Since I think I am smart, going to make prediction. (more…)
Archive for the ‘economics’ Category
Predicting housing prices
Wednesday, May 28th, 2008More maths on oil
Wednesday, May 28th, 2008Econbrowser publishes oil price estimates in more detail
Bottom line: Demand is going to rise one hell of a lot. Supply for that demand just is not there.
This paper does not review supply from coal to liquids or gas to liquids. The only way to meet demand is to generate liquids from coal by underground gasification followed by gas to liquids conversion. This will require many, many quite gigantic projects, but at present we have only a small number of small exploratory projects, most them scheduled to start producing around 2015 or so. So the price of oil will have to rise to quite astonishing levels, at least for a couple of decades. We have only seen the beginning.
Finally, some one else does the maths on oil
Thursday, May 22nd, 2008I am continually puzzled by the world’s chronic inability to do basic arithmetic, but I see that econbrowser has done the maths on oil.
There are a lot of people in China. There are no longer large political obstacles to competent and industrious people in China making money. Therefore, very soon, a lot of Chinese will be making a lot of money. Therefore China will soon be consuming an enormous amount of oil. Econbrowser concludes China will soon be consuming a lot more oil than is ever likely to come out of the ground.
Therefore the price of oil will rise without limit until coal to oil and nuclear to hydrogen fills the gap. And right now, coal to oil projects are insignificant, and nuclear to hydrogen is not even on the drawing board. Therefore in the next decade or so, oil will rise to astonishing heights, far above present prices.
This time they did ring a bell at the bottom
Wednesday, May 21st, 2008You know the saying about markets: “They don’t ring a bell at the top or the bottom”
The bell has just rang to announce the bottom of the housing market in California. From here on out, the prices are going up from insanely high to even more insanely high. Never again will ordinary affluent middle class people be able to buy a house in silicon valley, until the day dawns when the private property right to develop land is once again respected.
Various incompetently run or criminally run banks found themselves with lots and lots and lots of inflated and fraudulent mortgages. In due course, they found themselves with the real estate that was securing the mortgage. In the last few days they have held auctions in Silicon Valley and Sacramento to get rid of the properties. The properties sold like hotcakes, with bidders bidding them up, and up, and up.
Exxon blows it
Wednesday, May 14th, 2008Bryan Caplan wonders if oil prices are a bubble.
When oil spikes abruptly, that means people made incorrect investment decisions – under invested in exploration, development, and gas to liquids conversion.
A simple back of the envelope calculation tells me they are still under investing. Exxon recently abandoned gas to liquids plant that would be profitable if oil remains above forty dollars to fifty dollars a barrel. But if everyone acts like that – and everyone is acting like that – oil is going to be way above fifty a barrel.
Do I hear someone saying “Hey. Do you think you are lot smarter than the guys running Exxon?”
It is quite simple. For the price of oil to remain stable at present levels, we need to accommodate China’s industrialization by producing a lot more oil each year. The planned increases in oil production add up to peanuts. So the price of oil is heading up, and going to stay up.
Vote Obama
Tuesday, May 13th, 2008The presidents that have done the most to smash capitalism have never been Democrats, because anti capitalist Democrat presidents have always found themselves paralyzed by gridlock – the pro capitalist faction unites along party lines, and the federal government system locks up, as it was designed to do. The founding fathers intentionally constructed the federal government so that it would be slow and inefficient at making large controversial changes.
The greatest catastrophes for capitalism have come from the anticapitalist Republican presidents, Nixon and Hoover, because they could get “bipartisan” anticapitalist measures through congress.
Environmentalists have always intended global warming as a justification installing a socialist command and control economy. McCain has just unveiled a global warming plan, theoretically market based, but in fact not in the slightest market based, a command and control plan which is the socialists wet dream. He calls it market based, but this merely means that bureaucrats will be able to blame markets for the chaos they create. The only role of the market in the plan is to be the guy that takes the fall. As Brutally Honest says, McCaine has drunk the koolaide
Maybe Obama is just as anti capitalist, or even more anti capitalist than McCain, but if he is, he will face gridlock.
