27 April 2008

TransEconomics mentioned in León newspapers

I was checking something on Google when I stumbled across two León, Guanajuato newspaper articles from last 29 February 2008 that mention TransEconomics. One appeared in Periódico A.M. The other in Correo.

I had participated the day before as the globalist in a forum on the outlook for the León economy beautifully organized by the Guanajuato Chapter of the Mexican Institute of Financial Executives (IMEF).


Estaba verificando algo en Google cuando me encontré con dos artículos publicados en periódicos de León, Guanajuato el pasado 29 de febrero de 2008 donde se menciona TransEconomics. Uno salió en Periódico A.M. El otro en Correo.

Había participado el día anterior como la globalista en un foro sobre perspectivas para la economía leonense impecablemente organizado por el Grupo Guanajuato del Instituto Mexicano de Ejecutivos en Finanzas (IMEF).

NBER Ice Cream Flavor of the Day

When I was a kid, the younger four of us nine kids would pile with our parents into my dad's Buick and ride from Southeast Minneapolis an eternal two hours and forty-five minutes to visit our aunt and uncle and cousins in Hayward, Wisconsin.

Upon arrival, we would jump out of the car, rush through an obligatory greeting of our aunt, then race to the corner and just around it to "The Dairy"---our name for West’s Hayward Dairy. Our uncle owned it.

I’d blast in the glass door, be boosted by some older sibling up onto a swivel chair at the soda fountain, and begin to scan the ice cream flavors from which I could command of my cousin my first ice cream cone of the weekend. This ice cream sitting in round manila buckets was not that low-fat rubbery muck. It was thick high-cholesterol creamy freshly made Hayward Dairy ice cream. I disinctly remember saliva rushing into my mouth as I sat in ecstatic agony choosing.

Why do I recall this scene today, 40 years later? Because this morning, my weekly free subscription e-mail The Latest NBER Research” arrived. And, upon scanning 33 new National Bureau of Economic Research working paper abstracts, I drooled.

Now you're asking urgently, Jenny, which flavor did you choose! Miguel, Edward, Sebastián M. Saiegh, and Shanker Satyanath (2008), "National Cultures and Soccer Violence.

This study reports findings of "a strong relationship between the history of civil conflict in a [soccer] player's home country and his propensity to behave violently on the soccer field, as measured by yellow and red cards."

The researchers measured player home country histories of civil conflict by the number of years that country were stricken with civil war between 1980 and 2005. They justify using civil war experience as a proxy for cultural attitudes to violence by citing findings from ethnographic studies that national tolerance for violence goes up after a civil war. I did not read the cited ethnographic studies, so don't know how the sociologists who conducted them measured the change in norms. I wonder why Miguel et al didn't use the same metrics as the sociologists. (Why measure norms by proxy if we know how to measure them directly?)

According to the authors, how does war act to change norms? And translate into violent soccer habits? They explain that the data "tentatively suggest that childhood and adolescent exposure to national violence may be the causal channel", given that "the proportion of years before a player reached age 18 that his home country experienced civil war strongly predicts violence on the soccer field."

Sadly, the results also suggest that violent norms acquired through childhood exposure to war tend to persist:

If individuals can be socialized into a violent culture, then they could also potentially unlearn their national culture over time if they moved to a different society, yet our data do not offer strong support for this hypothesis. In a variety of specifications not reported above, we tested whether the impact of a player’s home country civil war history diminishes over time for older players, or for those with more experience in the European professional leagues, but in no case are these interaction terms statistically significant at traditional confidence levels (not shown). Violent national cultures appear quite persistent, at least over the time frame of the typical soccer playing career. (Page 14.)

My first reaction is that this reinforces my long-term bleak outlook for the size of the risk premium in global oil prices. I believe that, long after the civil war in Iraq officially ends, violence (including sabotage to oil installations) will persist for decades, rendering Iraqi oil supplies persistently chancy. As they are today in Nigeria.

My second reaction is more academic. I have some ideas for follow-up studies. The authors might consider testing whether alternative norms or clusters of norms--distinct from but related to or underlying social tolerance for violence--are what truly drive the correlation between a player's home country and his propensity to collect yellow cards in soccer.

