DPC Wall Street and Trinity Church, New York 1903
A loss of $340 million on just one loan.
• Oil Price Fall Starts To Weigh On Banks (FT)
Banks including Barclays and Wells Fargo are facing potentially heavy losses on an $850 million loan made to two oil and gas companies, in a sign of how the dramatic slide in the price of oil is beginning to reverberate through the wider economy. Details of the loan emerged as delegates of Opec, the oil producers’ cartel, gathered in Vienna to address the growing glut in the supply of oil. Several Opec members have been calling for a production cut to shore up prices, but Saudi Arabia, Opec’s leader and largest producer, signalled that it would not push for a big change in the group’s output targets. Repercussions from the decline in the price of crude, which has dropped 30% since June, are spreading beyond the energy sector, hitting currencies, national budgets and energy company shares.
The price slide is having a serious impact on oil producers that rely on revenues from crude exports to balance their budgets. The Russian rouble has lost 27% of its value since mid-June, when crude began to fall, while the Norwegian krone is down 12% and on Wednesday the Nigerian naira touched a record low. Companies are also being hit, with BP’s shares down 17% since mid-June and Chevron’s down 11%. Shares in SeaDrill, one of the world’s biggest drilling rig owners, fell as much as 18% on Wednesday as it suspended dividend payments. The company has suffered from an oversupply of rigs as the majors respond to crude’s slide by cancelling projects. Now banks are also being affected, with Barclays and Wells said to face potential losses on an energy-related loan.
Earlier this year, the two banks led an $850 million “bridge loan” to help fund the merger of Sabine Oil & Gas and Forest Oil, U.S.-based oil companies. Investors, however, balked at buying the loan when it was first offered in June and slumping oil prices combined with volatile credit markets in the months since have scuppered further attempts to sell, or syndicate, the loan, according to market participants. With underwriting banks unable to offload the loan to investors they are now facing losses on the deal as the value of the two oil companies’ debt erodes. Sabine’s bonds were trading above their face value at around $105.25 in June, but have since fallen to $94.25 – firmly in “distressed” territory. Their yield – which moves inversely to price – has jumped from around 7.05% to 13.4%. Rival bankers estimate that if Barclays and Wells attempted to syndicate the $850m loan now, it could go for as little as 60 cents on the dollar.
Isn’t it fun?
• Oil Sinks Further As OPEC Meeting Looms (MarketWatch)
Oil prices extended their losses and sunk to fresh four-year lows on Thursday as expectations of a cut in OPEC oil production faded following the Saudi Arabian oil minister’s comments Wednesday. On the New York Mercantile Exchange, light, sweet crude futures for delivery in January traded at $72.22 a barrel, down $1.47, or 2% in the Globex electronic session. January Brent crude on London’s ICE Futures exchange fell $1.92, or 2.5%, to $75.83 a barrel. The Organization of the Petroleum Exporting Countries meets in Vienna within a few hours to decide whether its members will cut production to remove some of the glut in supply in global markets and boost oil prices. The 12-member oil cartel typically steps in to adjust output when prices move sharply due to excess or insufficient supply. It currently has an oil production ceiling of 30 million barrels a day and has been producing in excess of this level in recent months.
Crude-oil prices have plummeted this year, losing almost 30% of their value since June, mainly due to rising U.S. oil production driven by the shale boom and slowing demand growth in Asia and Europe. Analysts say that OPEC will need to cut oil production much lower than its current ceiling for prices to make a significant recovery. Today’s OPEC meeting and any decision on production cuts is likely to set the tone for oil prices for the next few months and well into 2015. Forget about an OPEC cut: Three delegates told Reuters that OPEC was unlikely to take any action after Russia said it wouldn’t cut in tandem. On Wednesday, Saudi Oil Minister Ali al-Naimi said he expects the market “to stabilize itself eventually,” hinting he wouldn’t push for a cut in OPEC’s production targets. “This is a very clear indication that the Saudis and OPEC will do nothing at the meeting … It is not 100% rock solid or set in stone, but it is a very clear signal,” Michael Wittner, head of oil market research at Societe Generale said. His bearish price forecasts are for $70 Brent and $65 WTI for the next two years.
“Saudi oil minister Ali Al-Naimi said: “The market will stabilise itself eventually”. Question is where and when.
