By Michael Lelyveld

Once again, eager Chinese home buyers have responded to rising prices by getting divorced.

For at least the second time in recent years, rumors of impending price controls on apartments have sent couples rushing off to break up perfectly good marriages, in some cases so that families can buy properties they may not really need.

Last month, dozens of couples flooded registration offices in Shanghai to file for divorces after reports that the city was considering higher down payment requirements for purchases by married households. Rumors spread that the new rules would take effect on Sept. 1.

In some versions of the rumor, couples were told that divorces would not be recognized for one year under real estate and tax rules unless they registered by the deadline.

The reports of tougher restrictions on property sales followed a 27.3-percent jump in Shanghai’s new home prices in July from a year earlier and increases as high as 40.9 percent in major coastal cities like Shenzhen, according to the National Bureau of Statistics (NBS).

After several days, Shanghai authorities denied they were studying new financing limits, but it was too late to stop the stampede of divorce filings and apartment sales before the end of the month.

One couple told The Wall Street Journal they were trying to avoid a 70-percent down payment requirement for buying a larger apartment by filing singly as divorced first-time buyers and putting down just 30 percent.

“We don’t have any other way out,” the wife said.

While Shanghai held off on new rules at the start of the month, higher down payment requirements for second homes took effect in the central city of Wuhan following similar moves in Nanjing and Suzhou, the official Xinhua news agency said.

Price hikes resume after pause

On Sept. 8, police said they had detained seven Shanghai real estate agents for spreading rumors about new rules to drive up sales and commissions, Xinhua reported.

Two days later, the Ministry of Housing and Rural-Urban Development voiced support for the crackdown and called for penalties to stop similar scams.

The turmoil over home buying comes as the pace of price hikes has resumed after appearing to ease slightly for several months.

A new NBS survey of month-to-month increases in 70 cities released Monday found new home prices were higher in 64 cities in August, up from 51 in July compared with 55 in June and 60 in May, Xinhua said.

In the first eight months of the year, sales of floor space in residential buildings rose 25.6 percent from a year earlier and 40.1 percent by value, the NBS said in an earlier report.

In a survey released by the People’s Bank of China (PBOC) over the weekend, 53.7 percent of respondents rated home prices as “high and hard to accept,” Xinhua reported.

Home loans soared by over 670 billion yuan (U.S. $100 billion) in August as yuan-denominated lending more than doubled from July, the PBOC reported last week.

But recovery in the real estate market has been uneven after a two-year slump drove developers to the brink, leaving many in second and third-tier cities with a huge backlog of unsold homes.

The last time the divorce ploy came into play was in March 2013 as families tried to avoid restrictions on second-home buying and the government threatened to impose a 20-percent profit tax on property sales to cool the market down.

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Three years earlier, former Premier Wen Jiabao pledged to curb speculation and make homes affordable for first-time buyers, but prices in Beijing and Shanghai climbed 40 percent or more in 2010, widening the gap between rich and poor.

After the run up, the price of units in new residential buildings in Beijing reached 20,328 yuan (U.S. $3,081) per square meter in January 2011, Shanghai Securities News reported at the time.

Last month, the average Shanghai sales price hit 41,259 yuan (U.S. $6,204) per square meter, CCTV reported, suggesting that prices in first-tier cities roughly doubled in five years.

The costs and the divorce cases raise the question of how much has changed after the boom-and-bust cycle has run its course.

The answer is not much, except that the central government under President Xi Jinping and Premier Li Keqiang seems less concerned about excesses in the property market, now that economic growth has slowed down.

During the boom years of 2010 and 2011, China’s gross domestic product growth averaged over 10 percent, according to World Bank figures. Now, official GDP growth has dropped to 6.7 percent, making real estate demand a relative bright spot in the fading economy.

After China’s stock markets battered investors with its own boom-and-bust cycle last year, the government has clamped down on speculative trading, leaving the Shanghai Composite Index virtually frozen for the past six months.

China’s industrial sector has plummeted, exports have declined and capital controls continue to curb individual investment abroad.

“That leaves one place where you would put your money, and that would be real estate in the coastal cities,” said Gary Hufbauer, senior fellow at the Peterson Institute for International Economics in Washington.

“If they’d open up capital flows, people would invest elsewhere and it would take a lot of the pressure off,” Hufbauer said.

Narrow investment opportunities

The narrowing of investment opportunities has become a preoccupation for the rising middle class as those with savings and access to credit continue to seek second and third properties.

The pressures are much the same as they were before the housing boom went bust, even though China’s government has already witnessed the economic and environmental effects of overbuilding, rising debt levels and blocks of unoccupied homes.

If anything, the government may have contributed to the pressures for real estate investment by cracking down on non- bank lending activities that offered higher rates of return.

In August, the China Banking Regulatory Commission (CBRC) issued new rules for peer-to-peer (P2P) loans that bypass traditional banks in the wild and woolly sector that has kept many unsound businesses afloat.

P2P lending products “can include anything from loans for weddings, guaranteed against the cash gifts that couples expect to receive, to high-yield lending for risky property or mining projects,” Bloomberg News said.

Under the CBRC rules, individuals may borrow a total of up to 1 million yuan (U.S. $150,000) with limits of up to 5 million yuan (U.S. $750,000) for corporations.

But lenders cannot take public deposits or offer wealth management products (WMPs) that promise higher-than-bank rates of return.

The intention is to reduce fraud and default risks, but the result of WMP restrictions may be a further narrowing of investment opportunities.

Meanwhile, central government authorities may be showing less urgency than their predecessors over housing inflation in the big cities because of industrial overcapacity and weaker overall demand.

Building activity that would cut into production overcapacity in sectors such as steel and cement continues to lag.

Property investment in the first eight months rose 5.4 from a year earlier with a slight gain in August, reversing a four-month string of declining growth, according NBS data.

The overcapacity industries that support construction are heavily concentrated in the rust belt northeast provinces, where the first-half economic growth rate slumped to 2.2 percent, far below the national average of 6.7 percent, according to the National Development and Reform Commission (NDRC).

China’s housing problems may also be too diverse to address with a national policy.

While big city markets may be overheated, smaller cities remain cool.

The floor area of new unsold homes fell 5.6 percent in July from a year earlier in 35 major cities, the Financial Times said, citing E-House China R&D Institute, but small cities had a two-year backlog as of late last year.

At midyear, China had 714 million square meters of excess housing inventory, the NBS estimated, according to Xinhua. By the end of August, unsold floor space of all commercial buildings stood at 708.7 million square meters after six months of modest declines, the NBS said.

“The government will need different policies for different cities,” the news agency said, quoting an NDRC official.

So far, the cities are still waiting for word from the central government, leading to a patchwork of policies, rumors of new restrictions and, in some cases, responses like the Shanghai divorce rush.

“The affordability of housing is bad in the key cities of the eastern coast and it’s probably going to get worse,” Hufbauer said.

Mr. President, thank you. Thank you very much. Thank you for convening this meeting. To all my colleagues, friends, ladies and gentlemen, 20 years ago President Bill Clinton entered the General Assembly with a pen in hand, the pen that he had used to sign the Comprehensive Nuclear-Test- Ban Treaty, the same pen used by President John F. Kennedy decades earlier to bring the Limited Test Ban Treaty into life. At the time, President Clinton declared the treaty would be yet another essential step towards a century in which the roles and risks of nuclear weapons can be further reduced and ultimately eliminated.

Today, our countries have the opportunity to vote once again to sign onto, to reaffirm the CTBT’s promise of a safer, more secure, and more peaceful planet. And the resolution that we have an opportunity to adopt this morning is a strong and necessary statement of our principles and promises as a global community. It reaffirms the de facto norm – I emphasize, a norm – in the world today against nuclear testing. It acknowledges the legitimate interests of states that fully and faithfully renounce nuclear weapons to receive assurances against the use of the threat of the use of nuclear weapons, and that those assurances will be upheld. It reinforces the Nuclear Nonproliferation Treaty and its disarmament goals, and it builds support for the international efforts to strengthen verification and monitoring systems. And it encourages nations to make the necessary preparations for the day when this treaty enters into force.

I want to emphasize, the resolution does not impose a legal prohibition on testing, nor does it compel any government to adopt new reporting requirements. But it does reinforce the core purposes and objectives of the CTBT itself: to diminish our reliance on nuclear devices, to reduce competition among nuclear powers, and to promote responsible disarmament.

Now, let me just add for a moment, next month in Reykjavik, the 30th anniversary of the Gorbachev-Reagan meeting will be celebrated, remembered. And I want everybody to think about where we were. I grew up in a world of hiding under my desk in school and being told to take cover and train for the possibility of a nuclear war, none of which would have done any good, we know. And I can remember years in the Senate when I wanted to be on the Arms Control Observer Group, with luminaries such as Pat Moynihan and Ted Kennedy and John Warner and Sam Nunn, people who worked a lifetime to move towards responsible efforts here.

And through the years, we watched as the United States and the Soviet Union, the former Soviet Union, engaged in this arms race – tit for tat, each doing something that led the other to feel they had to respond, until we had 50,000 warheads facing at each other, until that moment of Reykjavik, when the two presidents came out and said this is insanity; we have to move in a different direction.

And ever since then, that’s exactly what the world has been doing. We’ve moved in a different direction – from 50,000 warheads, we’re now down to about 1,550. And we have proposed to move even further down. And you have brilliant people who spent a lifetime looking at this – a former Secretary of Defense Jim Schlesinger, former Secretary of State Henry Kissinger, Bill Perry, Sam Nunn – people that you wouldn’t expect talking about the possibility of a world without nuclear weapons. And most recently, the United States and Iran spent two long years negotiating what everybody thought was the improbable – a nation that hadn’t talked to – well, two nations that hadn’t talked to each other since 1979 began a conversation in the room right in back of this chamber, the first time I came here for UNGA, and we turned that into a nation actually giving up a nuclear program and making it clear to the world it was willing to move away from the path of a nuclear weapon in order to make the world safer.

So two decades after this process began, there may be some who question the value of pursuing this treaty or investing in its adoption, because the world has changed dramatically. Almost every member of the United Nations has now renounced the option of testing and responsible governments everywhere are committed to reducing the dangers that are posed by nuclear materials and nuclear weapons.

Yet we have been reminded in recent weeks of the absolute necessity of supporting the CTBT. North Korea’s latest nuclear test is a challenge to this council’s leadership. It is a challenge to the norm that I just articulated. It is a challenge and a direct threat to international stability and peace. It is a dangerous and reckless act of provocation which we have to summon a determined and effective answer to.

Today, this morning, is an affirmation of our willingness to make that clear, to give that answer, to take a step that says we will not lose our commitment, we will remain committed to moving in the direction of ending the threat of nuclear war. Today is also a reminder of the value of the CTBT. The DPRK’s actions and our response demonstrate the effectiveness of the International Monitoring system, of the International Data Center, of the broader verification and detection regime. And this entire episode has offered a stark reminder of why the infrastructure of this treaty is so vital and why adopting this resolution is so important.

My friends, our affirmative vote here is a sign of our unwavering commitment to a safer world in which nuclear technology is used solely for peaceful purposes and the risk of nuclear conflict is no more. I can tell you that we are engaged right now in a process in the United States Government with the Senate, where we have many new members who have not been part of this debate, where we’re beginning a process of literally explaining and educating what the advances in technology do for us. In today’s modern world of virtual capacity and of computerization and artificial intelligence, we don’t need to blow up weapons to know what we can do.

We have the ability to do this, and I simply say to all that I can think of few greater gifts that we and our generation could give to the next than an affirmation that we will continue to move away from the possibilities of nuclear weaponry. Our action today can give people everywhere that a world without nuclear weapons might actually be possible and that we’re going to do everything responsible in our capacity to be able to make that day a reality.

I thank you.

In a bilateral meeting on the sidelines of the 71st Session of the United Nations the Moroccan Royal Advisor Taieb Fassi Fihri submitted Morocco’s official request to the AU Commission Chairperson, Dr. Nkosazana Dlamini Zuma, to rejoin the African organization.

It is worth noting that the Kingdom of Morocco withdrew from the then Organisation of African Unity (OAU) in 1984 over the admission of the Sahrawi Arab Democratic Republic as a full member of the African institution.

“The Kingdom of Morocco has officially submitted a request to accede to the African Union (AU) Constitutive Act, and therefore, become a Member of the Union,” the AU said in a statement.

Rabat first announced its intention to return to the club in July, with King Mohammed VI saying his country wanted to “take up its natural place within its institutional family.”

“Through this historic act and return, Morocco wants to work within the AU to transcend divisions,” he added.

In his address to the African Union, King Mohammed urged the bloc to reconsider its position on the “phantom state” of Western Sahara, saying that a political solution was being worked on under the auspices of the UN.

“The recognition of a pseudo state is hard for the Moroccan people to accept,” he said.

The SADR is not a member of the UN or the Arab League, the king went on to note, adding that “at least 34 countries” do not recognise it.

“On the Sahara issue, institutional Africa can no longer bear the burden of a historical error and a cumbersome legacy,” the monarch said.

