Old habits die hard
Given my education and time in the finance industry, you could argue I am on the higher end of the financial literacy scale. Yet, I frequently make questionable financial decisions. Yesterday I needed cash and was not near a branch of my bank. I ended up using a another bank’s cash machine and paid a $5 fee! At that particular moment, I made the right decision. My nearest bank branch was twenty minutes away and I was running late. Twenty minutes was worth more to me than $5. But I can not justify participating in such an arcane banking system. Many online banks offer higher interest rates and free use of any bank’s cash machine. Online banks can afford to
Baby boom retirement may lose its drama
THERE was much ado in the newspapers not long ago, when the first member of the massive baby boom cohort collected the first of many, many Social Security checques. Fiscal analysts have long been preparing for the baby boom bomb, and the damage corresponding increases in entitlement expenditures could do to the budget. The transformative powers of baby boom retirement wouldn't end there, either. See Megan McArdle here for a look at how the aging of America might change the nation's social and economic patterns.But all this depends upon the dramatic demographic outcome long predicted by statisticians—a wave of some 78 million old Americans spending their way through their twilight years. What, however, if that isn't the right number? What
A look at a downturn past
AMERICAN consumer confidence has reached a low last seen in 1980. The Economist described the conditions at the time, in the June 7, 1980 issue:The slumping American economy has replaced foreign crises as the main concern of the White House. The current crop of economic gloom has sent the president's men scurrying for answers to questions: will Mr Carter be fighting an autumn campaign in the midst of a slump at least as bad as that of 1973-75? And, if so, should the president resort to some speedy pump-priming to produce a more congenial economic climate by election day?As with foreign policy in this election year, public pronouncements on economic policy give little clue to what the administration is really
Will oil supply give first, or demand?
WHILE there is no shortage of explanations for the recent run up in oil prices, one key dynamic is rightly given credit for a significant share of the increase. Petroleum demand has risen strongly in the last few years, and supply has not grown as quickly. The result has been constant upward pressure.Lurking in the background is the possibility that at some point, oil supply will cease growing at all—that natural limits will be reached such that production is ever after declining. This phenomenon is called peak oil, and its arrival would usher in an era of near ceaseless oil price growth until major adjustments in energy use had been made.But is that the peak to focus on? A post
Malthus revisited, and still wrong
THIS week's "Economic focus" looks at arguments that we're experiencing a return to Malthusian dynamics:If the world's population growth was a false concern four decades ago, when it peaked at 2% a year, it is even less so now that it has slowed to 1.2%. But even though crude demography is not to blame, changing lifestyles arising from rapid economic growth especially in Asia are a new worry. As the Chinese have become more affluent, they have started to consume more meat, raising the underlying demand for basic food since cattle need more grain to feed than humans. Neo-Malthusians question whether the world can provide 6.7 billion people (rising to 9.2 billion by 2050) with a Western-style diet.Once again the
A daily round-up of economic newsm
A daily round-up of economic news:Housing starts unexpectedly jumped in April, pushing the expected annual total back above 1 million units. A large increase in multi-family unit construction was responsible for the increase. Year-over-year starts are as dismal as ever, but growth in permits for future construction is cause for some hope.Oil prices remain volatile and buoyant. After a fall to near $120 per barrel in trading yesterday, a new Goldman Sachs forecast helped to push prices above $127 today. China is expected to increase fuel imports in the wake of this week's earthquake, and Goldman Sachs raised its oil price forecast for the second half of the year to $141, up from $107.Hong Kong announced first quarter GDP growth
In Zimbabwe, hedge your drinking
THE economic blogosphere is full of gems today. Inflation in America and Britain is uncomfortably high, but it could be worse—just ask Zimbabwe:During the meal, one of my mates was drinking beer - 750ml bottles of Castle Lager (fondly called bombers) he ordered a 5th one, was advised that the price, which when he ordered his 1st, 2nd 3rd and 4th ones was 160 million per bottle, had gone up to 340 million per bottle.Best to drink quickly, I suppose.(Hat tip: Felix Salmon)
After the Volcker recession, the Scorsese boom
ACCORDING to Nobelist Robert Mundell, the most significant wealth-creating film in history was Taxi Driver, and not just because half the college students in the world have a poster of De Niro plastered on their dorm room wall. John Authors explains:The 1976 classic, directed by Martin Scorsese with Robert De Niro as the bitterly alienated protagonist, gave the world De Niro’s catchphrase “You talking to me?,” and also introduced a young Jodie Foster. But what does it have to do with the world economy?John Hinckley, the deranged would-be assassin who attempted to kill Ronald Reagan in 1981, claimed that he was inspired by it. He said that his action was an attempt to impress Foster. (The movie features a scene
