Things are bouncing back this morning, but it’s been an ugly week. The broad market is a sea of red:
Peak oil gets all the attention, but the peak isn’t the problem. Unless your assumptions about the dynamics of oil production are rather artificial, there will be an inflection point before the peak. Symptoms of strain in the system appear as soon as the production rate grows more slowly more slowly than GDP less intensity improvements, or simply more slowly than expected. That’s when price has to begin rising to clear the market, creating the signal to alternatives (efficiency, biofuels, unconventional oil …) that they are needed, so that’s when the pain hits. Whether the pain is brief and results in an orderly transition, or something rockier, is a matter for some debate. Either way, arguing about when the peak might come is the wrong question; we should be considering whether we’re past the inflection point, and thus in a period of rising stress, and what to do about it.
I got a silly chain email, which proposed taking the $85 billion needed for the AIG bailout and distributing it among all 200 million taxpayers, so that we’d each get $425,000 to play with. I decided to test this idea on my boys, who are seven and eight. Ignoring the fact that $85B divided by 200M is $425, not $425,000, we had a conversation about what would happen if the government distributed half a million in cash to every American:
Kid1: That would be generous.
Kid2: That would be hard. There are like 150,000 people just in Bozeman.
Me: Where would the government get that kind of money?
Kid1: Make it (by printing).
Kid2: Steal it from another country.
Production and Operations Management 17(4) honors Jay Forrester as an important person in the history of operations management. He joins Kenneth Arrow, Ronald Coase, and William Cooper in the distinction this year. Congratulations Jay!
Hat tip to John Sterman on the SD email list. I don’t have fulltext access to the journal, but if someone sends me a snippet, I’ll post it.
Brad Setser analyzes the Fed’s balance sheet in Extraordinary Times. They sure are:
Several of the economics blogs I read have
had useful roundups of bailout commentary. A few I find found useful:
Do we need to act now? on Economist’s View
9/26 Links on Economist’s View
NYT Economix’ analyst roundup
Greg Mankiw’s roundup of commentary
Real Time Economics’ Secondary Sources
Greg Mankiw with more commentary
Brad de Long on Krugman on the Dodd plan
WSJ Real Time Economics’ Text of Lawmakers’ Agreement on Principles
Thomas Palley on Saving the Financial System
Marginal Revolution on the Republican plan to rescue mortgages instead of buying mortgage assets
Marginal Revolution with a Modest Proposal (finding and isolating toxic assets)
Marginal Revolution with substitute bridges
Real Time Economics on securitization
Brad deLong on nationalization (the Swedish model)
The Big Picture with Stop Targeting Asset Prices
Marginal Revolution asks, is the Sweden plan better?
From the ArXiv blog: researchers have discovered a new fractal, closely matching a Sierpinski Carpet, in the boundary layer dynamics of coffee in milk. I don’t know how Rayleigh-Taylor instabilities work, but I do find occasional cool things in my coffee:
Update 9/26: WorldChanging has another take on the WCI here.
I haven’t read the whole thing, but here’s my initial impression based on the executive summary:
Major gases, including CO2, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulfur hexafluoride.
|Large Industrial & Commercial, >25,000 MTCO2eq/yr|
|Yes||Point of emission|
|Yes||Point of emission|
|Electricity||Yes||“First Jurisdictional Deliverer” – includes power generated outside WCI|
|Small Industrial, Commercial, Residential||Second Compliance Period (2015-2017)||Upstream (“where fuels enter commerce in the WCI Partner jurisdictions, generally at a distributor. The precise point is TBD and may vary by jurisdiction”)|
Gasoline & Diesel
|Second Compliance Period (2015-2017)||Upstream (“where fuels enter commerce in the WCI Partner jurisdictions, generally at a terminal rack, final blender, or distributor. The precise point is TBD and may vary by jurisdiction”)|
|Biofuel & fossil fuel upstream||To be determined||?|
|Biomass combustion||No, if determined to be carbon neutral|
|Agriculture & Forestry||No|
(See an earlier Midwestern Accord matrix here.)