Seumus Milne writes:  Austerity fails on its own terms.  Now we know for sure George Osborne’s economic plan has failed, even on its own account. For all the self-congratulation about credit-fuelled growth, the recession in wages goes on. Four years into the coalition, most people’s living standards are still falling. Last week it seemed as though pay might have finally overtaken prices. But yesterday’s figures showed that real earnings fell by 1.6% over the past year. That continues the longest drop, of seven consecutive years, since records began in Victorian times.

Now we know for sure George Osborne’s economic plan has failed, even on its own account. For all the self-congratulation about credit-fuelled growth, the recession in wages goes on. Four years into the coalition, most people’s living standards are still falling. Last week it seemed as though pay might have finally overtaken prices. But yesterday’s figures showed that real earnings fell by 1.6% over the past year. That continues the longest drop, of seven consecutive years, since records began in Victorian times.

The fall in living standards is greater still for the poorest, who effectively suffer higher inflation. Add in the fact that business investment as a share of national income and productivity are still declining, and no wonder David Cameron’s red lights are flashing. Of course the Tories like to boast about employment growth. But since only one in 40 of the new jobs are permanent, the number of people in enforced part-time work has doubled to 1.3 million, and there has been an explosion in artificial self-employment, the experience on the ground is something else entirely.

The most spectacular failure, however, is in the government’s central economic objective – for which all the pain was supposed to have been endured. After four years in office, the budget deficit and debt are growing, when the original plan had the books as good as balanced by now. The government’s core policy has failed on its own terms – let alone anyone else’s.

A crucial factor in that failure is falling wages and job insecurity. Cuts in real pay and growing low-wage employment have meant lower tax receipts and greater demand for benefits. Almost all the pain of benefit cuts for the most vulnerable has come to nought.

If cuts aren’t working, and low pay and insecurity are shrinking tax revenues and boosting benefit costs, you might think that would be cause for a change of direction. Not a bit of it: £50bn more cuts are lined up for the next parliament – and the government is doing everything to drive down wages and job security still further.

RIch Miller writes;   Cheap oil is a geopolitical gift to the US.  A new age of abundant and cheap energy supplies is redrawing the world’s geopolitical landscape, weakening and potentially threatening the legitimacy of some governments while enhancing the power of others.

Some changes already are evident.  Surging US oil production enabled America and its allies to impose tough sanctions on Iran without having to worry much about the loss of imports from the Middle Eastern nation. Russia, meanwhile, faces what President Putin called a possibly “catastrophic” slump in prices for its oil as its economy is battered by U.S. and European sanctions over its role in Ukraine.

Oil is “the most geopolitically important commodity,” said Reva Bhalla, vice president of global analysis at Stratfor, an advisory company in Austin, Texas. “It drives economies around the world” and is located in some “usually very volatile places.”

Benchmark oil prices in New York have dropped more than 30 percent during the last five months to around $75 a barrel as U.S. crude production reached the highest in more than three decades, driven by shale fields in North Dakota and Texas. Output was 9.06 million barrels a day in the first week of November, the most since at least January 1983, when the weekly data series from the Energy Information Administration began.

“For 10 years, the defining factor in the oil market was the growth of China and Chinese oil demand,” said Daniel Yerginvice chairman of Englewood, Colorado-based consultant IHS Inc. and author of a Pulitzer Prize-winning history of the commodity. “Now the defining factor is the astonishing growth of U.S. oil production.”

The most probable case is a four- or five-year cycle with prices in a general range of $65 to $80 a barrel, he said. That compares with an average of about $88 from 2008 to 2013 and a high of more than $140 at one point during that period.

The big question is whether oil-producing nations will react with accommodation or confrontation, said James Burkhard, vice president and head of oil-market research for IHS.

“That’s where the water gets a little muddy,” he said. “That story will be unfolding in the months and year ahead. It does add greater uncertainty and volatility that can often lead to negative surprises.”