One candidate alternative norm to study is social tolerance for breaking formal rules generally, not just rules prohibiting violence. Dependent variables in the follow-up study would include soccer fouls that are not violent, such as the illegal use of hands.

A second alternative norm is empathy, or solidarity, especially among elites toward those not in power. I suspect that the two things, empathy and adherence to rules, are connected. And believe that they might underlie a social propensity to violence.

As a proxy for empathy, I would consider formal institutional checks against dictatorship, which, for democracies, could be checks against dictatorship by the majority. I suspect that higher empathy among the powerful toward the weak raises the likelihood that minority rights protection will be written into law. I also suspect that such societies with the highest empathy levels are the most most rule abiding.

Digging more deeply into causality, my hunch is that empathy is driven in the first place by people's experience with authority. Over history, have those in power generally been fair? Have they voluntarily subjected themselves to controls that limit their conduct? Or have they behaved capriciously and illegally?

By my (surely unoriginal) theory, well-founded trust in authority bumps societies up a spiritual step from adherence to jungle-like norms (screw others, lest they screw you) to adherence to empathetic norms (do unto others as you would have them do unto you).

Conversely, a sense of vulnerability derived from governance by capricious and rapacious rulers leads people to watch out for themselves only. This becomes manifest in a calculating approach to following rules (apply selfish cost-benefit analysis when deciding whether to adhere to rules), versus an empathetic approach (treat opponents fairly, even at the risk of temporarily losing power to them--do this because you trust that you won't be burned).

Because norms depend on a nation’s historical experience of authority, social norms are path dependent.

Finally, the rise to power of individual leaders can be path-switching events. A particular leader—often a charismatic one—can reshape norms and thus change a nation's cultural tracks for decades or centuries. Gandhi, Hitler, King, Chávez, Lincoln, Hussein, Bush, Bin Laden all have shaped societal norms.

Norms that later become manifest on soccer fields.

(The Spanish translation of this post is still pending.)

07 April 2008

Greenspan: It was the conundrum

In my review of favorite blogs for watching the financial crisis, I omitted one of the best: Economists' Forum on the Financial Times (subscription) site. On it, Big Shot Bears and Bulls react to a Wolf.

Yesterday's edition featured Alan Greenspan: A response to my critics. The former Fed chairman defends himself against charges that Fed policy under his watch earlier in this century was overly loose, and that it engendered the house price bubble the bursting of which landed us in the crisis that we're dealing with today.

His argument works like this:
  1. Claim: "Remarkably similar housing bubbles ... emerged in more than two dozen countries between 2001 and 2006." In fact, "the US bubble was close to median world experience."
  2. Implication: So Fed policy cannot explain the U.S. bubble.
  3. Counter-theory: "The dramatic fall in real long term interest rates statistically explains, and is the most likely major cause of, real estate capitalization rates that declined and converged across the globe."
This fall in long-term rates that Greenspan mentions occurred between 29 June 2004 and 2 February 2005, during which time the federal funds rate rose by 150 basis points, while the long-term bond yields fell by 70 bps. Normally, long- and short-term rates move together.

In his now famous 2005 testimony before Congress, Greenspan pondered the enigma out loud:
For the moment, the broadly unanticipated behavior of world bond markets remains a conundrum.


En mi reseña de blogs preferidos para observar la actual crisis financiera, omití uno de los mejores: Economists' Forum en Financial Times (suscripción).

En la edición de ayer de este foro, se publicó Alan Greenspan: A response to my critics. El ex presidente de la Fed se defiende de cargos de que la política de la Fed bajo su conducta a inicios de este siglo era excesivamente expansiva, y que engendró la burbuja en vivienda cuya ruptura causó la crisis actual.

