Quote of the Day

Have no idea what to do with that $8 per paycheck--that approximate tax saving based on the stimulus plan?

In my view, fixing the banking sector is more important than getting the stimulus right.  So if you can afford to lose the money, go to a large bank (more likely to be insolvent), find their most overpriced service, and buy as much of it as you can.  That way you are doing your part to recapitalize our banking system.

If you're stuck for ideas, just keep on using ATM machines, owned by other banks, so you can pay large fees to take out small sums of money from your checking account.  When you need to, take all of your withdrawals and deposit them back in the account once again and start all over with the process.

Prof. Tyler Cowen, GMU (WSJ)

A Soulless Clone of Me?

Something I've never thought about: Would your clone have its own soul, or be the a soulless version of you?  Would you clone yourself given the opportunity and money?

Dubai: Coming Down from a High

For the past several years, investors, workers and consumers treated the Dubai economy like a roller coaster that only goes up.  Then last fall, they suddenly found themselves looking over the edge.  It was a view some foreign workers didn't stick around to contemplate.

If you're looking for a scene that reflects the uncertainty and anxiety behind Dubai's image of bottomless abundance, you might start at the airport parking lot, where, The Times of London reported earlier this month, 3,000 partly paid-off cars had been abandoned by their suddenly unemployed expatriate owners.

The government's concern about plummeting confidence levels is so great that the police chief was called on to issue a vehement denial.  He did, saying only 11 cars were abandoned at the lot — even though banks, car companies and airport security workers say the number is much higher.  [NPR]

Rising Possibility for Global Financial Warfare

America's intelligence community has said the global economic crisis is now the top threat to the nation's security.  The downturn could produce political instability and damage the ties that hold countries together.  Countries might even be tempted to engage in financial warfare, officials say.

The concern now is not the gross size of countries' economies, but how money moves between countries, and the way those movements can turn into a kind of financial warfare.  Take China and the United States.  The Chinese now hold about $1 trillion worth of U.S. debt, including Treasury notes and other securities.  That gives them enormous power over the U.S. economy.  Were they to suddenly sell those securities, the U.S. dollar would tank.  [NPR]

Lean Times Lie Ahead for New York

Though it won't be losing its status as the world's financial capital anytime soon, according to Richard Florida in the Atlantic:

In his sweeping history, Capitals of Capital, the economic historian Youssef Cassis chronicles the rise and decline of global financial centers through recent centuries. Though the history is long, it contains little drama: major shifts in capitalist power centers occur at an almost geological pace.

Amsterdam stood at the center of the world’s financial system in the 17th century; its place was taken by London in the early 19th century, then New York in the 20th. Across more than three centuries, no other city has topped the list of global financial centers. Financial capitals have “remarkable longevity,” Cassis writes, “in spite of the phases of boom and bust in the course of their existence.”

The transition from one financial center to another typically lags behind broader shifts in the economic balance of power, Cassis suggests. Although the U.S. displaced England as the world’s largest economy well before 1900, it was not until after World War II that New York eclipsed London as the world’s preeminent financial center (and even then, the eclipse was not complete; in recent years, London has, by some measures, edged out New York). As Asia has risen, Tokyo, Hong Kong, and Singapore have become major financial centers—yet in size and scope, they still trail New York and London by large margins.

Florida goes on to talk about how resources will be reallocated from the financial sector into other sectors that make up New York economy. Of course, this should be applicable to other cities across the US as well.

Good article, though long.

"Our Brain Doesn't Like being Tricked"

Animals may use sweet taste to predict the caloric contents of food.  Eating sweet noncaloric substances may degrade this predictive relationship, leading to positive energy balance through increased food intake and/or diminished energy expenditure.  Adult male Sprague-Dawley rats were given differential experience with a sweet taste that either predicted increased caloric content (glucose) or did not predict increased calories (saccharin).  We found that reducing the correlation between sweet taste and the caloric content of foods using artificial sweeteners in rats resulted in increased caloric intake, increased body weight, and increased adiposity, as well as diminished caloric compensation and blunted thermic responses to sweet-tasting diets.  These results suggest that consumption of products containing artificial sweeteners may lead to increased body weight and obesity by interfering with fundamental homeostatic, physiological processes. [APA via ScienceBlogs]

I've been telling friends all along that diet food, which is full with all sort of chemicals, is not good for you.  And, I still believe that the FDA has a lot to answer.

Statistics and the Oscar

Nate Silver is taking a stab at predicting the outcome of the Oscar by statistic regression.  We'll just have to wait and see whether he gets it right.

"You're Fired!"