A daily round-up of economic news
A daily round-up of economic news:For most of the year to date, export strength has helped keep a weak American economy afloat. That may be about to change. Industrial production fell by 0.7% in April, more than had been anticipated. Automakers led the way down.Deal news! Old media giant CBS, a Sumner Redstone property, has announced a plan to purchase Cnet for about $1.8 billion. Cnet is a California-based internet company which manages a number of popular websites, including Metacritic, MP3.com, and GameSpot.OPEC revised down its 2008 forecasts for both demand and supply from non-member states. The organisation said that global demand should rise by 40,000 fewer barrels per day than originally anticipated. But non-member supply will also be 100,000
Even the best case for farm subsidies is a bad one
DEAN BAKER says there's nothing like an extensive system of agricultural subsidies to help feed the poor in developing nations:The truth is that the U.S. and European subsidies that cause the Post, the NYT, the World Bank and many NGOs to get apoplectic have the effect of lowering world food prices. That means that fewer people go hungry than would be the case without these subsidies. This isn't rocket science, it's almost definitional. The U.S. and European effectively pay their farmers to keep farming, thereby producing more food than otherwise would be produced. This may have negative consequences for farmers elsewhere in the world, but it does mean that supply is greater and prices are lower than they would be
Are Americans demanding smaller plates?
THE SIMPLE solution to the obesity epidemic: people need to eat less. But, anyone who eats in American restaurants can tell you, portions tend to be enormous. Americans are served so much food they often have leftovers they take home (taboo in European countries with smaller portions). Americans have become conditioned to large portions at low prices. Ironically, I pay a premium for less food on my plate. I usually go to the fancy sandwich place that charges $2 more than the local deli. Why pay more for the same quality tuna? I can not stomach the half pound of protein most New York delis insist on serving a single person. I pay more in order to get less. It’s the
The case for carbon tariffs remains weak
MEGAN MCARDLE expresses a very common concern with proposals to price carbon in developed nation markets:As a practical matter, I agree with the economist I lunched with yesterday that cap and trade is doomed as long as it includes offsets and doesn't price the carbon cost of foreign goods. Otherwise, all we do is displace consumption of fossil fuels to China--an excellent, though thoroughly inefficient, charity program, but no good for the environment. In fact, the net environmental result might well be negative. China and India use fossil fuels in a much less efficient, much more polluting way, because clean technology has a higher capital cost; a ton of coal or a barrel of oil consumed in China produces less
The latest political oil gambit could be worse
AS NOTED in the morning memo, Congress has voted to halt deposits of oil into America's strategic petroleum reserve in an effort to slow the rise in petrol prices. Could this possibly work? In all probability, it will do little to offer consumers any help. But there is a case to be made for trying such a strategy. Geoffrey Styles writes:Since current SPR additions are only 0.07 MBD (70,000 bbl/day), how much effect could foregoing them have on oil prices? Measured against 85 MBD, virtually none, but that's not the relevant comparison. What really counts is the Mid-continent light sweet crude system, consisting of pipelines going into and out of storage at Cushing, serving a number of inland refineries, including
A daily round-up of economic news:American consumer prices rose by less than expected in April, increasing just 0.2%. Annual inflation remained uncomfortably high, however. Year-over-year prices in April were up 3.9%, down from March's annual rate, but still outside the Federal Reserve's preferred range.Freddie Mac, a major player in America's mortgage lending market, lost $151 million in the the first quarter of 2008—a much narrower loss than anticipated. The firm will nonetheless seek to raise over $5 billion in new capital. Last week, Freddie Mac's rival firm Fannie Mae announced a quarterly loss of over $2 billion.The death toll continues to climb in China in the wake of a powerful, 7.9 magnitude earthquake; at least 15,000 are now estimated to
Women have more job security, but lower wages
THE LATEST recession economic slowdown has been harder on men than women. Between April and November of last year, women gained 300,000 jobs, while men lost nearly 700,000. Why? Women tend to work in the service industry, where jobs, so far, have exhibited less sensitivity to the business cycle. More men are employed in pro-cyclical industries, such as construction, and declining industries, such as manufacturing. Peter Coy notes that while women may have more job security, they may not have better jobs. Their service industry jobs offer less benefits and stagnant wage growth. Why have many women ended up in lower paid jobs even as the gender pay gap narrowed for comparable work? Many of the “female professions” Mr Coy cites require skills