A fact from this book. WOW! My, how has trade changed...
Saturday, June 19, 2010
40 Great Inspirational Speeches from movies mashed into one Great Speech
Go HERE to see more mash-ups on a variety of topics...Mucho entertainment and a little education to boot!!
Do you self correct?? If so, then your sign is Microeconomics. If not, then it is Macroeconomics...Here's your sign...
A rather simple (by that I mean in layman's terms) explanation of how markets clear, or don't clear, in a Microeconomic vs Macroeconomic sense from Professor Brad Delong. The writer is suggesting, in a microeconomics sense, markets clear pretty well on their own as business and workers adjust to changes in market conditions, whether it is from creative destruction, out-sourcing, off-shoring, etc. Resources (land, labor, capital, entrepreneurship) shift to production more desired by society through the mechanism of supply and demand.
""...Overall unemployment may rise a bit or for a while as this process of adjustment takes place--it depends whether entrepreneurs and producers in the expanding industry where excess demand emerges are more or less on the ball, keen-eyed, and keen-witted than those in the industry where excess supply emerges and where businesses shrink. But the process of adjustment, even with frictional unemployment while it takes place, is a good thing--it makes us all richer. Attempts to stop it in its tracks or short-circuit its mechanisms are counterproductive and harmful. The end of the process comes and excess demand and supply are eliminated when there are more people making the things that are wanted more and fewer people making the things that are wanted less...."""However, he suggests as you move to the Macroeconomic level this relationship breaks down.
""...But in macroeconomics things are different. The excess supply is economy-wide--throughout all commodity markets, producing supply in excess of demand for goods, services, labor, and capacity. Producers and entrepreneurs respond to an aggregate demand shortfall just as individual producers respond to a particular shortfall of demand for their products: they hold sales to liquidate inventories, they cut prices, they cut wages to try to preserve margins, they fire workers. In the macroeconomic case, the dynamic process that leads to the elimination of excess supply and its counterbalancing excess demand in the microeconomic case gets underway--or, rather, half of it gets underway.In microeconomics, the market "self-corrects" when the economy is expanding and there is room for resources and labor to move to a new level of product/service mix with no net decrease in overall employment. However in a macroeconomics view when WHOLE industries (vertically and horizontally) experience a slow-down there is no where for productive resources to go---sort of in a holding pattern. and remain idle He does not come right out and say it, but his premise, I believe, is that the macoeconomy does not "self-correct" and that when the "free-market" (interaction between buyers and sellers) breaks down, then the only other game in town is for government to step in to "prime the pump" with spending, and perhaps an industrial policy (i.e. alternative energy), to get things moving again.
The problem is that the set of industries that are shrinking is made up of pretty-much-everybody. There are no industries that are expanding. The excess demand is not for the products of a goods-and-services producing industry that can rapidly ramp-up production by employing lots more labor. The excess demand is in finance: for means-of-payment, or safe high-quality assets, or for long-duration sales vehicles. There is a rise in unemployment from the flow out of goods-and-services producing industries where the excess supply has appeared. But there is no countervailing flow out of unemployment. How do you put large numbers of people to work making more Federal Reserve notes or increasing the supply of liquid assets that are means-of-payment that are the reserve deposits of banks? How do you shift the flow of production to instantaneously raise the stock of long-duration assets, of claims to wealth that are shares in companies with secure long-run prospects that are vehicles for moving purchasing power across time from the present to the future? You can't...""
Friday, June 18, 2010
YES!! Coffee reduces heart disease! Up next: Omellettes and Cinnamon Buns and I will be good to go...
Drinking several cups of tea or coffee a day appears to protect against heart disease, a 13-year-long study from the Netherlands has found. It adds to a growing body of evidence suggesting health benefits from the most popular hot drinks. Those who drank more than six cups of tea a day cut their risk of heart disease by a third, the study of 40,000 people found. Consuming between two to four coffees a day was also linked to a reduced risk. While the protective effect ceased with more than four cups of coffee a day, even those who drank this much were no more likely to die of any cause, including stroke and cancer, than those who abstained.