Russia is the biggest loser.  Russia’s economy will contract by 1.7 percent next year after stalling out in 2014, IHS forecasts. It projects inflation will rise to 8.4 percent from 7.6 percent, boosted by a depreciating currency.

Iran has seen its revenue from oil exports fall by some 30 percent, President Hassan Rouhani said in remarks to parliament published Oct. 29 on Shana, the Oil Ministry’s news website. The nation needs to achieve a break-even sales price of $143 a barrel this year to keep its budget in balance, according to data compiled by Bloomberg.

Like Russia, Iran’s economy has been weakened by economic sanctions — in its case over its nuclear program. The steps by the U.S. and its allies have almost closed Iran’s oil and gas fields to investment in the last decade, limiting the country’s access to technology to boost output.

Venezuela lost 30 percent of its foreign-exchange revenue in the last month because of a “tremendous” drop in oil prices, Maduro said Nov. 13 in a televised national address from Caracas. He said he sent the country’s foreign minister to five oil producers, including Mexico and Russia, to drum up support ahead of the Nov. 27 OPEC meeting.

The U.S. is emerging as a big winner, according to the Nov. 11-12 poll of investors, analysts and traders who are Bloomberg subscribers.

Increasing energy independence means the U.S. is less vulnerable to supply disruptions overseas.  The boom in U.S. energy output also enhances U.S. prestige, which had been dented by the global financial crisis that originated in America’s housing market.

China is another big winner, as it imports almost 60 percent of its crude.

The world’s second-biggest economy probably will take advantage of the savings to build up its strategic reserves rather than dedicating the funds to increased spending on defense or the environment, according to Lin.

The plunge in oil prices also gives the nation leverage in its dealings with Russia. The two countries signed a $400 billion, 30-year gas-supply accord in May during a summit in China, then deepened their energy ties earlier this month by signing a preliminary agreement for a second Russia-China pipeline.

Gao Yuan and Li Xiang write:  A well-functioning global value chain evaluation mechanism will create the foundation for a “high-level” economic free trade zone and benefit all economies, Chinese officials and researchers said.

Russia and Venezuela are discussing joint action against low oil prices, Russian Energy Minister Alexander Novak said in Moscow. Venezuelan Foreign Minister Rafael Ramirez was in Moscow for talks as part of a tour of several oil-producing nations, including Algeria, Qatar and Iran, aimed at developing a joint strategy.

The Swiss National Bank faces the biggest test of its cap on the franc in two years but may find it easier to defend now than when euro zone breakup fears were rampant and the strategy unproven.

Impact of US-EU Trade Deal and No Customs on Turkey:

• Turkey’s exports will increase 7% if it is given the opportunity to sell tariff-free goods to the United States.
• Turkey’s gross domestic product (GDP) will decrease by $4 billion if it is excluded from the US-EU free trade agreement.
• If Turkey is allowed to join the pact, its GDP will increase by $31 billion. If including the $4 billion loss that would be avoided, the total benefit would reach $35 billion.
• The US-EU agreement is expected to boost prosperity by 2.6%-9.7% in EU countries and by 13.4% in the United States. In Switzerland, Canada, Mexico and Turkey, if excluded from the agreement, prosperity will decrease by 3.75%, 9.48%, 7.24% and 2.5%, respectively.

Will sanctions against Iran be lifted?  The UN security Council plus Germany are talking.  The Iranian supreme national security council secretary, Ali Shamkhano has said that sanctions have to be removed.

Some say that Iran does not understand the complexity of the sanctions.  When Iran signed an interim agreement in Geenva in the fall of 2013, some sanctions were lifted in exchange for a reduction in nuclear activity.  Some blocked monies were released.

Iran has not been clear on the fact that when US Congress passed sanctions on Iran in 2011, they put down every problem they had with the country including hostages.

From Iran’s point of view, all sanctions against the central bank have to be removed otherwise no one will do business with Iran.  Iranians complain that the press never discusses the complexity and range of sanctions.