A key player in the financial crisis was insurance giant AIG, which sold a huge volume of credit default swaps supposedly protecting buyers of mortgage-backed securities from losses due to default. But AIG had nowhere near the capital necessary to honor these guarantees when things went bad, and much of AIG’s liabilities ended up being picked up by the Fed and the Treasury. On Tuesday the U.S. Treasury announced that it had sold the last of the common shares in AIG that it had acquired as compensation for its emergency assistance to AIG and reported that the Treasury and the Fed had together earned a profit of $22.7 billion as a result of their assistance to AIG. I was curious to take a look at how this story ended up having a happy ending.
Author Archives: James_Hamilton
Trillion dollar platinum coin
Here’s one of the wilder suggestions floating around for what the President could do if Congress fails to raise the debt ceiling.
Will U.S. oil consumption continue to decline?
A lot of attention has been given to the optimistic assessments of future U.S. and Iraqi oil production in the IEA’s World Energy Outlook 2012. However, perhaps even more dramatic is the report’s prediction of a significant long-term decline in petroleum consumption from the OECD countries. For example, the report predicts about a 1 mb/d drop in U.S. oil consumption by 2020 and a 5 mb/d drop by 2035 relative to current levels. I was curious to examine some of the fundamentals behind petroleum consumption to assess the plausibility of the IEA projections.
Data revisions mean more of the same
Revisions to some of the key indicators bring us back to the same old story– the U.S. economy continues to grow, but at a slower rate than any of us would like.
Peak oil
I offer some observations on exhaustible resources and economic growth in the latest issue of the UCSD Economics Newsletter.
Calculated Risk
Business Insider has a very nice interview with Bill McBride, in which Bill explains why he is more optimistic about the economy than many others. And yes, the praise of Bill is all well deserved.
Europe in recession
The Business Cycle Dating Committee of the Centre for Economic Policy Research (the European counterpart of the U.S. NBER) last week
issued a declaration that Europe entered a new recession a year ago, dating the business cycle peak at 2011:Q3.
2012 World Energy Outlook from the International Energy Agency
On Monday the IEA released its World Energy Outlook 2012. This includes an optimistic assessment of the situation in the United States:
The United States is projected to become the largest global oil producer before 2020,
exceeding Saudi Arabia until the mid-2020s. At the same time, new fuel-efficiency measures in
transport begin to curb US oil demand. The result is a continued fall in US oil imports, to the
extent that North America becomes a net oil exporter around 2030.
Links for 2012-11-10
A few links to some items I found of interest.
Finding compromise
President Obama won a second term in office yesterday, receiving 50.3% of the popular vote But the Republicans held control of the House of Representatives and Americans remain deeply divided. Historically, the party in control of the White House loses some congressional seats in the midterm elections. That means that any legislation passed into law over the next two years, and likely the next four years, is going to have to be agreed to by both a Democratic President and a Republican House.