I just wanted to let you guys know that I am having increasing problems with computer viruses. Some of you have noticed span in the RSS Google reader. I have also lost my links information, and now I have lost my ability to write new posts. The reason for my “Drudge-like” attention-getting update is that since I can’t post anything new, my only way to contact you is by amending existing posts. I have been working on a new post, one of my “grouchy” ones, but can’t post it yet. Instead I’ll complain about today’s Fed action, or should I say lack of action. The S&P fell about 8 points right after the 2:15 announcement. The 5-year TIPS spread is now back down to 1.42%. Where’s that hyperinflation everyone on the right keeps promising us? And by the way, where’s that global warming Al Gore promises? I’m not comfortable unless it’s at least 85, and it’s been in the 60s in Boston this summer.
Seriously, I have no reason to doubt the science on CO2 and global warming, but the real action is in the economics of global warming. The new Journal of Economic Perspectives has 3 interesting pieces on the subject. One thing I took away is that the apocalyptic visions being made of extreme global warming just won’t happen. I predict a maximum of 2 more degrees centigrade. Geoengineering is for real. I’d like to know more about how serious the problem of ocean acidification from CO2 really is—it could become a key issue. And also more research on the possibilities for technologies that remove CO2 from the air at remote locations where it can be buried. My hunch is that we’ll try to create clouds from sea water at higher latitudes if temps threaten to rise more than 2 degrees, and then work on a technology to remove CO2 already emitted in the second half of the 21th century (to deal with the ocean acidification problem.) If I am right, that’s tilts the argument away from Stern’s more ambitious agenda, toward Nordhaus’s less costly approach to the problem.
BTW, I’m told that tomorrow morning my debate with Lee Ohanian (on the issue of deflation/inflation) will begin on CBSMoneyWatch.com. It will be a three part debate. Sorry for all the problems here, and thanks to those who have stayed around despite the problems. I think Austrian economists may like the next post.
Let’s take a look at inflation expectations since the stock market (and TIPS spreads) hit a low in early March:
Date 5 year TIPS yields 5 year T-bond yield TIPS spread S&P 500
3/9/09 1.52% 1.90% 0.38% 676.53
4/1/09 0.93% 1.65% 0.72% 811.08
5/1/09 1.24% 2.03% 0.79% 877.52
6/1/09 1.02% 2.55% 1.53% 942.87
6/10/09 1.08% 2.93% 1.85% 939.15
6/19/09 1.23% 2.80% 1.57% 921.23
6/22/09 1.23% 2.70% 1.47% 893.04
Den ganzen Beitrag lesen…