• World On Brink Of Oil Price War As OPEC Set To Keep Pumping (Telegraph)
Oil slumped on Wednesday as expectations that Opec will cut production faded following dovish remarks by cartel kingpin Saudi Arabia, which could signal the beginning of a price war. Speaking on the sidelines ahead of Thursday’s critical meeting of the Organisation of Petroleum Exporting Countries (Opec) in Vienna, Saudi oil minister Ali Al-Naimi said: “The market will stabilise itself eventually”. His remarks were interpreted by the market as a signal that the cartel would keep its production ceiling at 30m barrels per day (bpd), which sent the price of crude lower. Brent crude – a global benchmark comprised of a blend of high-quality oil from 15 North Sea fields – fell 1.3pc to $77.30 per barrel after Mr Naimi’s comments, before recovering to trade flat at $78.29 by late afternoon. Brent crude has fallen 30pc since June. Crude traded in the US fell to as low as $74 per barrel as traders bet that Opec will allow the price to fall further amid growing signs of a global price war amid producers.
“There remains little prospect of any production cut being agreed at [Thursday’s] Opec meeting,” said brokers at Commerzbank. “Opec will merely agree to comply better with the current production target of 30m bpd. Iranian officials, traditionally seen as hawks within the cartel of mainly Middle East producers, also appeared to soften their position following an afternoon of closed door meetings with counterparts from Saudi Arabia and Kuwait. Bijan Zanganeh, Iran’s oil minister, told reporters after leaving the talks that Iran was now “close” to the Saudi position, heading into Thursday’s final discussion at the Opec secretariat. Rafael Ramirez, Venezuela’s Opec representative, had tried to galvanise support for production cuts to restore oil prices to around $100 per barrel, after talks with senior Russian oil officials on Tuesday delivered no immediate sign of a consensus. Although Russia is not a member of Opec’s 12 nations, the country is a major oil producer and has expressed concerns over falling prices.
Major Opec nations, Russia and US shale oil drillers now appear on the brink of a price war as these three giant producing blocs fight for a greater share of global demand. Although Opec states enjoy the lowest average production costs – in some cases around $2 per barrel – they have increasingly lost ground in North America, which remains the world’s largest consumer of oil. Some Opec members now want producers outside the cartel, including Russia and the US, to shoulder some of the responsibility for balancing the market by essentially cutting their output. UAE energy minister Suhail Al-Mazrouei said on Wednesday that Opec alone was not responsible for the stability of the oil market. “This is not a crisis that requires us to panic,” he said.
“In 1986, the Saudis opened the spigot and sparked a four-month, 67% plunge that left oil just above $10 a barrel.” This time around, the Saudis will achieve that by simply not closing the spigot.
• Oil Bust of 1986 Reminds US Drillers of Price War Risks (Bloomberg)
The last time that U.S. oil drillers got caught up in a price war orchestrated by Saudi Arabia, it ended badly for the Americans. In 1986, the Saudis opened the spigot and sparked a four-month, 67% plunge that left oil just above $10 a barrel. The U.S. industry collapsed, triggering almost a quarter-century of production declines, and the Saudis regained their leading role in the world’s oil market. So while no one expects the Saudis to ramp up output now like they did then and U.S. shale oil companies are pledging to keep drilling regardless, the memory of that bust looms large for American industry executives on the eve of OPEC’s meeting tomorrow.
As the Saudis gather with officials from the 11 other OPEC nations in Vienna, analysts are split on whether the group will cut output to lift prices or leave production unchanged to fight for market share with shale drillers. “1986 was the big price collapse and the industry did not see it coming,” said Michael Lynch, president of Strategic Energy and Economic Research in Winchester, Massachusetts, who has covered the oil sector for 37 years. “It put a lot of them out of business. You just don’t forget it. It’s part of the cultural memory.” The Organization of Petroleum Exporting Countries, responsible for about 40% of the world’s output, pumped 31 million barrels a day in October, exceeding its official target of 30 million. Oil has tumbled more than 30% from a 2014 peak in June.
The more they drill, the lower prices will go. They’ll lose financing.
• Drill On: U.S. Mantra as OPEC Power Wanes in the Face of Shale (Bloomberg)
No matter what OPEC countries decide tomorrow about cutting oil output, U.S. producers already know what they’re going to do: drill on. As Saudi Arabia and its 11 fellow members of the Organization of Petroleum Exporting Countries meet for what’s viewed as the cartel’s most important conclave since 2008’s worldwide financial crisis, the U.S. has the most to gain and the least to lose. For the oil industry, a significant production cut by OPEC would lift prices and profits across the board and help finance further U.S. energy innovation. And while a weaker response – or no move – would put more pressure on energy companies, the industry is increasingly insulated by burgeoning North American output. “The U.S. oil industry is going to continue on its growth track whether OPEC comes out with a cutback or not,” Daniel Yergin, vice chairman of consultant IHS. “As oil prices go down, the U.S. industry is going up the learning curve and is better capable of coping with lower prices than it would have been two or three years ago.”
