Watch out for that oil, Slick.

[karl]

Professor James Hamilton of the University of California presented an economic model to the Brookings Institute in which he asserted by using this model, that it was high oil prices and the oil shock which were the catalyst for the recent financial crisis. In order to back up his theory Hamilton begun his economic model in 2003. At this time crude oil was about $30 a barrel. Using the 2003 price as a ball point figure he showed what an oil shock would do,(such as the one experienced in 2007-8) to GDP.

The graph that he presented showed that high oil prices would directly bring GDP to what it was in 2008. In view of his findings, he put forward the theory that it was in fact high oil prices which caused the housing sector to crash and in turn the financial market. He turned current theories on their head. According to Professor Hamilton it was in fact high oil prices which caused the financial crisis we have experienced in the past two years.

Professor Hamilton's model echoes the work of Dr Nouriel Roubini who is a Professor of Economics and International Business at the Stern School of Business at NYU. Dr Nouriel evangelizes that it is high oil prices which caused the recent financial crisis. He is now predicting that although the global economy is presently in recovery, if the price of oil exceeds $100 a barrel, this will have a disastrous negative effect on the world economy. He states that it will have the same effect on the economy as oil did when it was at $145 a barrel last year. In a recent interview Dr Roubini explained that he was of the opinion that an increase in the price of oil over $100 would have a negative real trade effect and disposable income effect on countries such as the US, Europe and Japan.

[Gerr]

I wonder how much Wall St. paid this guy to come up with this theory.

[karl]

I wonder how much Wall St. paid this guy to come up with this theory.

What would be the reason for them to pay him? He's not absolving Wall Street. He's just pointing out that the first domino was the massive hike in the price of oil.

Has the fact that the world runs on oil escaped us?

[Ellen]

if it was that simple, how do they explain the almost complete recovery of the Canadian economy. Our oil prices were higher than yours.

[Bravus]

But we should be no means get active in finding alternatives...

[karl]

But we should be no means get active in finding alternatives...

We have wonderful, cost-competitive alternatives in natural gas and nuclear power. We also have massive oil reserves. Tree-huggers have stymied development for many years. I believe the tide is turning, and Obama is paying lip service to that. We'll see if we can make it real development.

[karl]

if it was that simple, how do they explain the almost complete recovery of the Canadian economy. Our oil prices were higher than yours.

I hope you are not attempting to argue that massive increases in oil prices were helpful or even neutral to the economies of the various countries.

Canada's banks, before the crisis, were rated the best-capitalized of all G7 countries. That should have facilitated a faster recovery.

The same was not true south of your border. In the U.S., unsteady financial institutions needed to off-load toxic assets in order to start rebuilding balance sheets. Others, like Citigroup and Bank of America, that were teetering on the brink of insolvency, needed much new capital just to remain on life support.

Read more: http://www.time.com/time/business/article/0,8599,1880327,00.html#ixzz0lDhcFae9

[Bravus]

Apologies all - in trying to be concise I realise my post above comes across as sarcastic.

And I personally would *love* to see a huge increase in the number of nuclear power stations and the start of a 'hydrogen economy' that replaces fossil fuels for vehicles with fuel cells.

[karl]

Apologies all - in trying to be concise I realise my post above comes across as sarcastic.

And I personally would *love* to see a huge increase in the number of nuclear power stations and the start of a 'hydrogen economy' that replaces fossil fuels for vehicles with fuel cells.

Amen and amen.

[SivartM]

Solar solar solar solar solar...

[karl]

How many watts are you deriving from the sun, Sivart?

[SivartM]

None.

How many watts could I be deriving from the sun if people invested more in affordable solar technology?

A lot.

But no, we must keep spending all of our money on expensive dinosaur soup.

[karl]

None.

How many watts could I be deriving from the sun if people invested more in affordable solar technology?

Private enterprise is doing a pretty good job on solar and it is very cost-effective for low-watt continuous drain applications like lights and small household needs. For appliances with major continuous pull (like air conditioners) solar is a bust.

http://www.ecobusinesslinks.com/solar_panels.htm

[phkrause]

Professor James Hamilton of the University of California presented an economic model to the Brookings Institute in which he asserted by using this model, that it was high oil prices and the oil shock which were the catalyst for the recent financial crisis. In order to back up his theory Hamilton begun his economic model in 2003. At this time crude oil was about $30 a barrel. Using the 2003 price as a ball point figure he showed what an oil shock would do,(such as the one experienced in 2007-8) to GDP.

The graph that he presented showed that high oil prices would directly bring GDP to what it was in 2008. In view of his findings, he put forward the theory that it was in fact high oil prices which caused the housing sector to crash and in turn the financial market. He turned current theories on their head. According to Professor Hamilton it was in fact high oil prices which caused the financial crisis we have experienced in the past two years.

Professor Hamilton's model echoes the work of Dr Nouriel Roubini who is a Professor of Economics and International Business at the Stern School of Business at NYU. Dr Nouriel evangelizes that it is high oil prices which caused the recent financial crisis. He is now predicting that although the global economy is presently in recovery, if the price of oil exceeds $100 a barrel, this will have a disastrous negative effect on the world economy. He states that it will have the same effect on the economy as oil did when it was at $145 a barrel last year. In a recent interview Dr Roubini explained that he was of the opinion that an increase in the price of oil over $100 would have a negative real trade effect and disposable income effect on countries such as the US, Europe and Japan.

Interesting article.

pk