Monday, October 20, 2008
Despite Early OPEC Meeting, Some See Even Lower Oil Price Near Term
“A perennial problem is diverging interests among OPEC members. iran and Venezuela need high oil prices to make their sulfurous, heavy crude economically viable and are calling for cuts deep enough to keep oil prices above $80 a barrel; Saudi Arabia, which has far and away the most clout by virtue of the size of its reserves, also has far and away the lowest production costs and thus is less affected than other producers by price declines.”
Economists React: China’s Growth Is Slowing, Not Slumping
“The GDP figure isn’t particularly useful. It offers little granularity and is best used as a lagging indicator on the ‘direction’ of growth. It is also unclear to what extent Olympic-related factory closures and transport disruptions depressed the [year-to-year] growth rate. Moreover, there is tension in the monthly data. September’s PMI, fixed investment, and iron ore import growth all rose. But industrial production and steel production growth fell. The latter two may be signaling problems specific to the steel sector rather than the broader economy. … The upshot is that growth is slowing, but not yet slumping. – Ben Simpfendorfer, Royal Bank of Scotland"
RW: I was unaware that 9% annual growth was anywhere near slumping. Hasn’t Ben (the media) heard of the rule of 72? With 9% annual growth, income will double in 8 years!
Paulson: Bank capital plan is 'investment, not expenditure'
“This is an investment, not an expenditure, and there is no reason to expect this program will cost taxpayers anything. They will not only own shares that should be paid back with a reasonable return, but also will receive warrants for common shares in participating institutions.”
RW: At least Bernanke’s honest – he says that he cannot assure the profits will be made.
“The agency market continues to be a vale of tears in search of buyers. Agency spreads are wider today despite improvement in other spread markets and improvement in funding markets. FNMA had scheduled an announcement of a benchmark note but decided to pass on the opportunity.”
RW: Payback’s a b- - ch!
Do Not Pass Go. Do Not Collect $200.
“Confused about how the crisis happened? Start by getting out your old Monopoly set, Tim Harford advises:
The game is one big property boom, funded by an overly generous central banker – a diagnosis many economists would also apply to the sub-prime crisis. Alan Greenspan, the Fed chairman who presided over the boom, was nine when Monopoly was widely published. It is not known whether he played the game as a child, but he seems to have taken inspiration from it somehow.
Maybe that's why I always ended up depressed after playing as a kid ...”
RW: I knew that there was a reason why I liked to play Monopoly. The rule: if you suck at Monopoly, then don't buy real estate! Remember the McDonald’s Monopoly game? Never won that either.
A Damascene Moment
“Tomorrow's Lehman CDS settlement remains one prominent possible thorn in the side of policy normalization. So risky markets may struggle to tack on much more upside until tomorrow's settlement is successfully resolved.
Assuming that does come to pass, Macro Man would not be surprised to see a decent rally in risky stuff. The combination of an easing of the worst of the crisis and the impending US election could give markets all the excuse they need to rally.”
RW: Kind of wish that he would explain the problem with Lehman’s CDS settlement, but at any rate, Macro Man is the best – super informative, and always refers to himself (could be a girl) in the third tense. Macro Man, if you’re out there, will you please explain the title? Damascus? Syria? What? I am sure that I am totally stupid by not knowing this.
And I knew that FOX would not let me down! Here is the classy news for the day:
Report: Halle Berry Says She Takes Control in Bed