The swagger of U.S. producers in the face of plunging oil prices shows the confidence they’ve gained from upending OPEC’s six decades of market dominance with technology that wrings oil from dense rock for prices as low as $40 a barrel. The shale boom has placed the U.S. oil industry in its strongest position since OPEC began flexing its pricing power in the early 1970s. Investors are taking note, pouring money back into shale producers in the past 10 days after shares fell an average 20% since July. Beyond the ability of producers to remain profitable at lower prices, the broader U.S. economy is even less susceptible to whatever course OPEC might take. A shift away from industries like steelmaking and into services such as health care has helped make the economy less reliant than ever on oil and natural gas, according to government data compiled since 1950.
Since the 1973 Arab oil embargo, the first major shock brought about by OPEC coordination, the amount of oil and gas consumed in the U.S. to generate $1 of gross domestic product has fallen 64%. The U.S. in August imported an average of about 4.8 million barrels a day of crude and petroleum products, a 24% decline from 1986, the year when Saudi Arabia’s market machinations sent prices below $10 a barrel in a crushing blow to U.S. producers. As the services economy has grown, oil demand has fallen, with the U.S. burning 13% less oil in 2013 than 2005. Improvements in fuel consumption mean cars and trucks can travel further on each gallon of gasoline. The nation is 26%age points more efficient in terms of the the energy required to generate economic growth than the global average, according to the U.S. Energy Information Administration.
” IMF data shows Nigeria, Russia and Saudi Arabia all need prices above $90 to balance their budgets.”
• Oil Slump Reverberates After Nigeria Currency Devaluation (Reuters)
The impact of sub-$80 oil prices rippled across energy-exporting emerging markets on Wednesday, with investors betting other countries will have to follow Nigeria in devaluing their currencies. Brent crude remained firmly below $80 per barrel and around a third lower from June levels after Saudi Arabia signaled it was unlikely to push for a major change in output when producers’ club OPEC meets on Thursday. Nigeria’s naira hit a record low near 178 per dollar – lower than its new target band of 160-176 per dollar – a day after the central bank devalued the currency by 8% and hiked rates by 100 basis points to conserve its reserves. Central bank governor Godwin Emefiele forecast a sustained drop in oil, saying the $73 per barrel assumed in Nigeria’s 2015 budget may be too optimistic.
“Oil remains on the back foot … it is a relevant dynamic for the rouble and for various parts of the Middle East and Africa,” said Manik Narain, emerging markets strategist at UBS in London. “We will see more pressure on local currencies there and Nigeria is an early example.” The risk that falling revenues will affect spending plans in oil-exporting countries, with unpredictable political and economic consequences, is a prime concern of investors. IMF data shows Nigeria, Russia and Saudi Arabia all need prices above $90 to balance their budgets. Sub-Saharan Africa’s other big oil producer, Angola, saw its kwanza currency trade near a record low hit on Tuesday.
These guys are getting scared.
• Seadrill Plunges on Dividend Suspension as Oil Rig Market Sours (Bloomberg)
Seadrill fell the most in six years after the offshore driller controlled by billionaire John Fredriksen suspended dividends as the slump in oil prices weakens demand for rigs. Seadrill, which hadn’t frozen or cut dividends in six years, dropped as much as 19% in Oslo trading, the most since November 2008. The stock was down 17% to 118.3 kroner at 3:58 p.m., the lowest since July 2010. “The decision to suspend the dividend has been a difficult decision for the board,” Fredriksen, chairman of Bermuda-based Seadrill, said in a statement. “However, taking into consideration the significant deterioration in the broader offshore drilling and financing markets over the past quarter, the board believes this is the right course of action.”
The plunge in crude prices since June is blowing through the oil-services industry as clients peg back spending on finding and developing fields. Transocean, one of Seadrill’s largest competitors, earlier this month wrote down the value of its fleet by $2.76 billion. Halliburton, the second-biggest oil-service company, is buying the third-largest, Baker Hughes. Seadrill, which paid owners $1 a share for the first two quarters this year, said in August that level was sustainable until at least the end of 2015. Today’s surprise decision will strengthen the company’s capital position by about $2 billion a year, the company said. “Suspending dividends entirely is the most reasonable thing to do, since the market is looking so bleak,” said Robert Andre Jensen from SpareBank 1 Markets AS. “Fredriksen’s companies are known for paying dividends, but you have to focus on your chances to survive the downturn.”
