Saturday, September 18, 2010

This is determination personified for me...Would YOU do this for the privilege to vote?

Wow! I wonder if this will survive a constitional challenge...The word Self-Determination** has a couple of different meanings when I look at this photo...

Election workers carry voting material to remote mountainous villages in Shotol, Afghanistan.

1.the act or power of making up one's own mind about what to think or do, without outside influence or compulsion
2.the right of a people to decide upon its own political status or form of government, without outside   influence
Source HERE

What is the difference between a politician in Afganistan today and George Washington? Turns out they are very similar when it comes to getting elected.

An article today in the NYTIMES on blatant vote buying in today's elections in Afghanistan...
"...How much does it cost to buy an Afghan vote?...Nonetheless, prices are low. In northern Kunduz Province, Afghan votes cost $15 each; in eastern Ghazni Province, a vote can be bought for $18. In Kandahar, they sell their rights for as little as $1 a ballot. More commonly, the price seems to hover in the $5 to $6 range, as quoted to New York Times reporters in places like Helmand and Khost Provinces...."
In the West vote buying is more subtle and mostly manifests itself  as a "quid pro quo"---vote for me and I will favor, with money or regulations, your union,  business, corporate, environmental concern, etc.  But direct vote buying NEVER happens or happened in the US, right? Even George Washinton was not immune to political realities:

"...But for all of Washington's commendable belief in moderate alcohol use, he very much appreciated its utility. Esther White, a Mount Vernon archaeologist, told me Washington once lost a 1755 campaign for the Virginia House of Delegates because he didn't treat prospective supporters to a drink. Two years later, he rolled out 144 gallons of refreshment. He won with 307 votes, a return on his investment of better than two votes per gallon. He never lost another campaign...." (Source HERE)

Friday, September 17, 2010

How College Students spend their time---Do you REALLY only study this amount of time?

""Being in, or at, a college doesn’t seem to be a terribly bad life.
That’s one of the many implications from a new report by Bureau of Labor Statistics, titled “Back to College.” Here, for example, is the lifestyle of the typical full-time college student:""


Tuesday, September 14, 2010

Don't whine about the price of wine---It's China's fault---is this becoming a familiar refrain?

More evidence of the increasing purchasing power of the Chinese...For better or worse, this luxury good is in big demand, hence the world price will increase as well...

New Whine: China Pushes Bordeaux Prices Higher
""...But wine makers and merchants also credit booming demand from emerging economies, especially that of China, where labels like Lafite and Margaux have joined Prada and Hermés as badges of wealth. Last year, China passed the U.S. to become Bordeaux's biggest export market by volume outside Europe..."The pricing of the 2009 wines is way, way above what's been seen before for any previous vintage," Mr. Gearing says.  A big factor is China. The volume of Bordeaux bottled wine exported to the country last year was 39 times the volume in 2000, according to the Council of Bordeaux Wine. Exports of 2009 Bordeaux to China increased 97% by volume and 40% by value from 2008.  "China is now our most important market, even before France," says Paul Pontallier, general director of Château Margaux, which recently opened an office in Hong Kong. "It's really taken off over the past six to twelve months."

This Restaurant in Roanoke "gets" a fundamental economic concept--TANSTAAFL!

Housing Bubble and a dishonest political class---birds of a feather or not connected at all---You decide, I am too tired...

    Homeownership and the Housing Bubble---Is there a correlation?...The graph below shows the Consumer Price Index (Dark Red Line, right scale), the housing price index (pulled from within the CPI--Bright Red Line, right scale) and the Homeownership Rate in the US since 1990 (Blue Line, left scale). For the purposes of this graph, the author (Carpe Diem) used 1990 as the base year (CPI and Housing Index =100).  A housing index high of approx. 225 in 2007 means that housing prices increased 125% over 20 years (225 minus 100= 125).  Over the SAME period prices in general, as measured by the CPI, increased 50% (approx 150 minus 100= 50).  
Source: Carpe Diem

