Recovery

There is a general trend that economists completely fail to predict when recessions occur, how deep they will be, and when the recovery will happen. Typically experts do little more than expect a continuation of the recent past. In fields where prediction of the political or economic future go, educated people with only a passing knowledge of the subject do just as well as experts at making predictions(which is admittedly a horrible job)

So I am going right ahead and making a prediction of my own. Sure, my prediction that spring 2007 would be a great time to buy stocks never worked out. That hasn't stopped me from having strong--if uneducated--opinions about the future though.

My prediction is this: employment reached a minimum at some time in the past three months. Unemployment rates will recover from this point on. The rate of this hiring will be approximately the same as the rate of job loss was in the past two years, meaning that in 2012 unemployment rates will be back down to normal levels.

I base prediction this on a few things. Mostly though I make this prediction because this is what usually happens. Looking at past recessions the rate of unemployment drop after the recession is about the same as the rate of rise at the start. Sure this recession might be different, we might be in another great depression, but the most likely assumption is that it is a completely normal recession, which will be followed by a completely normal recovery.

I however am not going soft on two issues: oil, and housing. Oil prices will stay high, housing prices will continue to drop until they hit inflation adjusted 2000 prices. I have no idea where the hiring will happen, just that it will happen somewhere.


There are many other people who share my opinion. Here are a few articles supporting a strong recovery:

Why So Glum? Numbers Point to a Recovery

Polls say the economy is heading in the wrong direction. Markets say it's back on track. This time, the markets are right

How America pulled itself back from the brink—and why it's destined to stay on top

News of America’s death is greatly exaggerated. In reality, the U.S. is on the verge of a demographic, economic and social revival.

Electromagnetism

It took me nearly a year, but I finally finished the last odd electromagnetism problem in an old edition of Serway's physics textbook. OK, there are a few that completely beat me. There were another dozen or so where I was absolutely convinced the answer at the back of the book was wrong. Still, I got a whole lot more than I missed, and there were no sections where I didn't get most of the answers correct.

I realized when I got a utility job that most everything can be understood by basic physics. I also realized that I didn't remember anything from the two semesters of electromagnetism I have taken. So I went for the direct method. My old high school physics textbook had answers to every odd problem, and eleven chapters on electromagnetism. Each chapter has about 70 problems in total, but doing problems you don't have answers to just builds up bad habits. So I decided to try and do every odd problem in those eleven chapters. Something close to 400 problems.

After that I can't say I really understand electromagnetism all that well. However I at least learned enough to feel safe going on to an advanced undergraduate text. Two or three of those, and maybe I will work up the nerve to take on Jackson.

Feynman Art

I was listening to the audiobook Surely You're Joking Mr Feynman last night. He was talking about his adventures as a painter. Realizing that this stuff must now be all posted online, I decided to search for it. Sure enough, i found a site showing most of his work. True to his reputation the man seems to have used his art mostly as a way to get girls out oftheir clothes.

Board Games

I played Settlers of Catan for the second time last weekend. I played it once in grad school, remembered it as awesome, so immediately grabbed it out of a box of games a friend brought when I saw it. It took forever to figure out the rules, but once you get going it is an amazing game.

While I don't know a lot about it, my understanding is that Settlers of Catan helped kick off a boom in game making which has produced a lot of great games. Some day I need to buy some of the other highly rated games such as Puerto Rico, or Power Grid.

Safest highways ever.

While the media has irrationally focused on the problems with cars made by Toyota (Toyotas are still very safe cars) the real story gets very little attention. Highway death rates are the lowest they have been since we started keeping records, in 1954. This drop has saved tens of thousands of lives, and the rate of decline is As high now as it has ever been.

Predicting Performance

The list of things that do not predict who is a good teacher always impresses me:

Among the factors that do not predict whether a teacher will succeed: a graduate-school degree, a high score on the SAT, an extroverted personality, politeness, confidence, warmth, enthusiasm and having passed the teacher-certification exam on the first try.

Source

Essentially everything people think they know about predicting performance appears to be wrong.

Cutting back on gasoline production

If there was ever strong evidence for peak oil, this is it. Even oil company insiders are realizing they have too many refineries for the amount of oil they will be producing in the near future.

Of course they typically blame demand. This is silly though. Five years ago many smart people were predicting $30 a barrel oil for decades. After all oil had stayed that price for decades, why would it change?

 Had a drop in demand been to blame economics 101 says oil prices today would be even lower than they were in 2000. Instead we find prices around three times as high. I see no evidence whatsoever that the world wouldn't consume as much $30 dollar a barrel oil as these refineries could produce. If demand is the problem why don't refineries lower the price of their product?

The answer is of course the raw material is too expensive. Refineries are  converting crude into gasoline at about the same cost they were a decade ago, but oil fields can, or will, no longer produce crude at this price.

The only two reasonable explanations for this are OPEC is finally restricting supply, or we are hitting(or more likely already hit) peak world oil production. As the biggest declines in production have come from the United States, the North Sea, and other mature fields peak oil is far more likely.