Posted on Monday, August 24th, 2009
By the Center for Geoeconomic Studies
This chart plots oil prices against Iran’s estimated import bill “break-even” oil price — the price below which Iran either had, or would have had, to find sources of hard currency other than oil exports, which constitute about 85% of its total exports, to finance its imports in a given period. From 1998 to mid-2008, rising oil revenues enabled Iran’s government to enact programs and subsidies aimed at consolidating popular support and preventing social unrest. But the steep decline in oil prices in the second half of 2008 significantly curtailed the regime’s ability to finance these programs. As the chart shows, oil prices dropped below Iran’s break-even point in late 2008, at which time President Ahmadinejad proposed that government energy subsidies be canceled, a move that met resistance in Iran’s parliament. However, oil prices have been rising in recent months, reducing the pressure on Iran’s government to make further unpopular subsidy cuts. Rising oil prices may be critical to President Ahmadinejad as he struggles to reconstruct a foundation of popular support.
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Posted in Commodities/Oil, State Capitalism | 0 Comments »
Posted on Wednesday, January 21st, 2009
By the Center for Geoeconomic Studies
Financial stocks plunged this week, renewing the debate over how to fix the banking system. The Treasury’s remaining $350 billion in TARP funds would be enough to buy the existing common equity of the U.S. banking system, but buying existing stock wouldn’t provide the banks with new capital. To fix the banks, the Obama administration must select from a range of options that include capital injections, asset purchases, a ‘bad bank’, or nationalization.
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Posted in Financial System, State Capitalism, U.S. | 0 Comments »
Posted on Monday, January 5th, 2009
By the Center for Geoeconomic Studies
The experience of the 1997-98 East Asian crisis encouraged many developing countries to accumulate vast sums of foreign exchange reserves in order to self-insure against future crises. As our chart indicates, as of the end of November, emerging market countries were burning through these reserves. This crisis will put to test previous thoughts about necessary reserve levels and the efficacy of self-insurance.
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Posted in Capital Flows, Emerging, State Capitalism | 0 Comments »
Posted on Tuesday, December 2nd, 2008
By the Center for Geoeconomic Studies
The financial crisis has triggered a sharp expansion in government. Some commentators portray this as a paradigm shift–a shattering of the faith in free markets and small government in the U.S. But our chart shows that past recessions have also caused government to grow as a share of the economy. If the effect is more powerful this time, that is because the recession is likely to prove longer and deeper-not necessarily because of shifting paradigms.
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Posted in Fiscal Policy, State Capitalism, U.S. | 0 Comments »
Posted on Friday, September 26th, 2008
By the Center for Geoeconomic Studies
The charts above put the size of Paulson’s $700 billion rescue plan into perspective. Given that $700 billion is small relative to the total assets of all FDIC insured institutions, the design of the bailout will be at least as important as the size. Government money may have more impact if it is used to bolster banks’ capital rather than to bolster their assets. The following articles capture some of the debates around the bailout plan.
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Posted in Financial System, State Capitalism, U.S. | 0 Comments »
