Forcing the market to produce large amounts of renewable fuel will harm consumers. Even though it reduces some emissions, it increases others.
via Lose-Lose on Biofuels? — The American, A Magazine of Ideas.
Blame the Board
Princeton economist Alan Blinder says much of the financial crisis was due to excessive risk taking, which was due to perverse incentives, which were due to crazy compensation packages, which were approved by boards of directors:
The yield curve is very steep, which usually foreshadows rapid growth in the economy, but we have issues in the financial system that may resist that stimulus. Liquidity in private hands is tight, so opportunities to make money borrowing short and lending long are limited.
So whatever sort of debt or currency problems we have down the road, they’re likely to be drawn out over years and years. That’s great, in that it gives us the leeway to stimulate our economy with gigantic deficits right now. It’s dangerous, in that without the ferocious external pressure to shape up that countries like Iceland, Ireland and the UK have and will face, we might not be able to help ourselves from spending and borrowing our way into really serious trouble.
via From Reykjavik on Thames to Reykjavik on Hudson? – The Curious Capitalist – TIME.com.
A new McKinsey report is out arguing that an oil shock is inevitable, and it could come sooner than expected. When? As early as 2010, under the firm’s “moderate” economic downturn scenario, and as late as 2013 if the downturn is more harsh.
I know where I’d place my bet between Daniel Yergin and Jeff Rubin with respect to the outlook for triple-digit oil price, but here are their respective cases nevertheless:
via Rubin vs Yergin on Triple-Digit Oil Prices.
PK agrees with Rubin.
The purchase-accounting rule, known as Statement of Position 03-3, provides banks with an incentive to mark down loans they acquire as aggressively as possible, said Gerard Cassidy, an analyst at RBC Capital Markets in Portland, Maine.
“One of the beauties of purchase accounting is after you mark down your assets, you accrete them back in,” Cassidy said. “Those transactions should be favorable over the long run.”
JPMorgan bought WaMu’s deposits and loans after regulators seized the Seattle-based thrift in the biggest bank failure in U.S. history. JPMorgan took a $29.4 billion writedown on WaMu’s holdings, mostly for option adjustable-rate mortgages and home- equity loans.
via JPMorgan’s WaMu Windfall Turns Bad Loans Into Income (Update2) – Bloomberg.com.
David Swensen, the top-ranked college endowment manager in the past decade, said individual investors should own inflation-protected Treasuries because U.S. economic recovery efforts may lead to an increase in consumer prices.
via Yale’s Swensen Recommends TIPS to Hedge ‘Substantial Inflation’ – Bloomberg.com.