Su argumento se estructura así:
  1. Afirmación: "Burbujas de vivienda asombrosamente similares ... surgieron en m[as de dos docenas de países entre 2001 y 2006." Y de hecho "la burbuja en EE.UU. coincide con la experiencia mediana."
  2. Implicación: Así que la política monetaria en EE.UU. no puede ser la explicación de la burbuja en EE.UU.
  3. Teoría alternativa: "La caída dramática en las tasas de interés reales explica estadísticamente, y probablemente es la principal causa de, el declive de y convergencia en las tasas de capitalización para bienes raíces a través del globo."
La caída en las tasas de largo plazo que menciona ocurrió entre 29 junio 2004 y 2 febrero 2005, cuando la tasa de fondos federales escaló en 150 puntos base, mientras los rendimientos para bonos de largo plazo bajaron en 70 pb. Normalmente las tasas de corto y largo plazo suben y bajan juntos.

En su ahora famoso testimonio ante el Congreso de febrero 2005, Greenspan ponderó el enigma en voz alta:
Por el momento, el comportamiento generalmente inesperado de los mercados de bonos globales permanece un acertijo.

03 April 2008

Mike McGlone's commodity report

Michael McGlone's Commodity Perspective is out. Mike is the commodity director at Standard & Poors.

I'm hooked on this concise monthly report, because it:
  • Illustrates changes in subindices and individual assets that are driving (or deviating from) changes in the headline index;
  • Connects fundamentals to total returns;
  • Explains asset interconnections;
  • Reviews theories as to what's going on and why.
You need to read it right away when it comes out though. It's perishable.


Ya se publicó el informe de Michael McGlone, Commodity Perspective. Mike es el director de commodities en Standard & Poors.

Estoy adicta a este informe mensual conciso, ya que:
  • Ilustra cambios en subíndices y activos individuales que marcan la pauta (o se desvían) de los movimientos en el índice general;
  • Conecta los fundamentales con los movimientos en los índices;
  • Explica conexiones entre clases de activos;
  • Repasa teorías acerca de qué sucede y por qué.
Recomiendo leer el informe cada mes tan pronto como salga. Es perecedero.

31 March 2008

"I'm a cow" will remain untranslated

I'm very sorry not to have provided a translation to "I'm a cow". It's beyond my translating skills.


Siento mucho no haber proporcionado una traducción a "I'm a cow" ("Soy vaca"). Excede mis poderes de traducción.

I'm a cow

For those new to my favorite game, called "Crisis Watching on the Blogs," I'll list some entry points. Now don't worry--they all link to each other. You can enter anywhere.

You'll find that, because this is about crisis watching, most of the players are Bears.

Take Noel Roubini. He's not just any bear--he's a Dark Black Bear. No matter how dark your outlook, his is darker.

I must warn you: this sells, and to capture the revenue, Dark Black Bear has an irritating blog site.

But just try avoiding his blog site! You'll last an hour. He sets the agenda. He is crystal clear. And he was right when I was wrong.

I do sometimes wonder whether by issuing dark prophesies he knows will be amplified through the blogs he can act upon our financial future, guaranteeing that he'll be right.

Then I think, nah. If that were possible, Bernanke would do it. We'd have no crisis.

(Though sometimes I do totter back into superstition and think, won't it be a glorious day when Noel Roubini finally wakes up in a good mood? My guava tree will have euros growing on it!)

Paul Krugman is Grizzly Bear. He gets mean when discussing Republicans.

And mean also seems to sell. Ask The New York Times.

But hell, he gives me access to his brain. Only a generous man could be the teacher that he is.

Brad Setser is Little Unassuming Bear. Though on Black Bear's site he looks like a Little Bull.

Setser is so appealing, so modest and unassuming next to Haughty Bears just described, he makes you want to read line after gory line of forensic tracking down of missing Middle Eastern billions of international reserves.

I'm teasing him. His is wonderful stuff, imperative reading , and holder of links to all other imperative reading.

He steered me, for example, to Professor EconBrowser Bear, who is actually Two Bears. Siamese Twin Bears. I say this because I read them for months before realizing that they were Two Different Bears.

I sometimes get to wondering, who am I in this game? Am I Pooh Bear? (she says modestly because she's from the midwest). Because, when pondering financial crises, I do sometimes feel like a Bear of Little Brain.

But then I think, wait a minute--I'm no bear at all. In the TransEconomics base scenario, all creatures great and small emerge safely out of the woods later on this year. (Of course I also have alternative scenarios, with probabilities assigned to them. Perhaps I'm Professionally Cautious Bear. Or Wimpy Bear.)