“It is with no small measure of emotion that I am addressing our great, lofty African family today. The Moroccan monarch stressed the fact that his nation’s decision to return to the AU did not mean it was changing its stance on Western Sahara.

Morocco will continue to be present in Africa and reinforce south-south cooperation to contribute to the development of the African continent and collaborate with American and European allies to bring peace and stability to this continent.

Committed defender of African integration, Morocco is an regional economic and financial hub, a hotspot for international investment in Africa. But South-South dialogue isn’t enough in itself. African development can only prosper with a triangular co-operation model, North-South-South.

Morocco is strengthening its political, economic and spiritual presence in Africa. This royal vision will certainly contribute efficiently to a stable and prosperous africa that will become more and more economically attractive to foreign investors.

Morocco’ s political influence is growing and so is the trust of the states it is working with. The kingdom keeps defending African’s cause, either directly, thanks to its participation in different operations to maintain peace or either indirectly, supporting, in all of the international summits, sustained efforts for human and social development in the sub-Saharan area.

Rabat’s membership bid must be approved by a vote of the AU Commission in order to be accepted.

The death toll from a boat carrying undocumented migrants that sank off Egypt’s northern coast earlier this week has risen to 51, a local official said Friday.

“Security forces have recovered nine more bodies,” Mohamed Sultan, governor of Egypt’s northern Beheira province, told Anadolu Agency.

The boat, which had reportedly been carrying hundreds of undocumented migrants of various nationalities, sank Wednesday in the Mediterranean Sea north of Beheira’s port city of Rashid (Rosetta).

Bodies recovered so far include eight African nationals and one Egyptian child, according to Sultan.

Egypt’s state-run media earlier reported that at least 600 people had been aboard the ill-fated vessel.

Egypt’s coasts are among the main transit routes used by migrants and refugees from Africa and Asia hoping to make the sea journey to Europe.

Original article

US President Barack Obama has vetoed legislation that would have allowed the families of 9/11 terror attack victims to sue Saudi Arabia over its alleged ties to the hijackers involved in those crimes 15 years ago.

However, Obama’s veto Friday may delay the bill only temporarily. Congress could override the president’s action, and many Washington observers feel that such a rebuff to Obama is likely.

An override in this case would mark the first time in Obama’s two terms that one of his vetoes was rejected.

In a letter to the Senate, the president said that the bill, the Justice Against Sponsors of Terrorism Act, would “neither protect Americans from terrorist attacks nor improve the effectiveness of our response to such attacks.”

Furthermore, he argued, the measure would be “detrimental to U.S. national interests more broadly.”

The legislation would have allowed families to sue Saudi Arabia over its alleged ties to the 2001 terror attacks in New York, Pennsylvania and Washington, by authorizing U.S. courts to waive any claim of foreign sovereign immunity in cases involving terrorism on U.S. soil.

The White House has argued the bill would undermine the longstanding practice of sovereign immunity and expose U.S. diplomats, service members and, in some cases, businesses to “spurious” lawsuits around the world.

Pressure to let veto stand

Lawmakers can override the president’s veto with a two-thirds vote by each chamber of Congress. Both the Senate and the House of Representatives are led by the opposition Republican Party, and its leaders have indicated they are confident they have enough votes to overturn Obama’s veto.

No schedule for an override vote has yet been set.

Even before the president announced his veto, White House officials held a series of urgent meetings on Capitol Hill, trying to persuade senators and members of Congress to allow the president’s decision to stand.

The number of lawmakers who plan to vote against the veto and reinstate Saudi Arabia’s exposure to legal action is difficult to tally, according to the White House deputy press secretary, Josh Earnest, because of “the frequency with which we hear private concerns expressed that don’t match the public votes that are cast [later].”

Confidence in override

Congress passed the Justice Against Sponsors of Terrorism Act by an overwhelming margin earlier this year after intense lobbying by 9/11 victims’ families and groups who support them.

Earnest said administration officials have tried “to make a forceful case to members of Congress that overriding the president’s veto means that this country will start pursuing a less forceful approach in dealing with state sponsors of terrorism.”

Republican leaders in Congress expect the override to pass.

“There will be a roll call vote on the veto override,” Senate majority leader Mitch McConnell said Tuesday. “Our assumption is that the veto will be overridden.”

House Speaker Paul Ryan said Wednesday he believes there are enough votes to override the bill, though he also expressed reservations about the legislation.

“I worry about legal matters,” Ryan said. “I worry about trial lawyers trying to get rich off of this. And I do worry about the precedents. At the same time, these victims do need to have their day in court.”

Earnest argued the Obama administration is concerned about the impact on U.S. relations with countries around the world, not just with Saudi Arabia.

Fifteen of the 19 airline hijackers who commandeered four passenger jets in the terror attacks were citizens of Saudi Arabia. Riyadh has denied any involvement in the attacks.

Obama expressed “deep sympathy” for the families of 9/11 victims and a “deep appreciation” for their desire to pursue justice. He said his administration remains “strongly committed” to helping them find justice and preventing further terrorist attacks against America.

Infants whose mothers had a higher level of a particular type of vitamin B during pregnancy have a lower risk of eczema at age 12 months, new Southampton research has shown.

The study from the Medical Research Council Lifecourse Epidemiology Unit, University of Southampton, is the first to link maternal serum levels of nicotinamide, a naturally occurring vitamin, and related metabolites to the risk of atopic eczema in the child.

The researchers believe the findings support the concept that eczema partly originates as a baby develops in the womb and could reveal ways of reducing the risk of the skin condition.

According to Dr Sarah El-Heis, the study’s lead researcher from the University of Southampton, “Nicotinamide cream has been used in the treatment of eczema but the link between the mother’s levels of nicotinamide during pregnancy and the offspring’s risk of atopic eczema has not been previously studied.. The findings point to potentially modifiable influences on this common and distressing condition.”

Nicotinamide is a form of vitamin B3. Its level is maintained through intake of foods such as fish, meat, chicken, mushrooms, nuts and coffee as well as tryptophan, an amino acid found in most proteins. Nicotinamide and related nutrients are important for the body’s immune responses and energy metabolism.

The research, published in Clinical and Experimental Allergy, assessed the amount of nicotinamide and related tryptophan metabolites during pregnancy in 497 women that took part in the Southampton Women’s Survey. The rates of eczema in their children at ages 6 and 12 months was studied.

Results showed that offspring of mothers with higher levels of nicotinamide had a 30 per cent lower chance of developing atopic eczema at 12 months. There was an even stronger association with higher levels of anthranilic acid, a tryptophan metabolite.

Nicotinamide can improve the overall structure, moisture and elasticity of skin and therefore could potentially alter the disease processes associated with eczema, the researchers say. The study showed a gradual association between higher maternal nicotinamide and anthranilic acid levels and a lower risk of atopic eczema, suggesting that the development of eczema is not simply prevented by the presence of these nutrients.

Professor Keith Godfrey, Director of the NIHR Southampton Biomedical Research Centre in Nutrition, added, “More research is needed to investigate this interesting association, but the findings are further evidence of the potential benefits of eating a healthy balanced diet during pregnancy.”

The potential to better observe the weather and climate over the Indian Ocean has received a major boost with the arrival this week of EUMETSAT’s Meteosat-8 satellite in its new position of 41.5°E.

Meteosat-8 is EUMETSAT’s contribution to the Indian Ocean Data Coverage (IODC) service, and will provide this crucial function together with India’s INSAT-3D, at 82°E, China’s FY-2E at 86.5°E and Russia’s Elektro L N2 at 77.8°E in an international, cooperative arrangement.

Meteosat-8, the first of EUMETSAT’s Meteosat Second Generation (MSG) meteorological satellites, will replace the soon-to-be-de-orbited Meteosat-7, the last of the first generation satellites, which had been providing the IODC service but is approaching the end of its nearly 20-year-long lifetime in space.

EUMETSAT’s Head of Strategy, Communication and International Relations Paul Counet said the benefits of the IODC cooperation were wide-reaching.

“The provision of better and more frequent observations by Meteosat- 8 from this new position will bring benefits to countries, such as Indian Ocean islands and the east African coast, which experience tropical cyclones,” Paul said.

“Additionally, this arrangement will allow for better observations of severe weather over EUMETSAT Member States in Central Europe.”

EUMETSAT’s fleet of MSG satellites fly in a geostationary orbit 36,000km above the Earth. Their primary instrument is the SEVIRI imager.

Meteosat-9, launched in 2005, takes an image of Europe every 5 minutes from its position at 9.5°E. Meteosat-10, launched in 2012, takes an image of the “full-disk” or hemisphere, showing Europe and Africa, every 15 minutes and is stationed at 0°.

This imagery provides crucial information for “nowcasting” severe weather events.

Meteosat-8 was, until recently, stationed at 3.5°E, serving as a “hot back-up” for those two satellites.

However, in early July, the EUMETSAT Flight Operations team set the spacecraft on an ~80-day drift journey to bring it to its new position.

“Preparations for this complex project started back in October 2015,” EUMETSAT MSG Indian Ocean Data Service Project Manager Flavio Murolo said.

“The drift orbit to bring Meteosat-8 over to 41.5°E was carefully chosen to save fuel and to keep a safe distance from other satellites throughout the relocation.

“During the drift, a number of tests were carried out on the satellite’s instruments and the complete validation test campaign for the new service will be carried out now that the spacecraft has reached its destination. This will include about two months of parallel operations with Meteosat-7, with data dissemination to users.

“The results of the service validation tests will be reviewed and a formal Operational Readiness Review will be held before Meteosat-8 begins its IODC operational service early next year.

“The start of the operations of Meteosat-8 over the Indian Ocean region will mark an important change for the services provided to users because it is a transition from the first to the second generation Meteosat satellites.

“This transition will significantly improve the service, offering a wider suite of products, more observation channels, an enhanced image spatial resolution and more frequent imaging.”

Two manoeuvres, conducted 12 hours apart, were required to stop the Meteosat-8 drift.

Most everybody has been there: you’ve decided to quit your job and now you have to inform your employer that you’re leaving. So what is the best way to resign?

Turns out, there are generally seven ways in which people quit their jobs, and there are two key factors that determine whether a person resigns in a positive way or in a way that could have damaging consequences for the business, new research from Oregon State University shows.

Those predictors are whether an employee feels they are being treated fairly at work, and whether they feel they are respected by their boss, said Anthony Klotz, an assistant professor in the College of Business at OSU and lead author of the paper. Those who feel they are respected and treated fairly are more likely to resign in a positive manner.

“As an employee, you are pretty powerless for much of your work life, until you decide to quit,” he said. “That is the one time you feel empowered and have a chance to even the score if you feel like you’ve been treated badly.”

Employee resignations are part of doing business; in the U.S. and western Europe, resignation rates run about 10 percent per year, while in parts of Asia, they can be much higher. But there is little known about how employees go about quitting their jobs, and what the implications of their resignations may have for the company, good or bad.

“There is a lot of research about why people quit their jobs. But very little is known about how people quit,” Klotz said. “Employers as well as employees want to know what the right way is.”

Klotz and his co-author, Mark Bolino of the University of Oklahoma, set out to learn more about how employees quit their jobs and the consequences of their choices when doing so. Their findings were published recently in the Journal of Applied Psychology. The study was supported by the Society for Human Resource Management Foundation.

Through a series of studies, including interviews with employees and employers, the researchers found that generally, employees quit in one of seven ways:

• By the book: These resignations involve a face-to-face meeting with one’s manager to announce the resignation, a standard notice period, and an explanation of the reason for quitting.
• Perfunctory: These resignations are similar to “by the book” resignations, except the meeting tends to be shorter and the reason for quitting is not provided.
• Grateful goodbye: Employees express gratitude toward their employer and often offer to help with the transition period.
• In the loop: In these resignations, employees typically confide in their manager that they are contemplating quitting, or are looking for another job, before formally resigning.
• Avoidant: This occurs when employees let other employees such as peers, mentors, or human resources representatives know that they plan to leave rather than giving notice to their immediate boss.
• Bridge burning: In this resignation style, employees seek to harm the organization or its members on their way out the door, often through verbal assaults.
• Impulsive quitting: Some employees simply walk off the job, never to return or communicate with their employer again. This can leave the organization in quite a lurch, given it is the only style in which no notice is provided.

The by the book and perfunctory resignations are the most common, but roughly one in 10 employees quits in bridge-burning style. Avoidant, bridge burning and impulsive quitting are seen as potentially harmful resignation styles for employers.

In addition, the researchers found that managers were particularly frustrated by employees who resigned using bridge burning, avoidant or perfunctory styles, so employees who want to leave on good terms should avoid those styles, Klotz said.

The study findings also indicated that managers responded the least negatively to resignations when employees kept them “in the loop” and when employees followed organizational policies regarding resignation. Quitting in these more positive styles is a good idea for employees who want a positive recommendation from a former supervisor or may consider returning to that company one day.

The managers’ attitudes toward the perfunctory resignation was a bit surprising, he said, and seemed to be rooted in the fact that employees using that style did not provide reasons for their decisions to resign.

Each resignation situation is unique to that employee and their relationship to the company, Klotz noted, so the best way to resign at one company may not be the best way to resign at another. But companies would be well-served to review their employee handbooks and update their formal resignation policies to reflect best practices for current company needs, he said.