Genocide and environmentalism
Sunday, May 11th, 2008Bryan Caplan writes
When someone says “There are too many Jews,” we suspect that he wants to kill Jews. Similarly, it turns out that at the root of Hitler’s propensity to kill people was his belief that there are too many people.
And if you’re tempted to say that Hitler proposed a barbaric solution for a real problem, take a look at how Germany actually did feed its population since 1945: increasing agricultural productivity and increasing exports. The two methods that Hitler dismissed out of hand transformed Germany into one of the richest nations in history.
Religions that command human sacrifice are good at providing power to their priesthood. Thus we see the first greenie famine being welcomed with delight by the true believers, much as they previously welcomed the return of malaria.
Environmentalists confidently state with immense confidence all sorts of “facts”, most of which are impossible to meaningfully test, some of which can be easily tested, and which test false – which test does not impair the confidence of the environmentalists in the slightest, just as the obviouse falsehood of the Christian doctrine of transubstantiation does not trouble those Christians who believe in it in the slightest.
Two obvious and extreme example are:
- the much repeated “fact” that we are in the middle of a vast mass extinction, that ten thousand species go extinct every year. Ask any greenie to name a species that has recently gone extinct. He will not be able to answer, and will be entirely untroubled by his inability to answer.
- the much repeated “fact” that the ice is melting, even though satellites show that the area of the world under ice has not changed significantly since satellites have been observing.
When environmentalist “scientists” report the disappearance of ice, they are not in fact reporting the disappearance of physical corporeal ice and snow, the stuff that causes your car to slide, and has to be shovelled off the path, the stuff that is apt to sink ships at sea. What they are really reporting is the disappearance of magic ice, the spirit of the ice, Gaia’s infusion of spirituality into a frozen wilderness that they contemplate from the comfort of Starbucks. Hence their total indifference to physical evidence. The holy ice, which is melted merely by man’s unholy gaze is disappearing, even though the merely physical ice continues to endanger shipping in pretty much the same places as it has for the last century or so.
Similarly when environmentalist “scientists” report that the polar bear is endangered, they are entirely indifferent to actual numbers of polar bears. Far from being endangered, polar bears, like deer, a pest and a hazard. Rather, because they raid garbage dumps, because they have become a pest and a hazard, the holy spirit of wild nature of which the holy bear is a manifestation, is in danger of going extinct.
US$ declining as a reserve currency
Tuesday, May 6th, 2008“Financial Cryptography? reports that use of the US$ as a medium of international exchange and as an international sttore of value has declined to about two thirds of what it was four years ago.
Changes in the way people use money are extremely slow. Because money is a store of value, people are profoundly reluctant to change. Such a change is cataclysmically rapid compared to the normally glacial rate of monetary change.
In my own personal experience, US banks and US financial institutions have suffered a cataclysmic decline in competence, honesty, reliability, and efficiency over the past decade or so, particularly in international transactions. Over the past several years I have been repeatedly astonished and disbelieving at basic failures of integrity and inability to perform the ordinary duties of a bank, such as simply making sure that money does indeed get from where it is, to where it is supposed to go, or to make reasonable and realistic assessments of credit worthiness and financial worth. The propensity of the Bush administration to print money, and the fact that the Iraq war is taking longer and costing more than expected is also having a severe impact. I have no idea which of these several causes is the more serious.
Paul Collier explains the famine
Tuesday, May 6th, 2008Paul Collier explains the famine.
In the modern era, famines are usually caused by war or socialism. This time around, it is a bit different. Collier lists four causes – one is Chinese prosperity, two are environmentalism – the ban on genetically modified food, and the American biofuel program, and one is social engineering – state intervention to preserve small (and thus ineffectual) farms as a voting block.
As I remarked earlier, the twentieth century was a time of socialist famines. Let us hope the twenty first century is not a time of greenie famines.