From the Time:

With the flagging economy, no one's job is secure, not even for a mistress. A Qingdao newspaper reported that a Qingdao businessman facing money problems decided to “fire” four out of his five mistresses last December.

[He] arranged ... competitions for his five mistresses. Only the top winner would remain Fan's mistress and enjoy a monthly income of US$800 and an apartment. The five women then presented themselves in front of a professional model trainer, gave speeches, sang songs and even gulped down liquor to show their drinking capacity.

Spoiler alert:  The story didn't end well.  If you're interested to read the ending and the moral of the story, you can find it here.

Skirts Will Get Longer

One of the 13 unexpected consequences of this financial crisis:

During boom times, skirts get shorter.  In these bearish times, prepare for hemlines to head south.  Somewhat in relation, we’ll see something else go north: the age and weight of Playboy centerfolds.  Evolutionary biology encourages people to seek “more mature” mates during times of economic insecurity, argue Terry F. Pettijohn and Brian J. Jungeberg in one of the more interesting studies published recently in the Personality and Social Psychology Bulletin.  To support their claim, the researchers showed that during recessions, centerfolds get older and, well, rounder.

Interesting.

Ouch!

My husband and I were talking about Caterpillar huge job cuts the other day and wondering what was going on with John Deere.  Well, we now have that answer ... 

John Deere posts 45% fall in profits

No Kidding?

Nationalisation, long regarded in Washington as a folly of Europeans, is gaining rapid ground among US opinion-formers. Stranger still, many of those talking about federal ownership of banks are Republicans. [FT]

When lowering entrace standards didn't work, US military tries different tactic

...the American military will begin recruiting skilled immigrants who are living in this country with temporary visas, offering them the chance to become United States citizens in as little as six months.

...the new effort, for the first time since the Vietnam War, will open the armed forces to temporary immigrants if they have lived in the United States for a minimum of two years...

Recruiters expect that the temporary immigrants will have more education, foreign language skills and professional expertise than many Americans who enlist, helping the military to fill shortages in medical care, language interpretation and field intelligence analysis. [NYT]

In the Unix Universe, It's Time to Celebrate

Unix weenies everywhere will be partying like it's 1234567890 this Friday.

That's because, at precisely 3:31:30 p.m. Pacific time on February 13, 2009, the 10-digit "epoch time" clock used by most Unix computers will display all ten decimal digits in sequence. (That's 6:31:30 Eastern, or 23:31:30 UTC.) [Wired]

I wonder to wear for such occasion...

It's kinda like collecting typewriters...

... but a little more bizarre??? Presenting Stapler of the Week.

If there's a demand, there will be supply... even if it sounds gross

India's Hindu nationalist movement is launching a new soft drink made from cow urine.

Om Prakash, the head of the department, said the drink — called "gau jal," or "cow water" — in Sanskrit was undergoing laboratory tests and would be launched "very soon, maybe by the end of this year."

"Don't worry, it won't smell like urine and will be tasty too," he told the Times of London from his headquarters in Hardwar, one of four holy cities on the River Ganges. "Its USP will be that it's going to be very healthy. It won't be like carbonated drinks and would be devoid of any toxins."  [Fox News via Tyler Cowen]

Even if it doesn't contain any toxins, would you still drink it?  Hey, obviously there's a demand for it.

Now, I'm not an expert on grammar, but...

Spain enters first recession for 15 years

Holy cow!  15 years recession?  Spaniards have some pretty good economic forecasts!

High Returns Investment

Critics of proposed increases to Head Start in the House stimulus bill labeled them porky pet projects. But many economists argue that those forms of spending represent a very big collective piggy bank. Spending on programs specifically designed to provide high-quality early education — especially for children in low-income families — yields significant and measurable economic benefits.

... estimate of the average rate of return — explained below — recalls a number that stockbrokers once promised us we could get in our private retirement accounts: 12 percent per annum.

Studies like these calculate rates of return by comparing the costs of public investment in children against a variety of benefits, including better outcomes in school, lower risks of crime and teenage pregnancy, higher earnings and resulting higher tax revenues, and local economic effects such as increased labor-force participation of parents. [NYT]

Even with studies like these, education is always the first thing to go when politicians make decision on budget cuts.

U.S. Saving Dilemma

It's astonishing to think that, during the past two decades of credit expansion, Americans went from squirreling away more than 7.0% of their aftertax income to less than zero (-0.7%) in the third quarter of 2005 ... the personal saving rate remained at 1.0% or below from the fourth quarter of 2004 through the first quarter of 2008, before spiking to 2.6% in the second quarter of 2008 and climbing to 2.9% by the final quarter of the year.