    The layman's definition for inflation is "too much money chasing too few goods".  The demand for housing outpaced the available stock of new and used houses fueled by "easy money" from the Federal Reserve and multiplied by the creative financial instruments developed by Wall Street firms.  All designed to get more money into the hands of more people to buy more housing.
    Three simple observations can be made about the data: (1) homeownership rates increased dramatically since 1995 (a VERY steep increase year over year after 1995), (2) lagging behind, yet increasing at an increasing rate and keeping pace with homeownership rates, is the price of housing in general and (3) while prices as measure by the whole CPI have increased, they have increased at a modest rate over time.
    There have been a myriad of reasons hypothesized for the "bubble" in the housing market which contributed to the meltdown in the banking/financial markets. I believe history will be a much better judge as time passes and more objectivity is inserted into the analysis than there is presently.   However, the President AND Congress are responsible for over-sight in these matters. One cannot underestimate the power these two entities exert over the process. This letter sent to Pres. Bush in 2004 by members of Congress provides some insight into the thinking at the time. There seems to be a suggestion that there is a favorable trade-off between "safety and soundness" of the financial system and "affordable housing".  Please read the whole letter but here is the operable paragraph: (note: GSE are "Government Sponsored Entities" such as "Fannie Mae" and "Freddie Mac".  They hold a majority of mortgages in the US and are implicitly guaranteed by the Federal Govt.--this is a whole other blog entry).
"...We write as members of the House of Representatives who continually press the GSEs to do more in affordable housing. Until recently, we have been disappointed that the Administration has not been more supportive of our efforts to press the GSEs to do more. We have been concerned that the Administration's legislative proposal regarding the GSEs would weaken affordable housing perfonnance by the GSEs, by emphasizing only safety and soundness. While the GSEs' affordable housing mission is not in any way incompatible with their safety and soundness, an exclusive focus on safety and soundness is likely to come, in practice, at the expense of affordable housing....""
There are many parties to blame in the meltdown and I don't blame politicians exclusively, but for the political class to deny any culpability, as some of the signatories have claimed in public forums, is less than disingenuous and borders on dishonesty...I will let you make the call there...

Sunday, September 12, 2010

White House to NOT install Solar Panels---My opinion--INSTALL THEM and ignore the critics!!

     I believe solar energy is going to be a vital component to servicing our current and future energy needs and will contribute significantly to a much needed positive Aggregate Supply shock.   By  a positive Aggregate Supply shock, I mean the advancements in solar will be so significant that widespread adoption will across the board decrease the cost of producing for producers--decreasing the cost of producing provides an incentive to produce more.  Produce more goods and more workers will be needed for the production of those goods (so says the economic logic).  Producing more goods then promotes spinoff subsitute and complementary goods--so on and so forth--we are off to the production races...That is REAL economic growth! The tangible and intangible residual benefits are a cleaner environment (a nod to the Lefties) AND less dependence on countries that rely on oil as its primary export (a nod to the Righties).  BOTH ideologies have a stake in this fight and and I don't understand (well actually I do understand) why the resistance from the Right and the timidity from the Left. 
   I don't get the Administrations decision to not install solar panels at/on the White House (Click HERE for article).  Seems a fear of not wanting to invite comparisons to the Carter Administrations has driven the decision, if not in its totality then at least partially.  Are we NOT past that yet? Considering that $80 billion , yes $80 billion, has been allocated in various forms of economic stimulus to renewable energy research, development and actual installation, seems it would be EXCELLENT leadership to outfit the White House with solar technology.  Most Americans are committed to the notion of developing alternative energy sources.  The use of the technology is widespread enough that I don't believe the average American would look askance at it.  I say install them!! What do you think?  Install the solar panels or not?  You have heard my spiel, let me hear your thoughts...

Is healtcare expensive because YOU don't pay enough of the price? I am just the messanger...

If someone else (lets call them a "third party") is paying a portion of the purchase price for something you need/want do you care about how much the total purchase price is? Do you care even less if this third party pays a continually larger portion and you pay a continually smaller portion?  The graph below shows overtime the relationship between what individuals pay at the point of service for health care  relative to what third parties pay for the service.  Prices convey a lot of information but when they become obfuscated by time and distance between the contracting parties, then price distortions tend to set in.   
Source: Carpe Diem
 I can use myself as an example. I have had a series of steroid injections in my lower back for pain.  It required outpatient services, anaesthesia, etc.  I paid my minimal co-pay and the insurance company was billed for the rest. Although I teach economics and know better, I had no incentive to find out how much the total bill came to.  Didn't need to.  The hospital and I were the original contracting parties and I paid the required "price".  Now the bill becomes separated from me by time and distance and the "third parties" now negotiate the price.  Local knowledge starts to dissipate, except for the  hospital that is now contracting with far-off (in time and distance) insurance companies. If I had been a medicare patient, then the third party would have been the Federal Government.  I am not suggesting this is the whole problem with health care costs, but it is a rather large slice.  It is not talked about much in the media, so I hope this helps you to understand another piece of the puzzle in the debate a little more...
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