Understanding why employees quit in the ways they do is particularly important for companies that could suffer if an employee uses his or her departure as an opportunity to damage the company’s reputation or create other problems, Klotz said.

“Turnover is common, it’s expensive, it’s disruptive and it can be contagious,” he said. “But this damage is mitigated when employees resign in a positive manner. So to the extent you can, as an employer, you want to have employees resign in a positive manner.”

Companies also should consider monitoring how employees quit for potential signs of management issues. If a number of employees quit in a negative way, that could be a sign of a poor supervisor or other problems with company treatment of employees, he said.

Klotz said he would also like to further study the “lame duck period,” between the time an employee gives notice to their last day on the job, to better understand what happens during that period.

“Is it better to just say ‘see ya’ and pay the employee’s salary for two weeks, or is it better to have the person stay for a transition period such as training their replacement?” Klotz said. “It’s often a very weird time for the employer and the employee.”

Oregon Senators Jeff Merkley and Ron Wyden on Friday welcomed news that Wells Fargo CEO John Stumpf has stepped down from the Federal Reserve’s Federal Advisory Council.

On Thursday, Merkley and Wyden had joined colleagues in calling on the Federal Reserve Bank of San Francisco’s Board of Directors not to reappoint Stumpf to another term on the Council. The Council is responsible for consulting with and offering direct insight to the Board of Governors of the Federal Reserve System on a broad range of issues related to the banking system.

The Senators made their call in a letter that was also signed by Senators Angus King (I-ME), Elizabeth Warren (D-MA), and Maria Cantwell (D-WA). The letter came after revelations that Wells Fargo, under Stumpf’s leadership, opened roughly two million checking and credit accounts without the knowledge of their customers.

“The leader of a bank responsible for creating millions of fraudulent accounts has no business on an advisory panel that gives input on many important consumer protection issues,” said Merkley. “Mr. Stumpf’s resignation from this council is a good first step—now he should take further steps to truly take full responsibility for this debacle.”

“The shocking revelations about how millions of Americans were defrauded on Mr. Stumpf’s watch clearly disqualified him from continuing to serve on this key advisory council,” Wyden said. “While I am gratified that he has resigned this position, there is obviously much more he needs to do before his bank can regain the full confidence of consumers.”

The complete text of yesterday’s letter can be read below:

  September 22, 2016

Roy A. Vallee

Chairman of the Board, San Francisco Board of Directors

Federal Reserve Bank of San Francisco

101 Market Street

San Francisco, CA 94105

Dear Chairman Vallee:

Given the importance of emphasizing both personal accountability at the senior management level and a healthier internal banking culture in the aftermath of the serious problems that provoked allegations of fraudulent activities at Wells Fargo, we write to urge you and the San Francisco Board of Directors not to reappoint John Stumpf to the Federal Advisory Council for a third one-year term in January 2017.

As you are well aware, the twelve members of the Federal Advisory Council are chosen by the Reserve Banks to represent the twelve Federal Reserve Districts at the Federal Reserve Board. The Council normally meets four times a year, and each member typically serves three one-year terms. Section 12 of the Federal Reserve Act grants the Council power to consult directly with the Board of Governors of the Federal Reserve System on a broad range of economic, monetary, and financial issues. Members are asked for individual insights into regional trends as well as recommendations in regard to key decisions made by the central and Reserve Banks.

It would be ironic if the Federal Reserve, a key federal banking regulator tasked in part with ensuring the fair and equitable treatment of consumers in financial transactions, continued to receive special insights and recommendations from senior management of a financial institution that just paid a record-breaking fine to the Consumer Financial Protection Bureau for “unfair” and “abusive” practices that placed consumers at financial risk.

We do not wish to suggest that declining to reappoint Mr. Stumpf to a customary third term on the advisory council is the single corrective action to right all wrongs in this situation. Far from it. United States Senators both on and off the Banking Committee have publicly offered stronger tools for enhanced accountability, including recouping compensation from senior management. To overlook this option, however, would represent a failure on our part to review and identify all measures available to hold Mr. Stumpf personally accountable for the misconduct that took place on his watch. Perhaps even more distressing, it would leave a corporate voice that has admitted to betraying customer’s trust on a powerful and reputable federal advisory body. This must and can be rectified.

Please be advised that this situation may offer lessons for Congress should it seek to improve, through legislation, the membership of the Federal Advisory Council and similar advisory bodies at other federal banking regulators.

In closing, we appreciate your consideration of our suggestion as you prepare to reappoint a member to the Federal Advisory Council in January 2017.

In cities, mobility is crucial. Ensuring the distribution of people, goods and services, transportation is essential to cities’ social and economic development.

As cities grow, the demand for mobility escalates. This stresses existing urban transport systems and infrastructures, exacerbates widespread traffic, and increases road accidents and fatalities. It also increases greenhouse gas emissions and other pollution, causing serious health concerns and grave environmental repercussions.

How can current systems cope with the rising demand for urban mobility? How can legislators and city planners around the world develop strategies to enhance sustainable, integrated urban transportation systems? In short, what is the future of urban mobility?

Cities and Mobility and Transportation aims to answer these questions. Part of a new series called “IESE Cities in Motion: International Urban Best Practices” by Professors Pascual Berrone and Joan Enric Ricart and researcher Ana Isabel Duch T-Figueras, the book:

• analyzes the main urban mobility and transportation trends and challenges
• compiles international best practices on sustainable urban mobility
• serves as a tool to help city managers and policymakers solve urban mobility challenges and improve accessibility for the benefit of all.

Four Levers for Sustainable Urban Mobility

The IESE Cities in Motion book series defines a framework for analyzing how cities can enact groundbreaking transformations using four main levers of change: technology, public policy, consumer behavior and infrastructure design.

1. New applied technologies and innovations are playing a critical role in delivering urban mobility solutions. For example, smartphones and mobility apps are facilitating on-demand services and increasing choices: users can use their phones to check traffic conditions, plan routes or simply see when their bus is coming.

“Smart parking programs” provide another example. Although “parking” might seem odd in a discussion of mobility, the issue is, in fact, critical: up to 30 percent of drivers in smog-breeding downtown traffic are in search of a spot to stop.

San Francisco’s SFpark program counters this problem by using smart parking meters to collect and distribute real-time information about available parking spaces. Drivers can use their phones to access this information and even to “feed the meters,” which adapt pricing to meet demand. As a result of the program, parking time fell nearly by half, greenhouse gas emissions by a third, and, remarkably, even meter prices fell slightly. The takeaway: with smart transportation solutions, everybody wins.

2. Policies, legislations and regulations can make an impact by incentivizing mass transit options, creating new alternatives and/or regulating the use of cars.

Stockholm provides a clear success story. In 2006 the Swedish capital decided to fight rush-hour smog by charging vehicles entering or leaving the inner city. As a result, greenhouse gas emissions fell 10-14 percent, traffic was reduced by up to 50 percent and transportation fatalities continue to drop, falling nearly 60 percent between 2011 and 2013 alone. Through its combined sustainable transportation initiatives, Stockholm achieved a total greenhouse-gas-emission drop of 25-35 percent — while the economy grew by 41 percent.

3. Change in people’s behavior and preferences. Increasingly conscious of the environmental impact of their choices, people are changing their mobility preferences. The availability of a wider range of choices is also changing the way that people get around.

This is illustrated by the recent surge in bike-sharing programs, which have grown to include more than one million bicycles globally. The Chinese city of Hangzhou, home to some eight million people, operates the world’s second-largest program. Hangzhou’s 65,000+ bikes complete around a quarter of a million trips per day, attracting commuters, car-owners and public-transport-users alike. Emissions have dropped and the system enjoys the highest satisfaction rate of all the city’s development projects: 80 percent. Once again, a win-win.

4. Infrastructure and urban planning are clearly key in shaping cities’ mobility systems, since the way cities are designed will help determine what kind of transport will be used. For example, sprawling cities may opt for a Bus Rapid Transit (BRT) system as a cost-effective alternative to digging metro tunnels or installing light rail.

Pioneered in 1974 by forward-thinking urban planners in Curitiba, Brazil, BRT systems serve as a kind of surface subway, with high-level planning for efficiency. As of June 2016, BRT systems spread to service 204 cities across six continents, transporting around 33 million passengers every day.

Johannesburg’s BRT system, founded in 2009 on occasion of the FIFA World Cup, transports between 40,000-60,000 passengers per day. As well as reducing annual greenhouse gas emissions by 40,000 metric tons, the system is estimated to be delivering economic returns of close to $900 million. Furthermore, the BRT has significantly increased access to underserved areas — a vital task in a city still living under the legacy of apartheid.

At the end of the day, better connected — and more accessible — cities increase people’s wellbeing. The alternative? If left unchecked, current emissions patterns will lead to widespread devastation.

However, the authors are optimistic. They note that current trends in mobility and transportation indicate an important paradigm shift which, if driven by considerable political vision, strategic thinking, and investments, promises to deliver significant improvements. Now it’s time to set those wheels in motion.

Muslims are not allowed to vote for non-Muslims in upcoming elections said a decree issued by a group of senior politicians and conservative Islamic groups who met at a mosque in Jakarta on Sept. 18.

The decree forbidding Muslims voting for a ‘non-believer’ was made ahead of next year’s guber­natorial (governor) elections and is being seen as a way to counter the re-election hopes of current governor of Jakarta, Basuki “Ahok” Tjahaja Purnama, who is a Christian, and ethnic Chinese Indonesian.

Political analyst and pollster Djayadi Hanan, told The Australian that Indonesia is currently fertile ground for identity politics.

“Ahok is a double minority — he is ethnically Chinese and he is a non-Muslim, and people can be rallied around those issues,” Hanan said.

“According to our surveys, around 45 percent of Jakarta’s Muslims agree Muslims should not be led by non-Muslims,” he said.

More than 80 percent of Jakarta’s voters are Muslims, said the report which added that the decree was spurned by Indonesia’s second-largest Muslim organization, Muhammadiyah.

The Metropolitan Museum of Art in New York City will open an exhibition this weekend, “Jerusalem: 1000-1400: Every People Under Heaven.” For the most part, it promises to be an excellent presentation featuring 200 pieces from many international collections. Judaism, Christianity, and Islam, of course, have historical roots in Jerusalem.

There is one part of the exhibition, “Holy War and the Power of Art,” that appears problematic. Holland Cotter of the New York Times offers a familiar interpretation of the medieval world that touches on this theme: he states that in the 11th century, it was not a good time for Muslims or Jews.

“In Europe in 1095,” he writes, “Pope Urban II put out the call for Christians to liberate Jerusalem from people ‘absolutely alien to God.’ Accordingly, in 1099, Crusader armies showed up at the gates and began an ethnic and religious cleansing. They slaughtered Muslims, burned Jews alive in synagogues and cut down Christians who happened to cross their path.”

Cotter’s account cannot go unanswered. Misinformation—mistake of facts—and disinformation—deliberate distortion of facts—are commonly employed in discussions about the Crusades, and this exhibit at the Met is bound to whet the appetite of others who have been drinking the moonshine of the Black Legends.

There are two points of contention: Why the Crusades were launched and who mistreated Jews.

Few know this subject better than Princeton scholar Bernard Lewis. “The Crusade was a delayed response to the jihad, the holy war for Islam, and its purpose was to recover by war what had been lost by war—to free the holy places of Christendom and open them once again, without impediment, to Christian pilgrimage.”

Thomas F. Madden is professor of history and director of the Center for Medieval and Renaissance Studies at St. Louis University. He is an expert on the Crusades. Here are some of his observations.

• “Christians in the eleventh century were not paranoid fanatics. Muslims really were gunning for them. While Muslims can be peaceful, Islam was born in war and grew the same way. From the time of Muhammad, the means of Muslim expansion was always the sword.”
• “Pope Urban II called upon the knights of Christendom to push back the conquests of Islam at the Council of Clermont in 1095.”
• “Urban II gave the Crusaders two goals, both of which would remain central to the eastern Crusades for centuries. The first was to rescue the Christians of the East…The second goal was the liberation of Jerusalem and the other places made holy by the life of Christ.”

Jewish author Dennis Prager is exactly right when he says that the Crusades were “wars to retake territories in the Holy Land that Muslims had forcefully taken from Christians.”

What about the way Jews were treated? Prager admits that “the wholesale massacre of Jews in Germany by various Crusaders” took place. “For the record, however, in no instances did the Church order these killings and in almost every case Jews sought and received aid and support from local bishops.”

Sociologist Rodney Stark, who has written extensively on this subject, offers the specifics (see his book, God’s Battalions: The Case for the Crusades, especially pp. 125-127, from which the following is taken):

“Emicho of Leisingen was a minor Rhineland count who responded to the pope’s call to crusade by assembling a small army of German knights,” writes Stark. He then explains how the bishops reacted when they learned about Emicho’s plans.

