Iraq's economy on the brink of collapse

[yota691]

Iraq's economy on the brink of collapse 

41 Show    October 22, 2014 12:29

Iyad al-Samarrai

 

In light of the security crisis experienced by Iraq and rearranging papers and complete the construction of the government in preparation for the resumption of work, seeing oil prices, a big drop exceeded what it was the price in 2010, and there may be further decline with what was announced that some OPEC countries are not ready to reduce its output.

The decline in oil prices is not a purely economic issue but linked to political considerations and this is not our subject, but what concerns us talk about is what does that mean for Iraq?

Iraq sells its oil at a discount of up to ten dollars a barrel for the world price, and therefore when it reaches Brent crude to nearly $ 80 a barrel, it is not possible to determine the price of a barrel of oil in the Iraqi budget ninety dollars and must be determined price not to exceed $ 65 per barrel, and this means Simplified in the accounts that do not exceed the budget 2015 budget of what it was in 2010.

If we know that the operating budget had risen gradually over the past five years, it means that the state investment budget will be exposed to a policy of austerity that is not secured by other sources to finance the investment budget was an interview with Prime Minister al-Abadi clear in this area.

Today we face great challenges, the cost of the face Daash and prepare the National Guard and trained and outfitted with heavy weapons and compensate for equipment lost by the Iraqi army in confrontations with Daash will generate not unprecedented pressure on the budget.

As the former Iraqi government expanded in the operating budget, and we touched it year after year without any regard for the future and the prospect of lower oil prices, believing that the increase in production offset what may be the decline in prices.

We have tried in the past alert for that and find stability or growth is simple in the operating budget to calculate the expansion of the investment budget, but we did not find deaf hear, but turned investment budgets a way to steal public money unchecked and become thefts officials of public money modern society and modern both follow the situation in Iraq .

Maybe bears the Prime Minister of the current Dr. Abadi relatively aspect of this responsibility has been chairman of the Finance Committee for four years and Sayre government requests in the expansion of spending, and now Dr. Abadi said he finds and his finance minister solutions to the problem of a devastated economy it has no income except oil after collapsed industry, fell areas of Iraq fertile agricultural and important, however Daash, and those areas handed over production of grain to the Ministry of Commerce, but the farmers did not receive eighths of what Soukoh so in light of the current situation will be difficult for them to cultivate their land, but if you find Daash them to solve, even if it did, it would have replaced the state Iraqi and closer relations between them and their interests on the Daash with all that this entails risks to the future.

State still paying huge salaries to tens of thousands of subscribing to the armed forces, although it was unable to repel Daash them, as it continues to pay the salaries of large numbers of other employees displaced, even though they actually stopped working it can not, but it can not abdicate their responsibility and this represents a material burden on the budget without charge a service or where it would come economic state with all this money?

Indeed, he says that the Kirkuk oil and oil of Kurdistan have become outside the administration of the central government and it is being exported away from them, so they will stand in front of the author of the Iraqi budget is a big problem, namely: How will the estimates and according to any account and what the fate of the production, which is subject to the control of Kurdish, which can be up and inclusive of Kirkuk oil to one million and a half barrels a day, and this problem was intransigence former reason not to reach out to the solution, but led to further complications.

In our view that any solution no matter what some saw as unfair better than the absence of a solution, and this point of contention between me and a number of ministers of the previous government who insist on their own vision for their problem with the province, the oil province of Kurdistan should be in the budget accounts and enters them is not important who would assume administration or sold and the proceeds but must appear in the budget.

Budget 2015 must be less than the 30% of the budget in 2014 Is the Ministry of Finance will be able to address the issue, as it must be, how severe austerity measures and that there are multiple claims of the Kurdistan region and from various sectors in the community benefits and the security situation.

I can not hide my deep concern on the economic situation, which is heading toward the Great Depression in the light of these merits, and I remember in the end that one of the Western studies discreet and almost a year ago predicted that Iraq would be subjected to bankruptcy in 2017 if not changed policies of the government of Iraq, and I think that our ministers specialists briefed on This report, which was seen by some mockingly but we have to look at it more seriously today.

