Economics

"In the 1990’s, a call went out for the F.A.A. to stop letting air-traveling parents carry young children in their laps, making them buy a ticket for their children instead, so that every person could wear a seatbelt. The F.A.A. refused, saying that the cost of an extra ticket could force parents to travel by car instead. Car crashes are the leading cause of death for children. On the other hand, the problem of child safety in air travel, the F.A.A. said, “barely exists.” Yet another example of how terrible we are at assessing risk, especially when it comes to our children." - Alex Scrivener via Bookmarklet

on JAL they won't let you buy a ticket for a child under 2 years of age even if you want to. - Dead Silence

"Organizations are also starting to shift R&D, innovation, and design activities to the region. The trend, of course, contains a threat for Western companies. Asian powerhouses like Haier, Chery, and Tata have significant experience providing high value products at very low cost to choosy middle-class Asian customers. As Western consumers tighten their belts, expect these and other, less-known players to bring their value-oriented propositions to global markets." - imabonehead via Bookmarklet

"When prices are low, liquid elemental sulphur is poured into large blocks to solidfy (sulphur freezes at about 115C) on the prairie landscape for long term storage. Later, when prices are higher, it is remelted, prilled, and shipped to market (often to China). This block is near Cremona , Alberta, Canada. There are a couple dozen such blocks in Western Canada, mostly in the Rocky Mountain foothills, close to sour gas production facilities. The facility is operated by Shell Canada and stores sulphur from the Caroline Gas Plant to the west. The vertical wall here is about 25ft tall." - A.T. via Bookmarklet

This is really interesting. I never had heard of such a thing. - Kamilah Gill

well, I bumped into it during yet another chaotic wandering on Flickr - it caught my eyes by (obvious for me) similarity for Ukrainian national flag ... :) - A.T.

"With California a day away from issuing IOUs instead of paying its bills, Gov. Schwarzenegger and the legislature remain at odds over how to close a now $26.3 billion deficit. Schwarzenegger on Thursday ordered a third unpaid furlough day for 235,000 state employees. With its $1.7 trillion economy sputtering and 11.5% unemployment surging, California's difficulty in balancing its budget could affect the national recovery. But the Golden State's budget problems are hardly new. The seeds of them were planted more than 30 years ago." - imabonehead via Bookmarklet

"What's the long-term impact of high-priced oil? Rubin says it will spur manufacturing to return to North America and shrink the service sector. We're going to go back to "actually making things," he says, but the transition won't be easy because the infrastructure, technology, training and culture required for it will have to be massively overhauled. Food will be sourced locally — no more lamb from New Zealand and pineapples from Hawaii. Farms will make a big comeback. But it's going to be more expensive. Additionally, the suburbs will depopulate and airlines will go bankrupt." - A.T. via Bookmarklet

"June 22 , 2009 update: The latest results of the Moodys/REAL CPPI show a return of negative 8.6% in April for the all properties national index" - Frankie Warren via Bookmarklet

brutal. that growth just doesnt look sustainable though from 2003-2008. Prices on average nearly doubled in 5 years. - Frankie Warren

I think that the general difficulty that many people have in understanding statistics is an important problem, because it leads people to misinterpret the world around them. General managers of baseball teams overpay for free agents coming off of good years because they underestimate the chances that the recent good year was just the result of variance around a mediocre mean – or at least they did until the Billy Beane era. - Steve via Bookmarklet

Retail investors plow money into expensive mutual funds that have beaten the S&P 500 index for a few years in a row because they underestimate the chances that recent success is the result of pure, dumb luck; more importantly, the scandal of mutual fund expenses goes unchallenged because of the conventional wisdom that you should pay more to get into “better” funds. (I think it is... more... - Steve

"If you had any doubt that the intent of policy, such as the heroic efforts by the Fed to channel money to the mortgage market my manipulating spreads of mortgage paper so as to lower borrowing costs, was not merely to clear inventory but boost prices, today's action should put your mind at rest. The powers that be have just put in a big time above market bid, now permitting refis of 125% LTV for borrowers who are current. That is, assuming they get any takers. The effort is presumably to address borrowers who are already under water, and so would be swapping out of a mortgage that is in negative equity land for one that has a lower coupon. That lowers their payments (ex costs) and frees up some of the money formerly spent on the mortgage to spend on other stuff, like paying down their credit card debt (that was a lame attempt at humor, the authorities hope this will lead to more consumption). In addition, the new mortgage in theory is less prone to default than the old, since it consumes less of the borrowers' income." - Bill Kinney via Bookmarklet

Chart showing lengths of upswings and downswings. - Bill Kinney via Bookmarklet

"Innovation takes time. Building new markets that can grow into significant sources of revenue takes hard work and patience. So what's going to prop up your earnings the next time the world, or just your industry, goes into slow-down mode? What will your customers want and need 10 years from now? One core way to answer that question is to think hard about coming environmental pressures and trends." - imabonehead via Bookmarklet

"...Warren Buffett told CNBC Wednesday that he has trouble seeing so-called green shoots of economic recovery in the U.S. The risk of a collapse in the financial system has past, but "we haven't got the economy moving again," he explained. "We could see a lot of inflation," Buffett warned." - imabonehead via Bookmarklet

