GS “Recession Watch” Odds at 35%

From M. Abecasis/GS today:

Source: M. Abecasis, “Introducing Our Recession Watch Tracker,” U.S. Daily, Goldman Sachs, December 2, 2022.

The 35% figure contrasts with the 65% consensus from the October WSJ survey, and, the 50-50 chance by the Fed staff, and my term spread based estimates between 44%-56%. I found it interesting why, in part, they discount the estimates from standard term spread models:

When financial market participants see a higher probability of recession, they are more likely to expect the FOMC to cut the federal funds rate to stimulate the economy. We are skeptical that traditional yield curve models will produce sensible recession odds in the current environment, as the Fed is likely to be more reluctant to ease policy for a given set of growth and employment outcomes when inflation is high. But while quantifying recession probabilities based on historical experience is likely to produce misleading results, the relationship between the policy rate and growth still makes market pricing for the funds rate a useful signal of expectations for the odds and timing of a potential recession. Currently, the bond market is pricing hikes through 2023Q2, but 42bp of cuts in 2023H2 (vs. 33bp at the end of October), 87bp of cuts in 2024H1 (vs. 50bp), and 57bp of cuts in 2024H2 (vs. 31bp).

Here’s the picture of 10yr-3mo and 10yr-2yr term spreads as of close today:

Figure 2: 10 year-3 month Treasury term spread (blue), and 10 year-2 year spread (red), %. Source: US Treasury, author’s calculations.

Both spreads are now firmly in negative territory. My latest estimates (for data through Nov 23) here.

40 thoughts on “GS “Recession Watch” Odds at 35%

  1. ltr

    https://newseu.cgtn.com/news/2022-12-02/Severe-inflation-causes-striking-fall-in-real-wages-for-EU-nations-1fpGCulE6Xe/index.html

    December 2, 2022

    ILO report: Severe inflation causes striking fall in real wages for EU nations

    Severe inflation combined with a global slowdown in economic growth – driven in part by the war in Ukraine and the global energy crisis – are causing a striking fall in real monthly wages in many countries.

    According to a new International Labour Organization (ILO) report, the crisis is reducing the purchasing power of the middle classes and hitting low-income households particularly hard.

    The Global Wage Report 2022-2023 * shows the Impact of inflation and COVID-19 on wages and purchasing power. It estimates that global monthly wages fell in real terms to minus 0.9 percent in the first half of 2022 – the first time this century that real global wage growth has been negative.

    Among advanced G20 countries real wages in the first half of 2022 are estimated to have declined by 2.2 percent, whereas real wages in emerging G20 countries grew by 0.8 percent, although that is 2.6 percent less than in 2019, the year before the COVID-19 pandemic.

    “The multiple global crises we are facing have led to a decline in real wages. It has placed tens of millions of workers in a dire situation as they face increasing uncertainties,” said ILO Director-General, Gilbert F. Houngbo.

    “Income inequality and poverty will rise if the purchasing power of the lowest paid is not maintained. In addition, a much-needed post pandemic recovery could be put at risk. This could fuel further social unrest across the world and undermine the goal of achieving prosperity and peace for all,’ he added.

    Urgent policy change required

    The cost-of-living crisis comes on top of significant wage losses for workers and their families during the COVID-19 crisis, which in many countries had the greatest impact on low-income groups.

    The report shows that rising inflation has a greater cost-of-living impact on lower-income earners. This is because they spend most of their disposable income on essential goods and services which are generally subjected to greater price increases than non-essential items.

    Inflation is also biting into the purchasing power of minimum wages, the report says.

    Estimates show that despite nominal adjustments taking place, accelerating price inflation is quickly eroding the real value of minimum wages in many countries for which data is available.

    The analysis shows there is an urgent need to apply well-designed policy measures to help maintain the purchasing power and living standards of wage workers and their families.

    Lessening the ‘probability or depth of recessions’

    Adequate adjustment of minimum wage rates could be an effective tool, given that 90 percent of ILO member states have minimum wage systems in place.

    Strong tripartite social dialogue and collective bargaining can also help to achieve adequate wage adjustments during a crisis, according to the report.