 

The important question here: How do we stop the collapse of the Iraqi economy? And that the focus of our conversation in the second section of this article.

Ayad al-Samarrai warns of collapse of the Iraqi economy  

15 Show    October 22, 2014 12:32

 

(Independent) .. The Secretary-General of the Iraqi Islamic Party, Ayad al-Samarrai deep concern and fear of what was to become of the economic situation in Iraq in light of successive crises and the situation in the region and the decline in oil prices in an unprecedented way.

And between the Samurai in an article published under the title (of the Iraqi economy to the brink of collapse) that when he arrives, Brent crude to nearly $ 80 a barrel, it is not possible to determine the price of a barrel of oil in the Iraqi budget ninety dollars must set the price not to exceed $ 65 per barrel, I mean in simplified accounts that do not exceed the budget 2015 budget of what it was in 2010.

He continued: If we know that the operating budget had risen gradually over the past five years, it means that the state investment budget will be exposed to a policy of austerity, pointing out that the cost of the face Daash and the preparation of the National Guard and trained and equipped and compensation heavy weapons and equipment lost by the Iraqi army in confrontations with Daash will generate pressure has no parallel on the budget.

He criticized the Samurai performance the previous government, which has expanded in the operating budget and finance committee of the previous learn all that and a blind eye to it, in light of turning investment budgets a way to steal public money unchecked, stressing that, Dr. Abadi and Finance Minister to find solutions to the problem of a devastated economy is not its oil revenue only after the industry collapsed and fell into fertile agricultural areas of Iraq and the task, however Daash.

He added that the problem of Kirkuk and the Kurdistan region are increasing the difficulty of the subject and its complexity, wondering: The 2015 budget must be reduced by 30% of the budget in 2014 Is the Ministry of Finance will be able to address the issue. (End)

[skeetdog]

Thanks Yota...This Samarri can lay a thick smoke n mirror ployment of propaganda as any I've heard...It's harvest season, even in Iraq. It fixin to get colder than a well digger a$$ for bout% mouths. The government just signed the once state cointrolled plants and factories back over to the private sector. I'll get my last bit of rationalizing today with Adams input on why the ISX shut completely down until the 28th...The private sector just got the biggest boost ever as the terms of capitalism, employment, maintenance, transportation, infrastructure...etc just this move aloan is enormous...Think of all the different aspects it takes to keep these plants goin, the supplies involve the equipment to maintain. The workers, their living quarter, clothes, cars the Iraqi economy is waiting to be funded, I wouldn't let outside investment touch this financing Gold Mine...This alaon will establish the banks with commerce thus the snowball rolls downhill on the flat ground ever so aquirin sand and camel dune...Did I GO TOO FAR WITH THAT.....

[Tirebiter]

Thanks for the article got a. Skeet I couldn't agree more. As I recall in previous budgets they set their expected price or barrel much lower than the price at that time to hedge against fluctuations. Additionally, an Erbil agreement and implementation would encourage stability.

[jcfrag]

I call BS too!!   unless they are talking about what the price of oil is headed for.......   All of our oil men fracing their way to the core of the earth to get at that oil as fast as possible has caused huge difference in the oil markets....    the US now being like the largest supplier of oil in the world....... but with all of that increase, the price was bound to drop sooner or later ...which is good for us and bad for us....

[outlawclg]

As best as I can find, consensus is that oil will stabilize around $90 a barrel.

[SocalDinar]

Thanks Yota,

 

This is from IMF Website http://www.imf.org/external/pubs/nft/2003/fispol/

 

Long read but easy enough to get the point. 

 

 

1. Fiscal Challenges in Oil-Producing Countries: An Overview
Jeffrey Davis, Rolando Ossowski, and Annalisa Fedelino  

This volume brings together papers that deal with a wide range of macroeconomic and fiscal issues in oil-producing countries, and aims at providing policy recommendations drawing on theory and country experience. The scope of the essays reflects the significant operational involvement of the IMF with oil producers, particularly in terms of surveillance, program work, and technical assistance. This work has highlighted the difficult challenges that confront policymakers in these countries, and the possibilities in several areas for improved practice.

