Daily Reading – November 18, 2010
FT Alphaville: The mathematics of inventories.
Now you won’t need reminding that it is the change in growth in inventories that counts towards GDP growth. So even if inventories rise another $110bn in Q4, as they did in Q3, the contribution to GDP growth is zero. If inventories rise a still strong $60bn in Q4, for example, inventories will deduct 1.5% from annualised GDP growth. With final sales rising a sickly 0.75% annualised (!!) over the last two quarters, you don’t have to be a genius at maths to realise a recession is entirely possible, even without sharp declines in housing or consumer durables.
FT Alphaville: Who’s bailing out whom?
Facetious title — but here’s an updated list of bank exposure to eurozone peripherals (in this case Ireland, Portugal and Greece) to ponder, as Ireland nears its bailout…
Calculated Risk: MBA National Delinquency Survey: Delinquency rate declines in Q3.
The MBA reports that 13.52 percent of mortgage loans were either one payment delinquent or in the foreclosure process in Q3 2010 (seasonally adjusted). This is down from 14.42 percent in Q2 2010….
China Financial Markets: What happens if Chinese growth slows?
Imagine at the time that you had been smart enough, and foolhardy enough, to predict that over the next two decades Japan’s growth rate would collapse to substantially less than one percent annually, and that by 2010 it would be less than one-third the size of the US. Had anyone believed you (and of course no one would have believed you), they would have almost certainly made two very obvious predictions.
Kid Dynamite’s World: Jerome Kerviel Talks More About His Rogue Trades.
I am by no means attempting to abdicate Kerviel of responsibility, but I’m flummoxed by how SocGen could have missed the reality of this situation. Their lack of risk management is, in a word, remarkable. Lets talk about some details.
Felix Salmon: Twitter datapoint of the day.
I don’t have a problem with Twitter monetizing my public tweets in this manner; as I understand it, DMs aren’t included, and neither are any tweets from protected accounts. But it’s quite astonishing how much those tweets are worth, when they’re aggregated into a fat pipe.
TechCrunch: Twitter Raising New Venture Round at $3 Billion Valuation.
Twitter is mulling over raising a new round of financing, we’ve heard from multiple sources, and a variety of venture firms are frothing at the mouth to lead the round. The valuation is likely to be in the $3 billion range, and they’ll likely raise more than the $100 million they took a little over a year ago at a $1 billion valuation.
Econbrowser: Billion prices project.
From the perspective of economic theory, one of the project’s most interesting findings is that when vendors change the price, they are more likely to make a large change rather than a small one, giving the distribution of price changes a bimodal shape. This is in contrast to earlier research using scanner sales data or individual CPI components, which had suggested that small price changes were quite common.