You must be wondering what Sofas have got to do with the United States government. SOFA is a four-letter acronym that most people probably would never have heard of. It’s a scary word, which several decades ago lost Iran for America. Today, it is the biggest sticking point between Washington and Baghdad.

SOFA stands for “Status of Forces Agreement” which is drawn between a country and a foreign nation that has military forces stationed in that country. This agreement is intended to clarify the terms of operation of the foreign military.

U.S. SOFAs govern the treatment of U.S. personnel abroad. The U.S. courts will have power over any crime committed by a service member against another member or by a service member on military duty. They describe the legal status of the U.S. troops and their property in a host nation. They clearly point out the rights as well as the responsibilities of the United States and the host nation, on matters such as civil and criminal jurisdiction, carrying arms, wearing uniform, tax and customs relief, damage claims as well as looks into the entry and exit of the troops and property.

With so many U.S. troops scattered throughout the world and fighting for the nation, U.S. has always considered it imperative to have these critically important agreements, which in many cases grant immunity from prosecution of the troops.

The United States has about 90 SOFA’s in force as of now and the government wants to add Iraq to this list, in order to help with the long-term U.S. security presence there. (more…)

Modern economies depend on energy and the limited supplies of oil and gas have seen a huge increase in prices. Both India and Pakistan face the problem of insufficient natural gas to meet the increasing domestic demand for energy.

All the gas production in South Asia is currently used to meet the domestic needs. Natural gas is used to supply the new power plants, in an attempt to diversify from expensive oil imports. The result is an increase in the natural gas usage over the last decade.

Iran on the other hand has abundant gas resources, especially with the natural gas reserves that have been discovered in Iran’s South Pars fields in 1988. Ever since then, the Iranian government has been trying to increase its gas exports abroad. Iran understands the potential of high profits from gas-hungry countries in South Asia, such as India and Pakistan.

More than a decade ago, in 1995, Iran and Pakistan have signed an agreement for constructing a natural gas pipeline from Iran’s South Pars gas fields to Karachi, which is Pakistan’s main industrial port. Later, Iran came up with the proposal of extending the pipeline to India. However, the Indian government was not keen on entering into an agreement with Pakistan, owing to the tense relationship between the two countries. India came up with an alternative plan, suggesting the creation of a deep sea pipeline, to avoid any threat to security of resources. All that was in the past.

The potential for developmental and economic gain from natural gas ultimately forced Iran, Pakistan and India to reassess the situation. With relations between India and Pakistan improving and compromise on the pricing structure by Iran, this pipedream is turning into reality.

This project can prove to be vital for all three countries. It will give Iran a chance to gain entry into one of the biggest markets for energy resources, while India and Pakistan, with their fast growing economies will have sufficient long-term supplies to meet the increasing domestic demands.

Iran, Pakistan and India are expected to sign a deal soon, for building a 1,724 mile long natural gas pipeline that would carry 2120 million cubic feet of gas per day initially. The pipeline will run from Iran to Pakistan and then to India. Although, initially the project was estimated to cost $4.5 billion, the cost has been revised and finalized at $7.5 billion.

This is called the IPI pipeline or the “peace pipeline,” based on the perceived impact on it could have on reducing tensions between India and Pakistan.

This pipeline would begin in Iran’s South Pars gas fields and run through Baluchistan (Pakistan,) into India.

Although, everything else has been finalized, the only issue that is still being discussed is the delivery point. While Iran wanted to deliver it on the Iran Pakistan border, India wants it on the border of India and Pakistan. These issues are currently being sorted out and continuous talks are on between the officials of all three countries, and the formal agreement is expected to be signed towards the end of the month. (more…)

The increase in gas prices have hit people very hard and increasing number of motorists in the U.S. are looking for alternatives.

This desperate need to control the rising costs, has given rise to the new fad called “hypermiling.” This is a radical driving technique that is designed to make use of every bit of power from the tank, which doubles the gas mileage even in vehicles that are guzzlers.

Hypermiling has become very popular with drivers worldwide, as concern over the increasing price of gas and environmental issues heightens. Whatever their reason, whether it is to save a few dollars or aim at helping the environment, hypermiling is being seen as the smart way to drive.

The practice of “hypermiling” was started by a few truckers a few years ago, but in fact it existed for a long time and the earlier name in 1936 was Mobil Economy Run, and during World War II gas rationing led people to use these techniques.

Hypermiling means pumping up the tires to their maximum pressure, higher than the recommended levels in the car manuals; using low viscosity engine oil (low weight engine oil), which is only filled to the low-level mark, and drafting behind other vehicles on the highway to reduce the aerodynamic drag, which is controversial. When tires are inflated to their maximum, less energy is required for the vehicle to move. (more…)

Gulf States have been torched with the rising inflation due to the declining dollar and this has become a huge political issue. After the US currency has fallen more than 13% against the Euro in the last one year, some Gulf States which have pegged their currencies to the US dollar, are considering dropping the pegs, as the inflation reaches new heights.

Marlos Maratheftis, head of research for Standard Chartered in the Middle East said, “Inflation is rising in the Gulf to a great extent because of loose monetary policy. Tightening monetary policy can only happen if they drop their currency pegs or strengthen the currency, preferably both.”

