Need to redesign the system to create wealth for all, says Bangladeshi economist
Need to redesign the system to create wealth for all, says Bangladeshi economist
He also believes that the financial system needs to be redesigned to create a world that does not just benefit the rich.
Speaking to Arab News during his visit to Dubai recently, Professor Yunus said that the model of microcredit was to lend small amounts of money, about $20-$30, often to illiterate women in villages.
“These are women who never crossed the boundaries of their village. Yet they dare to take a $30 loan and become an entrepreneur,” Professor Yunus said.
The Bangladeshi economist hopes that young people will change the world. “They are not contaminated by the world’s way of doing things. They can start afresh as they have technology in their hands and can mold things their own way,” Professor Yunus said.
Professor Yunus talked about his most recent book, “A World of Three Zeroes,” which highlights the need for zero poverty, zero unemployment and zero net carbon emissions.
“The sum and substance of it is that the world is going in a wrong direction. The speed of that direction and its negative impact is getting higher and higher so we are sitting on a ticking bomb, which can explode at any time,” he said.
He said that a large chunk of the world's wealth was becoming concentrated in the hands of a few. “Today 1 percent of the world population owns 99 percent of the wealth, and tomorrow it will be worse,” he said.
This will lead to massive discontent and political and social disasters, he said. “I call it a huge mushroom of wealth which continues to grow but the ownership of the mushroom is by fewer and fewer people.”
Professor Yunus said that he sees selfless business as social business, which essentially means a non-dividend company to solve human problems.
“We created a lot of those businesses. Microcredit is one. We didn’t create it to make money for us but to solve the problems of other people. We needed to create counter banking, which is the microcredit that we did via Grameen Bank,” he said.
According to him, the bigger challenge is that the system is working against the poor. “So no matter what you do, you only do marginally better. You are not participating in filling the huge gap where wealth concentration has taken place,” he said.
“In order to do that, you have to redesign the machine itself. Microcredit is one piece of that machine, and not the whole machine. The entire machine has to be redesigned in a way in which wealth goes in both directions,” he said.
He said that the existing system had led to a perpetual model in which the condition of the poor may improve but at the same time the condition of the wealthy will zoom sky-high.
Saudi Arabia seeks stable, not soaring, oil prices
- Due to market tightness, Brent rose to nearly $80 per barrel but deteriorated to $78.80 on Friday.
- The average price for Brent crude per barrel over the past five months has been between $72.11 and $76.98
RIYADH: Oil prices rose this week on continuing market tightness. With the price rise, some Saudi-bashing has begun. Bloomberg reported that increasing prices were due to Saudi Arabia’s comfort with Brent crude above $80 per barrel. Such “analysis” is hogwash.
Due to market tightness, Brent rose to nearly $80 per barrel but deteriorated to $78.80 on Friday. WTI rose above $70 per barrel for the first time in three months and settled at $70.78 per barrel by the week closing.
The average price for Brent crude per barrel over the past five months has been between $72.11 and $76.98. As may be noted in those numbers, the Brent crude price has been resisting the psychological barrier of $80 per barrel. The fact is that, since October 2014, the Brent monthly average has never gone above $80.
The oil price outlook might be raised as a result of this upward tendency and the continuing tight oil market. For instance, with the latest numbers in hand, HSBC has revised its oil price forecast upward with Brent to average $80 per barrel in 2019 and $85 in 2020, before settling at about $75 in 2021.
Bloomberg was inaccurate about Saudi Arabia’s comfort with a Brent price above $80 per barrel. The Kingdom has never been among the bulls when it comes to oil prices. Again and again, Saudi Arabia has been a major advocate for stable oil prices, not increasing oil prices, which it views as unsustainable and damaging to the global economy. Bloomberg is also predicting that Saudi Arabia will follow its allegedly bullish nature and refrain from ramping up production to compensate for the oil lost once the US sanctions on Iran come into effect.
US Secretary of Energy Rick Perry has confirmed that Saudi Arabia, Russia and the US are well able to add enough crude oil supply into the market to compensate for Iran. Indeed, the Kingdom has begun to increase output to adjust for market needs, from 9.87 million barrels per day (bpd) in April to 10.42 million bpd in August.
The upward movement in oil prices came after strong fundamentals showed market tightness that spurred record levels of speculative traders, with nearly all betting on higher prices. The price rise also recognized that total US inventories are below the five-year average for the first time since May 2014. Oil prices have been gradually trending upward with gentle fluctuations. There have not been any steep surges or declines. There is nothing artificial about the trend. In reality, it is boringly predictable.
Last month, the International Energy Agency (IEA) reported OECD commercial crude oil inventories at 32 million barrels below the five-year average. Stocks at the end of Q2 2018 were up 6.6 million barrels versus the end of 1Q 2018, the first quarterly increase since 1Q 2017. The IEA also noted that global refinery throughputs in the second half of 2018 are expected to be 2 million barrels higher than in the first half of the year. These refined products stocks will draw down before building again in 4Q 2018.
Global crude oil inventories peaked in 2016. The OPEC+ agreement that worked for market balance was the reason for a fall in inventories. Since May 2017, global oil stocks have been on the decline and now global crude oil stocks are below the five-year average. Product stocks are also below that level, with strong demand and healthy refining margins.
Inventories have kept falling despite American producers pumping at all-time highs last month. It is only the massive flood of oil from the US which has kept crude oil prices at low levels from early 2015 to the end of 2017 — along with a resulting lack of upstream investment in the oil industry. Therefore, the IEA predicts that in 2022 spare production capacity will fall to a 14-year low.
Global oil markets are rebalancing. Oil prices started their upward momentum from the end of October 2017. They went above the psychological barrier $60 a barrel after 10 consecutive months of tireless efforts by OPEC and non-OPEC nations that started on January 2017. The market rebalancing will continue through the end of 2018, and beyond.
Such upward momentum in oil prices isn’t artificial movement because it came after many months without steep price fluctuations. In 2016, the Brent price average was $43. The 2017 Brent price average was $54, and prices just surpassed $60 in October 2017. The Brent average surpassed $70 in late March 2018 and has been hovering between $72 and $78 since. There is no evidence of a steep fluctuation or an artificial movement.
The claims of an artificial price movement have come just at the time when OPEC and the world are reaping the positive outcomes of 24 nations collaborating in output cuts that managed to successfully rebalance the oil market in a situation where global oil inventories were running at record highs. Also, these false claims came when the oil industry needs capital inflows to reactivate upstream investments for major international oil companies. Such investments are essential for the price stability that benefits oil producers and consumers globally. Low oil prices result in low investment in discovery and production of petroleum resources, which damages various industry sectors and energy needs. That leads to a vicious cycle of up-and-down price fluctuations.