• The bishop of Speyer “took the local Jews under his protection, and Emicho’s forces could lay their hands on only a dozen Jews who had somehow failed to heed the bishop’s alarm. All twelve were killed.”
• “Then Emicho led his forces to Worms. Here, too, the bishop took the local Jews into his palace for protection. But this time Emicho would have none of that: his forces broke down the bishop’s gates and killed about five hundred Jews.”
• “The pattern was repeated the next week in Mainz. Here, too, the bishop attempted to shield the Jews but was attacked and forced to flee for his life.”
• “The same again in Cologne, and again in Metz.”

Stark then quotes the distinguished historian of anti-Semitism, Léon Poliakov: “It is important to note that almost everywhere…bishops attempted, sometimes even at the peril of their own lives, to protect the Jews.”

Stark also quotes Madden who wrote that the pope “harshly condemned” all of these attacks, “but there was little more he could do.”

Furthermore, when Emicho ran up against the Hungarian knights, he more than met his match—he was creamed. The noted English historian, Sir Steven Runciman, said these defeats struck “most good Christians” as “punishments meted out from on high to the murderers of Jews.”

Last December, the New York Times ran a splendid op-ed piece by Sara Lipton, professor of history at the State University of New York, Stony Brook, and author of Dark Mirror: The Medieval Origins of Anti-Jewish Iconography. Here is what she said about this period in history:

“Hundreds, perhaps thousands, of Jews were massacred in towns where they had peacefully resided for generations. At no point did Christian authorities promote or consent to the violence. Christian theology, which applied the Psalm verses ‘Slay them not’ to Jews, and insisted that Jews were not to be killed for their religion, had not changed.”

Art critics such as Holland Cotter are not expected to be experts on the Crusades. But when they set themselves up as an authority, those who know better have every right to take them down.

For 16 years, in a scene out of pre-industrial America, Thabo Molubi and his partner made furniture in South Africa’s outback, known locally as the “veld.” Lacking even a stream to turn a water wheel and machinery, they depended solely on hand and foot power. But then an electrical line reached the area.

The two installed lights, and power saws and drills. Their productivity increased fourfold. They hired local workers to make, sell and ship more tables and chairs, of better quality, at higher prices, to local and far away customers. Workers had more money to spend, thereby benefitting still more families.

Living standards climbed, as families bought lights, refrigerators, televisions, computers and other technologies that many Americans and Europeans simply take for granted. The community was propelled into the modern era, entrepreneurial spirits were unleashed, new businesses opened, and newly employed and connected families joined the global economy.

People benefited even on the very edge of the newly electrified area. Bheki Vilakazi opened a small shop so people could charge their cell phones before heading into the veld, where rapid communication can mean life or death in the event of an accident, automobile breakdown or encounter with wild animals.

Two hundred miles away, near Tzaneen, other South African entrepreneurs realized their soil and tropical climate produced superb bananas. After their rural area got electricity, they launched the Du Roi Nursery and banana cloning laboratory, where scientists develop superior quality, disease-free seedlings that are placed in gel in sealed containers and shipped all over Africa and other parts of the world.

Educated in a rural school only through tenth grade, Jane Ramothwala was a hotel maid before becoming a general nursery worker with the company. Over the ensuing decades, she worked hard to learn every facet of business operations, taught herself English, and took adult training and education courses – eventually attaining the position of manager for the company’s plant laboratory.

She now earns five times more than she did previously. During that time, the lab grew from 800,000 plants to 10 million, and today the laboratory, nursery and shipment center provide employment for several college graduates and 45 workers with limited educations. Their lives have been transformed, many have built modern homes, and their children have far brighter futures than anyone could have dreamed of a mere generation ago.

Access to electricity, Jane says, “has had a huge impact on the quality of life for many families in rural parts of Limpopo Province.” It has improved her and her neighbors’ lifestyles, learning opportunities and access to information many times over.

These scenes are being repeated all around the world, from Nigeria and Kenya, to Chile, Peru, China, India, Indonesia and dozens of other countries. Thousands of other communities, millions of other families, want the same opportunities. But for now many must continue to live without electricity, or have it only sporadically and unpredictably a few hours each week.

Across the globe, nearly three billion people – almost half the world’s population – still lack regular, reliable electricity. Nearly 1.3 billion people have no access to electricity.

In sub-Saharan Africa, over 600 million people – almost twice the population of the United States, and 70% of the region’s population – still have no or only limited, sporadic electricity. Over 80% of its inhabitants still relies on wood, dung and charcoal fires for most or all of their heating and cooking needs, resulting in extensive smoke and pollution in their homes and villages.

In India, more than 300 million people (almost as many as in Mexico and the United States) still have no electricity at all; tens of millions more have it only a few hours a day.

Countless people in these communities live in abject poverty, often on just a few dollars a day. Sub-Saharan Africa’s per capita income is roughly $1 per day, Zambia-born economist Dambisa Moyo writes, giving it the highest proportion of poor families in the world.

Mothers in these communities spend hours every day bent over open fires, their babies strapped on their backs, breathing poisonous fumes day after day. Many are struck down by debilitating and often fatal lung diseases. Their homes, schools, shops, clinics and hospitals lack the most rudimentary electricity-based technologies: lights, refrigerators, radios, televisions, computers and safe running water.

Their mud-and-thatch, cinderblock and other traditional houses allow flies and mosquitoes to zoom in, feast on human blood, and infect victims with malaria and other killer diseases. Women and children must walk miles, carrying untreated water that swarms with bacteria and parasites that cause cholera, diarrhea and river blindness. Unrefrigerated food spoils rapidly, causing still more intestinal diseases.

Hundreds of millions get horribly sick and five million die every year from lung and intestinal diseases, due to breathing smoke from open fires and not having refrigeration, clean water and safe food.

When the sun goes down, their lives largely shut down, except to the extent that they can work or study by candlelight, flashlight or kerosene lamp.

The environmental costs are equally high. Rwanda’s gorilla habitats are being turned into charcoal, to fuel cooking fires. In Zambia and elsewhere, entrepreneurs harvest trees by the thousands along highways, turning forest habitats into grasslands, and selling logs to motorists heading back to their non-electrified homes in rural areas and even large sections of cities.

As quickly as rich-country charities hold plant-a-tree fund raisers, people around the world cut trees for essential cooking and heating.

Unless reliable, affordable electricity comes, it will be like this for decades to come. Little by little, acre by acre, forest habitats will become grasslands, or simply be swept away by rains and winds. And people will remain trapped by poverty, misery, disease and premature death.

That unsustainable human and ecological destruction can be reversed, just as it was in the United States. A vital part of the solution is power plants that come equipped with steadily improving pollution controls – and burn coal or natural gas that packs hundreds of times more energy per pound than wood or dung or plant-based biofuels.

“Access to the benefits that come with ample energy trumps concerns about their tiny contribution of greenhouse gas emissions,” New York Times columnist Andrew Revkin observed in his DotEarth blog. Africa sits on vast deposits of coal, natural gas and liquid condensates that are largely ignored or simply burned as unwanted byproducts, as companies produce crude oil. Can someone find a business model that can lead to capturing, instead of flaring, those “orphan fuels,” he wondered.

Ultimately, the energy, environmental, climate change and economic debate is about two things:

Whether the world’s poor will take their rightful places among the Earth’s healthy and prosperous people – or must give up their hopes and dreams, because of misplaced health and environmental concerns.

And whether poor countries, communities and families will determine their own futures – or the decisions will be made for them by politicians and activists who use phony environmental disaster claims to justify treaties, laws, regulations and policies that limit or deny access to dependable, affordable electricity and other modern, life-saving technologies … thereby perpetuating poverty, disease and premature death.

(Civil.Ge) — Low-cost airline operator Wizz Air announced on September 23 about opening a base at the Kutaisi airport and adding seven new routes, now offering total of 11 low-fare routes to eight countries from Kutaisi.

The airline has based one of its new Airbus A320 aircraft at the David the Builder International Airport in Kutaisi.

New destinations from Kutaisi include Berlin, Dortmund and Memmingen (about 100km from Munich) in Germany; Larnaca in Cyprus; Milan in Italy; Sofia in Bulgaria, and Thessaloniki in Greece.

Wizz Air said that the base establishment represents an investment of USD 98 million (cost of A320 aircraft) by the airline operator in Kutaisi, creating 36 direct jobs with the airline.

Wizz Air, which launched flights to and from Kutaisi in 2012, was operating four routes (Budapest, Katowice, Vilnius and Warsaw) before adding new destinations.

“We put Kutaisi on the map of aviation in 2012 and since then we have carried over 600,000 passengers on our low fare routes, stimulating the local tourism and aviation industries and strengthening business relations between Georgia and the rest of Europe,” Owain Jones, Chief Corporate Officer of Wizz Air, said.

Recently, Japan’s second quarter GDP growth was revised up to 0.7 percent, after four consecutive quarters of stagnation. But don’t set your hopes too high.

More than three years ago, the conservative caution of the Bank of Japan (BOJ) Governor Masaaki Shirakawa faded into history as his successor Haruhiko Kuroda pledged to do “whatever it takes” to achieve the 2 percent inflation target. Yet, today inflation remains close to zero and Japan’s stock market is down 13 percent.

Irrespective of the outcome of its recent meeting, the BOJ can only postpone the inevitable. Nevertheless, cyclical fluctuations in Japan or elsewhere will in no way mitigate secular challenges.

Failure of monetary gamble

Under Kuroda, the BOJ has boosted quantitative and qualitative easing with negative interest rate policy. Base money and the central bank’s holdings of Japanese government bonds (JGBs) each have swollen to almost ￥400 trillion ($3.9 trillion), which is now 80 percent of the country’s GDP, and they continue to expand at a pace of￥80 trillion ($780 billion) annually.

What Kuroda is doing would be comparable to Fed chief Janet Yellen boosting base money and the Fed’s treasuries up to $14.9 trillion, while easing at $3 trillion per year, with no specific limit in sight. In Washington, that would mean an economic kamikaze and political suicide. Until recently, Japan was a different story.

Now divisions are spreading in the BOJ. Kuroda’s fractured majority is sticking with the original plan of large-scale JGBS and negative rates to boost growth and inflation. However, some advocate greater flexibility – ￥70 trillion to ￥90 trillion per year – in purchases, hoping that would make a difference. In contrast, skeptics would like to curb the BOJ’s purchases, even at the risk of perceptions of tightening, rising yen and plunging markets.

Nonetheless, all three seem to believe that Japan’s fortunes can be reversed by monetary policies alone and that these policies are not part of the problem.

Failure of Abenomics

In December 2013, when the Liberal Democratic Party returned to leadership with Abe as its minister, the LDP campaigned on renewed fiscal stimulus, aggressive monetary easing from the BOJ, structural reforms to boost competitiveness and eventual fiscal consolidation. The devaluation of the yen, critical to Japanese exporters, was the tacit denominator of the proposed changes.

In addition to a huge liquidity risk, Tokyo took another risk in timing, as I argued then. It sought to implement the fiscal stimulus in 2013, while fiscal consolidation would follow. Obviously, unease increased in 2014. As Abe went ahead with the sales tax hike that spring, the recovery was too fragile for consolidation. Instead of strong expansion, Japan slid into recession and began its third lost decade.

Ironically, the yen continues to rise, thanks to stagnation in the West and the dated perception that yen remains a safe haven currency.

Last summer, the International Monetary Fund (IMF) finally acknowledged Abenomics is not working. “The targets for growth, inflation, and the primary balance remain out of reach under current policies,” it reported. As Tokyo’s policy authorities recognized the risks, they have delayed the proposed consumption tax hike, adopted new structural reforms and a negative interest policy.

Yet, outlook remains weak with real GDP growth less than 1 percent until early 2020s. Meanwhile, time is running out.

Hitting the ceiling

If the BOJ will continue to purchase JGB debt, it will own almost half of all JGPs outstanding by fall 2017. That would leave another half the JGBs available for the BOJ to buy. Yet, banks need some JGBs for collateral, while insurers must have their long-term JGBs. So a year ago, even the IMF had to conclude that the BOJ would hit its JGB purchase ceiling “sometime in 2017 or 2018.”

Now there is the additional challenge of the flat yield curve. After the BOJ’s negative rates in January, the JGB curve has flattened drastically. Coupled with low rates, persistently flatter yield curves are likely to weaken financial intermediation and penalize banks, insurers and pension funds, reducing their risk-taking.

Worse, Kuroda’s monetary gamble does not only involve bond markets, but equities as well. Under its stimulus plan, the BOJ buys 3 trillion yen ($29 billion) of exchange-traded funds (ETF) annually. In spring, these purchases made it a top-10 holder in about 90 percent of all Japanese stocks, according to Bloomberg data. In late July the BOJ doubled its ETF buys to 6 trillion yen ($59 billion) per year.

It could become the No 1 shareholder in some 40 Nikkei 225 companies by early 2018.

In the next few years, the BOJ could not only own most of the Japanese bond market, but virtually most Japanese stocks; even as Japan’s gross debt will exceed 250 percent of its GDP. It is a disastrous path.

The selloff twist

Usually, political opposition can undermine failed economic policies. Yet, Japan’s main opposition Democratic Party has been struggling since it lost to Abe in 2012. In turn, Emperor Akihito has even sought to abdicate the throne in his lifetime to prevent Abe from reviving the pre-war Imperial Japan.
If countervailing forces linger in domestic economy and politics, even internationally, market volatility is a different story.

