Thursday, September 15, 2016

On oil in ground

"Controlled Middle East oil, it would control the world. This oil represents 65 percent of world oil reserves. Therefore, America believes if it squashed Iraq, it would control the oil of the Middle East and consequently hold the oil in its hands [and] fix its price the way it likes."


An earlier report:

Keeping Iraq's Oil In the Ground

Did the U.S. invade Iraq to tap its oil reserves or to make sure they stayed under the sand?

"Did Dick Cheney send us in to seize the last dwindling supplies? Unlikely. Our world's petroleum reserves have doubled in just twenty-five years -- and it is in Shell's and the rest of the industry's interest that this doubling doesn't happen again. The neo-cons were hell-bent on raising Iraq's oil production. Big Oil's interest was in suppressing production, that is, keeping Iraq to its OPEC quota or less. This raises the question, did the petroleum industry, which had a direct, if hidden, hand, in promoting invasion, cheerlead for a takeover of Iraq to prevent overproduction?

It wouldn't be the first time. If oil is what we're looking for, there are, indeed, extra helpings in Iraq. On paper, Iraq, at 112 billion proven barrels, has the second largest reserves in OPEC after Saudi Arabia. That does not make Saudi Arabia happy. Even more important is that Iraq has fewer than three thousand operating wells... compared to one million in Texas..."

Saturday, September 3, 2016

DG - Negative Rates and Seigniorage: Turning the central bank business model upside down? The special case of the ECB

Author: Daniel Gros
Series: CEPS Policy Brief No. 344      No of pp: 7
"Negative rates have invalidated the normal business model of central banks, which consists of issuing zero-interest bearing cash as liabilities and earning a return on their assets (the resulting profits are called “seigniorage”). But many central banks are now earning a negative rate on their assets. Seigniorage, in fact, might now become negative in the euro area and in Japan.
Bond purchasing programmes (called usually QE for quantitative easing) offer central banks at least temporary profit opportunities since they can issue liabilities at lower rates than the long-term bonds they acquire. The resulting profits should be regarded in the same way as those of investment banks. For the time being, central banks are making large profits on their investment banking activities, but little in terms of traditional seigniorage.
The QE programme of the European Central Bank does not increase its seigniorage revenues, because 80% of the euro area’s sovereign bond purchase programme is done by the national central banks on their own accounts.
The policy implication of this assessment is that the seigniorage income of the ECB will be much smaller than many assume and one should thus not count on it as a source for any euro-area projects."

Source -