Little More on the Debt Limit

NYT:

Officials have said repeatedly that Treasury does not have the legal authority to pay bills based on political, moral or economic considerations. It cannot, for instance, set aside invoices from weapons companies to preserve money for children’s programs.

The implication is that the government will need to pay bills in the order that they come due. President Obama has warned as a result that the government “cannot guarantee” payments of Social Security benefits or other popular programs. Officials also have disputed the assertion of some Republicans that the government could prioritize interest payments.

That doesn't sound good...

Fed and the Debt Limit

Very interesting piece in the FT:

Wall Street bankers, from senior executives to traders, are complaining that the Federal Reserve is refusing to engage in scenario planning for a US downgrade or default.

With days until the Treasury’s August 2 deadline to raise the debt ceiling, bankers say they are not getting a response to efforts to discuss the market impact of a failure to reach a deal in Washington or if credit ratings agencies cut the US triple A rating.

Autos in the US Economy

Automation or Offshoring? Evidence from General Motors

Oil: Up or Down?

Steve Levine has an interesting blog post pointing out the financial market actors are increasingly betting that the price of oil will rise:

Oil traders are betting as a herd that they are on the cusp of potentially their most profitable period since the Libyan uprising stoked fears of Saudi Arabian oil being lost to the market. Hedge funds, among the biggest players in oil futures, are leading this charge, according to the U.S. Commodity Futures Trading Commission, which tracks such data. They have upped their bets on a serious rise in oil prices three weeks in a row -- the first time that has happened since late February-early March, Reuters reports.

The reasoning?

Interesting Blog on the Constitutional Option

I was sitting on the patio of my local country market this morning with my son and our puppy. We got chatting with a nice guy on a bike and he turned out to be Michael C. Dorf, a Constitutional Law Professor at Cornell. It transpired that he has a blog Dorf On Law and that he's been hosting a fascinating debate amongst eminent constitutional lawyers on the options that the President has should Congress fail to raise the debt limit.

I highly recommend reading it since it currently appears to me that there's a fair chance Congress will fail to agree.  House Republicans seem to be completely intransigent and unwilling to compromise.  Democrats are much more willing to compromise, but if they capitulate completely on this issue, they are going to find themselves having to capitulate on lots of other things too - Republicans will draw the lesson that they can get everything they want by threatening to blow up the government altogether.  So Democrats probably should not accede to Republican demands entirely, and the tenor of the news coverage at the moment suggests that they won't.

Latest European Bond Spreads

Energy in the Industrial Revolution

IEA Calls Halt to SPR Releases

According to the FT:

The International Energy Agency has decided not to repeat a highly unusual decision to draw on strategic oil reserves, while defending the original release as successfully meeting a “market need”.

The western countries’ oil watchdog made 60m barrels available for 30 days after June 23, saying this would cover the loss of Libyan output before other Opec members could raise their production.

This use of reserves for only the third time in the IEA’s 37-year history had achieved its goal, said the organisation’s secretariat on Thursday. “The action served a market need by adding liquidity and bridging the gap to additional supplies from Opec countries,” read a statement.

That didn't last long...

Quality of Political Leadership

The debate over raising the debt limit in the United States has been interesting to me, because two thinkers who I have a great deal of respect for took diametrically opposed viewpoints.  On the one hand, Calculated Risk has been adamant that it was all a bunch of political theater and the debt ceiling would be raised in time.

Congress will probably push this to the brink, but they will raise the debt ceiling before the country defaults. The first rule for most politicians is to get re-elected, and the easiest way to guarantee losing in 2012 is to throw the country back into recession. If that happened, I believe the voters would correctly blame the leaders of Congress, and I think Congress knows that too. Therefore it won't happen. I'm not worried and neither are investors.

On the other hand, Bruce Bartlett has been warning for months that, no, in fact the Republican congress was quite capable of failing to raise the debt limit:

It's never happened before. And I think many people in financial markets, and perhaps even in Washington, just assume away the possibility. They cannot conceive of the insanity of allowing the debt to default. But what I keep trying to explain to people is that these Tea Party people really are that crazy. And I'm just trying to get people to believe me.

European Interest Rates

International Oil Efficiency vs Gas Prices

US Survival Statistics

Taking "Singularity" Apart

The term "singularity" as applied to the medium-term future of technology/humanity bundles together a variety of predictions for purposes that suit advocates of continued technological development, but don't necessarily have to occur together.  In this post, I want to briefly point out the different pieces, and comment on the strength of the connections.  For readers wanting some more background on the concept, the Wiki article is a good place to start.

Global Oil Supply up in June

Saudi Oil Production Up 450kbd in June

Hmmm

New research effort:

Last month President Obama traveled to Carnegie Mellon University in Pittsburgh to unveil a $500 million effort to create advanced robotic technologies needed to help bring manufacturing back to the United States. But lower-cost computer-controlled mechanical arms and hands are only the first step.

So we're hoping to replace Chinese peasants with robots in factories here.  This is going to help unemployed Americans how?

US Oil Consumption

US 10 Year Treasury Note Interest Rates

Chinese Inflation

Employment Population Ratios by Gender

Brazilian Oil Production

Update on North Sea Oil Production