Sleeping Late? What is the opportunity cost of that decision?
Most ridiculous story of the year---8 year old's hat BANNED from school because it had tiny plastic army men attached. What would the Toy Story soldiers say about this?
Christan Morales said her son just wanted to honor American troops when he wore a hat to school decorated with an American flag and small plastic Army figures.
But the school banned the hat because it ran afoul of the district's zero-tolerance weapons policy. Why? The toy soldiers were carrying tiny guns.
"His teacher called and said it wasn't appropriate," Morales said.
Morales' 8-year-old son, David, had been assigned to make a hat for the day when his second-grade class would meet their pen pals from another school. She and her son came up with an idea to add patriotic decorations to a camouflage hat.
Earlier this week, after the hat was banned, the principal at the Tiogue School in Coventry told the family that the hat would be fine if David replaced the Army men holding weapons with ones that didn't have any, according to Superintendent Kenneth R. Di Pietro.
Obnoxious Food Item of the Month---Soft Pretzel Stuffed with Philly Cheese Steak---mmmmm....
""Food chains across the country seem to have taken This is Why You're Fat to heart. First there was the Double Down, sandwiching bacon-and-cheese between fried chicken, and then IHOP's Stackers, smooshing together pancakes and cheesecake.
The latest in the greasy fast food arms race is being introduced today at Philly Pretzel Factory--a mash-up of pretzel and cheesesteak.
The cheesesteak pretzel looks like your average over-sized twisty treat, but it's stuffed with ground beef, onions, and cheese. Early adopters seem excited that it's easier to eat than a traditional cheesesteak--an innovation in easy delivery of meat and cheese to mouth, a/k/a the American dream.
The only Philly Pretzel Factory in the five boroughs is on Staten Island (1200 Hylan Boulevard), but there are also branches in Newark and Jersey City. The Staten Island store confirmed that they have the cheesesteak pretzels in stock, and they will give them away for free next Monday the 24th from 11 a.m. to 2 p.m.""
"It's a bird, It's a plane, It's..It's, ballons?"--In South Korea they scramble jets!
South Korea military alert over children's balloons
Balloons released by schoolchildren sparked a major security alert in South Korea, reports say, amid heightened tensions with North Korea.
A resident of Ansan, near Seoul, reported seeing 40-50 objects resembling parachutes falling on a mountainside. The military and police mobilised a special joint task force. Upon investigation, the objects turned out to be helium balloons released by a local school. Tensions between North and South Korea have been running high since the sinking of a South Korean warship earlier this year. Seoul said the ship was torpedoed by Northern forces. In another incident earlier this month, an alert was raised after an explosion was heard on Yeonpyeong island, near the sea border with North Korea, and a diving suit was found on a shoreline, the JoongAng newspaper reported. A joint military and police investigation found that the diving suit was abandoned by a fisherman and that the explosion had been caused by a South Korean mine, the paper said.
How do you say "supply-side economics" in Russian? Don't have to--A 0% Capital Gains Tax Rate is a Universal Language
From BBC: Russia to drop capital gains tax to attract investment
""Russia will scrap capital gains tax on long-term direct investment from 2011, President Dmitry Medvedev has said.
Mr Medvedev said that in terms of improving Russia's investment climate "we, I hope, are moving forward".
He also said the number of "strategic" firms, in which foreign investment is restricted and which cannot be privatised, would fall from 280 to 41. Mr Medvedev has been promoting the idea of "modernisation", including diversifying the Russian economy. Also, many investors have been wary of coming to Russia because of corruption and the dominant role the state plays in Russia's business life. Mr Medvedev told the St Petersburg International Economic Forum that long-term direct investment was "necessary for modernisation". He also said that he would ask the government to create a special investment public-private fund. "Such an idea should be implemented within a year," he said.
