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With oil at $140 a barrel, can you still love Julian Simon?
Tyler Cowen, Marginal Revolution
Remember Julian Simon, the guy who argued that resource prices would fall, fall, fall in real terms? I loved spending time with him and to this day he remains an underrated economist. (By the way, the very first piece I ever wrote was a guide to using Julian Simon for high school debaters.) But can we still advocate his major thesis?
The possible belief space includes the following:
1. There is still a good chance that future resource and oil prices will fall dramatically, so Simon should not be dismissed. Still, the single best estimate today can be inferred from the current market price, which implies a good chance that resources will get more expensive.
2. Simon is right and futures markets currently indicate that the price of oil is expected to fall dramatically.
3. Simon is still right, the rest of the world is wrong, and betting on this is how I will get rich.
4. Simon is right but current markets don’t allow us to bet on his major claims. Futures markets extend for only a few years’ time, not for say the twenty years or so that are needed to validate his prediction. …
Second addendum: Here is Jeffrey Sachs on this topic.
(30 June 2008)
Dan Bednarz writes:
An equivocal defense of why Julian Simon’s argument might still be correct that the costs of resources “will fall, fall, fall in real terms.” Note also the link to a Jeffrey Sachs article on how economic growth can be maintained in a world of shrinking resources.
Credit-Card Debt Snaring More High-Income People
Krystina Gustafson, CNBC
An attorney with a six-figure salary, Will Chen thought credit card debt was something that only affected people with low-paying jobs. But when the lavish spending inspired by his new job outpaced his paychecks, he quickly fell $100,000 into debt.
Credit-card debt is becoming even more prominent in the struggling state of the economy. The average amount per consumer rose to $6,900 in the last year, a 21 percent increase, according to Experian, a global information services company. The average number of past-due accounts also increased to exceed more than one per consumer.
And it’s not just those with low salaries who are susceptible.
One common misconception is that credit card debt doesn’t affect upper-income households, said Greg McBride, senior financial analyst for Bankrate.com
“It’s not a function of household income, it’s a function of household spending,” he said. “People of all walks of life have been either guilty of overspending or the victim of some misfortune such as a job loss, an illness or a divorce.”
(27 June 2008)
Jeffrey Brown’s long time advice:
ELP Plan (April, 2007)
Charles Dickens writes:
“Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”
(Micawber Principle” )
What the Export Land Model Means for Energy Prices (PDF)
David Galland, Casey Research
Jeffrey Brown is someone you should know. That’s because he can help you understand today’s high energy prices and that, as an investor, make you a lot of money.
I’ll introduce to you to Jeff Brown in a moment. But first, as it’s relevant to the discussion, I want to touch on an important concept related to investing in challenging times.
You might call it the “Davy Crockett principle” in honor of something that American icon said during the War of 1812, “Be sure you are right and then go ahead.”
Simply, it’s critical to step away from all the noise and clutter that passes for knowledge on the financial talk shows, and take the time to be very sure you are investing in close concert with a powerful unfolding trend. That accomplished, come what may, you’ll come out okay once the dust has settled.
And the earlier you can get on board with a trend, the more money you can make.
(24 June 2008)
Where others see collapse, Casey Research sees opportunity.
Investment-oriented article, as you can tell from the excerpt. Casey offers a free 5-part course with the same material. -BA
