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Chemicals and the Economy

Global chemical operating rates slip to 86%

Global chemical operating rates have shown little improvement over the summer months.  As the chart from the American Chemistry Council (ACC) shows: Rates in July were at 86.4%. compared to 87% in May This compares with the average of 91% between 1987 – 2012, and 86.7% in July 2012 Total production was up 2.8% versus 2012, […]

Building the Factory of the Future

Over the past 4 years, major European companies and research organisations have been working to define and demonstrate the factory of the future.  Based on the Bayer Technology Services (BTS) site in Leverkusen, Germany, and with €30m ($40m) of European Union and other funding, they have now developed radically new ‘plug and play’ modular technology capable of being implemented widely […]

A flap of a butterfly’s wings to freeze the UK economy

The world’s media are increasingly aware that economic growth is being impacted by major demographic change.  Thus the leading UK weekly magazine, the New Statesman, has published this article by the blog last week. It looks at the challenges facing the UK in the next few months.  These are, of course, the same challenges that face all the major economies. “The [UK […]

Global interest rates surge as Newton’s 3rd Law continues to operate

Newton’s 3rd Law of Motion states, “To every action there is always an equal and opposite reaction“.  Thus the forces of two bodies on each other are always equal and are directed in opposite directions. Policymakers forgot this Law in their response to the 2008 financial Crisis.  Instead they believed that cutting short-term interest rates in the major economies to zero, […]

Financial markets worry as Fed talks of ending stimulus

After 5 years of government stimulus, policymakers are having to think about their exit plans.  US Federal Reserve chairman Ben Bernanke retires in January, and most of the blog’s clients in the financial community believe that he intends to start the process before he leaves, perhaps as early as next month. This is likely to prove very scary […]

China’s empty cities create global lending risk

More details continue to surface of the wasteful spending that underpinned much of China’s GDP growth in recent years.  The empty city of Ordos (first highlighted 3 years ago in the blog) is just one example.  House prices there have recently fallen 50%, and the shadow banking system (critical for privately-owned companies) is reportedly in […]

Lack of demand threatens US ethylene expansions

The above chart paints a depressing picture for anyone thinking it should be easy to make money via a major US ethylene investment based on cheap ethane from shale gas.   It shows 2012 ethylene production (red column) was still below SuperCycle levels, as were volumes for the two major derivatives – polyethylene (blue) and PVC (green).  It highlights how lack of demand […]

Demographics has “frightening implications” for the economy

The blog first wrote about the potential impact on GDP growth of changing demographics in January 2010, in its first White Paper, ‘Budgeting for a New Normal’  This put forward the Scenario that the world economy could face an: “L-shaped recovery, where we follow the pattern of the Japanese economy after its ‘financial bubble’ burst in 1990. […]

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