    Other policies that can ease the impact of the cost-of-living crisis on households include measures targeting specific groups, such as giving vouchers to low-income households to help them buy essential goods, or cutting Value Added Tax (VAT) on these goods to reduce the burden inflation places on households while also helping to bring down inflation.

    “We must place particular attention on workers at the middle and lower end of the pay scale. Fighting against the deterioration of real wages can help maintain economic growth, which in turn can help to recover the employment levels observed before the pandemic,” said Rosalia Vazquez-Alvarez, one of the report’s authors.

    “This can be an effective way to lessen the probability or depth of recessions in all countries and regions.” …

    * https://www.ilo.org/digitalguides/en-gb/story/globalwagereport2022-23

  2. New Deal democrat

    Every single one of my 7 long leading indicators, which forecast 1 year out, is negative, and have been negative for months.

    I have about 2 dozen short leading indicators. Only a very few – initial claims, new factory orders, durable goods orders, manufacturing jobs, and housing units under construction – are not negative. Of these, the most important – initial claims – looks likely to turn negative YoY with several weeks to 2 months.

    The coincident indicators are worsening almost every week, especially as to employment. I’ve previously mentioned tax withholding, which worsened again this week. As I forecast this morning, the poor tax withholding over the past three months correctly forecast (yet another) negative number in the household jobs survey. The temporary staffing index looks likely to turn negative within 2 weeks.

    I don’t think we’re in a recession now, but I don’t think we’ll have to wait for Q3 2023 either. I suspect we’ll roll over most likely in Q1. I would watch manufacturing production in the industrial production report. If initial claims turn up YoY and that turns down, that’s likely the turning point right there.

  3. Macroduck

    The idea that term-spread models over-estimate recession odds because we are in an inflationary period is…odd. The data used to develop term-spread models include high-inflation periods, do they not? I would think other factors, such as large central bank balance sheets or Japan’s yield-curve control efforts, would be more credible reasons to doubt the results of term-spread models. Goldman’s claim is that they are smarter than the sum of market views, smarter than the best tool we have for forecasting recession. How very Goldman of them.

    Market-letter writers have an incentive to stand out from the herd, even when the herd is pretty smart. Get it right and you’re a hero. Get it wrong and we all just move on to the next forecast. Does Goldman tell us how their 35% estimate is arrived at? Black box?

    1. GREGORY BOTT

      Term spreads offer little in the way of knowledge. It’s just useless financial babble. Elitism that needs purged from society.

    2. Barkley Rosser

      MD,

      Keynes famously argued just the opposite about professional forecasters. He claimed they do not want to be caught being wrong while the crowd is right, and that this is much worse than the gain from being right while the crowd is wrong. Hence, according to him, the forecasters tend to herd so as to avoid being caught as a lone loser.

  4. Macroduck

    Off topic.

    How many times did CoRev tell us that voters would tell us what they thought of Biden’s policies? Then, when Republicans picked up very few seats in the House and look to be on their way to adding a Senate seat, he tried to spin it as a big deal, then went all wobbly? And Johnny goes on and on about the horrors of siding with a democratic state invaded by its hegemonic neighbor.

    Anybody notice Newt Gingrich’s take on Biden?

    https://www.gingrich360.com/2022/11/30/quit-underestimating-president-biden/

    “The Biden team had one of the best first term off-year elections in history. They were not repudiated.”

    “Biden has carefully and cautiously waged war in Ukraine with no American troops.”

    “However, conservatives’ hostility to the Biden administration on our terms tends to blind us to just how effective Biden has been on his terms.”

    Did Gingrich heap praise on Biden’s policies? No. Did he pretend that Republican policies are more popular with the public than Democratic policies? Of course he did. But Biden “not repudiated” by voters and “careful and cautious” in Ukraine and Republican “hostility to the Biden administration”? Those are sober assessments by one of the creators of the modern GOP.

    1. Ivan

      I think anybody who can take an unbiased view of Biden will recognize a competent and successful President. Sure the left will be able to find things he didn’t get done and be unhappy with that and the right will find things he did get done that they are upset about. But you have to judge him in the context of the power he does and doesn’t have. Gingrich is a skilled politician (evil but skilled) so he can appreciate the results and the context of getting there. Even has his own party is gaslighting and building false narratives about Biden’s socialism and failures, he is not the one to fall for his own bullshit.

