By JARED BERNSTEINAUG. 27, 2014
But new research reveals that what was once a privilege is now a burden, undermining job growth, pumping up budget and trade deficits and inflating financial bubbles. To get the American economy on track, the government needs to drop its commitment to maintaining the dollar’s reserve-currency status….
It is widely recognized that various countries, including China, Singapore and South Korea, suppress the value of their currency relative to the dollar to boost their exports to the United States and reduce its exports to them. They buy lots of dollars, which increases the dollar’s value relative to their own currencies, thus making their exports to us cheaper and our exports to them more expensive.
In 2013, America’s trade deficit was about $475 billion. Its deficit with China alone was $318 billion.
August 26, 2014 6:49 pm
By Ed Crooks
Horizontal drilling, which opens up layers of resource-bearing shale, and hydraulic fracturing, or “fracking”, has raised US crude output by more than 65 per cent in the past six years, helped by historically high oil prices that have made the techniques commercially viable.
The big question now is how much longer the US shale industry’s growth spurt will last.
The US shale industry is still young. Successful horizontal shale wells were first drilled for gas in 2002, and for oil in 2008. So there is still great uncertainty over how the reserves will perform in the long term.
Flows from shale wells decline quickly so the industry needs to drill thousands more every year for total output to grow. If drilling becomes uneconomic, the effects show through quickly in overall production.
My guess is we’re going to be in a period of significantly lower prices. Maybe not as low as $50 per barrel. But certainly enough to slow down the whole push towards shale development
Per Magnus Nysveen of Rystad, a consultancy, says about 10 per cent of the rigs working in the Eagle Ford shale formation in Texas and the Bakken in North Dakota will not be economic with global oil prices below $100 a barrel; not much lower than today’s $102.
A 10 per cent drop in drilling will not stop production rising in those areas, he says, but it will cause a significant slowdown in growth.
Fed likely to end bond-buying program in October
The Federal Reserve’s trillion-dollar effort to shore up the U.S. economy is likely to come to an end in October, closing the books on a bold but controversial experiment that has tested the limits of the central bank’s power.
For the past year and a half, the Fed has been buying tens of billions of dollars in government bonds and securities each month in an attempt to tamp down long-term interest rates and boost the recovery. It was the third and largest bond-buying program the central bank has launched since the 2008 financial crisis. But officials have been slowly scaling back the effort this year, and documents released Wednesday show that the Fed’s policy-setting committee is nearly ready to call it quits.