June 29, 2005
Romney's new health care proposal
The governor of Massachusetts has some new ideas for health care that, if nothing else, may help stimulate public discussion of the problem and our options for dealing with it.
June 27, 2005
How high do oil prices have to rise before demand actually falls?
That was the question that a reporter from Reuters asked me this morning. Here is what I answered.
GM auto sales strong in June
One feature of past oil shocks that contributed to an economic downturn was a sudden change in consumers' car purchases. But the latest indications are that U.S. automakers so far at least are not experiencing the same kind of problem this time around.
June 26, 2005
Can anything slake China's thirst for oil?
If China's oil demand keeps growing at its current rate, it could produce some real problems. But I see a number of reasons to expect that the growth will slow down significantly.
June 25, 2005
Concerns about the latest Social Security proposal
Having raised public awareness about the longer term challenges of funding Social Security, the Republicans now ride boldly to the rescue with-- a new accounting gimmick. To the extent that it amounts to anything more than that, I'm a little worried.
June 24, 2005
A supreme mistake
Count me among those disgusted with the Supreme Court's ruling against Susette Kelo, which asserted the right of the government to seize her home in order to divert the property to what it judged to be a use of higher economic value.
June 23, 2005
What is a bubble and is this one now?
Many of those discussing the possibility of a housing market bubble seem to be taking Justice Potter Stewart's position on pornography-- they haven't defined a bubble, but they think they know it when they see it. Maybe it's useful to take a look at a formal characterization of the concept of a speculative bubble, and see how well it seems to fit the facts of the current situation.
June 21, 2005
For the love of tulips
Many folks appear to be convinced that the current housing situation is akin to any of a number of other famous financial bubbles of history. Trouble is, those famous bubbles weren't very much like what most people seem to assume.
June 20, 2005
The case for more uniform fuel standards
Problems in the U.S. wholesale gasoline market have played a relatively minor role in the gasoline price increases of the last few years. But this is one part of the problem that we created all by ourselves and can fix all by ourselves.
June 19, 2005
Another exciting week in oil markets
Spot oil prices climbed to new highs last week even as the price of the December 2011 futures contract fell, steepening the backwardation I commented on here and here. A look back at what happened in the early 1980's may give some insights into what the market may be expecting next.
June 18, 2005
Babble about a housing bubble
There's been much discussion recently of whether the U.S. is experiencing a speculative bubble in house prices. Like previous historical bubble sightings, this one only seems to pop up in situations where the fundamentals on their own might justify significant price increases.
June 16, 2005
Ethanol clouds senators' judgment
The urge to be seen as doing something about our energy problems is giving rise to legislation that has the potential for more harm than good. The ethanol amendment approved by the Senate yesterday is a case in point.
June 14, 2005
What is Saudi Arabia up to?
There is a chronic disconnect between what Saudi Arabia says it's going to do and what actually happens. So what's really going on?
June 13, 2005
Worries about the yield curve
The yield curve has inverted eight times in the last half century, and in six of those episodes, the U.S. ended up in recession. Some analysts are concerned that we may see a ninth inversion before the end of this year.
June 12, 2005
Contango, backwardation, and all that good stuff
From some of the comments that have appeared both here and on some other blogs about my post Oil futures and the future of oil, it seems that some readers might appreciate a technical background discussion of the way in which carrying costs and convenience yield influence the relation between spot prices and futures prices. So if that describes you, by all means read on.
June 11, 2005
Time to repeal McCain-Feingold
Everybody seems to agree that this law at a minimum needs some major tweaking. I say it's time to throw it out altogether.
June 09, 2005
Oil futures and the future of oil
Commodity traders can have as hard a time as any of us trying to predict oil prices. But it's interesting to see what the current price structure tells us about what traders believe brought about the current high prices and what may be in store for us next.
June 08, 2005
Predicting the Fed's next move
Fed-watching can be something of an arcane sport. Will the subtle disappointments in the May employment and automobile sales figures persuade the Fed to hold back on another interest rate hike? And what would someone who's really "in the know" infer from how high Alan Greenspan raised his right eyebrow at his last public appearance? Although playing that game can be fun, it's actually quite easy for anybody to have a very well-informed belief about what we can expect next from the Federal Reserve.
June 06, 2005
Economic consequences of the high price of oil
All but one of the U.S. recessions since World War II have been preceded by a dramatic increase in crude petroleum prices. Recent turbulence in energy markets has some analysts speculating that, in the immortal words of Yogi Berra, it could be deja vu all over again. But this oil price shock differs significantly from earlier episodes, leading me to believe that the economy will be able to adapt to the new pricing environment without a major economic slowdown.
June 04, 2005
Disappointing job statistics?
The May employment figures released by the Bureau of Labor Statistics yesterday sent mixed signals, revealing that U.S. job creation slowed in May even as the unemployment rate edged slightly lower.
What's up with oil prices?
Oil prices made the third sustained run above $50 that we have seen over the last 9 months. Although the week-to-week price changes have been quite volatile, it appears that long-run factors, particularly strong oil demand from China and other developing counries, is the major story here.
June 03, 2005
No sign yet of recession
The probability that the U.S. economy is experiencing a new economic recession remains below 5%, according to the latest value of the quarterly real-time GDP-based recession probability index.