1 Oil plunge is threat and boon (San Francisco Chronicle) A renewed plunge in oil prices is a worrying sign of weakness in the global economy that could shake governments dependent on oil revenues. Yet it is also a bonus for consumers as prices fall at the pump, giving individuals more spending money and lowering costs for many businesses.
Overall, the slide is a boon for consumers in oil-importing regions like Asia, Europe and North America. But there are also some possible negatives. The US economy will receive an outsized benefit from lower oil prices because the US is the world’s largest oil consumer. Canadian consumers are also catching a break. In some regions, such as southern Ontario, gasoline could fall below the important psychological barrier of $1 per liter.
The oil companies propelling a production boom in Canada and the US won’t be so happy. Crude produced in Canadian oil sands, deep offshore in the Gulf of Mexico and in some US onshore shale formations is some of the most expensive oil to produce in the world.
Many of Europe’s economies are net importers of oil, so lower prices are likely to give a welcome, if small, boost to growth. That will be particularly useful in the 18-nation eurozone, where unemployment is high. Declining fuel prices also, however, add to one of the eurozone’s biggest headaches: low inflation. The few European producing countries — mainly Britain and Norway in the North Sea — face a drop in revenues that could balance out the positives of cheaper fuel.
Russia gets about 50 percent of its state revenue from oil exports, so the government’s concerns are clear. The national economy is already sliding into recession under the impact of Western sanctions and investors are pulling money out. In China, cheaper fuel would ease financial pressure on manufacturers and small businesses. China’s economic growth has declined steadily over the past two years.
2 India growth slows to 5.3% (BBC) India’s economy grew by 5.3% in the July-to-September period from a year earlier, down from a rate of 5.7% in the previous quarter. Although the rate was slower than earlier in the year, it was still better than many analysts had expected. The figures cover the first full quarter under the government of Prime Minister Narendra Modi.
Both the service sector and agriculture performed better than anticipated, despite a weak start to the monsoon. Investors were also encouraged by the news that the government is to cut its holdings in state-run banks, such as State Bank of India.
Despite the slightly stronger-than-expected figure, pressure is mounting on India’s central bank, the Reserve Bank of India, to cut interest rates, possibly as early as the next policy review meeting on 2 December. The benchmark interest rate has been kept at 8% since last January in an effort to curb inflation. India has a history of high inflation, but recently the rate dipped below 6%.
3 The ambition explosion (David Brooks in Straits Times) The real contradiction of capitalism is that it arouses enormous ambition, but it doesn’t help you define where you should focus it. It doesn’t define an end to which you should devote your life. It nurtures the illusion that career and economic success can lead to fulfilment, which is the central illusion of our time.
To survive, capitalism needs to be embedded in a moral culture that sits in tension with it and provides a scale of values based on moral and not monetary grounds. Capitalism, though, is voracious. The personal ambition it arouses is always threatening to blot out the counterculture it requires.
Modern China is an extreme example of this phenomenon, as eloquently described by journalist Evan Osnos in his book, Age Of Ambition. As Osnos describes it, the capitalist reforms of Deng Xiaoping raised the ambition levels of an entire society. A people raised under Mao Zedong to be a “rustless screw in the revolutionary machine” had the chance, in the course of one generation, to achieve rags-to-riches wealth. This led, Osnos writes, to a hunger for new sensations, a ravenous desire to make new fortunes.
It was the ambition explosion as much as anything else that created China’s prosperity. One woman who called herself “Harvard Mum” had her daughter hold ice cubes in her hands for 15 minutes at a time to teach fortitude. Soon China was building the real estate equivalent of Rome every fortnight.
But the fever, like communism before it, stripped away the deep rich spiritual traditions of Buddhism and Taoism. Society hardened. Corruption became rampant. People came to believe society was cruel and unforgiving. They hunkered down. One day, a little girl was hit by a bread truck in the city of Foshan. Seventeen people passed by and did nothing as the child lay bleeding on the ground. The security video of the incident played over and over again on TV, haunting the country.
China is desperately searching for a spiritual and humanist nest to hold capitalist ambition. Those of us in the rest of the world may not be searching as feverishly for a counterculture, but the essential challenge is the same. Capitalist ambition is an energising gale force. If there’s not an equally fervent counterculture to direct it, the wind uproots the tender foliage that makes life sweet.