I guess this makes me a Bull. But with all my estrogen?

I'm a cow.

Gore for President?

Senior Democrats mull Al Gore's nomination.

(Hat tip: RealClearPolitics.)

30 March 2008

What else I'm reading, or I'm RICH!

Here are some other books I'm reading:

The Moor's Last Sigh, by Salmon Rushdie. Once I pick it up, I can't put it down. Once I put it down, I can't pick it back up. Until one day I finally do. And so it goes. It's been six months now.

Ricardo Raphael, Los Socios de Elba Esther (non-Mexicans: Elba Esther Gordillo is the crooked head of our crooked teacher's union). This is a great book: researched deeply, argued intelligently, and laid out in compelling narrative.

By the way, I'd like to meet Ricardo Raphael. I've tried e-mailing him at CIDE, to no avail. If you know him, please ask him to get in touch.

Charles Kindleberger's Mania, Panics and Crashes (yes I know: surprise, surprise). This is more than a must-read. It's a must re-read. It had been five years, so I was due. (Oh yes, and there's the small matter of a financial crisis going on.)

Scenarios: The Art of Strategic Conversation by Kees Van der Heijden. A rather cerebral textbook on scenario-based strategic planning, which we're believers in at TransEconomics. We help corporations plan this way by providing multi-scenario global and Mexico forecasts and constructing detailed narratives for each. This is my second time through the book, which I began the moment I put it down after my first time through. Because it's dense. (Or I am.)

The Art of the Long View: Planning for the Future in an Uncertain World, by Peter Schwartz, touted as the best breezy and practical companion to Van der Heijden's book. I'm not really into breezy and practical, but anyway I'm reading it to gauge (don't you think that should be spelled "guage"?) whether to give it to corporate consulting clients to help them integrate our scenarios into their planning.

Both Schwartz and Van der Heijden worked in the Scenario Planning group at Shell (today Royal Dutch/Shell), which is, I believe, where the movement started. You can download Royal/Dutch Shell introductory material on the topic and actual scenarios here.

Harvard Business Essentials Guide to Negotiation. Interesting and useful. Negotiation is a complex art that is part science--it can be broken down and analyzed, and taught. Printed on crummy paper, though, for a $19.95 paperback.

Narcotráfico: el Gran Desafío de Calderón. Author Alejandro Gutiérrez is an investigative journalist for Proceso with deep expertise on his topic.

Here's a fun book with an extremely boring title: Principles of Forecasting. Before reading this book, Dumb Old Economist Me thought that forecasting = econometric or macro simulation modeling. But these topics take up only a sliver of this fat book, which covers soft approaches such as such as role playing and expert opinion consultation also.

And then there are the books that I should be reading. Their purpose is to sit on my desk and cause me guilt:

Pemex: La Reforma Petrolera, by David Shields (published by Planeta but missing from Planeta's online catalogue.) I know. I'm an analyst. I should read this. It just doesn't look like any FUN. (Can't I have some FUN?)

Calderón, Presidente: La Lucha por el Poder, by Jorge Fernández Menéndez (published by Grijalbo and available late last year at the Querétaro Librería Ghandi but missing from both online catalogues . . . sheesh.) And Carlos Tello Díaz, 2 de Julio. These rehash the Mexican post-electoral conflict of of 2006--high drama that split the country and weakened everyone: the Federal Electoral Institute (IFE), Calderón, and AMLO.

The World is Flat, by Thomas Friedman. I think I'm waiting for this book to become totally obsolete, so that I'll be off the hook. (Can't I get points for just owning it?)

I'm going to have to learn how to make money on all these Amazon links. I mean, just think about it: pretty soon I'm going to have about 200 million visitors a day . . . times let's say . . 10 cents per click . . . I'm RICH!


¿Qué otros libros estoy leyendo?

The Moor's Last Sigh, por Salmon Rushdie. Cada que lo abro, no lo puedo dejar de leer. Cada que lo dejo de leer, no lo quiero abrir. Hasta que un buen día lo abro. (Así llevo meses).

