Saturday, December 4, 2010

Healthcare costs in the US compared to other developed countries---I AM the problem! Seriously, I AM the problem...

A visually creative way to illustrate the costs of healthcare in the US vs. European countries.  We see a separation during the 80's  The first graph shows expenditures on healthcare per person over time. The second graph shows obesity rates over time. The second graph is only for the US, 6 European countries and Japan (the so-called G-8 countries).  The third graph I put them side-by-side.  Admittedly the second graph has a smaller sample, but I assume the relationship would hold if the other European countries were added to the mix. I am not suggesting "correlation is causation" but, our pesonal health habits and responsibilities are not talked about enough in the debate about the cost of healthcare. Full disclosure: I am part of the problem too---high cholesterol, high blood pressure and about 30 pounds over "ideal" weight.  It is very easy for me to see how per person healthcare costs are considerably more in the US relative to other developed countries.  Why is it not a larger part of the debate? Just askin'... 
Source HERE

Source HERE

This last graph you have to click on it to make it bigger AND you have to visually adjust the timeline of the graph on the right.  They dont match up exactly as is, so you have to be a little creative to see the correlation I am suggesting...

Validation of my rant in class about the Fed-to-Banks-to-US Treasury circular flow of money/circular flow of logic that reminds me of a hamster on a treadmill...

Last class period I explained one of the pieces of the puzzle as to why the banking system is not lending as much money as they could be. even though the Federal Reserve is/has been on a bond buying spree.  The short version---(1) Federal Reserve BUYS a $1,000 bond  from a bank--(2) Bank withholds more than is required (or another way of saying this, is they lend out less than they are able to) because they believe  it is too risky to lend to people/businesses right now--(3) Bank buys US Treasury Bonds/Notes as a way to earn interest on the money...Repeat steps 1 through 3...Some lending is occurring, but not on the level required to get the economy going.  Just so you can see that I am not making this up because it sounds so preposterous, here is a comment from today's NYTIMES:
""Here’s the way things are supposed to work and normally do: Banks take in deposits and then lend that money out.

And here’s what’s happening more frequently now: People are doing a better job of spending less than they earn, but any leftover money is going toward paying down debt, not taking on new debt.

So to the extent that banks have deposits, they can’t lend them out in the quantity they used to (or aren’t because of tightened credit policies). Instead, they buy Treasury bills, according to Bill Hampel, the chief economist for the Credit Union National Association. And those don’t pay as they once did because of the interest rate environment. Nor do they deliver the kind of returns the banks would get if they were lending the money under normal conditions. ""
Low returns from US Treasurys are, at best, better than taking chances with credit risks and, at worst, better than a sharp stick in the eye.  I suppose it falls somewhere inbetween...

The Reserve Requirement in action!! Hey, it is as rare as Haley's Comet...Let me enjoy the spectacle that is a Monetary Policy tool rarely employed by a Central Bank...

The reserve requirement is the Monetary Policy tool of last resort for the US Federal Reserve to employ to control the money creation process in the banking system, but it is used by other Central Banks around the world on occassion.  Click HERE for more detailed explanation of the Reserve Requirement and click HERE for my explanation of the Required Reserve and how it affects lending by the banking system.

From WSJ: Brazil Joins China in Push to Cool Overheating Economy

""Brazil's central bank rolled out a series of measures to tame rapid credit growth and prevent inflation pressures, joining other large expanding economies such as China that are trying to curb rising prices and fast moving capital inflows.
Brazil's Central Bank President Henrique Meirelles said the directives announced Friday, which aim to withdraw some 61 billion Brazilian reais ($35.88 billion) from the financial system, will have an impact on inflation and economic activity, and would also be felt in interest rates.

The Central Bank said it would raise reserve requirements on term deposits to 20% from 15%...
 "As we have seen during the past year, central banks have often been using reserve requirements as the first step down the tightening path, and such hikes have almost universally been followed by policy rate hikes as well,." said Win Thin, Global Head Of Emerging Markets Strategy at Brown Brothers Harriman in New York.""

Friday, December 3, 2010

An excellent, short video illustrating the economic progress the world has made in the last 200 years

Well worth a viewing. This gives you a long term view of economic progress...All boats have been lifted,some more than others, but as economists are fond of saying---it is all relative...

Thursday, December 2, 2010

How would YOU do on this test administered to 8th Graders in 1895...yes, that's right, 1895...I would have dropped out in 5th grade.

This is the eighth-grade final exam from 1895 from Salina, KS. USA.
It was taken from the original document on file at the Smoky Valley
Genealogical Society and Library in Salina, KS and reprinted by the
Salina Journal.

8th Grade Final Exam: Salina, KS - 1895

Grammar (Time, one hour)

1. Give nine rules for the use of Capital Letters.

2. Name the Parts of Speech and define those that have no modifications.

3. Define Verse, Stanza and Paragraph.

4. What are the Principal Parts of a verb? Give Principal Parts of do, lie, lay and run.

5. Define Case, Illustrate each Case.

6. What is Punctuation? Give rules for principal marks of Punctuation.

7 - 10. Write a composition of about 150 words and show therein that you understand the practical use of the rules of grammar.

Arithmetic (Time, 1.25 hours)

1. Name and define the Fundamental Rules of Arithmetic.

2. A wagon box is 2 ft. deep, 10 feet long, and 3 ft. wide. How many bushels of wheat will it hold?

3. If a load of wheat weighs 3942 lbs., what is it worth at 50 cts. per bu., deducting 1050 lbs. for tare?

4. District No. 33 has a valuation of $35,000. What is the necessary levy to carry on a school seven months at $50 per month, and have $104 for incidentals?

