Paul Kedrosky's Infectious Greed

While the world is busy with the old’s world’s problems, troubling stuff in SE Asia over oil between India and China:

India is being pulled into a complex and increasingly tense territorial dispute in the South China Sea, with China repeatedly warning ONGC, the Indian state oil company, that its joint exploration plans with Vietnam amount to a violation of Chinese sovereignty.

The Indian government responded to the latest Chinese warnings Thursday by repeating its pledge to continue exploring for energy in the South China Sea, where China is embroiled in territorial disputes with Vietnam, the Philippines, Taiwan, Malaysia and Brunei.

ONGC, meanwhile, said it planned to resume drilling next year at one of its two remaining blocks in the area, after a temporary suspension there because of a hard seabed, and after relinqishing another block last year because it lacked production potential.

“We plan to restart drilling there,” said ONGC Chairman A.K. Hazarika. “The [Indian] Ministry of External Affairs has informed us that the block is well within the territory of Vietnam and so there are no issues with exploration there.”

The testy public exchanges follow an unusual incident in July when, according to the Indian government, an Indian navy ship visiting Vietnam as part of expanding bilateral defense ties received a radio message warning it that it was entering Chinese waters. China has dismissed India’s version of the incident as “groundless.”

Analysts say the fresh standoff between Asia’s two emerging economic and military giants, which fought a brief war over their disputed Himalayan land borders in 1962, increases the risk of a military flare-up in the South China Sea.

More here.

Stephen Pinker’s latest book — on the decline of violence over time — is getting an early rave review. I’m planning to read the book, but the cautionary note struck in the closing of this Guardian review seems appropriate.

What might change [the steady decline of societal violence]? As I was reading this book I was repeatedly reminded of two novels. One is Lord of the Flies, an earlier generation’s definitive allegory of the violence lurking in us all. Pinker’s book makes Golding’s vision look dated: there is no state of nature bubbling away beneath the surface of civilised man, notwithstanding all the hysterical nonsense that has been uttered about the recent riots (which were, for riots, remarkably unviolent). The other novel is Cormac McCarthy’s The Road, this generation’s definitive allegory of how it could all go wrong. McCarthy pictures a world in which some random future spasm (perhaps an environmental catastrophe) leaves us all unhinged and lets the inner demons loose. Does our gradual move away from violence towards civility leave us better or worse equipped to deal with the next great calamity when it comes?

More here.

George Magnus calling Europe’s crisis correctly in a comment to a Mohammed El-Erian post over at the FT:

I regard bank recapitalisation and a robust and open-ended commitment by the ECB to buy Italian and Spanish bonds as a double-headed sine qua non for ending the European bond market and sovereign financing crisis. The existential issues that need to be addressed for a viable eurozone can be left until later. But they cannot if the bond market crisis is not resolved quickly. The time for incremental and technical changes to ECB and other policies and instruments is, to use banking parlance, long past due. And while I agree with Mr El-Erian’s policy prescriptions, it is surely not alarmist to say that if the political divisions and lack of determination in policy circles remain as now, we will surely hurtle to our own Kreditanstalt moment – the 1931 collapse of Austria’s largest bank which was how that appalling decade started.

More here.

I knew it was hight, but not this high:

In 2001-02, reality TV accounted for about 22% of the prime time TV audience watching the top 10 programs. By 2010-11, it accounted for about 56%, an increase of almost 155%. And 2010-11 did not mark the height of reality TV’s popularity during the past decade. In 2007-08, reality TV comprised more than three-quarters (77%) of the audience for the top 10 prime time TV programs, meaning it is down 27% from its peak popularity.

via Prime Time TV Preferences Shift during Decade.

Sort of wondrous and delightful that there is an entire site devoted to this:

This sign at JFK today seems appropriate:

• I'm in NYC, which always make me feel like an IKEA flat pack must feel if it could feel. ->
• "The more unpredictable a situation is, the more information needs to be ignored to predict the future." – Gigerenzer. ->
• Fave anagram for FOMC dissenter Richard Plosser: Crash Idlers Pro. ->
• Good podcast with Dan Lieberman on barefoot running. http://t.co/H6ZKysxl /via @Scienceofsport ->
• Jeremy Grantham: 'No Market for Young Men' http://t.co/sPs6A8IC /via @StockJockey ->

“The more unpredictable a situation is, the more information needs to be ignored to predict the future.”

- Gerd Gigerenzer

Jim Hamilton almost forensically takes apart Dan Yergin for the latter’s nonsensical anti-peak oil column in last  Saturday’s Wall Street Journal:

Yergin does not offer a statement of exactly what he means by “peak oil”, though his essay refers to it as a “fear” and a “specter”. Let me therefore begin my remarks with a clarification of exactly what I intend to discuss. I propose the following three propositions as the core claims that need to be evaluated:

1. The annual flow rate of oil production from a given reservoir eventually reaches a maximum, after which it declines.

2. The annual flow rate of total global oil production will eventually have to decrease as a necessary consequence of (1).

3. This peak in global production will be reached relatively soon.

Of these statements, I honestly don’t understand how a reasonable person could dispute (1). You could almost take it as tautological, and furthermore point to many, many examples of fields that passed their peak production long ago. I likewise see neither a conceptual nor an empirical basis for challenging (2). Thus it seems to me that the relevant debate is whether proposition (3) has any merit, and exactly what one means by “soon.” That question may or may not be what Yergin was intending to address with his essay. But since for me it is the core question, I would like to comment here on the implications of what Yergin wrote for what I perceive to be the main question of interest.

Read the rest here: More thoughts on peak oil.

Republican leadership letter to Fed chair Ben Bernanke today suggesting strongly that he not use monetary policy in service of economic growth. I’m trying to be non-partisan here, but I still this remarkable and verging on thuggish.

Dear Chairman Bernanke,

It is our understanding that the Board Members of the Federal Reserve will meet later this week to consider additional monetary stimulus proposals. We write to express our reservations about any such measures. Respectfully, we submit that the board should resist further extraordinary intervention in the U.S. economy, particularly without a clear articulation of the goals of such a policy, direction for success, ample data proving a case for economic action and quantifiable benefits to the American people.

It is not clear that the recent round of quantitative easing undertaken by the Federal Reserve has facilitated economic growth or reduced the unemployment rate. To the contrary, there has been significant concern expressed by Federal Reserve Board Members, academics, business leaders, Members of Congress and the public. Although the goal of quantitative easing was, in part, to stabilize the price level against deflationary fears, the Federal Reserve’s actions have likely led to more fluctuations and uncertainty in our already weak economy.

We have serious concerns that further intervention by the Federal Reserve could exacerbate current problems or further harm the U.S. economy. Such steps may erode the already weakened U.S. dollar or promote more borrowing by overleveraged consumers. To date, we have seen no evidence that further monetary stimulus will create jobs or provide a sustainable path towards economic recovery.

Ultimately, the American economy is driven by the confidence of consumers and investors and the innovations of its workers. The American people have reason to be skeptical of the Federal Reserve vastly increasing its role in the economy if measurable outcomes cannot be demonstrated.

We respectfully request that a copy of this letter be shared with each Member of the Board.

Sincerely,

Sen. Mitch McConnell, Rep. John Boehner, Sen. Jon Kyl, Rep. Eric Cantor