* If technology can continually wrest more oil out of the earth, why did Pennsylvania hit "Peak Oil" in 1891? Pennsylvania's peak has not been captured despite immense improvements in technology since then. There was a secondary peak around 1936, when methods of secondary recovery of oil from oil fields after primary production was developed, but those techniques have been known for 84 years now, after the secondary peak oil production in Pennsylvania fell rapidly for 40 years and has been a more or less steady trickle since then.
* Ireland's government is imposing an austere recovery plan in order to bail out the Bank of Ireland, whose inability to pay the debts that it owes other banks has caused a major European financial crisis orders of magnitude worse than what the U.S. experienced. Who made the loans to Irish banks that are going bad now?
Of the tens of billions of Euros of loans now at risk of default, the top lenders were government owned enterprises: about 10 billion came from company owned by the German government, about 5 billion came from companies owned by the Irish government, and about 4 billion came from a copmany owned by the government of the United Kingdom.
The Irish people are suffering reduced government services in substantial part in order to prevent the German and British governments, as well as many big European banks, from suffering from the bad loan decisions that they made in lending many billions of dollars to Irish banks.
* Increased investments in capital assets can't save the economy by itself. Even a doubling of investments in capital assets couldn't replace the hole created by the real estate bust driven contraction of the construction industry.
In 2007, before the recession, investment in equipment and software were slightly less than 8 percent of GDP.
Private sector demand has fallen by close to 9 percent of GDP as a result of the collapse of the bubbles in residential and non-residential real estate. Roughly half of this decline is due to the end of the bubble driven construction booms and the other half is due to the loss of consumption that followed the destruction of close to $8 trillion of housing bubble wealth.
* Construction is at a record low for October in places like Orange County, California, despite record low mortgage interest rates. Orange County had roughly 1% of the building permits this October that it did at the peaks of the early 2000s and the late 1980s.
* A key problem with contemporary macroeconomic theory becomes visible when one tries to derive it from microeconomic foundations. Individual economic actors "make mutually inconsistent plans based on heterogeneous beliefs about the future." Yet, most efforts to reconcile microeconomic and macroeconomic theory countefactually assume that the future plans of economic actors are as consistent as market clearing tendencies in the current economy force them to be, and that economic actors act with perfect foresight. Most economic models don't describe their assumptions that way, but make equivalent or nearly equivalent assumptions.
1 comment:
AFAIK the Irish total exposure is not mere tens of billions but hundreds of billions. The BIS gave a figure of €843 billion, almost the one of Spain (€1100 billion), in spite of being a country ten times smaller by population (and also much smaller by GDP).
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