The volatility of oil prices in recent years has brought these major challenges into sharper focus. Over a period of just a few years, oil prices plunged to around US$12 per barrel in late 1998, surged to US$30 per barrel in late 2000—only to fall back to US$20 per barrel in early 2002 (Figure 1.1). This volatility can translate into significant fluctuations in fiscal revenue. A case in point is Venezuela, where public sector oil revenues fell from 27 percent of GDP in 1996 to less than 13 percent of GDP in 1998 before rising again to more than 22 percent of GDP in 2000. At the same time, oil is an exhaustible resource, which poses difficult intergenerational equity questions. While it may be a distant concern for some producers, for others the reality of a post-oil period is approaching. And, since oil revenue largely originates from abroad, its fiscal use can have significant effects on the domestic economy.

Many oil producers have had difficulties designing and implementing policies in this context. Studies have shown that resource-dependent economies tend to grow more slowly than nonresource-dependent ones at comparable levels of development. Poverty is still widespread in a number of oil-producing countries. Downturns in oil prices have in a number of cases led to external and fiscal crises. And a pattern of fluctuating fiscal expenditures associated with oil volatility has entailed significant economic and social costs for a number of oil producers.

Oil-producing countries, however, do not form a homogenous group. First, there is significant variation in the extent of oil dependence. In some countries, oil accounts for the vast majority of fiscal revenue and exports, while in others it is less significant for the economy. Second, oil sectors are at different stages of development. There are several new or soon-to-be producers where the oil sector is being developed, and oil revenues can be expected to grow substantially over the next few years. At the other end of the spectrum, some oil producers like Yemen face the prospect of depleting their oil resources in the not-too-distant future. Third, governments' financial positions also vary substantially. Some governments have accumulated sizable financial assets, while for others public debt is a major concern. This has implications for the options and constraints in responding to fluctuations in oil prices. And finally, the ownership of the oil sector also differs across countries. In countries such as Venezuela and Mexico, the oil sector is dominated by a state-owned producer. In other countries, the oil industry is largely in private hands.

Moreover, the way oil revenues are collected and used is not just an economic issue. Importantly, policies are framed within specific political and institutional frameworks. These frameworks—including their governance, transparency, and accountability characteristics—tend to vary among countries. Several papers in this volume incorporate wider institutional issues specifically into their analysis.

This book is structured around four broad sets of topics. The papers included in Part I examine fundamental macroeconomic and fiscal issues and institutional factors associated with the formulation and implementation of fiscal policy in oil-producing countries. Part II looks at more specific oil revenue issues, in particular the taxation and organization of the oil sector, national oil companies, and oil revenue and fiscal federalism. Institutional arrangements to deal with oil revenue instability, including oil funds and the use of oil risk markets, are the focus of the papers in Part III. Finally, the papers included in Part IV discuss domestic petroleum and energy-pricing issues.

Determining Fiscal Policy in Oil-Producing Countries

Countries with large oil resources can benefit substantially from them, and the government has an important role to play in how these resources are used. At the same time, the economic performance of many oil exporters has been disappointing, even to the extent of prompting some observers to ask whether oil is a blessing or a curse. The papers in this section address analytical and operational issues in the formulation of fiscal policy in oil-producing countries, as well as the political and institutional factors that may affect the design and execution of policy.

In Chapter 2, Hausmann and Rigobon introduce an innovative analytical approach to explain the "resource curse." Their model relates the poor growth performance of many oil-dependent countries to the interaction of government spending of oil income, specialization in nontradables, and financial market imperfections. Both the level and volatility of government expenditure contribute to lack of diversification, which, according to empirical evidence, exacerbates the resource curse. The main policy conclusions are that welfare and macroeconomic performance can be improved by reducing the volatility, and in some cases the level, of government spending; improving budget institutions, debt management, and policy credibility; and enhancing the efficiency of domestic financial markets.

