas of science and technology." He cites, for example, the opening of King Abdullah University of Science and Technology (KAUST) for post-graduate studies in Saudi Arabia and Qatar's Science and Technology Park (QSTP).

But much more will need to be done, he says. To boost science, he calls on each Arab country "to create at least one world-class university" and "build at least one world-class state-of-the-art science centre."Hassan also believes the national merit-based academies in the region should become more engaged in their societies and stronger advocates for science education and science-based development.

He readily acknowledges that "with so many immediate challenges facing the region, it's difficult for governments to engage in long-term strategies for development." But he says that "unless countries within the Arab region make a sustained effort to build scientific capacity, they will find themselves unable to overcome the 'knowledge-deficit' obstacles that have impeded economic development for far too long."

"Nanotechnology may not be the first thing that comes to mind in discussions dealing with strategies to address the Arab region's most pressing challenges," Hassan concludes. But such investments in science and technology could be a key to the region's future."

Walter Derzko