Ricardo Raphael, Los Socios de Elba Esther (atención no-mexicanos: Elba Esther Gordillo es la lideresa chueca de nuestro sindicato de maestros chueco). Es un estupendo libro: basado en investigación profunda, formado de argumentos inteligentes y un narrativo adictivo.

A propósito, quisiera conocer a Ricardo Raphael. He mandado mails a su dirección en el CIDE, pero sin suerte. Si lo conoces, favor de pedirle que se ponga en contacto.

De Charles Kindleberger, Mania, Panics and Crashes (qué gran sorpresa). No sólo leerlo es obligatorio. Leerlo repetidamente lo es. Ya hacía cinco años que no lo leía así que era tiempo. (Bueno, OK, y está eso de la crisis financiera en Estados Unidos.)

Scenarios: The Art of Strategic Conversation by Kees Van der Heijden. Un libro de texto un tanto cerebral sobre la planeación estratégica por el método de escenarios. Somos adherentes a este método en TransEconomics. Ayudamos a nuestros clientes corporativos a planificar proporcionando alternativos de escenarios con pronósticos globales y mexicanos y construyendo narrativos detallados para cada uno. Es la segunda vez que leo este libro. Tan pronto lo terminé la primera vez lo comencé a leer nueveamente. Es que es algo denso. (O yo lo soy.)

The Art of the Long View: Planning for the Future in an Uncertain World, by Peter Schwartz, supuestamente el mejor libro ligero y práctico para acompañar el libro de Van der Heijden. Yo no soy mucho de libros ligeros y prácticos, pero lo estoy leyendo para evaluar si puede servir a clientes corporativos para que aprendan a integrar en su planeación los escenarios de TransEconomics.

Tanto Schwartz como Van der Heijden trabajaron en el Grupo de Planeacion por Escenarios en la petrolera Shell (hoy día Royal Dutch/Shell). Tengo entendido que fue aquí que el movimiento comenzó. Se puede descargar del sitio Web de Royal/Dutch Shell material introductorio sobre la planeación por escenarios, además de escenarios en sí.

Harvard Business Essentials Guide to Negotiation. Interesante y útil. La negociación es una arte compleja que también es ciencia--puede ser desglosada en taxonomías y analizada, y enseñada. El libro está impreso en papel de calidad mediocre considerando su precio de $19.95 (pasta blanda).

Narcotráfico: el Gran Desafío de Calderón. El autor es Alejandro Gutiérrez, periodista en Proceso profundamente conocedor de su tema.

Ahí les va un libro divertido con un título aburrido: Principles of Forecasting Antes de leer este libro, Yo Gran Economista Ignorante pensé que pronosticar = construir modelos macro econométricos o de simulación. Bueno, pues esos temas ocupan tan sólo una rebanadita de este libro gordo, que cubre métodos no cuantitativos también: el de jugar roles, de pedir su opinión (proyección) a los expertos, y otros. Cada capítulo abre con un resumen ejecutivo sensacional.

Luego están los libros que debería de estar leyendo. Su propósito es descansar sobre mi escritorio y engendrar en mí sentimientos de culpa:

Pemex: La Reforma Petrolera, de David Shields. De la editorial Planeta, pero excluido de su catálogo en línea. Ya lo sé. Soy analista así que debería de leerlo. Es que no luce divertido. ( ¿O no tengo derecho a divertirme?)

Calderón, Presidente: La Lucha por el Poder, by Jorge Fernández Menéndez. Publicado por Grijalbo y el año pasado disponible en la Librería Ghandi de Querétaro pero excluido de los catálogos de ambas empresas (!). Y Carlos Tello Díaz, 2 de Julio. Ambos libros analizan el conflicto post-electoral mexicano de 2006--el drama que fracturó el país y debilitó a todo el mundo: el Instituto Federal Electioral (IFE), Calderón y AMLO.

The World is Flat, por Thomas Friedman. Creo que estoy esperando que este libro se vuelva completamente obsoleto para ya no tener la obligación de leerlo. (Oigan, ¿no se puede ganar puntos por simplemente poseerlo?)