      Biden competently steered us through the Covid emergency, got us out of Afghanistan with a minuscule loss of life (even over a disastrous set-up by the orange clown), has brilliantly taken Russia down without risking a nuclear war, has steered the economy through a one-two punch of Covid supply chain disruptions (left unattended by Trump) and wartime energy supply disruptions with just minimal harm in the US (single digit inflation and a shallow recession to come). Politically he got a much better result in the midterms than anyone could have hoped for and is setting himself up for a “lets not rock the boat” 2024 re-election campaign.

      The Gingrich is warning the party elites that they should not swallow their own BS – but prepare for a serious fight against an impressive opponent.

  5. CoRev

    In a blog post re: the possibility of a near future RECESSION MD claims: “… But Biden “not repudiated” by voters…”? Yet, there were more Republican votes than Democrat, and Democrats lost control of the House, and nearly lost the Senate in an election where there were WAY MORE open republican Senate seats.

    Is inflation going to plateau? Will there be a recession? Is there an obvious economic performance difference between Biden’s and Trump’s administration? Now we need to wait for 2024 to see how the voters respond. 2022’s response is obvious. Dems lost control of the HOUSE.

    1. pgl

      “Is there an obvious economic performance difference between Biden’s and Trump’s administration?”

      Well yea. Trump gave us the COVID disaster with massive unemployment and Biden has given us quite the recovery and very low unemployment. OK – time to sit back and watch CoRev the barking dog chasing his own tail again.

      1. CoRev

        Ole bark, bark blames Trump for Covid? Still he refuses to compare the non-Covid impacted economic performance. Y’ano, things like inflation, employment (Biden’s performance still lag Tump’s), expectation of recession, and almost every other economic indicator used to measure their two economies.

        I just point out these obvious things to show the idiocy and bias demonstrated here. Ole Bark, bark just exemplifies and amplifies the craziness of these mental distortions.

        1. pgl

          Did you fellow barking dogs teach you to babble this way? Trump did not cause COVID 19 but his incompetence let it spread massively. One would think over 30 months into this – even a complete dork like you would have figured that out. But maybe not as you are indeed really dumb.

          1. CoRev

            Bwa, ha, ha: “his (Trump’s) incompetence let it (Covid) spread massively. ” Compared to? What I see is W. Europe with a consistently higher spread rate since Covid’s inception. Maybe it’s just a freedom thing that Ole Bark, bark rants against?

          2. baffling

            all trump had to do was say the virus is dangerous, socially distance and where a mask until our super duper vaccines roll out. then promote the uptake of vaccines when that occurred. he probably would have been reelected had he taken those steps. but he just could not help himself, and lost in a landslide election.

    2. Moses Herzog

      @ Covid Brain
      This is another of many issues, where your functional illiteracy causes you personal embarrassment. Shall I do the typing version of speaking slowly?? The party “in power”…….. at the White House…….. normally performs poorly in midterms. Let me say the same thing in a different way since you are obviously learning disabled. The party…….. out of power…….. at the White House…….. usually is advantaged in turning out its base…….. angry with the president.

      Most of the 2022 seats…….. labeled as “toss ups” before the election…….. went to Democrats. Understand now Bueller? Bueller….. ? Bueller…… ??

    3. Baffling

      Republicans gain control of the house and push the nation into recession in 2023. Those will be the accurate headlines. No recession while biden and democrats had control in 2022. Great talking points for 2024. And that is why republicans so desperately wanted a recession this year.

    4. Barkley Rosser

      CoRev,

      As a matter of fact it looks like inflation has plateaued in the US and has been declining for several months now, if not all that rapidly. You are unaware of this? Why am I not surprised?

      And this deceleration ofi inflation is happening with no recession so far, and a continuing hot job market. Gosh.

      1. CoRev

        Barkley, your failed reading comprehension is again evident. My comment: “Is inflation going to plateau?” yours “,,, inflation has plateaued in the US and has been declining for several months now, if not all that rapidly. You are unaware of this? Why am I not surprised? ” I didn’t make the prediction” inflation has plateaued”. Has it? Is that actually a good economic result of inflation higher than before Biden’s inauguration?