Inflation is high at 12% in the United Arab Emirates and about 18% of this inflation is due to the currency peg to the dollar. This is almost three times more than the government’s target and analysts expect it go up. Inflation in Saudi Arabia has hit 10% and Qatar reported of consumer prices rising almost 14% in the fourth quarter.

Kuwait became the only Gulf State to have dropped the dinar’s peg to the dollar about a year ago, and since then the dinar appreciated 7.9% against the dollar. Several contracts to buy the UAE dirham in about 12 months are trading at 2% premium and for the Saudi Riyal it is 1.2% premium to spot price, which shows that traders are betting that these countries will follow Kuwait in revaluing.

It was in November last year that the revaluation speculation reached a high after the UAE central bank governor said he was considering dropping the dirham’s peg to the dollar.

The reason Gulf countries are thinking on the lines of dropping the pegs has been due to the fact that the dollar has been going down for some time now. If given a chance most Gulf States would depeg the currencies from the dollar, which is falling rapidly. But the problem lies with Saudi Arabia, which has shown resistance in making this move. The U.S. was surely not impressed when Kuwait did this last May, even before the steep descent of the dollar. Gulf government officials reveal their worry about the consequences, as the U.S. may consider any such move as an economic war, since the global economy is fragile. (more…)

The US economy may be on the downslide but that is nothing when compared to the massive pall hanging over the Wall Street.

The heavy US investors say that although the nation’s economy is getting worse and it is continuing its downward slide, it will certainly recover later in the year, maybe in about six months or so.

However, things are different on the Wall Street, after more than $300bn vanished from the US equity markets. Wall Street is being taken to task, for the mistakes that led to this credit crunch and people who were part of it all are paying the price now. The prediction is that the way back to health for Wall Street is a very long one.

One economist from UK even warned that the world may be close to experiencing something like the Great Depression of 1930, and traders say that they have never felt this sort of fear before. The reason behind these feelings is the emergency funding package by the Federal Reserve and JP Morgan Chase to rescue Bear Stearns. This sort of funding procedure was first used in the 1930 depression and rarely used ever since.

Another problem facing the market is that, in spite of the Federal Reserve feeding $200bn, the banks are still not ready to lend to each other.

The general consensus is that the banking system has been broken since last summer and the credit crisis that it fostered is nothing like anything seen in the past many years. (more…)

Gold has soared in recent times and has reached high proportions in the past year. It rose to $1000 an ounce for the very first time in futures trading and is a wonderful thing to happen to investors, but the worst thing for consumers and jewelers. The increasing gold prices may just force the jewelry industry to re-invent itself. Analysts say that the $65 billion jewelry industry in the US is at stake.

Increase in gold prices proves to be a deterrent to consumers and a major concern for jewelry shop owners. As a jeweler laments, a gold chain that was priced at $189 will now cost $346 and there is nothing they can do. Even brands like Rolex increase their prices and this increase has to be passed on to the customers. Consumers are reluctant to buy as much gold as they did earlier because of the price increase.

The price of gold has risen by about 32 percent in 2007 and jumped almost 20 percent since the beginning of this year. This is the result of a weak dollar and high crude oil prices. The dollar fell very low against the yen for the first time in 12 years and also hit a low against the euro.

Analysts say that the low interest rates do not help the dollar and that gold may go even higher, if the Federal Reserve cuts the interest rates again as is expected.

To make it easier to understand the above jargon, gold price rises when dollar falls. Soaring oil prices cause inflation and gold rises at least 90% of the time when oil price increases. Gold prices always correlate closely with oil prices and go in the opposite direction of the dollar.

Where jewelers are concerned, the amount of increase and the time of increase in gold is based on the size of the store selling gold. Top jewelry stores like Tiffany and others sell jewelry to big retailers, and order jewelry for a whole year in advance and have plenty of stock. Since their stock is bought much before the increase in rates, they will not need to raise prices immediately. Some of these large stores even elect to absorb part of the increased cost, just to remain competitive in the current market. (more…)

The Economic Policy Institute released a study recently that found the economy in the United States has been steadily growing since 2000, but workers aren’t being paid any more than they were a few years ago. In fact, since 2003, the salaries and wages of 95% of workers have actually fallen a slight amount.

It doesn’t make sense. The economy is growing. There is less unemployment. Workers have increased productivity by over twenty percent in the last few years, and they aren’t being compensated? Inquiring minds want to know why.

Growing Economy?
One possibility is that the economy isn’t growing as much as we might think. Unemployment numbers are down, but does that reflect new job growth or simply more people dropping out of the rat race? The baby boomers are retiring, which leaves plenty of open positions for up and coming employees, so the low unemployment numbers might be an illusion rather than fact.

Biased Opinions
It should be mentioned that the Economic Policy Institute is well-known for its liberal bias. Economy growth is subject to many factors and making large assumptions based on samples can always be misleading – take a look at exit polls! It could easily be that paychecks are climbing a bit, but the growth was buried, either accidentally or deliberately by competing statistics. (more…)