Veo que tendré que aprender a hacer dinero con los clicks a Amazon, porque, a ver . . . pronto tendré yo diría unos 200 millones de visitantes al día. . . por . . . qué será . . . unos 10 centavos de dólar por click . . . ¡Ya soy RICA!

Blog is now bilingual

As you can see from the last post, this blog is now bilingual. (How do you say "post" in Spanish?)


Como se observa en el último post, este blog ya aparece en dos idiomas. (¿Cómo se dice "post" en español?)

Obama's book

Barack Obama's Philadelphia speech, which I commented on briefly last week, led me to his book, The Audacity of Hope.

I recommend it to anyone interested in politics--either as an observer or an actor--and to anyone seeking inspiration as a leader, for its:
  • Engrossing nitty-gritty on how American senators get elected and do their jobs ;
  • Nuanced thinking about global and U.S. problems;
  • Refreshing honesty and humor (these derive from the author's healthy ironic distance from life--he watches himself, and sees his own vanity and the absurdity of things);
  • Inspirational look into the mind of a leader who struggles every day with his exacting conscience.
I yearn for your comments.


El discurso que dio Barack Obama en Filadelfia, que comenté brevemente la semana pasada, me condujo a su libro, The Audacity of Hope.

Lo recomiendo a todo aquel que tenga interés en la política--sea como observador, sea como actor--o que busque inspiración como líder, por:
  • Sus fascinantes detalles sobre cómo se elige y trabaja un senador en Estados Unidos;
  • Su análisis sutil sobre problemas globales y estadounidenses;
  • Su honestidad y humor refrescante (se derivan de una irónica distancia que tiene Barack de la vida --él se observa a sí mismo y reconoce su propia vanidad y lo absurdo de muchas cosas);
  • Una mirada inspiracional a la mente de un líder que lucha diario con su exigente consciencia.
Anhelo sus comentarios.

19 March 2008

Obama's Philadelphia speech

This Slate version of Obama's March 18 Philadelphia speech contains the full text.

He has the courage and self-confidence to ask Americans to be nuanced.

18 March 2008

Fed: -75 bp; commodity prices will flatten

The Fed decision is out: -75 basis points to 2.25%.

  1. Dissent is up. Plosser and Fischer both voted for "less aggressive action." In the January 30 FOMC meeting, Fischer alone dissented, preferring "no change" in the monetary policy rate. On January 22, Mishkin was absent, thus didn't vote; those present voted unanimously.
  2. FOMC members recognize accelerating inflation and upward shifting inflation expectations, but hold to their view that weak demand will pull inflation rates down.
  3. In particular, they expect commodity prices to stabilize. They appear not to embrace Jeffrey Frankel's favorite explanation for rising commodity prices in times of recession--the current low level of real interest rates--given that their rate decision of today will contribute to it.
  4. Nor do they seem to agree with former Fed Chair Alan Greenspan, who said in a recent interview about his own low interest rate policy, "You can't do that any more."

Greenspan stands by his record: omitted hat tip

In my last post, I omitted a hat tip for the Greenspan video. It goes to Dealbreaker.

Greenspan stands by his record

Frankel theory on high commodity prices

Jeffrey Frankel is Brad Setser's guest blogger for a few days. He's focussing on why commodity prices are up if the global economy has turned down. His answer? Real interest rates:

If strong economic growth is not the explanation for the large increases since 2001 in prices of virtually all mineral and agricultural commodities, then what is? One wouldn’t want to try to reduce commodity markets to a single factor, nor to claim proof of any theory by a single data point. Nevertheless, the developments of the last six months provided added support for a theory I have long favored: real interest rates are an important determinant of real commodity prices.

High interest rates reduce the demand for storable commodities, or increase the supply, through a variety of channels:
- by increasing the incentive for extraction today rather than tomorrow (think of the rates at which oil is pumped, gold mined, forests logged, or livestock herds culled)
- by decreasing firms’ desire to carry inventories (think of oil inventories held in tanks)
- by encouraging speculators to shift out of spot commodity contracts, and into treasury bills.

All three mechanisms work to reduce the market price of commodities, as happened when real interest rates where high in the early 1980s. A decrease in real interest rates has the opposite effect, lowering the cost of carrying inventories, and raising commodity prices, as happened in the 1970s, and again during 2001-2004. It’s the original “carry trade.”