“The liquidity cycle is inflecting downwards. The odds of turbulence are rising ..”
• Tightening By Superpower Fed Trumps Mini-Stimulus In Europe And Asia (AEP)
The apparent tsunami of stimulus from central banks in Asia and Europe is a mirage. The world’s monetary authorities are on balance tightening. There may or may not be good reasons to buy equities at the current giddy heights, but reliance on the totemic powers and friendly intention of central banks should not be one of them. The US Federal Reserve matters most in a financial world that still moves to the rhythm of the 10-year US Treasury bond, and still runs on a de facto dollar standard. More than 40 currencies have dollar pegs or “dirty floats”, including China, joined to America’s hip whether they like it or not. Some $11 trillion of cross-border loans and bonds issued outside the US are denominated in dollars. The US capital markets are still a colossal $59 trillion, more than the total for Europe and Japan combined.
The Institute of International Finance says the impact of Fed action on capital flows to emerging markets is “twice as large” as moves by the European Central Bank. The Fed can hardly put off rate rises for much longer as the US economy grows at a 3.9pc clip and the jobless rate drops to a six-year low of 5.8pc. The “quit rate” tracked by labour economists as a barometer of the jobs market is suddenly surging, a clear sign that slack is vanishing and wage pressures will soon rise. The world is already turning on its axis even before the Fed pulls the trigger, as if the QE era were a memory. The dollar largesse that flooded the commodity nexus and drove the credit booms of Asia, Latin America and Africa is draining away. “The liquidity cycle is inflecting downwards. The odds of turbulence are rising,” said CrossBorder Capital, which monitors global flows.
Fresh money creation in Japan, China and the eurozone would not offset a liquidity squeeze by the Fed in a symmetric fashion even if it were happening, but it is not in fact happening on anything like an equivalent scale, and may not do so for a long time. The “happy handover” scenario is wishful thinking. China is tightening at a slower pace, but it is still tightening. The surprise rates cuts last week are less than meets the eye. The People’s Bank of China (PBOC) regulates the level of credit in the economy through curbs on quantity, not by adjusting the cost of credit. These controls are still in place. It is too early to conclude that President Xi Xinping has capitulated and ordered the PBOC to reflate, pushing the day of reckoning into the future once again. The balance of evidence is that Beijing is still attempting – with great difficulty – to deflate China’s $26 trillion credit boom before it turns into a national tragedy.
” .. investment in fixed assets such as machinery expanded the least since 2001 ..”
• China’s Industrial Profits Drop Most in Two Years Amid Slowdown (Bloomberg)
Industrial profits in China fell the most in two years, underscoring the need for looser monetary conditions as the world’s second-largest economy slows. Total profits of China’s industrial enterprises fell 2.1% from a year earlier in October, the National Bureau of Statistics said today in Beijing. That compares with September’s 0.4% increase and is the biggest drop since August 2012, based on previously reported data.
The People’s Bank of China, which last week cut benchmark interest rates, refrained from selling repurchase agreements in open-market operations today for the first time since July, loosening monetary policy further. Mired by a property slump, overcapacity and factory-gate deflation, China is headed for its slowest full-year economic expansion since 1990. Data released Nov. 13 showed the economy’s slowdown deepened in October. Factory production rose 7.7% from a year earlier, the second weakest pace since 2009, while investment in fixed assets such as machinery expanded the least since 2001 from January through October. Retail sales gains also missed economists’ forecasts last month.
And it’s supposed to be doing so well?!
• Spanish Consumer Prices Decline More Than Forecast (Bloomberg)
Spanish consumer prices fell more than economists forecast in November, which may raise concerns that deflation is taking hold in the euro region’s fourth-largest economy. Prices dropped 0.5% from a year earlier, the Madrid-based National Statistics Institute said today. The decline, based on a European Union measure, was bigger than the 0.3% forecast by economists in a Bloomberg News survey. Economic growth was unchanged at 0.5% in the third quarter, INE said in a separate release, confirming its Oct. 30 estimate. Euro-area data tomorrow is forecast to show inflation in the 18-nation currency region slowed to 0.3% in November to match the least since 2009.