Barnett and Ossowski address operational issues in formulating and assessing fiscal policy in oil-producing countries in Chapter 3. They put forward operational guidelines based on lessons drawn from the experience of many oil producers. First, the non-oil fiscal balance should be given greater attention as an indicator of fiscal policy, and should figure prominently in the budget and in fiscal analysis. Second, the non-oil balance, and expenditure in particular, should be adjusted gradually, which requires decoupling, to the extent possible, government spending from oil revenue volatility. Third, the government should strive to accumulate substantial financial assets over the period of oil production, on both sustainability and intergenerational equity grounds. Fourth, while many oil producers can afford to run sizable non-oil deficits, there are strong precautionary motives that would justify fiscal prudence. Fifth, in setting fiscal policy, consideration needs to be given to supporting the broader macroeconomic objectives. Finally, a number of oil producers should pursue strategies aimed at breaking procyclical fiscal responses to volatile oil prices and ensuring that the government's financial position is strong enough to weather downturns in oil prices.

Eifert, Gelb, and Tallroth (Chapter 4) provide an analysis of the underlying political and institutional determinants of the economic performance of oil exporters. Drawing on concepts from the comparative institutionalist tradition in political science, their paper develops a generalized typology of political states, which is used to analyze the political economy of fiscal and economic management in oil-exporting countries with widely differing political systems. Country experiences point to the key role played by constituencies for the sound use of oil rents, the importance of transparent political processes and financial management, and the value of getting the political debate to span longer time horizons.

Understanding the statistical properties of oil prices is important for fiscal policy formulation in oil-producing countries. In particular, whether oil price shocks are deemed to be temporary or persistent has implications for government wealth (including oil wealth)—a key input for assessing the sustainability of fiscal policy. In Chapter 5, Barnett and Vivanco test empirically the statistical properties of oil prices. Accepting that there are periodic permanent oil shocks (such as in 1973), their evidence suggests that most oil price movements are transitory. This implies that many year-to-year oil price fluctuations have only a minor impact on government wealth. For the most part, therefore—and looking only at sustainability considerations—governments should not adjust expenditure significantly in response to oil price changes.

Dealing with Oil Revenue

The papers included in Part II of this book address three sets of oil revenue issues. First, oil extraction plays a crucial fiscal role in generating tax and other revenue for the government in oil-producing countries. Therefore, the proper design of the fiscal regime for the oil sector is of key fiscal importance. Second, there is a need to look at the performance of national oil companies—including transparency and governance issues—since in many cases these enterprises play a major macroeconomic and fiscal role. Finally, three papers are devoted to fiscal federalism topics, as important questions arise over the assignment of oil revenues to various levels of government.

Sunley, Baunsgaard, and Simard argue in Chapter 6 that the fiscal regime must be properly designed to ensure that the state, as resource owner, receives an appropriate share of oil rent. Competing demands arise between the government and oil companies over sharing risk and reward from oil investments—where both aim at maximizing reward while shifting risk as much as possible to the other party. Abalance also needs to be struck between the desire to maximize short-term revenue against any deterrent effects this may have on investment in the oil sector. The paper surveys various fiscal regimes to collect revenue from the oil sector; cross-country evidence suggests that good fiscal regimes should guarantee some up-front revenue with sufficient progressivity to provide the government with an adequate share of economic rent.

In Chapter 7, a paper by McPherson on national oil companies covers an important area where previous work has been limited. The author argues that the performance of national oil companies is generally poor, as these enterprises are often plagued by lack of competition, the assignment of noncommercial objectives, weak governance, limited transparency and accountability, lack of oversight, and conflicts of interest. These ills may be addressed by setting performance standards, increasing competition in the oil sector, divesting noncore assets, transferring noncommercial activities to the government, and conducting (and publishing) independent audits on a regular basis. The reform of national oil companies, however, faces formidable obstacles, including political opposition and entrenched vested interests. To be successful, reform programs need support from the highest political levels as well as from a wide range of public opinion.

The assignment of oil revenues to various levels of government raises a number of extremely complex issues in oil-producing countries. These include whether subnational regions should have the right to raise revenues from natural resources; the ability of subnational governments to cope with oil revenue volatility given their expenditure assignments; the implications of various intergovernmental fiscal frameworks for the maintenance of overall fiscal control by central governments; interjurisdictional equity and redistribution issues; and environmental and social concerns.