5. Find cost of 6720 lbs. coal at $6.00 per ton.

6. Find the interest of $512.60 for 8 months and 18 days at 7 percent.

7. What is the cost of 40 boards 12 inches wide and 16 ft. long at $20 per m?

8. Find bank discount on $300 for 90 days (no grace) at 10 percent.

9. What is the cost of a square farm at $15 per are, the distance around which is 640 rods?

10. Write a Bank Check, a Promissory Note, and a Receipt.

U.S. History (Time, 45 minutes)

1. Give the epochs into which U.S. History is divided.

2. Give an account of the discovery of America by Columbus.

3. Relate the causes and results of the Revolutionary War.

4. Show the territorial growth of the United States.

5. Tell what you can of the history of Kansas.

6. Describe three of the most prominent battles of theRebellion.

7. Who were the following: Morse, Whitney, Fulton, Bell, Lincoln, Penn, and Howe?

8. Name events connected with the following dates:






Orthography (Time, one hour)

1. What is meant by the following: Alphabet, phonetic, orthography, etymology, syllabication?

2. What are elementary sounds? How classified?

3. What are the following, and give examples of each: Trigraph, subvocals, diphthong, cognate letters, linguals?

4. Give four substitutes for caret 'u'.

5. Give two rules for spelling words with final 'e'. Name two exceptions under each rule.

6. Give two uses of silent letters in spelling. Illustrate each.

7. Define the following prefixes and use in connection with a word: Bi, dis, mis, pre, semi, post, non, inter, mono,super.

8. Mark diacritically and divide into syllables the following, and name the sign that indicates the sound: Card, ball, mercy, sir, odd,cell, rise, blood, fare, last.

9. Use the following correctly in sentences, Cite, site, sight, fane,fain, feign, vane, vain, vein, raze, raise, rays.

10. Write 10 words frequently mispronounced andindicate pronunciation by use of diacritical marks and by syllabication.

Geography (Time, one hour)

1. What is climate? Upon what does climate depend?

2. How do you account for the extremes of climate in Kansas?

3. Of what use are rivers? Of what use is theocean?

4. Describe the mountains of North America.

5. Name and describe the following: Monrovia, Odessa, Denver, Manitoba,Hecla, Yukon, St. Helena, Juan Fermandez, Aspinwall and Orinoco.

6. Name and locate the principal trade centers of the U.S.

7. Name all the republics of Europe and give capital of each.

8. Why is the Atlantic Coast colder than the Pacific in the same latitude?

9. Describe the process by which the water of the ocean returns to the sources of rivers.

10. Describe the movements of the earth. Give inclination of the earth.

Wednesday, December 1, 2010

Population Pyramids for China and India compared to the US---Pictures are worth a thousand embedded economic concepts...

Two graphs comparing the size of different age groups in China and India, the worlds two most populated countries.  Together, they represent between 1/4 to 1/3 of the worlds population.  India is going to be young for a LONG time and China is going to face the problem much of the developed world is encountering now---an aging population with a relatively smaller replacement birth rate...I can see power and the economic landscape shifting in the coming decades....

Source: Business Insider

Source: Bussiness Insider

Tuesday, November 30, 2010

Is Cyber-Monday "Creatively Destroying" Black-Friday? I sure hope so...

Although it will make the news a bit more boring if it does. No more video of people shoving each other through doors to get to the "Deals". That always puts me in the Christmas spirit...

'Cyber Monday' Sales Show Strength

Online retailers experienced a sales surge Monday, capping off a holiday shopping week in which more Americans than ever decided to skip the mall and buy on the Web.

Early estimates indicated overall sales gains of about 20% from a year earlier for "Cyber Monday," the nickname for the Monday after Thanksgiving.

..That comes on top of strong online sales growth on Thanksgiving Day and Black Friday. For those two days combined, comScore Inc. reported that online shoppers spent about $1.1 billion, up more than 15% from $913 million a year earlier.

Online shopping is on pace to take even more share away from the rest of American retail. Through the four-day Thanksgiving weekend, a survey by the National Retail Federation reported that traffic to stores and websites was up 8.7%, with the average shopper spending 6.4% more than a year ago.

Driving activity were Cyber Monday discounts of as much as 60% on sites such as, as well as extensive free shipping offers.

Sunday, November 28, 2010

"Wait a minute Mr. Postman"...Actually, dont are being "creatively destroyed" by the marketplace...You might soon only exist in song...

There are lots of micro-economic concepts embedded with analyzing a company like Netflix, not the least of which is "creative destruction".  I was taken aback at the amount of postage they pay to mail DVD's.  Technology already has decreased a significant portion of the Post Offices revenue. How do they possibly replace that? Dont see how they can expand the market for mail.  Seems like a dead end road. 

Netflix’s Move Onto the Web Stirs Rivalries

""...For the first time, the company will spend more over the holidays to stream movies than to ship DVDs in its familiar red envelopes (although it is still spending more than half a billion dollars on postage this year). And that shift coincides with an ominous development for cable companies, which long controlled home entertainment: for the first time in their history, cable television subscriptions fell in the United States in the last two quarters — a trend some attribute to the rise of Netflix, which allows consumers to bypass their cable box to stream movies and shows...""

Media interpretation of the Same Pentagon report---Match the headline with the paper---

Here are two headlines from the Wall Street Journal and the NY Times reporting on the SAME pentagon report on the SAME day...Can you guess which headline corresponds with the respective newspaper?  (HT: Aidwatchers)

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