The implied Treasury yield 2-3 months ahead, based on 3 month and 1 month yields has fallen in the past two days.
Depressions and Recessions
A reader writes:
If you want to explain the difference between a recession and a depression, or why it took seven years for the economy to regain previous highs after 2008, well, go ahead. I’m all ears.
Russian Asset Prices Today
Ruble down about 7%, sovereign bond yields up 4.7 percentage points in 6 days, stock market down 1/3 in one day.
Predictions – Oil Prices and Recoveries and Recessions
A bit over 12 years ago, one prognosticator Steven Kopits wrote:
With the 9.4% unemployment report WTI oil prices are, I believe, effectively at a post-crash high.
I think the economic news suggests that we are running up the back of the “V”.
This is good news and bad news. The good news: an unexpectedly sharp recovery. The bad news: Our analysis suggests the US falls back into recession above $80 oil, and I think we’ll have a chance to test the hypothesis relatively soon.
Russia EMP Watch
One way to assess external financial stress is to look at exchange market pressure (EMP) – the change in the exchange rate, change in reserves, and change in interest rates, possibly weighted by inverse of standard deviations. or otherwise (see e.g., Patnaik, et al. (2017) for several different versions).
Counterinsurgency Ratios
One rule of thumb is that a successful counterinsurgency requires something on the order of 20-25 troops per 1000 population (Goode, 2010). Ukraine’s population is 44 million. Simple division and multiplication yields 880,000 to 1,100,000.
Would Pumping More Natural Gas in America Have Countered Russian Pressure?
A reader suggests this is the case. Well, if there was an integrated natural gas market, maybe. (To anticipate the answer to the question: Duh, NO).
Interpreting Macroeconomically a War Scenario, Graphically
Most of the discussion of the macro implications of an expanded Russian invasion of Ukraine presumes elevated oil prices (e.g., [1]). This makes sense, certainly for the short run. However, if oil prices rise sufficiently (keeping in mind for Brent have already risen from about $70/bbl to $90/bbl), they will kick the economy into a slowdown. Slowdowns tend to push down oil prices. I think in terms of graphs; this is how I see the short term, and (potentially) medium term.
A Wisconsin Labor Shortage?
I talked briefly on WPR’s Here and Now yesterday, on the Wisconsin “labor shortage”. After making my obligatory comment that economists would not use the term “shortage” to characterize Wisconsin’s situation, as there were (and are) no barriers to private firms to raising wages and benefits (see this post). However, supply could be constrained — either because of the presence of benefits (e.g., enhanced pandemic-related unemployment insurance), accumulated savings from the previous pandemic rescue packages, perceived increased disutility of work, or fear of illness. But higher wages and more flexible working situations could mitigate the high ratio of job openings to employment.
Odds
No prediction markets on an expanded incursion (remember they already have the Crimea and de facto Donbas) into Ukraine, but here’s the market on how many mentions of “Russia” or “Putin” in the State of the Union address – a proxy for prominence of the Ukraine issue.