Links 12/3/08

Royal Shakespeare Company to stop using ‘distracting’ real skull in Hamlet Telegraph

Mystery of crocs’ mass die-off BBC

Metal prices fall further than during Great Depression Ambrose Evans-Pritchard

Paulson Softening Stance on Foreclosure Relief Paul Jackson, Housing Wire

Manhattan Awash in Open Office Space New York Times

Oil Will Fall Further Without OPEC Action, Says BP Bloomberg (hat tip reader Scott). And stay down for 12 to 18 months too.

For College-Bound, New Barriers to Entry Wall Street Journal

Former Treasury Undersecretary Proposes 100 Year Treasuries Michael Shedlock. A not-bad takedown, but Mish misses the real issue. Exceptionally long dated bonds, like Disney’s 40 year bond, get sold when the long term environment is perceived to be reasonably stable AND the issuer is seen as rock solid. With all the talk about the coming multi-polar world, who knows what the US will look like in 100 years. Or even 30, for that matter.

Securities lending starting to dry up a little? AllAboutAlpha

Thoughts for the Day: AIG, Private Equity and Venture Capital Roger Ehrenberg. Check out the AIG mini-rant.

Finance, redistribution, globalisation Giuseppe Bertola and Anna Lo Prete, VoxEU

TIPS yields Jim Hamilton, Econbrowser, Intriguing.

Does exchange rate flexibility speed up current account adjustment? Menzie D. Chinn and Shang-Jin Wei, VoxEU. This is an important piece. Debunks a basic premise of floating rate currencies:

We find no robust evidence that the speed of current account adjustment increases with the degree of flexibility of an exchange rate regime. To be more precise, there is some evidence that, for non-oil developing countries, the most rigid fixed regimes have the fastest current account adjustment, followed by pure floaters. Countries with a dirty-float exchange rate regime exhibit the slowest current account adjustment.

Antidote du jour:

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  1. ndk

    Ooh. I like Mankiw’s hypothesis a lot; wish I’d thought of it. It strikes me as an excellent explanation, and it’s true that TIPS are no longer a good indicator of expected inflation due to their no-negative-coupon, payoff-at-par guarantee.

  2. Anonymous

    Doth the black kings squeal in protest, my share price for a horse of demand.

    When will these people crack open a history book, to see that things never stay the same. One energy source is always replaced by another, human, wheel/pulleys, wood/coal/steam. I would think rather than stick their heads in the sand and say no, no, no, we must keep our status quo.

    They could use their massive capital to spark the next generation of technology in energy. This way they would at least keep some of their clout/influence. This is my biggest fear with energy, that some think they have social license to carry on with old ideas, rather than help issue in a new era.

    It’s comical to think, that maybe every corporation should have a history major on the board, in order to help steer the boat. The monetary system is starting to really scare me.


  3. Anonymous

    I honestly thought the crocs story was about CROX, the plastic shoemaker. Too many stocks on my mind!

  4. donna

    “They could use their massive capital to spark the next generation of technology in energy. “

    SOmehow this never happens. There is always, always a big war over the last of the previous energy sources. We haven’t had the oil war yet — but we will. And the winner will be whoever best positions themselves to use the next energy resource. If we had brains, we would be investing all we could into alternative energy sources, and let ourselves be positioned to do as little as possible in the next big war.

    Hey, it’s how we won the last one. America had all the resources ready to go, and the empty manufacturing capacity. After this big crash, there will be destruction — and most of it will not be creative. We need to prepare for what is inevitably ahead.

  5. Anonymous

    Those poor gharials! Maybe in the future naturalists could catch the sick ones and put them on dialysis.

  6. Tortoise

    The president of the American Council on Education, a big college trade group, has predicted that students could face double-digit tuition increases next year.

    Is that what they call deflation?

  7. John Emerson

    The flamingo secretes milk which it feed to its young. Other birds which do this are penguins and pigeons.

  8. River

    Off Topic: Concerning Baltic Dry Index.

    Interesting comments about tanker speeds at sea and how they effect everything, including the BDI, according to this commentor.

    ' Recs: 76 When the Turn Comes for CL, it could be vicious
    My rough estimate says that at any given time in recent years about 600 to 700 million barrels of crude oil are at sea, enroute from exporters to consuming countries.

    As a shipowner, about the only cost I have much control over is my fuel cost. Financing and insurance costs are a function of time–so much per month or year. Maintenance is also mostly a function of time, but it might be defered during economic downturns. Crew costs are also a function of time–so much per month, or per shift.

    Fuel burned is a function of speed–the drag goes up as a function of the speed–roughly at the square of the speed–double the speed equals more than double the fuel, but half of all the other costs. So at any time, there is an optimum speed–the higher the cost of fuel, the slower to steam to optimize profits. The lower the fuel cost, the faster you show go, up to the limit posed by higher drag on the ship's hull.

    We have just had the biggest drop in bunker fuel prices ever experienced, so every good charter captain just started steaming faster–anything else would be to leave profits on the table. How much faster? If 25%, then the amount of crude at sea would have dropped by 100 to 150 million barrels over the past 2-3 months, or about 1.5 to 2 million barrels per day. This destocking at sea would make it look like we have a worldwide oversupply of that amount. By the way, this same factor of ship-speed also explains the weakness in the BDI.

    It also says that once oil prices(bunker fuel) starts back up, then that 2 million b/d will dissappear from the markets as the steaming speed slows back down. I happen to think the destocking at sea is about to end, and that, together with the winter seasonal increase and OPEC cuts may remove some 6 million b/d from markets between now and February, and that is why Land-Lubber just might be right in his call for $150 crude by 2-29-2009. Just my 2 cents for discussion. I can sure tell you as a pilot I adjust airspeed to reflect fuel costs, and so do all the airlines.'


  9. macndub

    Chinn and Wei’s paper is interesting. I’m not sure that I buy it, though. The first issue that I see is that fixed rates only adjust faster when the data set is controlled for economic openness. Is openness a stat like GDP? Or more of a judgement? Also, for the results to be significant, you’d need variability in each of the interactions: are there enough examples of open economies with fixed exchange rates to be meaningful, for example?

    Secondly, I’m suspicious of regression models that don’t have a theoretical underpinning. In this case, fixed exchange rates adjusted faster, but why? Did these economies suffer deeper recessions? That would certainly normalize a current account deficit, but the cost is high. Unnecessarily high, I would say.

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