European Central Bank policy makers are watching for signs that additional stimulus may be needed and have expert committees examining further measures to help boost near-stagnant growth to add to long-term loans and asset-purchase programs. “The data show risks of deflation remain high for some countries,” said Diego Trivino, chief economist at Intermoney Valores in Madrid. “Price drops in Spain are forced and structural as it’s the only way it can regain competitiveness in an environment of near-zero inflation in the euro region.” Spanish bond yields fell to a record low this week along with those of most members of the 18 nation euro region after ECB President Mario Draghi stoked speculation of a new stimulus program extending to sovereign bonds.
Juncker is a windbag, and plans like this are what comes out of such bags.
• Juncker Investment Plan Questioned on Capital, Leverage (Bloomberg)
German Chancellor Angela Merkel said she supports the European Commission’s 315 billion-euro ($394 billion) investment plan “in principle” as businesses around Europe sounded a note of caution. “We stress that investments are important, but that it has to be clear above all where the projects of the future lie,” Merkel, who announced Germany’s own 10 billion-euro investment program earlier this month, told the Bundestag in Berlin yesterday. The investment plan unveiled by commission President Jean-Claude Juncker will use 5 billion euros in cash from the European Investment Bank and 16 billion euros in European Union guarantees. The start-up money, projected to have an impact of 15 times its size, will serve as capital for a new EIB unit that can share risk with private investors.
The fund doesn’t have sufficient capital, Spanish Economy Minister Luis de Guindos said in Madrid yesterday. He described the commission’s leverage projection as “a bit high.” It’s right to focus on measures “to raise growth prospects across Europe and the emphasis on increasing private-sector investment,” British Chancellor of the Exchequer George Osborne said in a statement. The program, called the European Fund for Strategic Investments, is set to be operational by mid-2015. It doesn’t require EU member nations to commit any new money or alter existing budget agreements. The Brussels-based commission will dedicate 8 billion euros of existing funds to backstop its guarantee.
“Using a small amount of public funds to leverage private-sector provision can be a successful way to ensure that we choose projects that drive productivity and growth,” said Markus Beyrer, director general at BusinessEurope, a lobby representing employers from 35 nations. “We hope the leverage ratios set out in the investment plan can be achievable, but we must ensure that projects taken forward are genuinely ones that would not have taken place without the new fund.” By taking on some of the risk of new projects through a first-loss liability, the investment fund aims to attract cash-rich banks and companies to support investments in energy, broadband and transport infrastructure and back risk finance for small and medium-sized companies.
Go. Leave.
• Greece Paralyzed By Major Strike, Flights Stopped (Reuters)
Greek labour unions staged a 24-hour strike on Thursday that cancelled hundreds of flights, shut public offices and severely disrupted local transport, in the first major industrial action to cripple the austerity-weary country in months. Private sector union GSEE and its public sector counterpart ADEDY called the walkout to protest against planned layoffs and pension reform demanded by European Union and International Monetary Fund lenders who have bailed out Greece twice. All Greek domestic and international flights were cancelled after air traffic controllers joined the strike. Trains and ferries also halted services. Hospitals worked on emergency staff while tax and other local public offices remained shut. “GSEE is resisting the dogmatic obsession of the government and the troika with austerity policies and tax hikes,” the union said in a statement this week.
It accused the government of trying to take the labour market back to “medieval times” and of implementing policies that are causing a “humanitarian crisis”. Thousands of Greeks were preparing to march to parliament later on Thursday as part of rallies to mark the strike. The two unions last held a general strike in April. Major protests have declined sharply since then as frustration and anger give way to a mood of despondency and resignation over a jobless rate exceeding 25% and a sharp fall in incomes. Turnout at Thursday’s rallies could provide a key measure of the opposition facing Prime Minister Antonis Samaras’s conservative-led government, which is under pressure from EU/IMF lenders to impose more cutbacks to balance next year’s budget.
Yep. Krugman was here.
• After Zero Rates, Sweden Ponders Next Steps To Avoid Deflation (Reuters)
What should a central bank do next when it already has zero interest rates and arguably still faces the threat of Japanese-style deflation? If it’s the Swedish Riksbank, it should keep cutting, and do so soon, says Lars Svensson. Svensson no longer has a say; he quit as a deputy Riksbank governor last year after failing to persuade fellow board members to cut rates aggressively. Last month, they heeded his advice, lowering the repo rate to 0% and pushing back the official forecast for when the Riksbank will start tightening monetary policy again to mid-2016. After years of tense, polarized meetings that eventually led to Svensson’s resignation, a united Riksbank now sees zero rates as enough to push inflation up toward its 2% target. Svensson disagrees, saying Sweden should go into negative rates – effectively charging banks to deposit funds at the central bank – to avoid the deflation which has trapped Japan in low economic growth punctuated by periodic recessions for more than a decade.
