BP say they will rein in their $20 billion capital expenditure programme for this year instead of reducing dividends to shareholders. They plan to do so by carrying out the same work as planned for less than the $20 billion target. Shell will no doubt have to make a similar decision on spending very soon.

But on tighter budgets, both companies will find it very difficult to attain the oil exploration and infrastructure upgrades that will support future production and growth. Even one year of falling profits in the oil industry can have a lasting effect. In such a capital intensive sector, cash reserves are quickly eaten up for infrastructure expenditure when profits are low.

The oil industry has been through recession before, but this time round presents the greatest challenges. Oil supply is at its scarcest since production began. More money than ever is needed to find new oil fields, and those we know about are in remote, difficult to access areas where production and transport costs are very high. Without large sums of capital to fund these exploration and production costs, the industry is threatened with a growing funding gap. At some point that gap cannot be filled.

Shortly after the last serious recession in the UK – where both BP and Shell are partly headquarted – in the early-to-mid 1980s, North Sea oil and gas was discovered. Such a large field so close to industrialized Europe was a blessing for the industry. There is little chance of finding such a convenient stop-gap this time.

1) Every business is governed by a very small set of people compared with other types of institutions.

2) Each of these people can have a very significant effect on the welfare of society by exercising the powers they hold in a company.

3) One of the easiest ways to change how society works is to change the way these people hold power.

Of course there has always been regulation of corporate governance, but this has always been within the terms of the corporate world. Laws against fraud or insider trading, for example, are designed mostly to prevent dishonesty within business, or to stop some insiders gaining unfair advantage over others. They are not particularly concerned with those outside the corporate management and administration world – in other words, the consumers and suppliers (and even those who are too poor to be either: subsistence farmers would be one example). This whole group – the outsiders – are really just spectators on the sideline. But they are not disinterested spectators.

We have seen an improvement in corporate governance since the Enron scandal, as Dr Thomas Kirchmaier of the London School of Economics Corporate Governance institute points out here. But given that we, the populous, hold arguably as much of a stake in multinational corporations as we do in democratic governments, why do we not have more of a say in how they are run? Of course there are workability arguments, but these confuse efficiency with optimality. It is only one component of it, as democratic theorists know too painfully.    

The past decade or so has also seen a rise in grass-roots movements which operate on the paradigm that we do have a say in how corporations are run: namely, by the power we hold as consumers and the ways we choose to exercise our spending. This is a powerful and inspiring argument, but it breaks down when we think about assymetries of information. How many Icelandic consumers could have known what their banks were doing with their money, for example? Our responsibilities and choices as consumers are only small parts of a much larger nexus.

There were cries throughout the past ten years for more aid for the developing world, more fairness in trade, and greater protection of the environment. These global problems continue to dwarf those that were largely though not exclusively the concern of the developed world in the past decade: increasing wealth inequality and the attendant questions about the productivity and dignity-bestowing aspects of work, not to mention the larger question of what society might be for. But far too much of the outcry deafened us to the role corporate governance might have in dealing with these seeming leviathans.  

The debate now needs to turn even wider than bankers’ bonuses, or pay and competencies for directors: it needs to look at how every individual can exercise their stake in global business.

Many have been comparing today’s credit crunch with the Japanese banking crisis of the 1990s. Proof emerges today that we are dealing with something very different. Japan’s economy contracted in the fourth quarter at the fastest rate in 35 years. Japan, we might need to be reminded, is still the world’s second largest economy.

On Thursday the Irish government had to commit another 7 billion euro to bailout the country’s two largest banks, and now there is warning that the government could default on its sovereign debt.

Debt-market investors now rank Ireland as the most troubled economy in Europe.

Given that the European Central Bank is not a lender of last resort, a knock at the International Monetary Fund’s door might be expected soon.

