Global Economic Snapshot

Amid heightened inflation concerns, oil reached $100.10 a barrel yesterday due to a variety of causes. According to an analyst at Goldman Sachs, “Economic growth concerns have been trumped by long-term structural supply issues.”

Adam Sieminski, chief energy economist at Deutsche Bank, believes the main driver is "the huge volumes of money moving into oil and other commodities." Analysts at Barclays Capital say instability in Africa’s largest oil producer, Nigeria, also pushed prices higher.

Bloomberg – Oil Falls From $100 Record on Speculation U.S. Stockpiles Grew
Wall Street Journal – Weakening Demand? Oil Still Passes $100
Global Insight – Oil Prices Spike Back to Record Levels
European Central Bank – Assessing the Factors Behind Oil Price Changes
Cambridge Energy Research Associates – $100 Oil: Moving Deeper Into Uncharted Territory

Despite strong aggregate job growth in Silicon Valley, middle-wage occupations such as secretaries and customer support positions are disappearing while the number of lower-wage jobs is on the rise. Middle-income jobs in Silicon Valley declined from 2002-2006 from 52% to 46% and lower wage jobs increased from 22% to 27%.

Snapshot asks, is this trend assoicated with the technology industry a sign of the wider American economy and inherent to technology-fueled growth?

New York Times: Silicon Valley Losing Middle-Wage Jobs
Joint Venture: The Silicon Valley Index
Wall Street Journal: Silicon Valley Continues On Economic Comeback

Bond insurer FGIC, the third-largest insurer of both municipal bonds and structured securities composed of subprime mortgages, was forced to split these two parts of its business after being stripped of its AAA rating by Moody’s and not receiving a government or private bailout.

New York Governor Elliot Spitzer gave all bond insurers 3-5 days to save the profitable municipal bond portfolio of bond insurers and to isolate the heavy losses due to subprime mortgages. Snapshot asks: what will happen to the business of insuring structured securities?

Eric Danillo New York State Insurance Comissioner – Testimony Feb 14, 2008
Financial Times – Bond Insurer FGIC Tells Regulator It will Split
Wall Street Journal – Spitzer Warns Bond Insurers
Bloomberg – Muni Regulators Seek Disclosure on Auction-Rate Bonds
Financial Times – FGIC Downgraded by Moody’s
Bloomberg – Muni Regulators Seek Disclosure on Auction-Rate Bonds

America needs $1.6 trillion in public investments to get our infrastructure up to date, according to the American Society of Civil Engineers. New America's Economic Growth program, led by Sherle Schwenninger, argues that not only is it necessary, but in a time of recession, infrastructure-based stimulus is the best way to revive the economy.

So it's heartening to see that with rust-belt states coming up on the primary horizon, more presidential candidates are supporting public investment.

The Hong Kong Heng Seng Index fell 8.7% overnight, and is down 22% this year. The Shanghai Composite Index fell 7.2% giving it a loss of 13% so far this year. Snapshot asks, are the declines in the Chinese stock markets an indicator of China’s reliance on the U.S. market for growth or an internal market correction?