        Maybe only credentialed economists think so? Y’ano those same people unable to list Biden’s successful policies.

        1. Barkley Rosser

          CoRev,

          No reading problems on my part, just blazing ignorance and stupidity on yours.

          Inflation has already plateaud and begun to decline, as I pointed out.. Heck, our co-host just had a whole thread on this with gobs of evidence. So you bizarrely ask, and ecen repeaed your ridiculous question: “Is infation going to plateau?” Oh, I guess since it already has the answer is “no.” Sheesh.

          Oh, then you point out that the fact that it has plateaued means that it was going up and got higher than it was before Biden’s inauguration. Yes, that is correct, but does not get you out of reminding people that you are still stupider than Anoymous, who has recently been giving you a run for whatever money you might have.

          1. CoRev

            Barkley, it’s frightening to consider that you taught and are still teaching economics. Having a teepee shaped graph of Biden’s inflation and general economic performance IS NOT A GOOD thing. And a teepee shaped graph is the best we can expect. It is highly likely that the recovery side of Biden’s economic performance graph will remain MUCH higher than when he took office.

          2. Barkley Rosser

            CoRev,

            Sorry,, but despite your efforts to claim I should not be teaching, this is another case where you are blazingly iditoitic and wrong, kind of like when you went on and on here about how a lack of a trend in anomalies off a trend meant that the original trend did not exist.

            Again, you asked, and I quote “Is inflation going to plateau/?” Why did you ask this when the answer is “No, because it is going down”? Indeed, the latest WaPo had as its top headline that the decline in inflation is accelerating, and that retali gasoline prices are “dropping like a rock.”

            Has inflation been higher than when Trump was prez? Why yes. It has been higher than when Obama, the Bushes, and Clinton were in office as well, higher than it has been in 4o years since the early part of the Reagan presidency. But it is and has been a global problem with mutliple causes coming from both the supply and demand sides. If Trump had won in 2020 he would almost certainly have had to deal with this high inflation, maybe arguably about two percent less or so in 2921, but not arguably any lower this year, when the US has performed much better than Europe and some other parts of the world.

            Anyway, just to repeat: the answer to your question “Is inflation going to plateau?” is “No, it will not because it is declining.” In fact it did not actually “plateau,,” which would suggest reaching a certain level and then flattening out to stay at that level. It hit a peak and then turned around started going down again. No plateau and none coming ahead, although at some point it may bottom out. But, CoRev, a bottom is not a “plateau.”

            So, not only will not plateau, it never did. Your question just makes you look like an idiot, as usual, stupidest person commenting here.

    5. Macroduck

      Gingrich claims. I quoted.

      Will inflation plateau? Will there be a recession? You’re changing the subject. And – how many times do you need to be told? – inflation is a global phenomenon and the U.S. economy is doing better than much of the rest of the world. Political hacks like you pretend that Biden is to blame for ever little thing while ignoring massive job gains. Which is why I quoted Gingrich. Even the proto-hack acknowledged that voters didn’t repudiate Biden.

      Oh, and about that plateau?

      http://econbrowser.com/archives/2022/12/month-on-month-seems-to-have-peaked

    6. Noneconomist

      Speaking of more votes, CR, look again at votes for governor in five key swing states; Arizona, Pennsylvania, Michigan,Wisconsin, and Nevada.
      Votes for Democrats: 8,567,931
      Votes for Republicans: 7,210,773
      Pennsylvania, Michigan, Wisconsin where there will be 44 electoral votes in 2024 deserve a special look. Trump candidates were rejected—two soundly—in all three.
      Shapiro was +14.8, Whitmer, +10.6, Evers +3.4, a significant increase in his win over Walker. Evers’ opponent even promised no Republican would lose another election if he was elected.
      Trump proudly stumpedfor Mastriano, Tudor Dixon, Michels, Lake. Losers all.
      The only state to elect a Republican was Nevada where Lombardo won by 1.3%.
      If those three states hold , the Democratic candidate would need to win one of three other swing states—Nevada,Arizona,or Georgia, all won by Biden—to be elected.
      With Trump as the Republican candidate, how promising are victories in any of those states?

