Or, the world will beat Path Dependence down Paul David's Stanford doorstep. Meanies:
...a proper understanding of path-dependence, and of the possibilities of externalities leading to market failure, is not without interesting implications for economic policy. But those are not at all the sorts of glib conclusions that some critics have alleged must follow if one believes that history really matters--namely, that government should try to pick winners rather than let markets make mistakes. Quite the contrary.... One thing that public policy could do is to try to delay the market from committing to the future intextricably, before enough information has been obtained about the likely technical or organizational and legal implications, of an early, precedent-setting decision.
Translated from the Lockinese: Stan Liebowitz and Steve Margolis are mean to me. I don't want government to pick winners and losers. I just want government to stop inventors from marketing their inventions until an Authority to be Named Later decides that theirs are the right inventions.
Monday, December 18, 2006
Sunday, December 17, 2006
Expat Taxation
The International Herald Tribune reports on Americans renouncing their citizenship, because they can't afford to keep it:
She is a former U.S. Marine, a native Californian and, now, a former American who prefers to remain discreet about abandoning her citizenship. After 10 years of warily considering options, she turned in her U.S. passport last month without ceremony, becoming an alien in the view of her homeland.
"It's a really hard thing to do," said the woman, a 16-year resident of Geneva who had tired of the cost and time of filing yearly U.S. tax returns on top of her Swiss taxes. "I just kept putting this off. But it's my kids and the estate tax. I don't care if I die with only one Swiss franc to my name, but the U.S. shouldn't get money I earned here when I die."
....with new tax pressures facing American expatriates due to legislation enacted in Washington this year, some international tax lawyers say they detect rising demand from citizens to renounce ties with the United States — the only developed country that taxes it citizens while they are overseas. Americans abroad are also taxed in foreign countries where they reside.
"The administrative costs of being an American and living outside the U.S. have gone up dramatically," said Marnin Michaels, a tax lawyer with Baker & McKenzie in Zurich.
....Concern about taxes among expatriates has surged since President George W. Bush signed into law a bill that sharply increases tax rates for Americans abroad with income of more than $82,400 a year. The legislation also increases taxes on employer-provided benefits like housing allowances.
The changes, enacted in May and tweaked by the Treasury Department under guidelines issued in October, apply retroactively to last Jan. 1.
Matthew Ledvina, an international tax lawyer in Geneva, said demand for legal counsel on the citizenship issue was coming largely from American citizens who hold second passports and who have minimal ties to the United States.
He said some expatriates were weighing the value of their American passports and debating whether it was worth keeping them if the cost topped $50,000 a year.
....Ledvina said the waiting period for appointments at the U.S. Embassy in London had increased from a few days to more than three and a half months, with more than two applications processed each day.
She is a former U.S. Marine, a native Californian and, now, a former American who prefers to remain discreet about abandoning her citizenship. After 10 years of warily considering options, she turned in her U.S. passport last month without ceremony, becoming an alien in the view of her homeland.
"It's a really hard thing to do," said the woman, a 16-year resident of Geneva who had tired of the cost and time of filing yearly U.S. tax returns on top of her Swiss taxes. "I just kept putting this off. But it's my kids and the estate tax. I don't care if I die with only one Swiss franc to my name, but the U.S. shouldn't get money I earned here when I die."
....with new tax pressures facing American expatriates due to legislation enacted in Washington this year, some international tax lawyers say they detect rising demand from citizens to renounce ties with the United States — the only developed country that taxes it citizens while they are overseas. Americans abroad are also taxed in foreign countries where they reside.
"The administrative costs of being an American and living outside the U.S. have gone up dramatically," said Marnin Michaels, a tax lawyer with Baker & McKenzie in Zurich.
....Concern about taxes among expatriates has surged since President George W. Bush signed into law a bill that sharply increases tax rates for Americans abroad with income of more than $82,400 a year. The legislation also increases taxes on employer-provided benefits like housing allowances.
The changes, enacted in May and tweaked by the Treasury Department under guidelines issued in October, apply retroactively to last Jan. 1.
Matthew Ledvina, an international tax lawyer in Geneva, said demand for legal counsel on the citizenship issue was coming largely from American citizens who hold second passports and who have minimal ties to the United States.
He said some expatriates were weighing the value of their American passports and debating whether it was worth keeping them if the cost topped $50,000 a year.
....Ledvina said the waiting period for appointments at the U.S. Embassy in London had increased from a few days to more than three and a half months, with more than two applications processed each day.
Too little suffering in Norway
This story reads like a post on Angry Bear:
Norwegian Labour and Welfare Organization (NAV) director Tor Saglie says that unemployment rates in many parts of Norway are now dangerously low.
Saglie presented the NAV prognosis for development in the labor market on Thursday, and the conclusion is that registered unemployment next year may dip under two percent.
Saglie is concerned that this figure is too low, and that weaker segments of society may find themselves locked out of jobs.
With less than 2% unemployment?
"We are dependent on having a certain amount of unemployment in order to have a well-functioning labor market. Low unemployment makes it difficult to start work-intensive projects and so creates a rigidity in the economy," Saglie said.
Perhaps not so suprising in a country where they find Voting Under the Influence a problem:
Norwegian Labour and Welfare Organization (NAV) director Tor Saglie says that unemployment rates in many parts of Norway are now dangerously low.
Saglie presented the NAV prognosis for development in the labor market on Thursday, and the conclusion is that registered unemployment next year may dip under two percent.
