Recent Blog Posts
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The Times' Rorshach Geithner Story
Apr 27 20099:04am EDT -
Sinking Animal Spirits
Apr 27 20098:04am EDT -
Counter-cyclical Urban Policy
Apr 26 200910:04am EDT -
Be Your Own Counterfeiter
Apr 26 20099:04am EDT -
Being Tim Geithner
Apr 25 200912:04pm EDT -
Notes From a Press Conference Naif
Apr 25 20099:04am EDT -
What Good is the News?
Apr 25 20098:04am EDT -
Stressful Enough
Apr 24 20092:04pm EDT -
Not Regretting the Pound
Apr 24 20091:04pm EDT -
Introducing the New Ford Squeeze
Apr 24 20099:04am EDT -
Non-Economic Questions of the Day
Apr 24 20099:04am EDT -
The Stress Test Blind Alley
Apr 24 20098:04am EDT -
Happy Hour
Apr 23 20099:04pm EDT -
Recovery Without Rebalancing
Apr 23 20096:04pm EDT -
The Shape of Your Recession
Apr 23 20095:04pm EDT
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Oil Datapoints of the Day
At today's prices the value of oil in the ground exceeds the combined value of all the world's equity and debt markets.
Oil-importing nations are paying oil-exporting nations roughly $1,500bn per annum for oil - about 2.5 per cent of global gross domestic product - by some measures the biggest income transfer in history.
The whole article is excellent, and required reading for anybody wanting to scare up opinion against sovereign wealth funds. Yes, the savings rates of oil exporters might start falling as their capacity for domestic investment rises. But there's no doubt that their savings in absolute terms will rise impressively for the foreseeable future. If you think the SWFs are big now, just wait another decade: they'll have major geopolitical importance then.
The last two waves of petrodollar investment both turned very sour in the end, and I can't say that the medium-term outlook is any better. The magic of capital markets is that they're meant to somehow take capital from investors and funnel it to where it can be put to best use in the real world. But with banks deleveraging and investors staying risk averse, it's not easy to see that happening with any elegance in the future.
Over the next few years, oil will be converted into stocks and bonds at an astonishing pace. That trade has never worked out well in the past; what hope is there that it will work out well in the future?