The Russian economy, heavily dependent on oil and gas revenues, was enjoying several years of robust growth in the middle of the 2000s. However, it was hit hard by the global economic crisis, and in 2009 the economy shrank by 7.9%. The economy is forecast to return to growth this year, expanding by about 4%. But Russia is also set to run a budget deficit for several years to come. Its oil revenues fund, which has been financing the deficit, is expected to end next year, and the government wants to attract more foreign investment to boost the economy. In an interview with Bloomberg Television earlier this week, Russia's First Deputy Prime Minister Igor Shuvalov said: "While Russian stocks may be undervalued, Russia is not seeking investors interested in quick and easy money." "I would welcome real investors who can build factories, something new in this country."
Thursday, June 17, 2010
Which is more risky--flying through volcanic ash or driving to the store?
From BBC: Is driving more dangerous than flying through ash?
""The problem is that people are generally terrible at making rational decisions about risk.An example of government not properly assessing risk...I don't have the source handy, but I understand that when the Federal Aviation Administration (FAA) mandated that people with small children buy an extra seat and use a car seat rather than hold children in their laps, deaths of small children actually increased! They did not increase in planes however (as far as I know, no child has been killed in-flight as a result of turbulence), but on the highways, as parents elected to not pay for the extra seat because of the expense and drove instead. More families driving than flying, hence the incidents of car accidents increases. (Note: I am not saying it is the SAME kids getting killed in accidents as would be flying)...
To take just one of many examples, many Americans avoided planes after 9/11 and travelled by road instead. As a result, a team of researchers from Cornell University estimated there were at least 1,200 more deaths on America's roads than there would have been...Some 1,200 people died because they were avoiding what they perceived to be a riskier form of transport, 954 more than who died on the planes used for the terrorist attacks.
Who spends a dollar more effectively--the Fed Govt or You?...Guess again!
NewsFlash: We are/have been in a recession! In this particular recession it is generally accepted by economists (relatively objective ones) that it is because of sagging Aggregate Demand. This means our total demand for US made goods and services is LESS than our ability to supply US made goods and services (aka Aggregate Supply). We don't necessarily have an excess supply of goods/services, but we have an excess supply of CAPACITY to produce goods/services---a gap between our actual production and our potential to produce good/services. Because people are not buying "stuff" then businesses are not selling stuff and certainly not re-ordering stuff. This in turn effects employment as employers shed employees as demand for their goods declines. As more people become unemployed they buy less so businesses lay workers off or close entirely, so on and so forth. It becomes an economic death spiral downward.
This means we need to get money into the hands of people/businesses so they can spend it to INCREASE or at least STABILIZE Aggregate Demand so businesses will sell/re-order more goods, and more people can keep there jobs, and hopefully more will be re-called as business picks up--Phew! That was hard work! How best to achieve this?
In general, we all think in terms of "bang for the buck" (hey, we are Americans, after all). What transmission mechanism that originates from the Federal Govt is going most effective---Govt spends a dollar OR Individuals spend a dollar from a tax cut? Oh, boy, here we go!
Below is a chart that represents research into how much ONE DOLLAR spent (by govt or individuals) INCREASES GDP, which is the goal of congress/the President. This is called "The Multiplier Effect", or more specifically, "The Keynesian Multiplier Effect".
Mark Zandi via Ezra Klein
This means we need to get money into the hands of people/businesses so they can spend it to INCREASE or at least STABILIZE Aggregate Demand so businesses will sell/re-order more goods, and more people can keep there jobs, and hopefully more will be re-called as business picks up--Phew! That was hard work! How best to achieve this?
In general, we all think in terms of "bang for the buck" (hey, we are Americans, after all). What transmission mechanism that originates from the Federal Govt is going most effective---Govt spends a dollar OR Individuals spend a dollar from a tax cut? Oh, boy, here we go!
Below is a chart that represents research into how much ONE DOLLAR spent (by govt or individuals) INCREASES GDP, which is the goal of congress/the President. This is called "The Multiplier Effect", or more specifically, "The Keynesian Multiplier Effect".