In Chapter 8, McLure provides a conceptual framework for analyzing the assignment of revenues from the taxation of oil to various levels of government in multilayer systems. The paper focuses, in particular, on whether subnational governments should have the power to tax oil, why, and (if so) how. Most of the considerations examined in the paper suggest that revenues from oil should be reserved for national governments. There may be overriding legal and political economy considerations, however, that may lead to the assignment of power to tax oil to subnational governments.

The next two papers also see the centralization of revenues as the best solution. Reflecting the complexity of the issues, however, their authors reach different conclusions regarding second-best policies.

Ahmad and Mottu present a topology of existing oil revenue assignments in Chapter 9. While recognizing that the centralization of oil revenue is preferable, they conclude that a second-best solution would be to assign oil taxation bases with stable elements (such as production excises) to subnational governments, supplemented by stable transfers from the central government. This would allow subnational governments to finance a stable level of public services. The least preferred solution would be oil revenue sharing, which complicates macroeconomic management, does not provide stable financing of local public services, and may not diffuse separatist tendencies (oil-producing regions would still be better off by keeping their oil revenues in full).

Brosio also notes that a growing trend toward sharing of oil revenue with subnational governments bears out the principle that optimal policies (oil revenue centralization) often have to give way to second-best solutions (Chapter 10). Based on a review of various types of tax assignments and equalization mechanisms, he concludes that revenue sharing (including an equalization mechanism to limit regional disparities in revenues) should be preferred over the assignment of local taxes on oil. The main reasons are that oil is typically concentrated in a few regions; oil revenue is highly volatile and thus difficult for subnational governments to manage; oil taxes are complex and difficult to administer; and energy policy is a national responsibility.

Institutional Arrangements for Dealing with Oil Revenue Instability

Fiscal policymakers in oil-producing countries need to decide how expenditure can be insulated from oil revenue shocks, and the extent to which resources should be saved for future generations. The papers in this section discuss two institutional mechanisms that have been proposed to promote better fiscal management. First, oil funds have been suggested as an institutional response to stabilization and savings concerns, particularly when there are strong political pressures to increase spending. This is a topic where judgments on political economy issues can lead to different views, as reflected in the papers included in this section. Second, a potential way to deal with the oil price risks that affect the public finances of oil producers is to use oil risk markets.

Davis, Ossowski, Daniel, and Barnett look at the effectiveness of oil funds from both a theoretical and an empirical perspective (Chapter 11). The main types of funds include stabilization funds, savings funds, and financing ("Norwegian") funds. The objective of stabilization funds is to minimize the transmission of oil price volatility to fiscal policy by smoothing budgetary oil revenue. Savings funds aim at addressing intergenerational concerns. Oil funds other than financing funds, however, ignore the fungibility of resources, and therefore do not effectively constrain expenditure. Moreover, these funds often do little to improve the conduct of fiscal policy and entail certain risks, including fragmenting fiscal policy and asset management, creating a dual budget, and reducing transparency and accountability. Econometric evidence and country experiences generally raise questions as to the effectiveness of oil funds.

In Chapter 12, Skancke describes the Norwegian Petroleum Fund. The fund, which is viewed as a tool to enhance transparency in the use of oil wealth, is fully integrated into the budget and has flexible operating rules, thereby avoiding the problems discussed in the previous paper. Since the budget targets a non-oil deficit that is financed from the fund, the accumulation of resources in the fund corresponds to net financial public savings. A large-scale buildup of public financial resources, however, requires a high degree of consensus, transparency, and accountability—traditionally present in Norway—and therefore the Norwegian model may not be easily "exported" to many other oil-producing countries.

Wakeman-Linn, Mathieu, and van Selm note in Chapter 13 that despite the ambiguous track record of oil funds in other countries, Azerbaijan and Kazakhstan have created funds to assist them in managing their new petroleum wealth. The decision to establish funds in these countries was motivated by the serious challenge posed by an unfinished transition from planned to market economy in the context of an oil boom, which in the view of the authorities argued for the separation of oil revenues from other revenues. Given the recent history of these countries' oil funds, only preliminary conclusions can be drawn on how they have performed relative to their stated objectives. According to the authors, on balance these funds, if operated in accordance with existing rules, should contribute to better management of oil wealth and improved transparency. However, a further strengthening of these funds is urgently needed for their potential to be fully realized.

