Money talks: economics: Money talks: August 29th 2011
Bernanke says little at Jackson Hole, predictions about Obama’s Labour Day jobs speech and the euro zone’s gloomy outlook
Home » August 30th, 2011
Entries posted on: “August, 2011”
BofA Cashes Its China Chips
Bank of America Chief Executive Brian Moynihan bought himself some breathing room as the bank agreed to sell more than $8 billion of China Construction Bank stock, its second multibillion-dollar deal in a week.
Irene’s Damage Likely to Lead to Higher Insurance Premiums
The $7 billion in estimated losses from Hurricane Irene compound the vast damage caused by weather in the United States this year. Yet despite billions they’ve paid out for floods, tornadoes and earthquakes, big insurance companies can expect another profitable year.
Energy: That’s oil she wrote
I’VE been meaning to draw attention to this analysis from Stuart Staniford (brought to my attention by Kevin Drum). In it, Mr Staniford asks what the world might have looked like had oil demand continued to grow from 2009 on at its 2000-2008 rate of increase:In the counterfactual world, 2009 gross world product would have been 6.4 percent larger than in the actual world. We can estimate the implications for oil supply because we know that the global income elasticity of oil demand is about 2/3. Thus the counterfactual world would have required an additional 4.5 percent more oil than the real world.…2009 oil production was around 85 [million barrels per day] (depending on what source you like) so in the counterfactual world we would have needed it to be around 88-89mbd. Now, in 2008, oil production got up to around 86mbd (on an average basis) but doing so triggered (or required) an oil shock in which prices briefly reached $135/barrel on a monthly basis and almost $150 on a daily basis. What would the likely price path have been had the world then needed an additional 2-3mbd the following year?To give an indication of the scale of 2-3mbd, note that the loss of 1.6mbd of oil this year (Libya) triggered something like a $30 increase in the price of oil (before it became clear that the global economy was slowing again causing prices to fall). That, along with other commodity …
Business cycles: Was it housing what did it?
KARL SMITH has been doing some interesting blogging on the nature of the recession and recovery as seen through charts of the composition of economic activity. Do click through and have a look. He makes an interesting point about the contribution of housing to GDP; importantly, its decline began in 2006, over a year before the recession officially began and two years before the recession entered its severest phase. Employment figures tell the same story. Residential construction employment peaked in April of 2006; the economy lost nearly 250,000 construction jobs between then and September of 2008. Total nonfarm employment, however, kept right on growing until January of 2008. Total employment in September of 2008 was 433,000 jobs higher than in April of 2006, despite the bloodbath in residential building. Growth slowed with the collapse of the housing bubble, but it didn’t collapse until two years later; beginning in September of 2008, all sectors of the economy faced a sudden, sharp contraction.What does this tell us about the contribution of the housing bust to the recession? Mr Smith muses that it points to the importance of asset prices in the business cycle. This resonates the with Dean Baker view of the downturn, in which massive losses of housing wealth destroyed the economy. The problem is that prices also peaked in early 2006. According to the S&P/Case-Shiller …
Sheriff: Facebook Boast Leads to Arrest
A suspected reckless motorcycle rider has discovered the law’s long arm now reaches into cyberspace.
Tax Haven Pays Price for Success
Developed nations from Japan to America are desperate for growth, but the tiny Swiss canton of Zug is wrestling with a different problem: too much of it.
Kim’s Special Day ®
While average families are buckling down and watching every last dollar, some people continue to live in a world blissfully detached from grim economic reality. Among the members of this elevated class are politicians, celebrities — and the Kardashian clan. But even if we can’t all be celebrities (or even Kardashians), we can at least gawk at Kim’s wedding extravaganza last week. So let’s. I don’t know about you, readers, but on the wedding invitations I receive, recommended attire is listed simply as either “Black tie” or “Black tie optional.” There are no specific instructions beyond that. So you can imagine my surprise when I heard that all guests at the Kim Kardashian / Kris Humphries nuptials were required to purchase either a white or a black outfit for the ceremony. Keep reading this post . . .
Beyoncé’s Baby Bump and Lady Gaga’s Alter Ego Make Their MTV Video Music Awards Debut!
The biggest surprise performer at the 2011 MTV Video Music Awards on Sunday night? Beyoncé’s baby bump! The superstar stole the show thanks to her big announcement,…
Rescue Underway for 21 Trapped in New York Motel as Flooding Fears Increase
Rescue efforts are underway after 21 people were trapped in an upstate New York motel as rising waters from Hurricane Irene flooded the streets surrounding the building.
