Saturday, April 16, 2016
Draft Doha pact to freeze oil output till Oct; Citigroup quarterly profit plunges 27%; Neoliberalism as the root of our problems
1 Draft Doha pact to freeze oil output till October (Gulf News) A draft agreement among oil producers meeting on Sunday in Doha says average daily crude oil production in each month would not exceed the level recorded in January this year, according to a copy of the draft seen by Reuters.
The freeze would last until Oct. 1 this year, and producers would meet again in October in Russia to review their progress in engineering "a progressive recovery of the oil market", the draft reads. Final agreement has not been reached on the draft, but several senior sources in countries' oil ministries said they were optimistic that a deal would be reached.
Producers would continue to develop the process of consultation between them on the best ways to bolster the oil market, and the deal would be open for other states to join, the draft says. OPEC member Iran has said it will not participate in Sunday's meeting as it could not accept proposals to freeze its production.
2 Citigroup quarterly profit plunges 27% (BBC) US bank Citigroup has reported a 27% fall in first quarter profits compared with a year earlier. It came as Citi said it had set aside more cash to cover losses on energy loans, and as the cost of shrinking some of its businesses increased.
Citi, which is restructuring to focus on more profitable businesses, saw net income fall to $3.5bn from $4.8bn the time a year earlier. However, the results were better than analysts had been expecting. Chief executive Michael Corbat said Citi was making progress "in becoming a simpler, smaller, safer and stronger institution".
The bank's profit decline, in the three months to the end of March, is the largest among big US banks that have reported first quarter results so far. Citi recently slipped from third to fourth biggest US bank by assets, after being overtaken by Wells Fargo.
The global banking industry has struggled since the start of year due to uncertainty surrounding the world's economic outlook, with a slowdown in China and the continued fall of oil prices. Earlier in the week JP Morgan reported a 6.7% drop in profit. On Thursday, Bank of America reported that profits fell 13% in the first quarter and Wells Fargo reported a 7% drop.
Citigroup has had a larger drop in profit is in part because it has greater exposure to emerging markets, where the economies have been slowing. The bank has been selling assets and leaving less profitable markets. Mr Corbat said the first quarter earnings included "a significant repositioning charge" of $491m.
3 Neoliberalism as the root of our problems (George Monbiot in The Guardian) Imagine if the people of the Soviet Union had never heard of communism. The ideology that dominates our lives has, for most of us, no name. Neoliberalism: do you know what it is?
Its anonymity is both a symptom and cause of its power. It has played a major role in a remarkable variety of crises: the financial meltdown of 2007‑8, the offshoring of wealth and power, the slow collapse of public health and education, resurgent child poverty, the epidemic of loneliness, the collapse of ecosystems, the rise of Donald Trump.
But we respond to these crises as if they emerge in isolation, apparently unaware that they have all been either catalysed or exacerbated by the same coherent philosophy; a philosophy that has – or had – a name. What greater power can there be than to operate namelessly?
So pervasive has neoliberalism become that we seldom even recognise it as an ideology. We appear to accept the proposition that this utopian, millenarian faith describes a neutral force; a kind of biological law, like Darwin’s theory of evolution. But the philosophy arose as a conscious attempt to reshape human life and shift the locus of power.
Neoliberalism sees competition as the defining characteristic of human relations. It redefines citizens as consumers, whose democratic choices are best exercised by buying and selling, a process that rewards merit and punishes inefficiency. It maintains that “the market” delivers benefits that could never be achieved by planning.
The term neoliberalism was coined at a meeting in Paris in 1938. Among the delegates were two men who came to define the ideology, Ludwig von Mises and Friedrich Hayek. Both exiles from Austria, they saw social democracy, exemplified by Franklin Roosevelt’s New Deal and the gradual development of Britain’s welfare state, as manifestations of a collectivism that occupied the same spectrum as nazism and communism.
After Margaret Thatcher and Ronald Reagan took power, the rest of the package soon followed: massive tax cuts for the rich, the crushing of trade unions, deregulation, privatisation, outsourcing and competition in public services. Through the IMF, the World Bank, the Maastricht treaty and the World Trade Organisation, neoliberal policies were imposed on much of the world.
Freedom from trade unions and collective bargaining means the freedom to suppress wages. Freedom from regulation means the freedom to poison rivers, endanger workers, charge iniquitous rates of interest and design exotic financial instruments. Freedom from tax means freedom from the distribution of wealth that lifts people out of poverty.
Like communism, neoliberalism is the God that failed. But the zombie doctrine staggers on, and one of the reasons is its anonymity. Neoliberalism’s triumph also reflects the failure of the left. When laissez-faire economics led to catastrophe in 1929, Keynes devised a comprehensive economic theory to replace it. When Keynesian demand management hit the buffers in the 70s, there was an alternative ready. But when neoliberalism fell apart in 2008 there was ... nothing. This is why the zombie walks.