  6. pgl

    https://www.msn.com/en-us/news/politics/georgia-candidates-starkly-divergent-views-on-race-could-be-key-in-runoff/ar-AA14RdRX?ocid=msedgdhp&pc=U531&cvid=2007f68bca334db5ac5fdafdadde0d62

    Hershel Walker wants to pretend racism does not exist?

    Before he became a wildly popular running back at the University of Georgia, Walker, who grew up in Wrightsville, more than 140 miles south-east of Atlanta, defied pleas from civil rights leaders who called for him to join racial justice protests in his community in 1980, which saw a group of whites beat Black protesters at the local courthouse, among other acts of racist violence. Walker chose not to get involved.

    Oh no – he has to know racism exists. But he wants the adoration of white people so much he cannot stand up to racism. This is exactly why Trump and little Lindsey want Walker in the Senate.

  7. Steven Kopits

    Jim is quoted in this yesterday’s WSJ:

    But as the U.S. and Europe pulled back on purchases of Russian oil, Russia was able to sell more oil to Asia and Africa, said James Hamilton, an economics professor at the University of California in San Diego.

    “So far those sanctions have had less bite than people thought in the first few weeks of the conflict,” Mr. Hamilton said.

    Here’s what I wrote in my April 25 report:

    Prohibitions, including sanctions, split the participants’ personal interest from their societal interest. In the case of oil sanctions, politicians from NATO governments will be conflicted between supporting Ukraine and retaining their political popularity and supporting their respective economies. If forced to choose, European and US political leaders will prioritize domestic concerns at Ukraine’s expense.

    The enforcement associated with prohibitions, including sanctions, leads to a variety of anti-social, but entirely predictable, behaviors

    Hypocrisy
    Shell Oil Company is marketing a ‘Latvian Blend’ of 49.99% Russian crude and 50.01% non-Russian crude. The is a hypocritical pretense of compliance. The reputational risk to Shell is enormous

    Temporizing and Delay
    The EU has stated that it is considering oil sanctions in August, four months from now. The war could be over by then. Oil trader Vitol has made similar claims.

    Enforcement Evasion
    Russia may be expected to take steps to avoid sanctions controls, much like Iran does. This includes storing oil in large tankers at sea while identifying potential buyers willing to purchase the illegal oil; changing vessel names and identification codes to obfuscate the identify of its oil tankers; making its vessels go “invisible” by disengaging ships’ Automatic Identification Systems; and secretly moving oil through ship-to-ship transfers to other, licit vessels. This process has already begun.

    Sham Enforcement
    While the EU may talk a big game about enforcement, it may well turn a blind eye to illegal shipments to placate the Chinese or help keep oil prices low for their own economies

    A sanctions regime will put pressure on the international alliance against Russia

    India
    Various Indian refiners continue to purchase Russian crude. A $38 discount is worth billions of dollars to India. The lure will be irresistible

    China
    After initially swearing off Russian oil imports, China appears to be gearing up to purchase Russia crude, again at a big discount. Both the potential profits and the need for affordable crude will push China to bust sanctions against Russia.

    Germany and France
    Neither Germany nor France can sustain oil prices at the levels that meaningful sanctions against Russia would imply. This is compounded by their dependence on Russian natural gas.

    Hungary
    Hungary has a deep dependence on Russian energy. Prime Minister Viktor Orbán also has a troubling relationship with Putin and Russian intelligence services. Hungary can undermine the NATO alliance

    The United States
    The US government, as a practical matter, is naïve about black markets and related behavior. The US will be inclined to punish those buying cheap Russian oil, India chief among them. As a result, the US could easily alienate countries like India and China and thereby weaken the anti-Russia coalition.

    On these latter points, Volga-Dnepr, an oligarch-owned cargo airline, now appears to be running daily flights from China using AN-124s, the world’s heaviest operating cargo aircraft, with transponders turned off in many cases. What do you suppose those aircraft are carrying? And how do you suppose Russia is paying for the cargo?