Hedging represents a possible way to reduce oil revenue volatility and limit oil price risk, as Daniel argues in Chapter 14. Hedging may allow for more realistic and certain budgeting, provide insurance against declines in oil prices, and lessen the chances of oil price falls forcing costly fiscal adjustments. As oil risk markets have matured in the last decade, their range and depth could allow many oil producers to hedge oil price risk. At the same time, concerns about the potential political costs of hedging (particularly the failure to benefit from upturns in prices), institutional capacity constraints, financial costs, and the depth of the market have discouraged many governments from actively using hedging. In many cases these concerns could be overcome, however, and the author encourages governments to explore the scope for hedging oil price risk.

Designing Policies for Domestic Petroleum Pricing

In oil-producing as well as oil-importing countries, domestic petroleum product prices are often heavily regulated. Many governments keep prices below international levels, resulting in the implicit or explicit subsidization of oil consumption. The quasi-fiscal costs and appropriateness of setting domestic prices at below-market rates, as well as the potential social consequences of price reform, are contentious and deeply political issues in many countries.

Gupta, Clements, Fletcher, and Inchauste (Chapter 15) argue that the subsidization of petroleum products in oil-producing countries does not appear to be a wise use of resources. Petroleum subsidies are inefficient and inequitable, implying substantial opportunity costs in terms of foregone revenue or productive expenditure, and procyclical, thus complicating macroeconomic management. Moreover, as these subsidies are typically not recorded in government budgets as expenditures, their economic cost, as well as the incidence on different income classes, is often poorly understood. Despite the substantial costs of implicit petroleum subsidies, reform is often difficult, as there is typically strong popular opposition to their elimination. support for subsidy reform can be promoted through countervailing measures and publicity campaigns. Undertaking poverty and social impact analyses and establishing social safety nets can mitigate the adverse social and political effects of reforming energy subsidies.

In Chapter 16, Espinasa provides a simple accounting model to analyze the distribution of the cost of domestic petroleum subsidies between the government and the national oil company. It is found that the fiscal incidence of this cost depends on the fiscal regime in place. Some tax regimes shift the burden of subsidies to the state oil company, thus hampering its ability to invest and hence to provide the government with revenues over the medium term. In addition, estimates of the implicit subsidies should take into account domestic distribution and retail costs, which typically represent a sizable share of the final retail price.

In Chapter 17, Federico, Daniel, and Bingham examine the case for smoothing retail petroleum prices in countries where these prices are regulated by the government. The authors contend that full and automatic pass-through of international price changes to domestic retail prices is the first-best solution in a competitive market economy, as it allows for correct price signals and does not expose the government to undue fiscal risk as a result of volatile oil prices. However, most developing countries that regulate petroleum prices follow a discretionary approach to adjusting them, which suggests that from a political economy perspective full-cost pass-through is not a robust policy option. The paper therefore explores the case for government-managed retail price smoothing. It concludes that there is a sharp trade-off between the degree of price smoothing and government fiscal stability. Since many pricing rules would leave the government overexposed to oil price risk, only limited price smoothing is likely to be fiscally sustainable.

Energy sector operations often lead to quasi-fiscal activities. Petri, Taube, and Tsyvinski stress in Chapter 18 that this is the case in many of the countries of the former Soviet Union. Their study provides an analysis of quasi-fiscal activities arising from the mispricing of energy and the toleration of payment arrears. In addition to information on various countries of the former Soviet Union, the paper presents detailed case studies on Ukraine (a net energy importer) and Azerbaijan (an energy-rich country). The main policy recommendations in the paper focus on the need to adjust inappropriately low energy tariffs and improve financial discipline in order to reduce energy consumption and waste and streamline untargeted energy subsidies; to supplement these reforms with the provision of explicit and better targeted subsidies to needy population groups; to include estimates of quasi-fiscal activities in the reported fiscal positions; and to enhance the scrutiny of these activities and promote fiscal transparency.