Since the summer, Japan has been suffering from a bond tantrum as its sovereign debt has had its worst rout in a decade. Some expect the BOJ next to pursue a reverse “Operation Twist.” It could sell long-end bonds, while buying the short-end to make the easing more sustainable over time. But as trillions in long-dated JGBs continue to carry negative yields, an abrupt withdrawal from the long-end could roil the market.

Japan remains the world’s third-largest economy and the second-largest debt market. Moreover, correlations among major markets have increased significantly since 2008. A perceived policy reversal could unleash a dramatic selloff in JGBs, while global fixed-income markets would not remain immune.
If that selloff will not ensue in the fall or 2017-18, it will only grow into a more devastating market tsunami over time.

A slightly shorter original version was released by South China Morning Post on September 21, 2016

Shree Umiya Mataji Mandir has reportedly been established in Foxboro (Massachusetts).

According to reports, the Sanskar Culture Society bought an industrial building for $4.1 million and then converted it into the temple, which opens daily and caters to about two hundred families in the region.

This temple aims to provide “an outlet for cultural, educational, social, religious & spiritual needs” of the community members; keep the culture alive and guide the youth. It plans to offers Gujarati and Hindi language classes, activities for youth and seniors and volunteers for the community activities.

Hindu statesman Rajan Zed, in a statement in Nevada today, commended efforts of temple leaders and area community for realizing this Hindu temple.

Rajan Zed, who is President of Universal Society of Hinduism, further said that it was important to pass on Hindu spirituality, concepts and traditions to coming generations amidst so many distractions in the consumerist society and hoped that this temple would help in this direction. Zed stressed that instead of running after materialism; we should focus on inner search and realization of Self and work towards achieving moksh (liberation), which was the goal of Hinduism.

Kaushik D Patel is the president, while Harshad Patel and Vijaykumar Patel are vice presidents. Raj is the priest. All are welcome to this temple.

Umiya Mataji is described as “mother goddess of the universe” on its website. There is a Shree Umiya Mataji Mandir in Macon (Georgia, USA) and Shri Umiya Mataji Sansthan in Unjha (Mehsana district, Gujarat, India).

Mexico is one of the largest producers of petroleum and other liquids in the world, the fourth-largest producer in the Americas after the United States, Canada, and Brazil, and an important partner in U.S. energy trade. In 2014, Mexico accounted for 781,000 b/d, or 11% of U.S. crude oil imports.

Mexico’s oil production has steadily decreased since 2005 as a result of natural production declines from Cantarell and other large offshore fields. The rate of total production decline has slowed in the past several years. In December 2013, in an effort to address the declines of its domestic oil production, the Mexican government enacted constitutional reforms that ended the 75-year monopoly of Petroleós Mexicanos (PEMEX), the state-owned oil company.

Oil is a crucial component of Mexico’s economy. The oil sector generated 11% of the country’s export earnings in 2014, a proportion that has declined over the past decade, according to Mexico’s central bank.¹ More significantly, earnings from the oil industry (including taxes and direct payments from PEMEX) account for one-third of total government spending.² The 2015 federal budget was based on Mexican crude oil being valued at $79 per barrel, although Mexican Maya crude oil averaged less than $50 per barrel through the first seven months of 2015.^3,4 Declines in oil production have a direct impact on the country’s economic output and on the government’s fiscal health, particularly as refined petroleum product consumption and import needs grow.

Mexico’s total energy consumption in 2014 consisted mostly of petroleum (45%), followed by natural gas (40%). Natural gas is increasingly replacing oil in electric power generation. However, because Mexico is a net importer of natural gas, higher levels of natural gas consumption will likely depend on more pipeline imports from the United States or liquefied natural gas (LNG) imports from other countries. All other fuel types contribute relatively small amounts to Mexico’s overall energy mix. The country also has growing geothermal and wind energy capacity for electricity generation.

Petroleum and other liquids

Mexico’s oil production has declined in recent years, as has its position as a net oil exporter to the United States.

Mexico produced an average of 2.8 million barrels per day (b/d) of petroleum and other liquids during 2014. Crude oil accounted for 2.4 million b/d, or 87% of total output, with the remainder attributable to lease condensate, natural gas liquids, and refinery processing gain. Mexico’s total oil production had been declining substantially, 27% from its peak in 2004. Notably, crude oil production in 2014 was at its lowest level since 1986 and has continued to decline thus far in 2015. Mexico is a significant crude oil exporter, the third largest in the Americas, but the country is a net importer of refined petroleum products. Mexico’s largest trading partner is the United States, which is the destination for most of its crude oil exports and the source of most of its refined product imports. More information on Mexico’s oil production in the context of production in the Americas can be found in the U.S. Energy Information Administration (EIA) report on Liquid Fuels and Natural Gas in the Americas.

Sector organization and reforms

Mexico nationalized its oil sector in 1938, and PEMEX was created as the sole oil operator in the country. PEMEX is the largest company in Mexico and one of the largest oil companies in the world. Mexico’s energy sector is regulated by the Secretaría de Energía (SENER). Comisión Nacional de Hidrocarburos (CNH) provides additional oversight of PEMEX and its oil and natural gas activities.

After years of declining production, Mexico instituted significant energy reforms. In December 2013, the Mexican government enacted constitutional reforms ending PEMEX’s monopoly on the oil and natural gas sector and opening the industry to greater foreign investment. The reforms allow for new exploration and production contract models: licenses, production-sharing, profit-sharing, and service contracts. Previously, only service contracts, in which companies were paid for services and were not allowed shares or profits derived from the hydrocarbon resources, were allowed for foreign firms.

PEMEX will remain state-owned, but it will be given more budgetary and administrative autonomy and will have to compete for bids with other firms on new projects. As stipulated by the reforms, PEMEX was allowed first refusal on developing Mexican resources before private companies began bidding. This phase was known as Round Zero and resulted in PEMEX being awarded the right to develop 83% of the country’s proved and probable oil reserves.⁵The reforms also call for expanding the regulatory authorities of SENER and CNH, and for creating a new environmental protection agency, the Agencia de Seguridad, Energía y Ambiente (ASEA).

In July 2015, the first auction phase of Round One offered 14 offshore blocks for exploration and production to private investors. Because of low crude oil prices and the terms of the contracts, only 2 of the 14 blocks received adequate bids to be awarded. A consortium of three companies, Sierra Oil & Gas, Talos Energy, and Premier Oil, was awarded the second and seventh block of the auction.⁶ Subsequent phases of Round One were postponed as CNH adjusted rules surrounding the auctions to promote more bidding on the offerings. The fourth phase of Round One includes the lucrative deepwater blocks and is expected to draw more attention from the major international oil companies. The fifth phase of bidding, which offers shale and other nonconventional tenders has been suspended.

Reserves

According to the Oil & Gas Journal (OGJ), Mexico had 9.8 billion barrels of proved oil reserves as of the end of 2014. Most reserves consist of heavy crude oil varieties, with the largest concentration occurring offshore of the southern part of the country, particularly the Campeche Basin. There are also sizable reserves in onshore basins in the northern parts of Mexico.

Exploration and production

Most of Mexico’s oil production occurs off the eastern coast of the Bay of Campeche in the Gulf of Mexico, near the states of Veracruz, Tabasco, and Campeche. The two main production centers in the area are Cantarell and Ku-Maloob-Zaap (KMZ). In total, approximately 1.8 million b/d—or three-quarters—of Mexico’s crude oil is produced offshore in the Bay of Campeche. Because of the concentration of Mexico’s oil production offshore, tropical storms or hurricanes passing through the area can disrupt oil operations.

OffshoreMore than half of Mexico’s oil production comes from two offshore fields in the northeastern region of the Bay of Campeche—Ku-Maloob-Zaap (KMZ) and Cantarell. Another important source of oil production is southwest in the same bay, offshore the state of Tabasco. Most of the oil produced at KMZ and Cantarell is heavy and marketed as Maya blend, while the oil produced offshore Tabasco is a lighter grade.

Cantarell was once one of the largest oil fields in the world, but its output has been declining significantly for a decade. Production at Cantarell began in 1979, but stagnated as a result of falling reservoir pressure. In 1997, PEMEX developed a plan to reverse the field’s decline by injecting nitrogen into the reservoir to maintain pressure, which was successful for a few years. However, production resumed a rapid decline beginning in the middle of the past decade—initially at extremely rapid rates, and more gradually in recent years. In 2014, Cantarell produced an average of 322,000 b/d of crude oil, which was about 85% below the peak production level of 2.1 million b/d reached in 2004.⁷ As production at the field has declined, so has its relative contribution to Mexico’s oil sector. Cantarell accounted for 13% of Mexico’s total crude oil production in 2014, compared with 63% in 2004.⁸

KMZ, which is adjacent to Cantarell, has emerged as Mexico’s most prolific oil field. Crude oil production nearly tripled between 2004 and 2013, when it reached 864,000 b/d, as PEMEX used a nitrogen reinjection program similar to that used at Cantarell. PEMEX hopes to increase output further over the next few years, in part through the development of the anticipated 150,000 b/d Ayatsil satellite field, although views differ about whether the KMZ complex has already reached peak production.

Mexico’s other offshore oil production center is in the southwest in the Bay of Campeche, near the state of Tabasco. In that bay, the Abkatun-Pol-Chuc and Litoral de Tabasco projects, each consisting of several small fields, accounted for a combined 620,000 b/d of oil production in 2014.⁹ The production trajectories of the two oil field complexes differ considerably. Output from Litoral de Tabasco has increased from less than 200,000 b/d in 2008 to 320,000 b/d in 2014, offsetting some of the declines at Cantarell. Litoral de Tabasco also includes the promising Tsimin and Xux discoveries. Production from Abkatun-Pol-Chuc, on the other hand, has declined considerably from peak levels achieved in the mid-1990s, when output exceeded 700,000 b/d; production in 2014 averaged less than 300,000 b/d.¹⁰ On April 1, 2015, a fire at the Abkatun Alpha production platform led to a drop in production of approximately 80,000 b/d.¹¹

Mexico is believed to possess considerable hydrocarbon resources in the deepwater Gulf of Mexico that have not yet been developed. PEMEX has been drilling deepwater exploratory wells since 2006, making its first significant find in the Perdido Fold Belt, near the U.S. maritime border, in August 2012. In February 2012, the United States and Mexico signed a Transboundary Hydrocarbon Agreement concerning the development of oil and gas reservoirs that extend across their maritime border.¹² The agreement established a cooperative process and legal framework for safely managing and jointly developing transboundary reserves, and it ends the current moratorium on exploration and production in the transboundary area.

OnshoreOnshore fields accounted for 25% of Mexico’s total crude oil production in 2014. Most of this production consists of light or extra-light crude oil from the southern part of the country, accounting for 76% of Mexico’s onshore production. The largest oilfield in the south of Mexico is Samaria-Luna, which produced about 161,000 b/d in 2014.¹³

The most notable onshore prospect in the north is the Aceite Terciario del Golfo (ATG) project, better known as Chicontepec, which is located northeast of Mexico City. PEMEX has heavily invested in and promoted Chicontepec as a potentially significant source of future production, with 637 million barrels of proved crude oil reserves and 15 billion more barrels of probable and possible reserves.

Despite its potential, production in Chicontepec averaged only 49,000 b/d in 2014, a decline from 2013.¹⁴ Chicontepec has not lived up to expectations because of the unique technical challenges associated with its development. In fact, Chicontepec is not a single field but a formation with dozens of small fields spread over hundreds of square miles, which are highly fractured and at low pressure. As a result, many costly development wells are necessary, recovery rates are low, and decline rates are high. Moreover, the region does not yet have much of the supporting infrastructure necessary for large-scale oil development. PEMEX hopes to significantly increase production through an aggressive drilling program, aspiring to produce 300,000 b/d from Chicontepec by the next decade. However, many industry analysts expect production to peak far earlier, and at a much lower level, without significant foreign investment. Mexico’s energy regulator, CNH, has raised concerns about the project’s profitability and PEMEX’s development plan, given that Chicontepec accounts for a significant share of the company’s exploration and production budget.

Mexico’s oil and natural gas fields

Source: Bentek Energy a unit of Platts

Trade

Crude oil exportsMexican authorities reported that the country exported 1.14 million b/d of crude oil in 2014, a figure that continues to decline.¹⁵ The United States received approximately 68% of Mexico’s oil exports, which arrived by tanker.¹⁶ Most Mexican crude oil exports to the United States are Maya blend, while Mexico retains most of the output from its lighter crude streams (Isthmus and Olmeca) for domestic consumption. The United States is likely to attract the bulk of Mexico’s oil exports because of the proximity and the operation of sophisticated U.S. Gulf Coast refineries capable of processing heavier Maya crudes.

Mexico is typically among the top three exporters of crude oil to the United States. In 2014, the United States imported 781,000 b/d of crude oil from Mexico, behind Canada and Saudi Arabia. Mexico’s crude oil exports to the United States rose steadily through the 1980s and 1990s, before peaking in 2004 at 1.6 million b/d. U.S. crude oil imports from Mexico have generally declined since 2006, reflecting Mexico’s steady drop in crude oil production and rising fuel demand, along with dramatic increases in U.S. production in recent years.

