Oil is a complicated case because the military costs are not figured in for protecting it. But then is Bush’s stupid war really a part of this. We wouldn’t be in Iraq if it weren’t for the oil but our invasion and occupation will not result in any great benefits to us from Iraq’s oil. So while it is a cost, it is not a legitimate cost.

Also you have to understand that the whole way the oil market is structured is crazy. In the short term, oil is overpriced. $15-20/bbl of the current price is the result of the relatively recent entry into the markets of pure speculators who have a lot of highly leveraged money but little understanding of oil market fundamentals.

Long term, however, oil is massively under priced. It is a non-renewable irreplaceable resource. For the last 50 years or so both producers and consumers for their own reasons have acted as if this were not the case. But peak oil is on us either already or within the next 5 years and the long term low pricing will become unsustainable.

There are externalites associated with all of these factors but I have no idea how you would sort them all out or even if you would want to.

I think the problem not that we cannot price the externalities fairly clearly. The problem is that as a nation, we don’t want to pay for them. We would rather dump the losses where they fall: on people who are weak and get asthma, on soldiers, on the world’s environment, and anywhere else, just so we can have cheap, even irrationally cheap, energy. We aren’t even willing to pay the costs of transitioning to other sources of energy. The rich would rather speculate on oil and subprime mortgages and other financial legerdemain than invest in new sources of energy, which might involve real risk.

peas!

peas!

Ian Welsh @ 31

I don’t have a hate on for the Federal Reserve. I think it needs to do its job and that Congress needs to let it do its job. Freddie and Fannie for a time were essentially creating huge amounts of money; then after that Wall Street was. The Fed lost control.

Mind you the Fed didn’t seem to care very much, and was pouring fuel on the fire.

I don’t think the fed is good or bad. It’s a powerful tool that can be used for good or ill.

The problem is that the Fed is operating in an environment where it is expected to do all the heavy lifting. Congress has abdicated its economic responsibilities. It would also help to have a rational international economic policy. Some new form of Bretton Woods.

Hard to justice to in a comment. For now, like most tools, the Fed can do great good or great harm. It depends how you use it. Overall Greenspan did great harm and Bernanke is too, imo.

This summer,as the subprime problem began to boil over, I read in more than one business journal that the Federal Reserve made veiled warnings to financial powerhouses about too much investment in hedge funds and mortgaged-backed securities and reduced credit-worthiness, but they had no legal regulatory power in that area. So the excuse goes: The Fed felt it was ignored, so it shut up and let the banks and financial houses get exhuberant.

So, if this is true (and I have no earthly idea if it is or isn’t), what is the proper way for the Fed to behave when banks decide to get crazy with credit?

It’s more or less true. The Fed has plenty of power over the banks if it wants them, but it doesn’t have power over most Wall Street firms which aren’t classified as banks.

However the Fed didn’t even reign in the banks. It has for some time allowed banks to buy default insurance, and use that default insurance to reduce the effective amount of loans they have to put reserves against, for example. So reserve requirements have in effect been gutted. It also has a fair bit of power when it comes to how things are accounted for by banks, etc… but often chose not to use that.

The Fed was getting uneasy, but its policies aided and abetted the bubble.

For a good overview of how the Fed didnt have read this article by my co-blogger Numerian.

LS @ 24

Ian, what is your take on the Federal Reserve. There is so much controversy out there about it. What do you think? Does it hurt or help?

I don’t have a hate on for the Federal Reserve. I think it needs to do its job and that Congress needs to let it do its job. Freddie and Fannie for a time were essentially creating huge amounts of money; then after that Wall Street was. The Fed lost control.

Mind you the Fed didn’t seem to care very much, and was pouring fuel on the fire.

I don’t think the fed is good or bad. It’s a powerful tool that can be used for good or ill.

The problem is that the Fed is operating in an environment where it is expected to do all the heavy lifting. Congress has abdicated its economic responsibilities. It would also help to have a rational international economic policy. Some new form of Bretton Woods.

Hard to justice to in a comment. For now, like most tools, the Fed can do great good or great harm. It depends how you use it. Overall Greenspan did great harm and Bernanke is too, imo.

This summer,as the subprime problem began to boil over, I read in more than one business journal that the Federal Reserve made veiled warnings to financial powerhouses about too much investment in hedge funds and mortgaged-backed securities and reduced credit-worthiness, but they had no legal regulatory power in that area. So the excuse goes: The Fed felt it was ignored, so it shut up and let the banks and financial houses get exhuberant.

So, if this is true (and I have no earthly idea if it is or isn’t), what is the proper way for the Fed to behave when banks decide to get crazy with credit?

Things Come Undone @ 184

Ok first disprove my idea are there any Primes not divasble by 3? Are any of the results not a .333 or .666
Well I think I went that far but fine prove me wrong!
But how can we use this kbowledge to predict if a number is Prime? Also are you American/Mexican Indian in Part? Who cares I want an Answer!

A time honored way of looking for primes is the sieve approach. All even numbers are divisible by 2 so 2 is the only even prime number. 3 will remove every third number or if you discount even numbers every sixth number but I digress.

Anyway all numbers from 3 on have the following characteristics. They are divisible by 3, they are a multiple of 3 plus one, or they are a multiple of 3 plus 2. So if you divide by 3. You will have numbers that are perfectly divisible by 3 and have a zero remainder. Numbers which have a remainder of one and so further divided give 1/3. And numbers that have remainder of 2 and further divided give 2/3.

And other than being part of the sieve method this does not lead to a formula to find prime numbers.

“3’s” are a very interesting number.

Lea (no uh) @ 166

I love prime numbers almost as much as I love pi.

Ok first disprove my idea are there any Primes not divasble by 3? Are any of the results not a .333 or .666
Well I think I went that far but fine prove me wrong!
But how can we use this kbowledge to predict if a number is Prime? Also are you American/Mexican Indian in Part? Who cares I want an Answer!

A time honored way of looking for primes is the sieve approach. All even numbers are divisible by 2 so 2 is the only even prime number. 3 will remove every third number or if you discount even numbers every sixth number but I digress.

Anyway all numbers from 3 on have the following characteristics. They are divisible by 3, they are a multiple of 3 plus one, or they are a multiple of 3 plus 2. So if you divide by 3. You will have numbers that are perfectly divisible by 3 and have a zero remainder. Numbers which have a remainder of one and so further divided give 1/3. And numbers that have remainder of 2 and further divided give 2/3.

And other than being part of the sieve method this does not lead to a formula to find prime numbers.

Hi Ian: Just caught the post. Thanks. Question: what is the government support of airlines? I see it’s a big offset of tickets on Amtrac.

Yup, airlines receive far more subsidies than Amtrak does, in various ways.

LS @ 156

770

Shit up yoo gyes.

nuh uh! It rollz downhl!!!