http://www.irishtimes.com/newspaper/finance/2012/0117/1224310358138.html

INVESTORS IN Europe shrugged off Standard and Poor’s much-anticipated downgrading of nine euro zone countries, as stock markets in Europe swung into positive territory from mid-morning.

There were no hiccups at an auction of French debt, as France’s borrowing costs fell. French bonds gained as the country auctioned �1.895 billion in one-year securities at a yield of 0.406 per cent, compared to 0.454 per cent at a sale of similar-maturity securities earlier this month. The European Central Bank was also active in the bond market yetsterday, buying Italian and Spanish government debt.

Having earlier downplayed the Standard and Poor’s move, the Sarkozy administration also received a boost from ratings agency Moody’s yesterday, which announced it had decided to retain its triple-A rating on French sovereign debt.

Meanwhile, in a speech in Paris, French central bank governor Christian Noyer said Standard and Poor’s decision to strip France and Austria of their triple-A status and downgrade an additional seven euro zone countries late on Friday evening was an “additional challenge” for the region, but that the 17 member states that share the single currency have the “right strategy” for tackling the debt crisis.

The euro hit a near 17-month low against the dollar and an 11-year low against the yen in early tradeover that the mass downgrades would damage the lending capacity of the euro zone’s bailout fund.However, it recovered its early losses, with some of the gains attributed to speculators taking profits on their short positions on the currency.

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'NEW YORK - Almost three years ago, Peerless Industries Inc, a United States-based maker of audio-visual mounting solutions, made an unusual decision - it pulled its production out of China to build a new plant in the US. The company predicted that its production costs in China would eventually outweigh those in the US.

Peerless did not have to wait long to discover if it had made the right call. The company has confirmed that the decision was correct. Michael A. Campagna, president and chief operating officer of Peerless, said that the company is now more competitive in terms of costs.

"The labor costs in China are rising, even more so now than when we left. We quoted some new projects this year to double-check costing in China and we discovered that they have gone up since we left," said Campagna.

According to a recent study conducted by Boston Consulting Group (BCG), rising wages, shipping costs and land prices in China - combined with a strengthening yuan and a weaker dollar - are narrowing the cost gap between China and the US for many goods produced for US consumers.

As a result, a trend of US companies ...'

http://yastrow.com/nlarchive/2011/cannibalize-yourself-12-20-11.html

'One of Jobs's business rules was to never be afraid of cannibalizing yourself. "If you don't cannibalize yourself, someone else will," he said. So even though an iPhone might cannibalize the sales of an iPod, or an iPad might cannibalize the sales of a laptop, that did not deter him...'

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On 16 November in Astrakhan Lukoil president, Vagit Alekperov told journalists that his company will spend over $16 billion over the next decade to develop the country's Caspian offshore Korchagin and Filanovskii oil and natural gas fields in the Caspian, at the signing of a cooperation agreement with the Astrakhan Region.

An equitable division of the Caspian's offshore resources have bedeviled the region since the December 1991 implosion of the USSR, putting the Soviet Union's previous cozy arrangements with the Shah's Iran "into the dustbin of history," to quote Leon Trotsky.

Before the collapse of the USSR, the Soviet Union and Iran effectively divided the inland sea amongst themselves, according to the terms of the 1940 Soviet-Iranian treaty, which replaced the 1921 Treaty of Friendship between the two countries, which awarded each signatory an "exclusive right of fishing in its coastal waters up to a limit of 10 nautical miles." The treaty further declared that the "parties hold the Caspian to belong to Iran and to the Soviet Union."

Since 1991 three new nations have arisen in the Caspian basin to contest this bilateral arrangement - Azerbaijan, Turkmenistan and Kazakhstan. For the past two decades the five nations have wrangled about how to divide the Caspian offshore waters, and little has been achieved.

Amidst the disagreements Azerbaijan, Turkmenistan and Kazakhstan have tentatively moved cautiously to develop their offshore reserves in sectors that they believe would be indisputably within their future assignations under an eventual five-state agreement.

Even within these cautious offshore margins, Azerbaijan and Kazakhstan have increased their output in the last 15 years by 70 percent.

But at issue are the diametrically opposed positions of Iran and the Russian Federation about how to develop an international Caspian consensus beyond the now moribund 1921 and 1940 treaties. Iran insists that all Caspian nations should receive an equitable 20 percent of the Caspian, while the Russia Federation has consistently maintained that the five Caspian riverine nations should receive their portion based on the length of their coastline. Under the Russian formula, Iran's sector would consist of 12 percent to 14 percent of the Caspian's waters and seabed.

The stakes are high - in 2009 the U.S. government's Energy Information Administration estimated that the Caspian could contain as much as 250 billion barrels of recoverable oil along with an additional 200 billion barrels of potential reserves, in addition to up to 9.2 trillion cubic meters of recoverable natural gas.

Accordingly, all five Caspian nations have been delicately developing their offshore Caspian reserves in areas that will undoubtedly remain theirs whatever eventual agreement is hammered out between Azerbaijan, Iran, Kazakhstan, the Russian Federation and Turkmenistan. The Russian Federation and Iran are the last two nations to move "offshore."

Alekperov said, "Five hundred billion rubles ($16 billion) will be invested in development. This huge amount will provide an opportunity for sustainable development in the region."

Astrakhan Region Governor Aleksandr Zhilkin waxed lyrical on the importance of the agreement for the long-term development of Astrakhan's shipbuilding industry, situated on the lower Volga, the Russian Federation's major river emptying into the Caspian. Zhilkin commented, "All shipyards in Astrakhan Region will have work for the next ten years. Vagit Yusufovich (Alekperov) mentioned that Lukoil is investing more than 500 billion rubles ($16 billion) over the decade.

Zhilkin's remarks to reporters are hardly an idle boast, as he stated that Lukoil had paid more than $16.1 million in taxes last year to Astrakhan's regional budget.

So, the Russian Federation, like its four Caspian neighbors, is now beginning to tiptoe into its offshore waters, all the while insisting that its vision of divvying the inland sea prevails.

The last two decades have seen an apparent pragmatism slowly evolve over the Caspian offshore resources, first in Baku, followed by Astana, Ashgabat and more recently and reluctantly, Tehran and Moscow. While the issue of a final disposition of the Caspian's offshore waters remains significant if for no other reason than the various proposed undersea pipelines such as Turkmenistan-Baku, which could be an influential element in the European Union's projected $15 billion Nabucco natural gas pipeline reverie, all five nations seem to be moving cautiously towards planting their offshore flags in areas unlikely to arouse their neighbors.

It will be interesting to see if they meet in the middle.

Source: http://oilprice.com/Geo-Politics/International/Tensions-Increasing-Over-Caspian-Energy-Riches.html

By. John C. K. Daly of http://oilprice.com