In August 2015, the U.S. Department of Commerce approved the sale of crude oil from the United States to Mexico.¹⁷ Shipments of high-quality crude oil will be sent to Mexico in exchange for equal volumes of Mexican heavy oil. This exchange provides a better crude oil supply for each country’s refining configuration. Such swaps are considered legal exemptions to the U.S. law banning the export of crude oil.

Refined petroleum product tradeDespite its status as a large crude oil exporter, Mexico is a net importer of refined petroleum products. According to PEMEX, Mexico imported 641,000 b/d of refined petroleum products in 2014, of which 58% was gasoline, and most of the remainder was diesel and liquefied petroleum gases (LPG).¹⁸ Mexico was the destination for 44% of U.S. exports of motor gasoline in 2014.¹⁹

In 2014, Mexico exported 201,000 b/d of refined petroleum products.²⁰ The United States imported 61,000 b/d of that total, most of which was residual fuel oil, naphtha, and pentanes plus. As with crude oil, U.S. imports of refined petroleum products from Mexico have declined in recent years, from a high of 132,000 b/d in 2010.

Pipelines and export terminals

Mexico – Downstream Infrastructure Map Source: U.S. Energy Information Administration

PEMEX operates an extensive pipeline network in Mexico that connects major production centers with domestic refineries and export terminals. According to PEMEX, this network consists of pipelines spanning more than 3,000 miles, with the largest concentration occurring in southern Mexico.

Theft of oil from Mexican pipelines is occurring. The scale of the problem is unclear, and estimates of the stolen oil vary, but Mexican officials have declared that between 2013 and 2014 there were more than 3,600 illegal fuel taps, up 66% from the prior year, resulting in about $800 million in losses. Sinaloa and Veracruz have been cited as the most affected states in recent years.²¹

Mexico has no international oil pipeline connections. Most of its exports are shipped by tanker from three export terminals on the Gulf Coast in the southern part of the country: Cayo Arcas, Dos Bocas, and the Pajaritos terminal at the port of Coatzacoalcos. There is also an export terminal on the Pacific Coast at Salina Cruz.

Downstream

Mexico’s total oil consumption remained relatively steady over the past five years, averaging 1.9 million b/d in 2014. According to Mexican government data, gasoline accounts for roughly 45% of the country’s petroleum product sales, and diesel accounts for another 23%.²²

Mexico had six refineries, all operated by PEMEX, with a total refining capacity of 1.54 million b/d as of the end of 2014.²³ According to PEMEX, refinery output was 1.39 million b/d in 2014, a decline from 2013.²⁴ PEMEX also controls 50% of the 334,000 b/d Deer Park refinery in Texas.

Mexico hopes to reduce its imports of refined products by improving domestic refinery capacity. In February 2012, PEMEX awarded a contract for the design of a new refinery at Tula, but in December 2014 opted for a $4.6 billion expansion of the existing facility. Gasoline and diesel production will increase from 140,000 b/d to 300,000 b/d at Tula.²⁵ Despite this and other expansions, analysts contend that Mexico does not have a natural competitive advantage in refining, given the country’s close proximity to a sophisticated U.S. refining center. Some feel that it would be more productive to apply PEMEX’s limited capital to the upstream sector.

Natural gas

Mexico is a net importer of natural gas, mostly via pipeline from the United States, and its natural gas demand is rising because of expanding power generation capacity.

Mexico has considerable natural gas resources, but its production is modest relative to other North American countries (See Liquid Fuels and Natural Gas in the Americas). The development of its shale gas resources is proceeding slowly, while consumption is projected to increase 64% from 2013 to 2027. Mexico’s import needs are rising as domestic production stagnates and as demand increases, particularly in the electricity sector. Consequently, Mexico will rely on increased pipeline imports of natural gas from the United States and liquefied natural gas (LNG) from other countries.

Reserves

According to the Oil & Gas Journal, Mexico had 17 trillion cubic feet (Tcf) of proved natural gas reserves at year-end 2014.²⁶ Although the southern region of the country contains the largest share of proved reserves, the Burgos region in the north has the potential to be the center of growth in future reserves, as it contains 393 Tcf of technically recoverable shale gas resources.²⁷ Mexico has one of the world’s largest shale gas resource bases, which could support increased natural gas reserves and production. According to the EIA’s assessment of world shale gas resources, Mexico has an estimated 545 Tcf of technically recoverable shale gas resources—the sixth largest of any country examined in the study. The figure of technically recoverable shale gas resources is far smaller than the total resource base because of the geologic complexity and discontinuity of Mexico’s onshore shale zone. Most of Mexico’s shale gas resources are in the northeast and east-central regions of the country. The Burgos Basin, which accounts for most of Mexico’s technically recoverable shale gas resources, is considered to be Mexico’s most promising prospect for natural gas production in the future.

Sector organization

Before the energy reforms of 2013, PEMEX retained a monopoly on natural gas exploration, but the government allowed private participation in nonassociated gas exploration and production. The Mexican government opened the downstream natural gas sector to private operators in 1995, although no single company may participate in more than one downstream function (transportation, storage, or distribution). The Comisión Reguladora de Energía (CRE) was created to monitor the sector.

As it applies to the oil sector, the newly enacted energy reforms allow for greater outside investment in exploration, production, and other activities in the natural gas sector. The reforms allow for new exploration and production contract models: licenses, production-sharing, profit-sharing, and service contracts. PEMEX will remain state-owned but will be given more budgetary and administrative autonomy and will have to compete for bids with other firms on new projects. The reforms also call for expanding the regulatory authorities of SENER and CNH, and creating a new environmental protection agency, the Agencia de Seguridad, Energía y Ambiente (ASEA).

As the energy reforms were, Round Zero was held where PEMEX was allowed to submit bids to retain resources before offering them in public auction. PEMEX was awarded 100% of their bids, representing 83% of Mexico’s overall reserves.²⁸

Exploration and production

Mexico produced an estimated 1.6 Tcf of dry natural gas in 2013, a modest decline from the year before. Part of the decline is in response to the relatively higher price of crude oil relative to the price of natural gas, which encouraged PEMEX to favor development of oil.

CNH reports that approximately 147 million cubic feet per day of natural gas was vented and flared in 2014, slightly less than 30% of which occurred at Cantarell.²⁹ PEMEX and government agencies have prioritized a reduction in natural gas flaring for economic and environmental reasons. Efforts to improve the ability to capture, process, and transport associated natural gas production, particularly at Cantarell, have been effective and gas utilization rates have recently increased.

The geographic distribution of Mexico’s marketed natural gas production is slightly different and more dispersed than it is for oil. According to statistics from Mexico’s CNH, more than two-thirds of Mexico’s natural gas production in 2014 was from associated oil fields. Unlike in the oil sector, the onshore (Samaria-Luna) and offshore fields of Tabasco yield more natural gas than Cantarell or KMZ. More than two-thirds of the country’s nonassociated natural gas production occurred in the Burgos Basin in the northern part of the country; most of the remainder was from nonassociated fields in Veracruz.

Mexico has taken preliminary steps to explore for and produce shale gas, but the country lags the United States considerably in terms of the development of its shale gas and tight oil potential. PEMEX produced its first shale gas in early 2011 from an exploratory well in northern Mexico. Later that year, the government announced a significant discovery in the same region, which could significantly increase the country’s proved natural gas reserves. PEMEX announced in early 2014 that it planned on drilling 10 shale test wells, bringing Mexico’s total to 175, a small figure compared with the more than 27,000 wells drilled across the border in Texas in 2014.³⁰ Although PEMEX has allocated a small share of its budget to shale gas development, the sector is unlikely to grow rapidly without improvement in PEMEX’s financial situation, technical abilities, and terms for investors. However, new rules set by the energy reforms could allow entry of foreign firms to initiate significant development of Mexico’s shale gas resources.

Trade

Pipeline imports from the United StatesMexico is a net importer of natural gas, with most imports arriving via pipeline from the United States. In 2014 Mexico imported a total of 1,052 Bcf of natural gas; 729 Bcf came from the United States, an increase of nearly 120% from 2010.^31,32 U.S. natural gas exports to Mexico account for nearly half of total U.S. natural gas exports, and they were approximately 69% of Mexico’s natural gas imports in 2014.³³

Mexico is constructing dozens of new natural gas-fired power plants across the country to meet increasing electricity demand. To fuel these new power plants, many natural gas pipelines are being constructed to import larger amounts of natural gas from the United States. Pipeline flows from the United States into Mexico averaged 2.0 Bcf/d in 2014. Projects to increase pipeline capacity are underway across the northern part of Mexico and are projected to import more than 5 Bcf/d of natural gas by 2020.³⁴

Liquefied natural gas (LNG)Because of pipeline constraints, Mexico has to meet some of its natural gas demand with liquefied natural gas (LNG), importing 329 Bcf of LNG in 2014.³⁵ With pipeline capacity expansions, LNG imports are expected to peak soon and fall by almost half by the end of 2016 as cheaper natural gas from the United States will displace more expensive LNG imports and could possibly lead to LNG exports from Mexico.

Electricity

Mexico is investing in new power plants to increase electricity generation capacity and transition to natural gas as the main fuel source.

According to SENER, Mexico had 54.4 gigawatts (GW) of effective generation capacity in 2014.³⁶ The country generated an estimated 258 billion kilowatthours (kWh) of electric power in 2014, representing an increase of nearly 25% from a decade ago.³⁷ Power plants using fossil fuels provide 78% of Mexico’s electricity capacity and generation. The industrial sector accounts for 58% of Mexico’s electricity sales, while the residential sector is responsible for slightly more than one quarter of electricity sales.³⁸

The National Energy Strategy outlined by SENER and the Works and Investment Program of the Electricity Sector (POISE) set up by CFE set a goal to generate 35% of electricity from nonfossil sources by 2024. Nonfossil generation accounted for 22% of Mexico’s electricity supply in 2014.³⁹

Electricity trade between the United States and Mexico has existed since 1905, when privately-owned utilities located in remote towns on both sides of the border helped meet one another’s electricity demand with a few cross-border, low-voltage lines. Over the years, both countries developed highly regulated and structured electricity sectors, and major and minor cross-border transmission lines were constructed. For a variety of technical and market reasons, however, U.S.-Mexico electricity trade has remained small. Existing electrical interconnections between Mexico and the United States are relatively limited in capacity and are operationally constrained by nonsynchronous cross-border ties, except in the Southern California-Baja California region.

Mexico has been a modest exporter of electricity to the United States since 2003. In 2013, Mexico exported 7.8 million kWh to the United States, or 11% of total electricity imports.⁴⁰Electricity sales from Mexico to the United States could increase in the midterm, as the U.S. Department of Energy recently issued a presidential permit for construction of a transmission line across the U.S.-Mexico border. When completed, the transmission line will supply electricity from a Mexican wind farm to the California market. Mexico also exports smaller amounts of electricity to Belize and Guatemala.

Sector organization

The state-owned Comisión Federal de Electricidad (CFE) is the dominant player in the generation sector, controlling more than three-quarters of the country’s installed generating capacity. CFE also holds a monopoly on electricity transmission and distribution. In 2009, CFE absorbed the operations of Luz y Fuerza del Centro, a state-owned company that managed the distribution of electricity in Mexico City. The Comisión Reguladora de Energía (CRE) has principal regulatory oversight of the electricity sector.

The Public Electricity Service Act of 1975 established exclusive federal responsibility over the electricity industry through CFE, but amendments to Mexican law in 1992 partially opened electricity generation to the private sector. Private participation in electricity generation is now permitted in certain categories, including construction and operation of private plants for self-supply, cogeneration, small production (under 30 MW), and import/export. Any company seeking to establish private electricity generating capacity or to begin importing and/or exporting electric power must obtain a permit from CRE. As of 2014, independent generators—Productores Independientes de Energía (PIE)—held about 12.9 GW of generation capacity or 24% or total capacity, consisting mostly of combined-cycle, natural gas-fired turbines.⁴¹

Mexico’s national transmission grid, which is operated by CFE, includes more than 31,000 miles of mostly high- and medium-voltage lines.

Electric transmission crosses U.S.-Mexico border in only a few places

Source: U.S. Energy Information Administration

Fossil fuels

Power plants using fossil fuels comprise most of Mexico’s electricity generation. Although, petroleum products were the leading fuels in Mexico’s electric generation mix, natural gas consumed for electricity generation has risen rapidly in the past decade as price and availability make it a more economic fuel source.

Coal consumption in Mexico rose 21% from 2008 to 2012, although coal represents only 8% of total electricity generation. Mexico is a net importer of coal, supplying 81% of its coal demand domestically.