"State licensing is used to restrict entry unnecessarily. Licensed professionals lobby legislators to increase education and training requirements for new entrants so that their own earnings will rise. As long as tax revenues grow, it is politically expedient to accommodate the demands of professionals to restrict entry. But faced with a tight budget and pressing needs in critical areas such as health care, I would shift funds from licensing no matter how much the existing boards and professionals protest." - Alex Scrivener via Bookmarklet

"In many cases the primary licensing function is checking a candidate's education and criminal record. Without state licensing of contractors, private companies would offer similar services." - John E. Bredehoft

"California’s credit rating, already the lowest among U.S. states, may be cut several levels by Moody’s Investors Service as government leaders seek ways to eliminate a $24 billion budget deficit. The move would affect $72 billion of debt, Moody’s said in a statement today. California’s full faith and credit pledge is rated A2 by Moody’s, five steps above high-yield, high-risk status, or junk." - imabonehead via Bookmarklet

The article makes good points but I think it is a stretch at this point to tie Social Media to GDP just yet. Though, I do strongly believe that the factors in GDP measurement need to be updated. - Dilip Dand

A breakout session with Professor Geoffrey G. Jones Panelists share insights, informed by history, of the convergence that globalization promotes. They each focus on convergence from a different reference point: institutional convergence (in financial systems), policy convergence (in China), and the convergence of consumer preferences (with the beauty industry as an example). Globalization has a homogenizing effect on diverse national cultures. Its pressures cause societies to become more alike, converging in business approaches, political and economic systems, and even aesthetic attitudes. The results of convergence can be hard for people and countries to support though, and over time can mount into an anti-globalization backlash. Globalization today faces a legitimacy crisis that has been unfolding for the past decade, a product largely of financial system convergence. - Amira via Bookmarklet

Globalization is truly a misguided ship. Great article. - Dave - SustainedEuphoria

In just about one short year (March 2008 - March 2009), the bailouts managed to spend far in excess of nearly every major one time expenditure of the USA, including WW2, the moon shot, the New Deal, Iraq, Viet Nam and Korean wars — COMBINED. - Alex Scrivener via Bookmarklet

How does the spending compare to revenue? Amazing information! - Dave - SustainedEuphoria

Stunning numbers, especially for people who add little value to the economy. Good question in the comments, one I also had, if Bush hadn't started the bailout would Obama have started it? - Todd Hoff

A specter is haunting the world—the return of capitalism. Over the past six months, politicians, businessmen and pundits have been convinced that we are in the midst of a crisis of capitalism that will require a massive transformation and years of pain to fix. (...) A few years from now, strange as it may sound, we might all find that we are hungry for more capitalism, not less. An economic crisis slows growth, and when countries need growth, they turn to markets. After the Mexican and East Asian currency crises—which were far more painful in those countries than the current downturn has been in America—we saw the pace of market-oriented reform speed up. If, in the years ahead, the American consumer remains reluctant to spend, if federal and state governments groan under their debt loads, if government-owned companies remain expensive burdens, then private-sector activity will become the only path to create jobs. The simple truth is that with all its flaws, capitalism remains the most... more... - Amira via Bookmarklet

Why do we need growth? With this mentality it will never be enough. - Dave - SustainedEuphoria

Moreover, there is a great deal of movement in and out of the top income groups. The Treasury data show that 57% "of households in the top 1% in 2005 were not there nine years earlier." The rich sometimes get richer, but they get poorer as well. The study also reveals that income mobility has increased, not decreased, during the past twenty years. For example, 47.3% of those in the lowest income quintile in 1987 saw their incomes increase by at least 100% by 1996. That number jumped to 53.5% from 1996 to 2005. - Alex Scrivener via Bookmarklet

"Ok, who has $130 billion in bearer bonds? Remember, bearer instruments haven't been issued by the Treasury since 1982, when they became illegal to issue, at least to US institutions and residents (there was an exception carved out for Treasury instruments issued to non-US residents in 1985 - a time of high deficits) The answer to that question: it is rather unlikely that there remains $130 billion of legitimate US Bearer issuance outstanding anywhere - to anyone." - Alex Scrivener via Bookmarklet

"The financial crisis and the recession have turned up the heat on U.S. corporate boards, exposing them to intense criticism for their decisions on executive compensation. But the evidence indicates that CEOs typically aren't overpaid - in fact, good CEOs may be underpaid." - imabonehead via Bookmarklet

"The economies of China and, to a slightly lesser degree, India account for the majority of Asian economic growth today. As their growth regains momentum in the east, western economies are headed for a slower and less-pronounced recovery. These dynamics will enable the Asian economies to amass more and more market power which, over time, they are likely to assert in creative, novel ways that could significantly impact the future arc of global business..." - imabonehead via Bookmarklet

Fitch expects "home prices will fall an additional 12.5% nationally and 36% in California" from Q1 2009. - Steve via Bookmarklet

http://www.calculatedriskblog.com/2009... - Steve

Uche, I think it comes down to "I don't want the government taking my money, or immigrants taking my job". - Michael R. Bernstein

Excellent points. I'll have to follow his Weblog. As an immigrant serial entrepreneur I especially like his point about encouraging immigration as an engine of entrepreneurship in the U.S. - Uche Ogbuji via Bookmarklet

Juvenn, no doubt. People who combine anti-immigration sentiment with fiscal liberalism (AKA US conservatism) astonish me. Immigration is the most open market force in existence. - Uche Ogbuji