Mumbai: The crisis in the Middle East, and its impact on crude oil remain the biggest concerns for investors. Here are some new thoughts from the blogosphere on this topic.
The Becker-Posner Blog
This blog is run by economist Gary Becker and lawyer Richard Posner, and both have posted their views on the crisis.
Becker writes: “MENA (Middle East and North Africa) country regimes that become much more democratic as a result of the current unrest would tend to produce less oil than the autocratic regimes they replaced if they use government-run oil companies, and have a long horizon. This would mean higher oil prices in the near and long term.”
Read more at http://tinyurl.com/5seb7gr.
In his post, Posner writes that “given the enormous pressure these countries will be under to maximize their revenues, if forced to guess, I would guess that they will continue to rely on the international oil companies to produce and market their oil rather than imitate Mexico’s example and try to manage their oil industry themselves”.
The Big Picture
John Mauldin asks the provocative question whether booming economies are always good for the markets.
“The important question instead is whether booming growth is always good for equity markets. And on that, the data is frankly mixed. Indeed, while strong growth usually leads to higher earnings (good news), it also typically leads to a tighter liquidity environment as a) companies need money to finance larger inventories and capital spending, b) inflationary pressures may impact margins and c) central banks usually respond by draining excess cash away from the system... The most dangerous periods for equity markets are typically periods of strong economic activity combined with rapidly rising oil prices.”
Read his longish post at http://tinyurl.com/5sejlrq.
The Economist’s Free Exchange
Could the reproductive policy of a nation have caused the financial crisis?, A.S., who has only used his/her initials to identify himself/herself, asks in this fascinating post?
“Columbia professor Shang-Jin Wei said this could be the case. He claimed that the skewed Chinese sex ratio (there are more men than women) can explain much of global trade imbalances. Mr Wei reckons the Chinese sex ratio can explain the high Chinese saving rate, and this is what’s behind China’s current-account surplus... Mr Wei also reckons the sex ratio can explain capital accumulation in the corporate sector. The desire to accumulate wealth means that boys and their parents are more likely to become entrepreneurs, work more hours and take more unpleasant jobs. He found higher rates of entrepreneurship in areas with more skewed sex ratios.”
Read the full post at http://tinyurl.com/4dmfb29.
BRICs, CIVETS, 3G, MIST...the list of catchy sounding group of countries used by economists and strategists goes on. In this post, Humberto Moreira says, “Who can forget Knight Rider’s KITT, James Bond’s SPECTRE, or Calvin and Hobbes’ G.R.O.S.S. (Get Rid Of Slimy girlS)? As years passed, the trend evolved to spawn an alphabet soup of ‘creature economies’.”
He then comes up with his own list of acronyms, many of which as a group exceed 50% of the world gross domestic product.
“TRIBASIC sounds authoritative, MUSIC is clean, KARMIC should offer interesting returns, ACTIVISM could get people moving, but if I had to call a personal favourite, I think it would be…South Korea, China, India, Mexico, Indonesia, Turkey, America, and Russia, a.k.a SCIMITAR!”
Read more at http://tinyurl.com/66aytqu