Nuclear

Mexico has a single nuclear power plant, Laguna Verde, in Veracruz. The Laguna Verde power plant, which includes two CFE-operated boiling water reactors with a combined generating capacity of 1,400 MW, accounted for 4% of total electricity generation in 2014.⁴²Current operation licenses for the reactors expire in 2020 and 2025, but they are expected to receive extensions.⁴³ There are plans to expand Mexico’s nuclear generation capacity by building additional plants; however, low natural gas prices have delayed these plans.⁴⁴

Renewables

Mexico has 16,295 MW of total renewable installed capacity as of 2014, predominantly in hydroelectric, wind, solar photovoltaic (PV), and geothermal capacity.⁴⁵

The largest source of renewable power generation is hydroelectric power. Mexico had 11,632 MW of hydro capacity in 2013, which accounted for 18% of the country’s total installed electrical capacity.⁴⁶ Hydroelectricity supplied about 15% of Mexico’s electricity generation in 2014.⁴⁷ The largest hydroelectric plant in the country is the 2,400 MW Manuel Moreno Torres, at the Chicoasén dam in Chiapas. Another major hydroelectric project, the 750 megawatt La Yesca facility, was completed in November 2012. These larger hydroelectric projects are supplemented by smaller hydroelectric facilities (categorized as less than 30 MW each) that are being developed by both CFE and the private sector. There are an estimated 289 MW of smaller hydroelectric projects coming online by 2016.⁴⁸

Nonhydro renewables such as wind, geothermal, and solar PV, represented 3% of Mexico’s electricity generation in 2013.⁴⁹ Mexico had 980 MW of geothermal capacity, making the country fifth in terms of global geothermal capacity. In 2015, 100 MW of geothermal projects are expected to supplement the decreased generation at the 645 MW Cerro Pietro Geothermal field in Baja California, the key component of Mexican geothermal generation.⁵⁰

Solar power has received significant attention in northern Mexico, where the first large-scale solar power project, Aura Solar I, began operations in 2013. This project increases Mexican solar capacity by 30 MW to 434 MW.⁵¹

Several wind projects are in development in Mexico’s Baja California and in southern Mexico with the aim of boosting Mexico’s wind generation capacity from 2 GW to 12 GW by 2020.⁵²Mexico is hoping to achieve this goal by encouraging $14 billion in investment between 2015 and 2018.⁵³ Much of the current wind generation capacity is located in Oaxaca, where the Isthmus of Tehuantepec has especially favorable wind resources and has been a focus of government efforts to increase wind capacity. From 2010 to 2013, the Oaxaca region experienced a near 667% increase in wind generation capacity with the additions of five major projects (Oaxaca I,II, III, and IV, and La Venta III), bringing Oaxaca’s wind generation capacity to 1,751 MW.⁵⁴ In Baja California, Sempra U.S. Gas & Power is developing the 156 MW Energía Sierra Juarez 1(ESJ) wind farm. Electricity from the wind farm will be exported to the United States on a new transmission line, powering an estimated 65,000 homes in San Diego County in California.⁵⁵ ESJ became commercially operational in 2015 with a potential total capacity of more than 1.2 GW.⁵⁶ With these developments, Mexico is poised to become one of the world’s fastest-growing wind energy producers; however, Mexico’s domestic transmission infrastructure must be updated if the country is to capitalize on this increasing potential.⁵⁷

Notes:

• Data presented in the text are the most recent available as of September 21, 2015.
• Data are EIA estimates unless otherwise noted.

Endnotes:
¹http://www.banxico.org.mx/publicaciones-y-discursos/discursos-y-presentaciones/presentaciones/%7B22F68B32-0C6F-B53C-98E2-48DB7E78B169%7D.pdf, p13
²New York Times, “With Oil Revenue Dropping, Mexico Announces Budget Cuts,” Jan. 30, 2015. http://www.nytimes.com/2015/01/31/world/americas/with-oil-revenue-dropping-mexico-announces-budget-cuts.html?_r=2
³New York Times, “With Oil Revenue Dropping, Mexico Announces Budget Cuts,” Jan. 30, 2015. http://www.nytimes.com/2015/01/31/world/americas/with-oil-revenue-dropping-mexico-announces-budget-cuts.html?_r=2
⁴Bloomberg
⁵PEMEX, http://www.ri.pemex.com/files/content/No.%203%20Round%200%20&%20Round%201.pdf
⁶Oil and Gas Investor, http://www.oilandgasinvestor.com/round-one-mexico-disappoints-810076#p=full
⁷CNH, http://cnh.gob.mx/_docs/Reportes_IH/reporte_de_indicadores_de_extraccion.pdf
⁸CNH, http://cnh.gob.mx/_docs/Reportes_IH/reporte_de_indicadores_de_extraccion.pdf
⁹CNH, http://cnh.gob.mx/_docs/Reportes_IH/reporte_de_indicadores_de_extraccion.pdf
¹⁰CNH, http://cnh.gob.mx/_docs/Produccion/Produccion%20de%20aceite%20201505.zip
¹¹Bloomberg, http://www.bloomberg.com/news/articles/2015-04-01/pemex-says-4-workers-died-16-injured-in-fire-at-gulf-platform
¹²U.S. Department of the Interior, http://www.doi.gov/news/pressreleases/secretary-jewell-applauds-passage-of-us-mexico-transboundary-hydrocarbons-agreement.cfm
¹³CNH, http://cnh.gob.mx/_docs/Reportes_IH/reporte_de_indicadores_de_extraccion.pdf
¹⁴CNH, http://cnh.gob.mx/_docs/Reportes_IH/reporte_de_indicadores_de_extraccion.pdf
¹⁵PEMEX, http://www.pemex.com/en/investors/publications/Indicadores%20Petroleros%20Archivos/evolexporta_ing.pdf
¹⁶EIA, http://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_ep00_im0_mbblpd_a.htm
¹⁷Reuters, http://www.reuters.com/article/2015/08/14/us-usa-oil-exports-exclusive-idUSKCN0QJ1RI20150814
¹⁸PEMEX, http://www.pemex.com/en/investors/publications/Indicadores%20Petroleros%20Archivos/eimporpetro_ing.pdf
¹⁹EIA, http://www.eia.gov/dnav/pet/pet_move_expc_a_EPOBG_EEX_mbblpd_a.htm
²⁰PEMEX, http://www.pemex.com/en/investors/publications/Indicadores%20Petroleros%20Archivos/eexpogas_ing.pdf
²¹Houston Chronicle, http://fuelfix.com/blog/2015/02/17/668741/#27700101=0
²²PEMEX, http://www.pemex.com/en/investors/publications/Indicadores%20Petroleros%20Archivos/evolumenventas_ing.pdf
²³Oil & Gas Journal, Worldwide Refining Survey 2014
²⁴PEMEX, http://www.pemex.com/en/investors/publications/Indicadores%20Petroleros%20Archivos/eprocescrudo_ing.pdf
²⁵Wall Street Journal, http://www.wsj.com/articles/pemex-opts-for-4-6-billion-refinery-upgrade-over-building-a-new-one-1417649394
²⁶Oil & Gas Journal, Worldwide Look at Reserves and Production, January 1, 2015
²⁷EIA, Shale Gas Assesment, Attachment A-1, http://www.eia.gov/analysis/studies/worldshalegas/pdf/fullreport.pdf
²⁸Oil & Gas Mexico, http://www.oilandgasmexico.com/2014/08/13/an-overview-of-round-zero-results-round-one-content/
²⁹CNH, http://www.cnh.gob.mx/_docs/QuemaVto/Reporte_Quema_y_venteo_Diciembre_2014.pdf
³⁰Railroad Commission of Texas, http://www.rrc.state.tx.us/media/26444/annual2014.pdf
³¹BP Statistical Review of World Energy 2015, http://www.bp.com/en/global/corporate/about-bp/energy-economics/statistical-review-of-world-energy.html
³²EIA, http://www.eia.gov/dnav/ng/ng_move_expc_s1_a.htm
³³SENER Natural Gas Prospectus 2014, http://www.energia.gob.mx/res/ProspectivaDeGasNaturalyGasLP2014.pdf
³⁴NaturalGasIntel.com, June 24, 2015, http://www.naturalgasintel.com/articles/102760-mexicos-10b-in-infrastructure-projects-includes-natgas-pipeline-under-gom
³⁵BP Statistical Review of World Energy 2015, http://www.bp.com/en/global/corporate/about-bp/energy-economics/statistical-review-of-world-energy.html
³⁶SENER, http://egob2.energia.gob.mx/portal/electricidad.html
³⁷SENER, http://egob2.energia.gob.mx/portal/electricidad.html
³⁸SENER, http://egob2.energia.gob.mx/portal/electricidad.html
³⁹U.S. State Department, http://photos.state.gov/libraries/mexico/310329/oct13/2013_10_Electricity.pdf
⁴⁰EIA, http://www.eia.gov/electricity/annual/html/epa_02_13.html
⁴¹Comision Federal de Electricidad, http://www.cfe.gob.mx/inversionistas/Style%20Library/assets/pdf/InformeAnual.pdf, p26
⁴²Comision Federal de Electricidad, http://www.cfe.gob.mx/inversionistas/Style%20Library/assets/pdf/InformeAnual.pdf, p26
⁴³OECD–Nuclear Energy Agency, https://www.oecd-nea.org/general/profiles/mexico.html
⁴⁴World Nuclear Association, http://www.world-nuclear.org/info/Country-Profiles/Countries-G-N/Mexico/
⁴⁵IRENA Renewable Energy Capacity Statistics 2015, 7. http://www.irena.org/DocumentDownloads/Publications/IRENA_REmap_Mexico_report_2015.pdf
⁴⁶IRENA, “Renewable Energy Prospects: Mexico,” 13. http://www.irena.org/DocumentDownloads/Publications/IRENA_REmap_Mexico_report_2015.pdf
⁴⁷SENER, http://egob2.energia.gob.mx/portal/electricidad.html
⁴⁸Mexico Energy & Sustainability Review: 2014, 118. http://mexicoenergyandsustainabilityreview.com/mesronline2014/index.html
⁴⁹SENER, http://egob2.energia.gob.mx/portal/electricidad.html
⁵⁰Mexico Energy & Sustainability Review: 2014, 102-103. http://mexicoenergyandsustainabilityreview.com/mesronline2014/index.html
⁵¹Mexico Energy & Sustainability Review: 2014, 7. http://mexicoenergyandsustainabilityreview.com/mesronline2014/index.html
⁵²Mexico Energy & Sustainability Review: 2014, 125. http://mexicoenergyandsustainabilityreview.com/mesronline2014/index.html
⁵³Reuters, “Mexico sees $14 bln in wind energy investment by 2018,” http://www.reuters.com/article/2015/01/13/mexico-energy-idUSL1N0US06X20150113
⁵⁴AMDEE, http://www.amdee.org/wind-farms-in-mexico
⁵⁵Sempra, http://www.semprausgp.com/_/downloads/pdfs/FactSht_EnergiaSierraJuarez.pdf
⁵⁶Intergen, http://www.intergen.com/intergen-and-ienova-begin-commercial-operation-of-energia-sierra-juarez-wind-project/
⁵⁷Mexico Energy & Sustainability Review: 2014, 127. http://mexicoenergyandsustainabilityreview.com/mesronline2014/index.html

Today, advanced economies blame China for steel overcapacity. In reality, four decades ago Washington and Brussels opted for bad policies, which China seeks to transcend.

In the G20 summit in Hangzhou, some world leaders had harsh words for China’s steel overcapacity. Before the summit, President Barack Obama was urged by US lawmakers, unions and trade associations to blame China’s trade practices for US mill closures and unemployment and to stress the need for “aggressive enforcement of US trade remedy laws.”

In Brussels, European Commission president Jean-Claude Juncker seconded US concerns. In Canada, steelworkers and producers pressed Prime Minister Justin Trudeau to push China for the same reasons.

In Japan, Prime Minister Abe called for structural reforms to address China’s steel overcapacity.
Yet, as history shows, the first major steel crisis occurred already in the 1970s, starting in the US and Europe.

The postwar steel crisis

Since the postwar era, crude steel production has grown in three quite distinct phases. In the postwar era – often called the “golden era” of the advanced economies – global steel production grew an impressive 5 percent annually. It was driven by Europe’s reconstruction and industrialization, and catch-up growth by Japan and the Soviet Union.

As this growth period ended with two energy crises, a period of stagnation ensued and global steel demand barely ticked 1.1 percent annually. In the US, the challenges of the Rustbelt led to labor turmoil, offshoring and the Reagan era. In the UK, similar turmoil paved way to the Thatcher years.

Some steel growth prevailed but mainly in the smaller Asian tiger economies of Korea and Taiwan, which could not drive the global economy amid the collapse of the Soviet Union and the asset crisis in Japan in the 1990s.

A third period ensued between 2000 and 2015 when China’s entry into the World Trade Organization initiated a period of massive expansion in steel production and demand fueling annual output growth by 13 percent.

While China’s industrialization and urbanization is likely to continue another 10-15 years, the most intensive period of expansion is behind. As a result, the steel sector is facing overcapacity and stagnation for 5 to 15 years.

Policy responses in the US and Europe

Are Washington and Brussels now urging Beijing to resolve overcapacity by deploying the kind of policies they used in the first postwar steel crisis? No. After the mid-70s, the open trading regime took a step back as aggressive trade practices arose in the US and Europe. The two adopted fairly similar external policy measures but different domestic measures.