    So, all the ills associated with both an oil embargo and oil price cap are readily foreseeable. Readers will recall that I described western oil sanctions policy as ‘insane’. I have not changed my view.

    https://en.wikipedia.org/wiki/Antonov_An-124_Ruslan
    https://www.wsj.com/articles/gas-prices-are-dropping-heres-how-much-lower-they-might-go-11669943839?mod=Searchresults_pos1&page=1

    1. pgl

      Oh gee – you did provide a link to the WSJ. Pardon me for not seeing it as I skipped your usual long winded bloviating. Odd – you forgot to mention the headline:

      Gas Prices Are Dropping: Here’s How Much Lower They Might Go
      The average cost of fuel in the U.S. has fallen more than 30% from record highs, with seven states below $3 a gallon

  8. pgl

    Putin’s war crimes as well as his abandonment of his soldiers extend to the use and abuse of African fighters:

    https://www.thedailybeast.com/wagner-group-recruits-from-the-central-african-republic-allegedly-abandoned-in-ukraine?ref=scroll

    ABUJA, Nigeria—Russia’s infamous Wagner Group has abandoned dozens of former Central African Republic (CAR) rebels in Ukraine’s Donbas region after recruiting them to fight Vladimir Putin’s war, two former CAR fighters told The Daily Beast. The CAR sources, who were recruited by Wagner after quitting the Union for Peace (UPC) rebel group last December, said that many of the 100 or so ex-UPC fighters currently in Ukraine have lost contact with Wagner after the group trained them and flew them to the Donbas region about eight months ago. “Some of our colleagues have called us [on the phone] to inform us that the Russian soldiers who took them to eastern Ukraine deployed them to a particular town and left them to fight on their own,” Ali, who was not part of the group sent to Ukraine, told The Daily Beast. “As we speak, they haven’t been paid for months and they can’t even feed themselves.” (The Daily Beast has changed the names of its sources to protect them from possible retribution.) Some ex-UPC recruits, often referred to as “Black Russians” by many in CAR, are now having to “steal from civilians” to be able to survive the hardships in Ukraine, according to Ali.

    OK we all know that Putin has no soul. Speaking of disgusting people with no soul, I guess we will see Putin pet poodle JohnH defending this outrage.

    1. pgl

      Oh dear – some idiot at the WSJ referred to Dr. James Hamilton as Mr. Hamilton. Of course Stevie pooh calls him “Jim”. First of all – so a little respect. Secondly for those of us who have never trusted how you cherry pick quotes – provide a link so we can see what Dr. Hamilton really said.

      1. pgl

        And yet one of many patented lies from the most worthless trolls ever. Come on Jonny boy – find a blog where people have not already figured out your dumb little game.

  9. pgl

    Many thanks to Barkley for correcting the latest soap box stupidity ala JohnH who keeps telling us how the West has in the last generation divided up Middle East oil. Now if Jonny boy was referring to the period from 1945 to 1970 he might have a point but things change after 1970. A must read.

    Oil Titans: National Oil Companies in the Middle East
    VALÉRIE MARCEL
    John V. Mitchell contributor
    Copyright Date: 2006
    Published by: Brookings Institution Press, Center for the New Economy
    Pages: 322

    Now we all get that Jonny boy does not read real research preferring to go off in his usual uninformed emotional ways so permit me to provide such the abstract:

    In most important oil-producing regions of the world, the oil industry has been nationalized. Ninety percent of the world’s oil reserves are entrusted to state-owned companies. The five national oil companies (NOCs) that are the focus of this book together produce one quarter of the world’s oil and hold one half of the world’s oil and gas reserves. What do we know about these oil titans? Do we understand how they operate and what drives them? Do they emphasize politics over profits? Do they have the technical and business skills to develop responsibly the immense petroleum resources entrusted to them?

    Interesting questions for the grown ups here but not for highly emotional Know Nothings like JohnH,

    1. JohnH

      French tensions in the aftermath of the 1991 Gulf War, a prelude to France’s refusal to join the “coalition of the willing” in 2003.

