First up is the RollingStone’s Matt Taibbi take down of the New York Times’ Thomas Friedman, who likely has no clue how the average American citizen lives their daily lives. Friedman, likely the wealthiest journalist in the country, is an unabashed proponent of globalization that sees the world divided into two factions, those that like the trend towards the globalization of the world’s economy and those that don’t.
The problem for Friedman being the entire topic is far more complicated than simply painting the opponents of globalization as election year losers (think Bernie Sanders supporters and soon Trump’s). To understand where I’m going with this you must first read Taibbi’s piece because the price of globalization is inequality (income, political and other) along the decimation of the United States middle class. These built in inequalities drove the Brexit vote and no doubt plays a role in the thinking of both Trump and Sanders supporters, which I’m going to illustrate with a picture a reader sent me a while back:
Those that follow Slabbed’s twitter timeline have witnessed our coverage of the downsizing of the New Orleans RDS office, which I’m getting from a very well placed source. Shell has not exactly made a secret of what they are doing downsizing its New Orleans office but you can’t view what is happening now through the same lens used to examine previous oil patch bust layoffs. Here is an edited comment from Slabbed’s source on the current happenings in NOLA at RDS:
Shell had approximately 2,000 employees in the CBD at One Shell Square 2 years ago. Now, it’s about 700. 200 more are slated to leave by the end of the year.
So we have a 75% reduction in headcount in high quality white collar jobs at RDS NOLA including the various contractors. A clue follows for those that subscribe:
Shell ‘re-scoping’ at Vito ~ Upstream
“Vito” until recently was known by that name but it is now been code named “Polaris” with the engineering now handled by the Houston Texas contractor Jacobs Engineering Group (rather than in New Orleans) but the engineering will not necessarily be done in Houston Texas:
PASADENA, Calif., Dec. 6, 2011 /PRNewswire via COMTEX/ — Jacobs Engineering Group Inc. (NYSE: JEC) announced today it has received a contract from Shell India Markets Private Limited to establish an integrated organization with Shell Projects & Technology for its Project Design office in Bangalore, India.
Officials did not disclose the contract value, however, noted the contract duration is five years with provision for further extension.
The integrated project design organization expects to deliver a full range of engineering and design services for onshore upstream (oil and gas) and downstream major capital projects, mainly in the Middle Eastern and Far Eastern regions. The new organization aims to blend the strong technical and engineering design capability held by Shell and Jacobs, while optimizing the best work processes and tools of both companies.
Once upon a time a college education was the main ticket to gain admittance to the new economy. Now highly educated engineers are losing their jobs to highly educated and (cheaper engineers) in India. This is one of the costs of globalization and it is caused by the ruthless search for efficiency by businesses maximizing their profits. Its what business does but it carries a human cost that unabashed proponents of globalization have largely ignored beyond lip service. Inefficiency carries a cost but its true that inefficiency can also mean jobs.
Next up is the topic from where Slabbed derived its name, insurance. With the benefit of hindsight we can now determine who was right, Former Florida Gov Charlie Crist and Florida Citizens Insurance or Haley Barbour-Mike Chaney-Jim Donelon – Wall Street Journal Editorial Board. I’ve give you a hint folks Slabbed backed the winner in Former Gov Charlie Crist, a rare politician that actually gave a damn about his fellow citizens (subscription required):
The Insurance Industry Has Been Turned Upside Down by Catastrophe Bonds ~ Leslie Scism and Anupreeta Das
True competition instead of a anti trust exempted racket is a bitch, just ask Warren Buffet:
Citizens Property Insurance Corp., run by the state of Florida, used a mix of cat bonds and conventional reinsurance to buy $3.9 billion in coverage last year, up 20% from 2014. Citizens also paid less: about $282 million in 2015, compared with $304 million a year earlier.
Such savings are a boon for Florida residents such as Greg Truax of Tampa. When he opened this year’s policy-renewal package from Homeowners Choice Property & Casualty Insurance Co., he saw that his premium had fallen 5.7% from a year earlier, saving him $233.
Dulce Suarez-Resnick, an agent at NCF Insurance Associates in Miami, says lower rates have been a “lifesaver” for clients rebuilding their finances following the financial crisis and recession.
Sawgrass Mutual Insurance Co. has cut the annual premium on Ms. Suarez-Resnick’s own house by $484, or 15%, since 2013. “Thank God the rates started to go down to make it more affordable,” she says.
The bottom line here is when the insurance Chicken Littles were chirping the loudest back in 2008, Florida Citizens retained some risk (backed by the full faith and credit of the State) and now is able to securitize those risks by directly tapping into the overall capital markets and as a result wind policy holders in the riskiest state to insure against Hurricanes are seeing lower rates. I do not look for Mississippi or Louisiana to capitalize on the overall trend except indirectly as re-insurers have had to take less profit in order to compete against the cheaper capital currently available in the overall markets. Those wanting additional background can find it here.
If you’re in the Mississippi Windpool feel free to chime in about your current annual premium in comments.