The political upheaval in Libya has pushed oil prices to a 28-month high. Whenever crude runs skyward, fears of higher inflation usually follow, and this time is no different.
Strategic Briefing | 2.22.2011 | Libya: Oil & Political Crisis
Oil Rises to Highest Since 2008 as Libya Unrest Stokes Concern
Bloomberg/Feb 21
Oil surged to the highest price in more than two years in London as violence escalated in Libya, stoking concern supplies will be disrupted as turmoil spreads through the Middle East and North Africa… “Libya is producing 1.5 million to 1.6 million barrels a day, so any unrest is concerning,” Andrey Kryuchenkov, an analyst at VTB Capital, said by phone from London. “Until things settle there, prices are underpinned.”
Crude Near 28-Month Highs On Libyan Supply Cuts
Dow Jones Newswires/Feb 22
“Libya is the first major oil exporter to be engulfed by the crisis…it has probably doubled the additional risk premium in oil prices” to around $10/barrel, according to consultancy Capital Economics.
Global Warming & Asset Allocation
If you think climate change is a real and present danger, your asset allocation should reflect that outlook, according to a new study from Mercer, the consulting firm. That’s sure to be a controversial recommendation in some quarters. Anything related to climate change tends to stir debate of one kind or another, and so reviewing the topic as it relates to investing promises no less. Ready or not, it’s time to take a hard look at the implications of climate change for designing and managing portfolios, Mercer explains in “Climate Change Scenarios—Implications For Strategic Asset Allocation”
Book Bits For Saturday: 2.19.2011
● The Great American Bank Robbery: The Unauthorized Report About What Really Caused the Great Recession
By Paul Sperry
Summary via publisher, Thomas Nelson Inc.
The average American household lost $123,000 in wealth during the financial crisis. The Financial Crisis Inquiry Commission says Wall Street stole it, appearing to confirm the narrative told by countless politicians, economists, and pundits. The verdict seems unanimous. In fact, it’s unanimously wrong. The masterminds behind the biggest heist in history were radical social engineers on Pennsylvania Avenue, not financial engineers on Wall Street. The Great American Bank Robbery offers the first careful and thorough analysis of public policy’s role in the calamity. With stinging clarity, it indicts the real culprits–many of whom have returned to the scene of the crime in Washington. Now they’re planning an even bigger heist in the name of “economic justice.”
The Return Of The Budget Busters
Now it’s getting serious. House Speaker John Boehner warns that he’s won’t sign off on a short-term spending extension to keep the deficit-laden federal government operating. “Read my lips,” he says. “We are going to cut spending.” The budget showdown is here.
Kauffman Foundation Survey: Economic Bloggers’ Outlook Improves
The Kauffman Foundation published its new quarterly survey of “leading economics bloggers” today and the general outlook from this group is that there’s “a bit of hope” twinkling on the horizon, according to the press release. The Capital Spectator is among those surveyed.
History May (Or May Not Be) Your Guide
Economist James Hamilton reminds that we should recognize a distinction between claims that the Fed is printing money proper and crediting accounts at banks that are part of the Federal Reserve system. “These electronic credits, or reserve balances, are what has exploded since 2008,” Hamilton notes. Currency in circulation, by contrast, “has increased by 5.2% per year over the last two years, a bit below the average for the last decade.”
Consumer Prices Rise In January
In a time of soaring commodity prices, it’s no surprise to learn that consumer price inflation turned modestly higher last month. The debate is over what the latest jump in the CPI Index means for inflationary pressures down the road. Is there a new inflationary surge heading our way, as some analysts warn? Or is the firming of prices last month merely a sign that disinflation/deflationary trend of last year has been reversed and stabilized?
Research Review | 2.17.2011 | U.S. Labor Market
What Is the New Normal Unemployment Rate?
Justin Weidner and John Williams | San Francisco Fed | Feb 14, 2011
Mounting evidence suggests that structural factors may have increased the “normal” rate of unemployment to about 6.7%. Much of this increase is likely to be temporary. In particular, the extension of unemployment benefits probably accounts for about half of the increase. But, even with a 6.7% natural rate, current and forecasted levels of unemployment imply that significant labor market slack will persist for several years. It is important to stress that each of the methods used to estimate the natural rate is subject to considerable error, especially given the limited experience of very high unemployment in the post-World War II U.S. economy. As the recovery proceeds, we should develop a clearer picture of the new normal rate of unemployment.
Housing: Still Going Nowhere Fast
There’s not much cheer in housing these days, unless you’re a buyer with a fair amount of cash. Otherwise, the depressed state of residential real estate rolls on. Today’s update on building permits and new housing starts doesn’t change much, although with each month it’s becoming clearer that the bleeding has stopped. There’s also the usual bit of volatility on a monthly basis, and sometimes that dispatches a bit of good news. But it doesn’t mean much when you look at the big picture for this market. A recovery worthy of the name is still nowhere in sight.