“From this point it is unlikely that the current policy at zero is enough,” he told Reuters. “They should lower to -0.25 or even -0.50. The next meeting would be the natural time.” The Riksbank’s next policy meeting is on Dec. 15, with its decision announced the following morning. Rate-setters have not ruled out negative rates, but Riksbank Governor Stefan Ingves has rejected the comparison with Japan, pointing to expected Swedish growth this year of around 1.9%, with the economy moving up a gear again in 2015. Nevertheless, Swedish consumer prices have been flat or falling for most of the last two years on an annual basis. Underlying inflation, the Riksbank’s preferred measure which excludes interest rate effects, was 0.6% in October.
Draghi himself is a big risk.
• Europe’s Economy Faces Three Major Risks: Draghi (CNBC)
Europe’s recovery faces three risks – unemployment and a lack of productivity and structural reforms, according to the European Central Bank’s President, Mario Draghi. In a speech to be delivered to the Finnish Parliament later Thursday, Draghi concedes that the euro area economic outlook “is surrounded by a number of downside risks.” According to a transcript released ahead of the speech to Finnish lawmakers, Draghi will say that the euro zone’s “recovery will likely be dampened by high unemployment, sizeable unutilized capacity, and the necessary balance sheet adjustments….Inflation in the euro zone remains very low (and) meanwhile, we are facing continuously sluggish money and credit dynamics.”
“We have seen a weakening in the euro area’s growth momentum over the summer Also, most recent forecasts by private and public sector institutions have been revised downwards. Our expectation for a moderate recovery in the next years still remains in place, reflecting our monetary policy measures, the ongoing improvements in financial conditions, and the progress made vis-à-vis structural reforms and fiscal consolidation,” he said. His comments come amid speculation as to whether the ECB will implement a U.S.-style quantitative easing program to stimulate the euro zone economy in the face of slowing growth, disinflation and low consumer confidence – at a 9-month low in November.
Why isn’t Washington suing them?
• Goldman Sachs, HSBC Sued By Jeweller For Fixing Platinum Prices (Independent)
Goldman Sachs and HSBC are among a group of banks being sued in the US for allegedly fixing platinum and palladium prices. Modern Settings — a jeweller that buys precious metals and derivatives set on their prices — claims the banks “were privy to and shared confidential, non-public information about client purchase and sale orders that allowed them to glean information about the direction” of prices. “This unlawful behaviour allowed defendants to reap substantial profits, while non-insiders, which include plaintiffs, were injured,” lawyers acting for the company added. Separately, HSBC is facing a probe into allegations that an employee leaked confidential client information to a major hedge fund, according to reports. The leak is alleged to have taken place in March 2010, when HSBC was advising Prudential on its failed bid for AIA. A senior HSBC trader is said to have alerted a trader at hedge fund Moore Capital Management about a transaction taking place.
It’s going to take a lot more than dogs.
• Attack Dogs Deployed To Save South Africa’s Rhinos (Bloomberg)
Strapped into a black nylon harness, Venom abseils from a helicopter 100 feet to a bush clearing below. The two-year-old Belgian Shepherd’s master Marius slides down in tandem and unclips his ward. Then the dog races across the grass and tears down a man wearing a felt-stuffed bite suit. Venom is part of an army of dogs being trained as South African defense company Paramount Group’s contribution to fighting the poachers in South Africa, home to most of the world’s rhinos. Prized for their horns, which are used in Asian traditional medicine, a record 1,020 rhinos have been slaughtered in the country this year, triple the number three years ago.
The Malinois, as the breed is also known, “can work in extreme conditions,” Henry Holsthyzen, who runs Paramount’s K9 Solutions dog academy, said at a presentation of the year-old school yesterday. “It’s been proven useful in Iraq and Afghanistan. It’s high energy, highly intelligent and very fast. It’s an awesome package.” Rhino horns are made of the same material as human hair or finger nails, yet is more valuable than gold by weight. Prices for a kilogram range from $65,000 to as much as $95,000 in China and Vietnam, where consumers buy them in a powdered form to ingest as a supposed cure for cancer and to try improve their libido. South Africa is trying a number of measures to end the poaching, including setting up a protection zone within the Israel-sized Kruger National Park, moving rhinos to private ranches and deploying soldiers to fight poachers.
Home › Forums › Debt Rattle November 27 2014