Mark Zandi via Ezra Klein
Notice that one dollar spent can either yield a change in GDP of more than one dollar or less than one dollar. How can this happen?
To simplify, lets assume we ALL behave the exact same way. If I get a dollar in the form of a tax cut, research shows that I will save some portion of that dollar and spend the rest. So if we all save 10% ($.10) of our dollar then we will spend the other 90% ($.90), thereby increasing GDP by $.90. Economists would say we are acting "rationally" by saving some of our bounty. However, government does not save ANY of that dollar because, well, why would they? So, on the face of it, which entity, the individual OR the government, is going to have the BIGGEST impact on the purchase of GDP in that FIRST round of spending? Why the government, of course (I just proved it to you mathematically!!). Govt is going to buy $1.00 worth of "stuff" and I am going to buy only $.90.
However, as you look at the graph you will notice as you start from the top and move down you will see a transition from Tax Cuts/Rebates to more direct spending by the government then back to spending by individuals. Does this not go against what I just said about government spending being king? Sort of...
There IS going to be "leakage" from that federal dollar spent and not all of it will be spent directly on goods/services. Some of that dollar will be subjected to what I call "WTF"---no it is not what you are thinking, but it could be, I suppose. For me, WTF is "Waste, Theft, Fraud". Ultimately we want to look at who, an individual, business, or government entity is going to spend MORE of that initial dollar when it is received, hence affecting Aggregate Demand in the most impactful way.
Looking at the graph, we see the group with the highest tendency to spend an additional dollar they receive is the unemployed and others receiving direct government transfers. This makes sense, doesn't it? These are people living at the margin, as economist put it. Or more simply, people who have little immediate need to save but the most incentive to spend right away. They spend on necessities, one would suppose. Necessities, like food, rent, utilities and other basic staples, that are made in the US (mostly). This allows businesses to stay open to sell stuff and re-order more stuff AND keep/hire employees. Now Aggregate Demand is STABILIZED! Perhaps it inches forward to close the recessionary gap?
This is important to understand because there is A LOT of politics that takes place between the gaps of all the groups in the above graph. Who should get a tax cut, if anyone? Who should spend money in a recession:? The Federal Govt directly, or people who are most likely to spend it to get the economy stabilized? What do YOU think????
"And then, And then, I threw a puppy at the Hells Angels and Escaped on a Bulldozer--yeah, yeah, that's what I did!"--no, this was not Will Ferrell!
German student attacks Hell's Angels with puppy
A German student created a major traffic jam in Bavaria after making a rude gesture at a group of Hell's Angels motorcycle gang members, hurling a puppy at them and then escaping on a stolen bulldozer.
German police said on Monday that after making his getaway from the Hell's Angels club, the 26-year-old dumped the bulldozer, causing a 5 km (3 miles) traffic jam near the southern town of Allershausen, local police said. He then fled to his home nearby where he was apprehended by the police. "What motivated him to throw a puppy at the Hell's Angels is currently unclear," said a spokesman for local police, adding that the student had lately been suffering from depression. The puppy was now in safe hands, the spokesman added.
Arizona has done some squirrely things lately, but this the most squirrely---No, really, it is literally Squirrely
Arizona Spends $1.25M to Save 250 Squirrels
""Arizona is spending $1.25 million to build bridges for endangered squirrels over a mountain road so they don't become roadkill and then monitor their health.
The money is being spent, officials said, because cars kill about five of these squirrels each year.
While most suburbanites may be baffled why anyone would protect a pesky squirrel, these are Mount Graham red squirrels, a breed once thought to be extinct. Only 250 of them are known to live near the top of Mount Graham. The Federal Highway Administration grant will be used to build rope bridges over the lone road through the squirrels' habitat, according to Arizona Department of Transportation Community Relations Director Timothy Tait. The DOT plans to install 41 of the "canopy tunnel crossings" at a cost of $400,000.
Another $160,000 will be spent on cameras to monitor the bridges, and the rest of the money will fund a project to monitor the rodents.
That works out to about $5,000 per squirrel.""
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