Links for the Week Ending 26 January

  • The current oil narrative in the U.S. is one of bountiful supply but structurally reduced demand. Yet Mark Lewis, in The Financial Times, disputes the latter story (here, free registration at the FT). He argues that the last five years have seen a cyclical, not structural, shift in demand. But now that the economy is picking up speed, demand for oil is kicking up a notch. Given the astronomical capital expenditures needed to bring new supply to market, however, the only mechanism able to maintain equilibrium will be the rationing effect of higher prices.
  • Again in The Financial Times are some fascinating statistics showing that 26% of young adults aged between 20 and 34 now live with their parents in the U.K., up from around 21% in 1996. A prime mover behind this trend is the 13% decline in real median incomes for this age group in the decade from 2001/02 to 2011/12. All part of the new normal.
  • In my former job running a hedge fund, I learned one great skill that is rarely developed in the general populace; that is, to believe both the buy and sell case for any individual position. So does this mean that I was unable to trade, like a deer caught in the headlights? Not really, because sometimes (but not often) you rate the rationale behind one side of a trade as a little superior than the other—and that’s when you place your bet.  This approach can be extended to most things in life. So in the case of my recent series on technology and unemployment (starting here), I  looked at a series of papers that suggested we have a serious problem with technology. Given that bias, my inclination is to find intelligent people who say we don’t have a problem. One such person is the progressive economist Lawrence Mishel, who in a blog post last week argues that technology is not the job killer; rather,  low wages, inequality and unemployment are caused by other, non-technological factors. My understanding of this topic is highly fluid, with argument and counter-argument going on to my weighing scales. I tilt towards worrying, but am still very receptive to opposing views.
  • Of course, in the case of climate change, the scales are dramatically weighted to one side—i.e., bad climate change outcomes. Marginally encouraging is the fact that corporations are slowly comprehending climate change risk. As evidence, climate change has elbowed its way back onto the agenda at Davos. The Guardian is one of the few publications to pick up on this trend and has been tracking the various seminars, panel discussions and presentations there (herehere and here). And The New York Times has an informative article by Coral Davenport on how big business is getting more concerned over global temperature rise.
  • The Guardian also has a very interesting article on the impact of ENSO cycles (El Nino and La Nina cycles) on global mean temperature. What is new to me is the claim, which originates from a note in the academic journal Nature Climate Change (full article is behind a paywall), that the ENSO cycle itself will change as the planet warms, leading to more extreme El Ninos and thus more volatility in temperature variation. Yet again we learn of another source of climate risk.

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