In the US, policymakers avoided direct intervention in the domestic market and allowed domestic firms to suffer large losses, which resulted in huge plant closures. That translated to substantial reductions of least efficient integrated producers and the rise of more efficient players, including mini-mills. In contrast, Brussels administered a de facto domestic cartel.

Economically, the European capacity reductions proved less effective than those in the US, whereas socially Brussels was able to smooth the process of transformation, but mainly in the short-term.
As Washington and Brussels sought to protect their markets through non-tariff barriers, they opted for protectionist external policies, which imposed substantial costs on economies and consumers.

Chinese objectives

In the coal and steel sectors, Chinese government hopes to allocate $15.4 billion in the next two years to help up to 3 million laid-off workers find new jobs, particularly in the service sector.

However, unlike US and Europe in the 1970s, Chinese policymakers today are eager to sustain globalization and to intensify world trade and investment, as evidenced by the Hangzhou-hosted G20 Summit, the One Belt One Road initiative as well as the creation of the Asian Infrastructure Investment Bank and the BRICS New Development Bank.

In the coming years, Beijing is committed to resolving the overcapacity burden but not at the cost of Chinese living standards or those in other emerging economies. Instead, the objective is to sustain China’s economic rise, while supporting the industrialization of other major emerging economies. And that is very much in the interest of Washington, Brussels and Tokyo as well.

A slightly shorter version of this commentary was published by China Daily on September 19, 2016

It did not take long for “Brexit”, a portmanteau term invented in 2012, to become common usage the world over. Now a new expression is bidding for its place in the sun – “CANZUK” – and its emergence on the political scene is not unconnected with Brexit itself.

CANZUK, grammatically speaking, is an acronym – a word made up of initial letters, rather like NATO (North Atlantic Treaty Organisation). It is formed from the initial letters of Canada, Australia, New Zealand, and the United Kingdom – and it has emerged following a bout of vigorous activity by a body founded in Canada in 2014 called the Commonwealth Freedom of Movement Organisation (CFMO).

CFMO was formed to expand the existing historical connections between the citizens of the United Kingdom, Canada, Australia and New Zealand, by creating a sort of travel-free alliance between them. The big CFMO idea is to use mutual travel agreements and visa-free initiatives as a way of encouraging the British, Canadian, Australian and New Zealand governments to strengthen and expand economic, political, trade, investment, military and diplomatic relationships.

The unexpected result of the UK’s EU referendum, and the certainty that the UK will eventually leave the European Union, has thrust the CFMO initiative into prominence, As a result it has gained a more substantive identity in the shape of an off-shoot – CANZUK. In fact, as the UK builds its post-Brexit place in the world, CANZUK provides it with one of several credible paths to follow.

Eminent British historian, Professor Andrew Roberts, believes that the CANZUK countries should form “a new federation based upon free trade, free movement of peoples, mutual defence, and a limited but effective confederal political structure.” He points out that were CANZUK to become a union, “it would immediately become one of the global great powers alongside America, the EU and China. It would be easily the largest country on the planet, have a combined population of 129 million, the third biggest economy and the third biggest defence budget.”

In favour of the argument, he points out that the CANZUK countries already have a common head of state in the British monarch, a majority language, legal systems based on Magna Cara and the common law, Westminster parliamentary tradition, and a long history of working together. All they lack is geographical proximity, which is becoming less and less important in the modern world.

“CANZUK,” concludes Roberts, “is an idea whose time has, thanks to Brexit, finally come again.”

Momentum towards creating such an entity is mounting. Within a few months of posting a petition on its website, CFMO attracted tens of thousands of signatures, and support continues to grow by the day. The petition, in line with CFMO’s limited objectives, is a modest request to the parliaments of the CANZUK countries to introduce legislation promoting the free movement of citizens between the UK, Canada, Australia and New Zealand. In fact, each of the governments concerned is sympathetic to the general concept of strengthening existing ties. CANZUK is far from pie in the sky.

Suppose such a third major political force were indeed to emerge on the world stage, what might its attitude be towards Israel? Judging by Israel’s current relationship with the countries involved, the connection would surely be considerably warmer than the wary and arms-length – though admittedly strong – association that has developed between Israel and the EU. It would be boosted by thriving Jewish communities in three of the four CANZUK nations – New Zealand being the exception. The Jewish community in New Zealand, which itself has a total population of less than 5 million, represents just 0.2 percent of the whole – that is about a thousand souls. It so happens that one of the thousand is the current Prime Minister, John Key.

Israel’s relationship with Canada is particularly strong. Former Prime Minister Stephen Harper often reiterated that “Israel has no greater friend than Canada.” It was during his visit to Israel in January 2014, that the Canada-Israel Strategic Partnership was signed, reaffirming the close and special friendship that underpins the Canada-Israel relationship. The Partnership lays out a strategic direction for stronger future relations between the two countries, paving the way for even greater collaboration in such areas as defence, energy, development, innovation and  education.

Canada’s new prime minister, Justin Trudeau, has changed some of the rhetoric, but not the reality, of the close relationship. On Israel’s Independence Day in May 2016 he said:

“Canada and Israel unite in their people-to-people ties, shared values, respect for democracy, and growing trade relationship. I look forward to continuing to strengthen our strong friendship. Although today is a joyous day, let us also reflect on the threat that Israel and its people continue to face throughout the world in the form of terrorist attacks, acts of anti-Semitism, and religious intolerance. Canada stands with Israel and will continue to promote peace and stability in the region.”

With Australia, Israel has enjoyed close ties from the founding of the state, and in fact Australia has the distinction of being the first country to vote in favour of the 1947 UN partition resolution. Totally consistent, Australia has been, and remains, a long-standing supporter of a negotiated, two-state solution to the Israel-Palestinian issue, as indeed is New Zealand and the UK.

Meanwhile, Australia is deepening bilateral cooperation with Israel. Since replacing Prime Minister Tony Abbott in September 2015, Malcolm Turnbull has continued Abbott’s efforts to achieve even closer relations with Israel – choosing Tel Aviv as the site of one of just five designated global Australian “Landing Pads” for innovation entrepreneurship. Support for closer Australia-Israel ties is shared by the ALP Opposition.

Israel’s relations with the UK were particularly close during David Cameron’s premiership, and there is every expectation that the strong commercial and industrial bonds he forged will be strengthened under the post-Brexit government of Theresa May as it seeks to boost its trade agreements world-wide.

As a formal union or federation, the four CANZUK countries could be a new, strong entity on the world scene, very favourably disposed towards Israel. Professor Roberts goes so far as to believe that its emergence could bring about the fulfilment of Winston Churchill’s great dream of a Western alliance based on three separate blocs. “The first and second blocs – the USA and a United State of Europe – are already in place,” says Roberts. “Now it is time for the last – CANZUK – to retake her place as the third pillar of western civilization.”

All in all, Israel would seem to be in a position to benefit substantially from its realization. Bring it on!

Experimentation is a major tool in the scientist’s arsenal. We can put the same strain of bacteria into two Petri dishes, for example, and compare the relative effects of two different antibiotics.

What if we could do the same with economic systems? We could take a country and destroy its political and economic fabric through, say, a natural disaster or widespread pestilence – or a war. War is the ultimate political and economic cleansing agent. Its full devastation can send a country back almost to the beginning of civilization.

We could then take this war-torn country and divide it into two parts. It would have similar people, similar climate, similar potential trading partners, similar geography – but one part is rebuilt using capitalism as its base, while the other rebuilds using socialism and its principles. We’d let the virtues of each system play out and see where these two new countries would be after, say, fifty years.

Don’t you wonder what the outcome might be? Well, as it turns out, we have already performed The Experiment. It’s post-war Germany.

Following the devastation of World War II, Germany was split into two parts. The German Federal Republic, or West Germany, was rebuilt in the image of the western allies and a capitalist legal-political-economic system.  By contrast, the German Democratic Republic, or East Germany, was reconstructed using the socialist/communist principles championed by the Soviet Union. The Experiment pitted the market economy of the West against the command economy of the East.

On the western side, considering what’s being taught in our schools, one might expect that “greedy capitalism” would create a state where a few people became the rich elite, while the vast majority were left as deprived masses. Socialism, by contrast, promised East Germany the best that life had to offer, through rights guaranteed by the state, including “human rights” to employment and living wages, time for rest and leisure, health care and elder care, and guaranteed housing, education and cultural programs.

So the Petri dishes were set, and The Experiment began. In 1990, after just 45 years, The Experiment abruptly and surprisingly ended – with reunification back into a single country. How did it work out?

In West Germany, capitalism rebuilt the devastated country into a political and economic power in Europe, rivaled only by its former enemy, Great Britain. Instead of creating a rich 1% and a poor 99%, West Germans thrived: average West Germans were considerably wealthier than their Eastern counterparts. The country developed economically, and its people enjoyed lives with all the pleasures that wealth, modern technologies and quality free time could provide.

By contrast, East Germany’s socialist policies created a state that fell woefully behind. Its people were much poorer; property ownership was virtually non-existent amid a collectivist regime; food and material goods were scarce and expensive, available mostly to Communist Party elites; spies were everywhere, and people were summarily arrested and jailed; the state pretended to pay its workers, and they pretended to work. A wall of concrete, barbed wire and guard towers was built to separate the two halves of Berlin – and keep disgruntled Eastern citizens from defecting to the West. Many who tried to leave were shot.

By the time of reunification, productivity in East Germany was barely 70% of that in West Germany. The West boasted large, vibrant industries and other highly productive sectors, while dirty antiquated factories and outmoded farming methods dominated the East. Even staples like butter, eggs and chicken – abundant and affordable in West Germany – were twice as expensive in the eastern “workers’ paradise.”

Coffee was seven times more expensive, while gasoline and laundry detergent were more than 2½ times more expensive. Luxury items, like automobiles and men’s suits were twice as expensive, color televisions five times more costly. About the only staple that was cheaper in East Germany were potatoes, which could be distilled into vodka, so that lower caste East Germans could commiserate better with their abundant Russian comrades.

Moreover, state-guaranteed health care in the East did not translate into a healthier society. In 1990, life expectancy in the West was about 3½ years longer than in the East for men, and more than 2½ years longer for women. Studies found that unfavorable working conditions, psychological reactions to political suppression, differences in cardiovascular risk factors and lifestyles, and lower standards of medical technology in East Germany were largely responsible for their lower health standards.

The socialist mentality of full employment for everyone led to more women working in the East than in the West. This pressure resulted in better childcare facilities in East Germany, as mothers there returned to work sooner after giving birth and were more inclined to work full-time – or more compelled to work, to put food on the table, which meant they had to work full-time and run the household. This also meant East German children had far less contact with their parents and families, even as West Germans became convinced that children fared better under their mothers’ loving care than growing up in nurseries.

As the education system in East Germany was deeply rooted in socialism, the state ran an extensive network of schools that indoctrinated children into the socialist system from just after their birth to the university level. While it’s true that today East Germans perform better at STEM (science, technology, engineering, math) studies than their Western counterparts, that may be explained in part by the influx of numerous poorly educated immigrants to former West German areas, and the extensive money invested in the eastern region since reunification.

However, schools of the East were not intended to establish creative thinking, which results in creativity and innovation. Rather, they were authoritarian and rigid, encouraging collective group-think and consensus ideas, rather than fostering outside-the-box thinking, novel philosophies and enhanced productivity. Thus, East German technology was slow to develop and students were often overqualified for available jobs.

Did the East gain any advantage? Nudism was more prevalent in the East, if that was your thing.  Personal interaction was higher too, because telephones and other technologies were lacking. But even though East Germany was much better off than other Soviet satellite countries (a tribute to innate German resourcefulness), East German socialism offered few advantages over its capitalist western counterpart.  In fact, in the years since reunification, homogenization of Germany has been slow, due largely to the legacy of years lived under socialist domination, where any work ethic was unrewarded, even repressed.

Freedom was the single most important ingredient that caused West Germany to succeed. Freedom is the elixir that fuels innovation, supports a diversity of thought, and allows people to become who they want to be, not what the state demands they must be. When the government guarantees equality of outcomes, it also stifles the creativity, diversity, ingenuity and reward systems that allow people and countries to grow, develop and prosper. The Experiment has proven this.

These days in the United States, however, forgetful, unobservant and ideological politicians are again touting the supposed benefits of socialism. Government-provided health and elder care, free tuition, paid day care and pre-school education, guaranteed jobs and wages are all peddled by candidates who feel government can and should care for us from cradle to grave. They apparently think East German socialism is preferable to West German capitalism. Have they learned nothing from The Experiment?

A friend of mine believes capitalism is greedy and evil – and socialism, if “properly implemented,” will take us forward to realizing a better future. I counter that The Experiment proves society is doomed to mediocrity at best under autocratic socialism. Indeed, those who turn toward the Siren call of socialism always crash upon its rocks. But my friend assures me: “Trust me, this time it will be different.”

That’s what they always say. Perhaps Venezuela and Cuba are finally making socialism work?

*David R. Legates, PhD, CCM, is a Professor of Climatology at the University of Delaware in Newark, Delaware. His views do not represent those of the University of Delaware.