      MERIP, 1995: “ If two countries epitomize the opposing sides of the debate over the Iraq embargo, they are Saudi Arabia and France. Both were staunch allies of Iraq during the Iran-Iraq war, fought on the same side in Desert Storm, and had constructed sizable trade and commercial partnerships (Aramco and Total were even going to swap oil assets at one time). But while Saudi Arabia has supported US efforts to maintain the embargo, France has not. The French decision in early January to open an interests section in Baghdad illustrates its disagreement with Clinton administration policy.

      The French announcement, and periodic bickering regarding Iraq’s compliance with Security Council resolutions, are part of a larger French effort to reposition its foreign policy in the Middle East and regain a voice in the region. FRENCH OFFICIALS ALSO RESENT exclusion by the US and Britain from the contract bonanza following the war while simultaneously facing the indefinite loss of their main market, Iraq. Iraqi officials have recently promised Total and Elf two giant oil fields, Majnoun and Nahr ‘Umar. No agreements have been signed yet, but the contracts are ready and could be finalized just days after sanctions are lifted. These two fields, with a combined capacity conservatively assessed at 1 million b/d, will almost double the worldwide oil production of both companies, raising them to the same league as the largest US majors. “ obviously, France did not get to exploit those fields by 2003. https://merip.org/1995/03/the-saudis-the-french-and-the-embargo/

      Other issues were involved as well. Today’s tensions have different origins, but one common issue is US domination of weapons sales. Much will depend on Europeans’ willingness to tolerate the blowback from sanctions and how much the US gets blamed for it.

      Of course, Biden has a need to paper these tensions over, despite Macron’s very direct and explicit warning that the issues could “split the West.”

      1. pgl

        I read this BS a long time ago. BTW I have read a lot of critiques of these utter BS. The reality as noted in that Brookings Paper I noted is that both Kuwait and Iraq have nationalized their oil sectors. But nice try at providing “evidence” from a thoroughly debunked rant.

      2. pgl

        I have placed a critique of the person who heads this organization JohnH cites as some sort of authority for Jonny boy’s latest soap box under the post Short Horizon Inflation Expectations – Survey and Market Based.

        JohnH’s so called experts are notorious for dishonesty but this fellow really takes the cake. Come on Jonny boy – you lies are generally revolting to the core. But damn you have hit rock bottom with this one.

      3. pgl

        No agreements have been signed yet, but the contracts are ready and could be finalized just days after sanctions are lifted.

        Let me get this discredit clown’s claims here straight. No contracts have been signed but they might be? Well – what kinds of contracts. Now I will do this slowly since we know Jonny boy does not get basic business reality as exemplified by his babble over how contract manufacturing is the key profit maker in the semiconductor sector and not designing new products.

        Everyone who knows anything about the oil sector gets owning the upstream business is where the profits are. Now if Total got the right to buy oil from the national government of Kuwait and sell it to refineries, those rights convey very few profits. Or if BP got a contract to help Iraq do drilling, the price BP gets is cost plus a very small profit margin.

        So even if JohnH’s discredited clown found a “contract” here or there – it matters a lot what the contract was.

        But no – Jonny boy has never grasped business reality so he is easily punked by some ideological clown.

      4. Barkley Rosser

        JohnH,

        You are now losing it even worse than ever with this, which pgl has already largely taken apart. But for starters, whatever was going on with Total and US and British oil companies in the MIddle East has absolutely nothing to do with anything happening between the US and France today, where indeed their are differences over green subsidies and protectionism, although not enough to offset their closer relationship due to shared disgust with Putin;s policies.

        But this bit you cited is really seriously incoherent. So, one minute we have Total and France all upset about being shut of some unclear supposed blizzard of oil contracts. Where were these? So then Total gets a deal with Iraq, presumably to counter all that, although it has trouble getting the deal to get finalized. So, if Total got a deal in Iraq, why is it still so upset about these other deals, all this back in 1995? What a pile of completely irrelevant bliteration.

  10. Erik Poole

    Macroduck and Barkley Rosser,

    Excellent comments. Pack journalism exhibits the same pressures to conform, yet it is the odd non-conforming journalist that takes a big risk and, if successful, earns a big reputation.

    I am thinking the forecasting/political journalism games and similar have multi-equilibrium outcomes. This has to be very confusing for the public that relies on popular authority arguments.

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