Links for the Week Ending 28 December

Apologies for my absence, but I have been super busy over the holiday period.

  • Liam Halligan in The Daily Telegraph explains why oil prices will likely remain high in 2014. It’s a well-worn story in this blog, but Halligan provides a nice recap on the disappearance of “easy oil”. In his words: “The ‘upstream’ oil industry capital expenditure has risen, in constant dollars, from $250bn in 2000 to $700bn last year – almost a threefold increase. Over the same period, global oil supply rose just 14%.” In sum, shale oil is no free lunch.
  • Staying with The Telegraph, Ambrose Evans-Pritchard gives praise where praise is due with respect to the Fed and QE. I still think that the uber-aggressive version of QE we have witnessed in the US will only be vindicated once it is unwound. The imbalances it is causing are many, but they have manifested themselves in asset inflation not generalised inflation. Nonetheless, with both structural reform and active fiscal policy missing in action during the Great Recession, it was left to the Fed to stop the sky from falling down—which is what the Fed did, so all kudos to them. The next question is: can the US growth without QE? We shall see.
  • Being ‘poorer than your parents’ is  a hot topic on both sides of the Atlantic. Bloomberg has a lovely article comparing a dad and a daughter, but the statistics on US savings and pensions levels are what shocked me most. How will those boomers live through retirement with that amount of money?
  • Over the pond (and less anecdotal), the Institute for Fiscal Studies (IFS) has just published a report looking at the economic circumstances of different cohorts born from the 1940s to 1970s. Conclusion: for the middle-aged, you have little chance of matching your parents prosperity in your later years unless you can nail down a significant inheritance. If you don’t want to read the whole report, you can see a good synopsis in The Guardian here, but almost all the UK national press, whether from the left or right, reported on the IFS study.
  • Previously in the Links, I flagged Larry Summers speech at an IMF symposium. Here he is again talking about long-term economic stagnation in The Financial Times.
  • I frequently mention the thought-provoking work of Tyler Cowen, and have just finished reading his latest book “Average Is Over“. David Brooks has a nice piece in The New York Times expanding on Cowen’s employment theme and thinking about what type of people can thrive as technology upturns the job market.
  • And last but not least, over to climate change. The Carbon Brief has a wonderful post on the five-most important climate change papers of 2013, including the key charts. Required reading for anyone who has bought into the idea that the current temperature hiatus has lowered the risk posed by climate change. But then again, such a reader would be unlikely to stray far from Watts Up with That.

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