• Iran crude oil production in 2009 was 3.8 million barrel per day.
• In 2008 Iran exported about 2.6 million barrels of crude oil per day.
• In 2009 China imported 544,000 barrels of oils per day from Iran up from 430,000 barrel per day in 2008 (a 25% increase).
  • The export to China was about 16.5% of Iran’s oil export in 2008. Assuming the Iran’s total export did not change in 2009 the share of export to China out of total Iran’s export jumped to about 21% in 2009.
• China imports about 3.9 million barrel of its daily 7.8 million barrel consumption. Thus China’ import from Iran constitutes about 14% of its total crude oil import.

is the Efficient Market Hypothesis (EMH) really responsible for the current crisis?

and replies

The answer is no. The EMH, originally put forth by Eugene Fama of the University of Chicago in the 1960s, states that the prices of securities reflect all known information that impacts their value. The hypothesis does not claim that the market price is always right. On the contrary, it implies that the prices in the market are mostly wrong, but at any given moment it is not at all easy to say whether they are too high or too low.

However, somewhere else in the article he says:

From 2000 through 2006, national home prices rose by 88.7%, far more than the 17.5% gain in the consumer price index or the paltry 1% rise in median household income. Never before have home prices jumped that far ahead of prices and incomes.This should have sent up red flags and cast doubts on using models that looked only at historical declines to judge future risk. But these flags were ignored as Wall Street was reaping large profits bundling and selling the securities ..

This seems inconsistent. Is not the case that according to EMH you could not have known whether the prices are too high or too low?

1. the effects of fiscal policy in 2009 and beyond a discussion of Cogan Cwik Taylor WielandBy Brad Delong.
2. What Really HappenedBy Lawrence H White.
3. Liquidity, Default, RiskBy Brad Delong (This is a response to White)
   
   ]]> http://isummary.wordpress.com/2009/05/01/crisis-causes-and-cures/feed/ 0 ata http://isummary.wordpress.com/2009/04/28/gotha-programm/ http://isummary.wordpress.com/2009/04/28/gotha-programm/#comments Tue, 28 Apr 2009 20:52:26 +0000 isummary http://isummary.wordpress.com/?p=80 ]]> This is part of the Gotha Program, the program of the Socialist Democratic Party of Germany in 1875:

   [7] The Socialist labor party of Germany, in order to prepare the way for the solution of the social question, demands the establishment of socialistic productive associations; with the support of the state and under the democratic control of the working people. These productive associations, for both industry and agriculture, are to be created to such an extent that the socialistic organization of all labor may result therefrom.

   [8] [In addition to the demand for universal suffrage for all above twenty years of age, secret ballot, freedom of the press, free and compulsory education, etc.,] the socialist labor party of Germany demands the following reforms in the present social organization: (1) the greatest possible extension of political rights and freedom in the sense of the above-mentioned demands; (2) a single progressive income tax, both state and local, instead of all the existing taxes, especially the indirect ones, which weigh heavily upon the people; (3) unlimited right of association; (4) a (619) normal working day corresponding with the needs of society, and the prohibition of work on Sunday; (5) prohibition of child labor and all forms of labor by women which are dangerous to health or morality; (6) laws for the protection of the life and health of workmen, sanitary control of workmen’s houses, inspection of mines, factories, workshops, and domestic industries by officials chosen by the workmen themselves, and an effective system of enforcement of the same; (7) regulation of prison labor.

   It is interesting. The demands of the socialists 135 years ago (except probably for socialistic productive associations) is what liberal democracies of the west uphold now.

   
   ]]> http://isummary.wordpress.com/2009/04/28/gotha-programm/feed/ 0 ata http://isummary.wordpress.com/2009/04/28/%d8%aa%d8%ad%d9%88%d9%84%d8%a7%d8%aa-%d8%af%d8%b1-%d9%86%d8%a7%d8%a8%d8%b1%d8%a7%d8%a8%d8%b1%db%8c-%d8%af%d8%b1%d8%a7%d9%85%d8%af-%d8%af%d8%b1-%d8%a2%d9%85%d8%b1%db%8c%da%a9%d8%a7/ http://isummary.wordpress.com/2009/04/28/%d8%aa%d8%ad%d9%88%d9%84%d8%a7%d8%aa-%d8%af%d8%b1-%d9%86%d8%a7%d8%a8%d8%b1%d8%a7%d8%a8%d8%b1%db%8c-%d8%af%d8%b1%d8%a7%d9%85%d8%af-%d8%af%d8%b1-%d8%a2%d9%85%d8%b1%db%8c%da%a9%d8%a7/#comments Tue, 28 Apr 2009 20:11:47 +0000 isummary http://isummary.wordpress.com/?p=76 ]]> This year Emmanuel Saez won the John Bates Clark Medal. He is a leading researcher on the causes of wealth and income inequality. The graph on page 6 of this paper:” Striking it Rich: The Evolution of Top Incomes in the United States” shows how much inequality in income has been increasing since end of 1970.
   Here is what Peter Orszag, the director of the white house office of management and budget has to say about him.
   
   ]]> http://isummary.wordpress.com/2009/04/28/%d8%aa%d8%ad%d9%88%d9%84%d8%a7%d8%aa-%d8%af%d8%b1-%d9%86%d8%a7%d8%a8%d8%b1%d8%a7%d8%a8%d8%b1%db%8c-%d8%af%d8%b1%d8%a7%d9%85%d8%af-%d8%af%d8%b1-%d8%a2%d9%85%d8%b1%db%8c%da%a9%d8%a7/feed/ 0 ata http://isummary.wordpress.com/2009/04/27/ideology-of-deregulation/ http://isummary.wordpress.com/2009/04/27/ideology-of-deregulation/#comments Mon, 27 Apr 2009 20:19:54 +0000 isummary http://isummary.wordpress.com/?p=72 ]]> Krugman:
   “Fed shrugged as subprime crisis spread,” was the headline on a New York Times report on the failure of regulators to regulate. This may have been a discreet dig at Mr. Greenspan’s history as a disciple of Ayn Rand, the high priestess of unfettered capitalism known for her novel “Atlas Shrugged.”

   In a 1963 essay for Ms. Rand’s newsletter, Mr. Greenspan dismissed as a “collectivist” myth the idea that businessmen, left to their own devices, “would attempt to sell unsafe food and drugs, fraudulent securities, and shoddy buildings.” On the contrary, he declared, “it is in the self-interest of every businessman to have a reputation for honest dealings and a quality product.”

   It’s no wonder, then, that he brushed off warnings about deceptive lending practices, including those of Edward M. Gramlich, a member of the Federal Reserve board. In Mr. Greenspan’s world, predatory lending – like attempts to sell consumers poison toys and tainted seafood – just doesn’t happen.

   But Mr. Greenspan wasn’t the only top official who put ideology above public protection. Consider the press conference held on June 3, 2003 – just about the time subprime lending was starting to go wild – to announce a new initiative aimed at reducing the regulatory burden on banks. Representatives of four of the five government agencies responsible for financial supervision used tree shears to attack a stack of paper representing bank regulations. The fifth representative, James Gilleran of the Office of Thrift Supervision, wielded a chainsaw.

   Also in attendance were representatives of financial industry trade associations, which had been lobbying for deregulation. As far as I can tell from press reports, there were no representatives of consumer interests on the scene.

   Two months after that event the Office of the Comptroller of the Currency, one of the tree-shears-wielding agencies, moved to exempt national banks from state regulations that protect consumers against predatory lending. If, say, New York State wanted to protect its own residents – well, sorry, that wasn’t allowed.

   
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