[jcfrag]

 On the other hand, should the price of oil drop to less than 70 to 75 a barrel, then there goes the Canadian oil sands projects as that would no longer make sense to continue on with.as it is expensive to get the oil out of the sands.... and without their production, might just push the price back up again! Plus there are even newer things on the horizon that could shift the markets....... I'd say the Iraqis should get this done while they can, if they really want to get this done. They need to make some decisions and just have faith it will be in their best interest!

[jcfrag]

If you look at the chart in your post SD it is as 2002. Many new fields have hit the American Dream, from Louisiana, to Texas to N Dakota in recent years. 2008 knocked us in the dirt, but we came back with a vengeance! A lot of smaller American Companies are back in the game and putting new money back into our economy.

[SocalDinar]

Not in my area, JC frag..  I do here about the good things happening in Texas.

Empty commercial space everywhere.

Many part time jobs available and yes the healthcare industry doing ok

I can look at my numbers since 2008 and it looks like a slide to me.Yet work comp goes up, Healthcare now insane, EDD rates way up ( tier F )

New regulations strangeling business here. Many larger companies now have completely PART TIME work forces.

I had 15 full time employees in 2008. Now I'm down to 1. With Obamas new taxes and Californias insane amount of taxes I have no incentive to hire any more.

Why would I work harder to give it all for the Government to give away.

 

Point of the article is that monetary regime that depend on oil ( or any other natural resource ) take a huge risk if the price drops.

Edited October 22, 2014 by SocalDinar

[jcfrag]

I am not sure what the legislative brainiacs of California are thinking as Californians are leaving that state in droves as they are all sick of the state taxes. Oddly enough, poor planners see the money levels dropping so they go UP on their charges instead of eliminating the problem all together. In my home town they are literally drinking the gray water as they are in severe drought conditions. The city councils over the years have consistently stated that it would cost too much money to dredge out the local city lake to make it deeper to hold more water to get them through droughts. And that mentality has prevailed through the decades....and today they are in dire straights as it is just a matter of time before the local military base there pulls up stakes and moves to greener pastures. When that happens, there goes the income from that tax base. It will eventually become a ghost town.  The funny thing is that little lake used to be the big draw as many came from miles around to dance on the wooden floors that were built over that little lake.....they even had trolley cars that would deliver you to the ballroom from downtown as it was magnificent in its day. Today you can practically waltz across the lake bed. No foresight creates the ebb and flow of our great country!

 

My point being: demand creates the market and even these markets fluctuate depending on the "Monetary Regrime's" foresight. I can remember back in the 80's when the price of a barrel of oil in our neighborhood dropped from 35.00 to around 15.00 a barrel. It was devastating. Where were they then?

[uncirculd]

Well, to say it's unfortunate that they never developed their economic policy because of maliki, but they have themselves to blame by not doing anything about it then.  Now they are faced with the same issues and they need to stop whining and do something.   By not taking maliki out of office they now not only face economic woes, but it's been a breeding ground for terrorism and a nuclear dumping ground for Iran.  

 

Get over it and fix it.  But, I feel nothing for their woes.  They are asking for more trouble by keeping maliki in a GOI office.  He's a danger to the himself, Iraq, Sunnis, Kurds, and most of all Abadi.  Stop complaining about the past, and count your blessing Iraq that you still have a functioning parliament and 2/3 of your country in your possession.  Take it back.   

 

Then come here and tell us how to take ours back from the banksters.....lol 

[Laid Back]

Why so much misinformation around iraq.

 

Why  so many countries in the world are supporting and helping iraq to be succesful.

 

We are in the right track.  Iraq will be the next POWERHOUSE.

 

Go increase exchange rate.!!!

[staunch]

As best as I can find, consensus is that oil will stabilize around $90 a barrel.

Price of oil today is $82 a barrel.

US drilling operations were operating at a loss at $100 a barrel.

[jcfrag]

I agree LB, as do we all or else we would not be here today. I just wish they would stop it already with the "Wishy Washy" decision making and get on to the important stuff. Hang Maliki. Get rid of ISIS. Finish up on the budgets. Agree once and for all of the HCL....And hit the dang RV BUTTON!!!!!!         It is just that simple!