And that may be low compared to what lies ahead... the savings rate needs to return to at least 6% over the next few years to ensure investment in future productivity. The combination of a negative wealth shock and tight credit is expected to push the saving rate to 5.6% by the end of 2010, Julia Coronado, a U.S. economics research analyst at Barclays Capital, said in a Feb. 6 report.

Just to return to the 8.5% saving rate, the average rate going back to 1960, suggests that as much as $900 billion in consumption could be pulled out of the U.S. per year, not including the multiplier effects on GDP as the drop in consumption filters through retailers and their suppliers...

However damaging its short-term impact, there are good reasons for wanting the saving rate to climb over the long term, most importantly the fact that more savings means a bigger pool of capital to finance companies' investment in improved productivity and innovation, says Nicholas S. Souleles, a finance professor at the Wharton School. Without a higher level of savings, innovation and increased productivity would stall, leading to wage stagnation and a lower standard of living in the future. [BW]

Are we really that shallow?

From Freakonomics blog:

A new study by Michael Kraus and Dacher Keltner, psychologists at the University of California, Berkeley, has found that people reveal their socioeconomic status in live interactions. Undergrads with a higher socioeconomic status, for instance, were found to be ruder when interacting with others than students of a lower SES.

Like a peacock’s tail, the seemingly snooty gestures of higher SES [socioeconomic status] students indicates modern society’s version of “I’m fit,” and “I don’t need you.”

Meal Prices Adjusts According to Market

This is a promotion being offered by a restaurant 5 Spot in Seattle. Groovy. But does it mean that you'd be rooting for the market to tank?

Some of you may remember years ago (and we do mean 18 years thereabouts) at the 5 Spot when we were able to offer a true 5 Spot Special for a mere five spot ($5). Well, that was during the recession of 1990, and here we are in the midst of a more twenty-first-century malaise. The 5 Spot is heeding the call with the introduction of Blue Plate Specials on Sunday through Thursday nights until the first day of spring.

We can’t quite hit the $5 mark in 2009, but never say never as this time around we’re pricing these items daily according to the most recent close of the Dow Jones Industrial Average. If the Dow closes at 8650, then your "square meal" will only cost you $8.65; if it closes at 7875, then you win your meal for a mere $7.87.

(via Tyler Cowen)

Love in Six Words

Can you do it? I'm not that creative, but here's a new book called "Six-Word Memoirs on Love & Heartbreak" that is a collection of love and heartache in six words. In the NYT, here's one of my favorite love in six words by a commenter:

Traditional marriage:
You first, me last, we forever.

Modern marriage:
Me first, you free, no we.

There are other good ones. You should check it out, or perhaps write your own as well. Can you sum it up in six words?

Emergence of Hybrid 401(k)

A dozen or so asset managers and insurers ... are designing a new breed of retirement instrument that combines elements of pensions and 401(k)s. These products—call them hybrid 401(k)s—have begun slowly rolling out. And while they differ in structure, all combine annuities—essentially, insurance contracts that provide periodic income payments—with an investment portfolio. The hybrids won't protect investors from violent market swings. But they'll guarantee a certain amount of monthly income for the rest of your life. [BW]

I think this is a good concept because a lot of people don't know how to manage their retirement funds, especially when it comes to drawing it down for retirement. People used to live beyond their means. If they know how much they'll be pay periodically, I think it would forced people to forecast their living expenses better.

If there's a demand, there will be supply... no matter how perverted

At the Shibuya Pink Girl's Club in Tokyo, men pay upwards of $130 to grope the girl of their choice on a simulated subway train. [kottke.org via Tyler Cowen]

Keep Calm and Carry On

How appropriate for such current events.

In 1939, with war against Germany looming, the Government designed three posters to steady the public's resolve and maintain morale. These featured the crown of King George VI set against a bold red background, and three distinctive slogans - "Freedom is in Peril", "Your Courage, Your Cheerfulness, Your Resolution Will Bring Us Victory", and "Keep Calm and Carry On". [BBC]

Child Exploitation? You Decide

I don't think it is, since it's done with good humor. But you decide.

via: WSJ

Keep It Moist

Here’s a novel potential public health measure against the flu—kick up the humidity... The less water in the air, the longer the flu virus survives. And that leads to a greater chance of someone catching the bug. [SciAm]

Japan's Economy Tanking

Japan, where industrial output plunged a record 9.6 per cent month on month in December, is due to announce fourth-quarter gross domestic product data next week. Polls of economists suggest GDP will have fallen more than 3 per cent compared with the previous quarter – an annualised decline of more than 10 per cent. [FT]

I need to stop reading the news.