Professor Frankel is cross-posting this material on his own blog too.

16 March 2008

Month-old video on campaign still timely

This video of a discussion among four New Yorker writers about the Democratic Party race for the nomination is over a month old, but it's still timely, and it contains both funny moments and eloquent moments.

Panelists are Hendrick Hertzberg, Elizabeth Kolbert, Ryan Lizza, and Jeffrey Toobin. The moderator is The New Yorker editor David Remnick (a hero of mine since I read his 1998 Resurrection on post-Soviet Russia).

The video is long. For readers short of time, here are some highlights:
  • Hertzberg: There is very little programmatic or ideological difference between Hillary and Obama. "So, it's really not about the words in this campaign; it's about the music."
  • Hertzberg: "There's a soap opera here--there's a Clinton Family drama--that I think the country would just as soon--or at least I would just as soon--not be on the front of the national agenda for the next eight years."
  • Kolbert, comparing Obama and Hillary: "She's the class grind; he's the cool kid in the class."
  • Lizza: Hillary's campaign is freer, more open, messier than Obama's. Hillary staffers can speak to Toobin about the campain anonymously without fear of being sniffed out and muzzled later by "leak hunters." The tight discipline in the Obama camp is Bush-like.
  • Remnick: It's also Nixon-like.
  • Toobin: "This election is shaping up as a Democratic landslide."
  • Toobin: Whoever wins the Democratic nomination, the Democrats will have tens of millions of dollars more than John McCain. McCain's campaign raised $10 million in all of January; Obama and Hillary raised $10 million each in the first week after Super Tuesday.
  • Remnick: The press adores McCain, because of all the access that he gives them and his sense of humor.
  • Toobin: Evangelical Christian Republicans will not work for John McCain. They did work for Bush, and only because of their help did Bush win. Ergo, McCain will probably lose.
  • Kolbert: "'I'm the guy who can keep you safe.'That's what John McCain is running on." Hence a foreign policy crisis would be a boon to him.
  • Kolbert and Lizza: Obama's weakness is public doubt as to whether he's ready to be commander-in-chief. So a foreign policy crisis such as a terror attack, with its potential to underscore Obama's foreign policy inexperience, is the Obama camp's worst nightmare.
  • Kolbert: If Hillary becomes the nominee, that would be great for McCain ... "because then all the anti-Hillary people who are now trashing McCain can go back to their first love, which is trashing Hillary."
  • Lizza: "I think that the McCain camp fears Obama more than they fear Hillary. They think that Hillary is the known quantity; they understand how to run against her; they understand her strengths and weaknesses. And I think that they fear that in a race against Obama, the press and the country will get swept up in a sense of history, and that they never really get a fair hearing. That the Obama phenomenon, it doesn't end with the primaries, but that his victory in the primaries will just be the beginning of a sort of launch. And that he could have so much upside potential that, even though the polls show a very close race now, it's never a real race."

24 February 2008

A commodity report that even I can understand

I wasn't sure how to start out. Should I justify myself somehow? I checked my friend Felix Salmon's first post on Condé Nast Portfolio.com. He just jumped in. I'm jumping.

I like good writing and I strive to understand commodity markets. So I was pleased to stumble upon a well written, pedagogical commodity market report: the Standard & Poor's Commodity Perspective - S&P CSCI. I read the
January edition. It's obsolete by now but still helpful.

Author Michael McGlone assumes no expertise on our part. He tells us, for example, that
livestock prices "generally have an inverse relationship with the primary feedstock, corn."

He's a big-picture analyst. He connects January commodity returns to the real economy, consumer price inflation, past returns, other asset markets, and ongoing analyst debates.

In his final paragraph, by directing our eyes to the past, he shows us the future:
In 1900, when the U.S. began to industrialize, per-capital annual oil consumption was about 1 barrel per person. By 1970, it was about 27. In 1950, Japan consumed about 1 barrel per person annually. By 1970, it was about 17. In 1965, South Korea consumed about the same 1 barrel per capital and by 2000, it was about 17. today, China and India consume just over 1 barrel of oil per person annually.