Quick links to another proposal for Europe, and estimates of U.S. consumer benefits from lower natural gas and gasoline prices.
Should Germany save the euro by abandoning it? If Greece is forced out of the euro, who is next? Speculation that the same could happen to Spain, or Portugal, or Italy, could lead to self-fulfilling speculation against banks and sovereign debt, and where does the process end? Kenneth Griffin and Anil Kashyap suggest that the solution is for Germany to exit and leave everybody else in:
Although repeated currency devaluations are not the path to prosperity, a weaker euro would give a boost in competitiveness to all members of the monetary union, including France and the Netherlands, which is why they might very well choose to remain in it even if Germany were to gradually leave. A resurgence of manufacturing would also allow the vast unemployment rolls of Spain, Portugal, Greece and other countries to begin to decline.
Consumer benefits from natural gas fracking. Mark Perry points to these calculations by some Yale researchers, who suggest that a lower bound on the gain to consumer surplus from new technologies to obtain natural gas is the quantity consumed in 2008 (25.6 trillion cubic feet) times the change in price between 2008 and 2011 ($4.02 per thousand cubic feet), or $102.9 billion in extra consumer surplus each year. With natural gas prices in March down another $1.70 per thousand cubic feet relative to 2011 values, we’re on track for more than $146.4 billion in extra consumer surplus for 2012 compared to 2008.
Retail gasoline prices. That $146.4 billion is in addition to the $112 billion boost I calculated that we might anticipate as a result of lower oil prices. Political Calculations has a nifty tool to calculate the long-term U.S. retail gasoline price associated with a given price for Brent crude oil based on the cointegrating relation I described on Sunday. By the way, the average U.S. retail gasoline price has already come down 6 cents/gallon since I wrote that piece.