Quick links to a few items I found interesting.
Bassam Fattouh, Lutz Kilian, and Lavan Mahadeva have a new survey of academic studies of the role of speculation in determining oil prices. From the paper’s abstract:
A popular view is that the surge in the price of oil during 2003-08 cannot be explained by
economic fundamentals, but was caused by the increased financialization of oil futures markets, which in
turn allowed speculation to become a major determinant of the spot price of oil. This interpretation has
been driving policy efforts to regulate oil futures markets. This survey reviews the evidence supporting
this view. We identify six strands in the literature corresponding to different empirical methodologies and
discuss to what extent each approach sheds light on the role of speculation. We find that the existing
evidence is not supportive of an important role of speculation in driving the spot price of oil after 2003.
Instead, there is strong evidence that the co-movement between spot and futures prices reflects common
economic fundamentals rather than the financialization of oil futures markets.
Ed Dolan suggests that the real way to measure inflation is to take a look at what $300 would have bought you from the 1962 Sears catalog:
Need a watch? Here are the men’s models on p. 164. There’s a nice, basic Timex for just $14.95. Good deal, huh? But oops, better read the fine print. You have to wind it every day; and reset the time, too, or you’ll miss your bus. Wait, though– there at the bottom of the page is the newest thing, an electric watch. How does it compare to what the on-line store at Timex.com has for sale today? The 1962 electric model had a price of $43.95; the 2012 version costs just 4 bucks more, and probably keeps better time. So you won’t come back from 1962 with a watch, after all.
How about a TV? Here’s a top-of-the line 23-incher on p. 200 for $189.95. And check this out: “Silicon rectifiers as used in military missiles provide great reliability and long life.” Tempted? But, uh, “Controls conveniently grouped on the front?” Does that mean no remote? And color? Ya gotta be kidding! In 1962?
Before you grab that Sears Silvertone beauty, you’d better check out what the TV department at Amazon.com has on offer today. Here’s a nice 23-inch model: Color? Yep. Remote? Yep. Built-in DVD? Of course, dummy, this is 2012, after all! True, the 2012 model, at $229, will cost you an extra $50, but I think it’s still a better buy. How about you?
And here’s a discussion I had with Bloomberg News on Monday, ranging from oil prices to the Fed.