China Watch: Deflation

Even if prolonged consumer price deflation is avoided, economists said that the drop in prices of goods leaving at the factories level was likely to depress further corporate profits, which are an important source of funding for investment in China. Producer prices could fall by as much as 10 per cent, said Yu Song at Goldman Sachs, which “would make industrial profits look very bad”. [FT]

This is Why You're Fat

Just plain unbelievable at what we invent to stuff ourselves with.  (h/t: Chicagoist)

Not recession-proof, but recession-resistant

That's not to say the recession hasn't changed some beer drinking habits — with less to spend, people are drinking at home more and "trading down," as the industry says, to less expensive brands.

Grupo Modelo is building a gargantuan new brewery south of Piedras Negras, Mexico, just across the border from Eagle Pass, Texas. When finished in the spring of next year, it will produce enough Corona to supply the entire U.S. market. Corona beer is the top imported beer in the U.S. [NPR]

It seems the "less expensive" beer is Corona...

Diamonds are Forever (but not through this recession)

From FT:

De Beers does not expect any recovery in demand for diamonds until Christmas next year at the earliest and is planning to cut production drastically.

How drastic, you might ask? Well, let's look at the demand forecast:

Chaim Even-Zohar, a consultant and industry veteran, did little to raise the spirits of the executives and investors at the conference by predicting that demand for rough diamonds will fall by between 59 per cent and 63 per cent this year.

Price is expected to fall 50 percent. May be this is the time to find good bargain on jewelry. Just in time for Valentine's Day.

Bad Shopper

Collins-Snowe-Specter cuts in the fiscal boost package: estimated cost: 600,000 jobs.

Couldn't we have seated Al Franken in the senate and bought one Republican senator for 200,000 jobs rather than having to buy three for 600,000?

Someone is not a very good shopper...

-Prof. Brad DeLong

America is still the land of opportunity

Former Guns N’ Roses bass player Duff McKagan is the author of a new Playboy.com financial blog called “Duffnomics.”

He said he first took in interest in money matters when he started reading old Guns N’ Roses financial records after he “got sober” in 1994.

That experience inspired Mr. McKagan to begin studying finance at Santa Monica College and the Albers School of Business at Seattle University. Not only did people start taking him more seriously in business meetings, but his unique background as a rock star who went to business school catapulted him into a different limelight, Mr. McKagan wrote. [Crain's]

Ask and you shall receive

Sarah, a 3 year-old, was having a conversation with her dad who was a chemistry professor:

SARAH: Daddy, were you in the shower?

DAD: Yes, I was in the shower.

SARAH: Why?

DAD: I was dirty. The shower gets me clean.

SARAH: Why?

DAD: Why does the shower get me clean?

SARAH: Yes.

DAD: Because the water washes the dirt away when I use soap.

SARAH: Why?

DAD: Why do I use soap?

SARAH: Yes.

DAD: Because the soap grabs the dirt and lets the water wash it off.

SARAH: Why?

DAD: Why does the soap grab the dirt?

SARAH: Yes.

DAD: Because soap is a surfactant.

SARAH: Why?

DAD: Why is soap a surfactant?

SARAH: Yes.

DAD: That is an EXCELLENT question. Soap is a surfactant because it forms water-soluble micelles that trap the otherwise insoluble dirt and oil particles.

SARAH: Why?

DAD: Why does soap form micelles?

SARAH: Yes.

DAD: Soap molecules are long chains with a polar, hydrophilic head and a non-polar, hydrophobic tail. Can you say ‘hydrophilic’?

SARAH: Aidrofawwic

DAD: And can you say ‘hydrophobic’?

SARAH: Aidrofawwic

DAD: Excellent! The word ‘hydrophobic’ means that it avoids water.

SARAH: Why?

DAD: Why does it mean that?

SARAH: Yes.

DAD: It’s Greek! ‘Hydro’ means water and ‘phobic’ means ‘fear of’. ‘Phobos’ is fear. So ‘hydrophobic’ means ‘afraid of water’.

SARAH: Like a monster?

DAD: You mean, like being afraid of a monster?

SARAH: Yes.

DAD: A scary monster, sure. If you were afraid of a monster, a Greek person would say you were gorgophobic.

(pause)

SARAH: (rolls her eyes) I thought we were talking about soap.

DAD: We are talking about soap.

(longish pause)

Read how the conversation ends here.

This story is almost as good as what my mom said to my young cousin who often asked "why?" like many typical young children. My mom said something like, "Do you know why you have two eyes, two ears, two nostrils, but only one mouth? Because talking is not as important as seeing, hearing and smelling."

Quote of the Day

Obama is a walking analogy; if he were a punctuation mark, he’d be a colon.

Matt Bai, in his opinion piece in the NYT