Add to that another swinging demolition ball to be used against the myth of Skid Row: 99p Stores Limited is part-owned by Barclays Venture, the private equity wing of the major retail bank, meaning even the vast wealth of private equity occupies a place in our poorest communities.  A counterpart of 99p Ltd is Poundland, which sells products assigned a fundamental value by our markets, in the efficiency of their invisible wisdom, 1 pence greater than that of their rivals. Poundland too is owned by private equity – the US-based firm Advent International.  

There must be few places other than a 99p or Poundland store where you can see the interests of the vastly wealthy classes mixing so closely with those of the economy’s least fortunate – maybe a church or other religious venue would see that same mingling, or a parliament (allegedly). Readers are invited to provide other examples.

More here.

“Well now the nightmare is over, I think we can call it a nightmare without in anyway being anything other than objective.”

These were the words of Jon Snow, presenter of the UK’s Channel 4 News. He was talking about Zimbabwe.

Is it unfair journalistic bias to call the Zimbabwe of today a nightmare, as Daniel Finkelstein of The Times claims, saying it is ‘outrageous’ and that Jon Snow has confused his own opinion with objectivity?

An admission: Jon Snow’s comments weren’t really about Zimbabwe at all, but about George Bush’s term being the nightmare that is over. Yet would Daniel Finkelstein have had the same objection if the reference had been to Zim?

The wider question is can we accept that it is possible for there to be no breach of journalistic principle for a reporter to use the word ’nightmare’ in a piece?

Imagine, for example, a reporter sneaks into Harare, sees the cholera and starvation and turns to the camera and opens with ‘Harare is a nightmare’. No blame is attributed, no sides are taken. What the reporter is saying is not far from an ascription of fact – cholera and starvation are surely archetypal contents of a nightmare, or a vision of hell.

There are of course differences between what is happening in Zimbabwe and what happened under George Bush’s term.

But looking at the Bush presidency we see that we have had two very serious wars, one of the worst financial crises since modern economies emerged, a crisis of confidence and diplomatic relations around the world, and a refusal to accept objective scientific fact of the climate dangers our planet is facing. Again, it is not necessary to ascribe blame. We can simply look at the events and say: nightmarish.

What Jon Snow did is slightly different, because he said the nightmare that was ending was Bush’s term. In that way he did ascribe blame. But nearly every journalist in the world has ascribed blame to Robert Mugabe. They have also given him a chance to respond, as George Bush was also always allowed to do. That is what distinguishes journalism from propaganda.

The facts are there to show George Bush helped bring about at least some of the nightmares of his term, though not all. He brought the US to Iraq and Afghanistan and appointed as his representative to the United Nations, John Bolton, a man who opposes that organisation’s existence. There are facts and there are facts.

Jon Snow is perhaps guilty of hyperbole, and of not spelling out his reasons, and of not having a voice immediately present when he made that comment to at least have the opportunity to oppose it, but he is by no means guilty of lack of objectivity, or of confusing opinion with fact. In this case, his opinion is fact. To paraphrase a quote ascribed to Edward R Murrow in Good Night and Good Luck, it is not always the case that logic demands two sides to an argument. 

Daniel Finkelstein knows this well, as he himself has called the debt puddle Gordon Brown is leading the UK towards ‘a nightmare’, here. The difference between Snow and Finkelstein is that the latter is a comment columnist. But all good journalism requires taking a side - what you believe to be the right side. As long as you let the other side speak.

PS. Apologies have to be made for exceeding the finance remit again - more restraint will be used in future.

“I’ve been condemned by traditional economists who said that printing money is responsible for inflation. Out of the necessity to exist, to ensure my people survive, I had to find myself printing money. I found myself doing extraordinary things that aren’t in the textbooks. Then the IMF asked the U.S. to please print money. I began to see the whole world now in a mode of practicing what they have been saying I should not. I decided that God had been on my side and had come to vindicate me.”

The maverick in Harare is no doubt smiling as cholera and poverty fill the streets around him, happy that soon the rest of us will be following his lead. What a vindication.

“I sit back and see the world today crying over the recent credit crunch, becoming hysterical about something which has not even lasted for a year, and I have been living with it for 10 years. My country has had to go for the past decade without credit.”