Saglie is concerned that this figure is too low, and that weaker segments of society may find themselves locked out of jobs.
With less than 2% unemployment?
"We are dependent on having a certain amount of unemployment in order to have a well-functioning labor market. Low unemployment makes it difficult to start work-intensive projects and so creates a rigidity in the economy," Saglie said.
Perhaps not so suprising in a country where they find Voting Under the Influence a problem:
We're The Labour Party
You can say that again:
John Hutton, the Work and Pensions Secretary, will use a speech tomorrow to claim that tens of thousands are losing out in the jobs market to growing numbers of immigrants, many from eastern Europe, even though "opportunities are out there".
Mr Hutton's hardline approach will dismay many backbench Labour MPs, who will fight any move to cut the benefits of long-term claimants of the Jobseeker's Allowance or to introduce any measure of compulsion to seek work before benefits are paid.
Sources close to the minister, however, said his "mind is entirely open" and that he would examine all options in what would in effect be a wide-ranging review of the Welfare State, nine years after Labour took power. His surprise move will be seen as provocative by allies of Gordon Brown, the overwhelming favourite to take over from Tony Blair as Labour leader, who jealously guards swathes of domestic policy.
Mr Hutton, however, has not ruled himself out as a Blairite challenger to the Chancellor when the Prime Minister steps down, should John Reid, the Home Secretary, not join the contest. In a speech at the Institute for Public Policy Research in London, he will claim: "The next challenge we face is to ensure the hard-core of 'can work but won't work' benefit claimants take advantage of the opportunities out there and compete for jobs alongside growing numbers of migrants who arrive in Britain specifically to look for work rather than to settle for the long term."
There are about 900,000 people claiming Jobseeker's Allowance, about 12 per cent of whom have spent six of the past seven years on benefits, according to Government figures.
John Hutton, the Work and Pensions Secretary, will use a speech tomorrow to claim that tens of thousands are losing out in the jobs market to growing numbers of immigrants, many from eastern Europe, even though "opportunities are out there".
Mr Hutton's hardline approach will dismay many backbench Labour MPs, who will fight any move to cut the benefits of long-term claimants of the Jobseeker's Allowance or to introduce any measure of compulsion to seek work before benefits are paid.
Sources close to the minister, however, said his "mind is entirely open" and that he would examine all options in what would in effect be a wide-ranging review of the Welfare State, nine years after Labour took power. His surprise move will be seen as provocative by allies of Gordon Brown, the overwhelming favourite to take over from Tony Blair as Labour leader, who jealously guards swathes of domestic policy.
Mr Hutton, however, has not ruled himself out as a Blairite challenger to the Chancellor when the Prime Minister steps down, should John Reid, the Home Secretary, not join the contest. In a speech at the Institute for Public Policy Research in London, he will claim: "The next challenge we face is to ensure the hard-core of 'can work but won't work' benefit claimants take advantage of the opportunities out there and compete for jobs alongside growing numbers of migrants who arrive in Britain specifically to look for work rather than to settle for the long term."
There are about 900,000 people claiming Jobseeker's Allowance, about 12 per cent of whom have spent six of the past seven years on benefits, according to Government figures.
Darwin Awards
Unable to cope with civilization; the Discontented:
As 400,000 utility customers weathered another day without power, a new, lethal consequence of last week's windstorm emerged: carbon-monoxide poisoning.
A 26-year-old man was found dead in Kirkland [Washington] on Saturday morning with a generator running in his living room. About 100 other people, including an 11-month-old baby, were treated at Seattle-area hospitals on Saturday after inhaling the fumes of generators and charcoal barbecues dragged indoors.
...."We're dealing with a carbon-monoxide epidemic in Western Washington," said Dr. Neil Hampson in the Center for Hyperbaric Medicine at Virginia Mason. "This has the potential to be the worst case of carbon-monoxide poisoning in the country."
Among the patients treated at Harborview and Virginia Mason were 34 Kent residents, mostly Somali immigrants, who had been cooking and warming themselves over charcoal grills brought indoors, according to the Kent Fire Department.
As 400,000 utility customers weathered another day without power, a new, lethal consequence of last week's windstorm emerged: carbon-monoxide poisoning.
A 26-year-old man was found dead in Kirkland [Washington] on Saturday morning with a generator running in his living room. About 100 other people, including an 11-month-old baby, were treated at Seattle-area hospitals on Saturday after inhaling the fumes of generators and charcoal barbecues dragged indoors.
...."We're dealing with a carbon-monoxide epidemic in Western Washington," said Dr. Neil Hampson in the Center for Hyperbaric Medicine at Virginia Mason. "This has the potential to be the worst case of carbon-monoxide poisoning in the country."
Among the patients treated at Harborview and Virginia Mason were 34 Kent residents, mostly Somali immigrants, who had been cooking and warming themselves over charcoal grills brought indoors, according to the Kent Fire Department.
Saturday, December 16, 2006
One foot in the grave?
It may be your lucky day:
Marvin Margolis, an 80-year-old Manhattan financial consultant, is looking for investors willing to bet on when he will die.
Two years ago, Mr. Margolis bought a large life insurance policy. Now, he’s considering selling it to a group of investors, a deal that should give him as much as $2 million to enjoy in his final years. In return, the investors will get the policy’s $7 million payout when he dies — which they hope will be soon, so they can stop paying his premiums.
“This is a wonderful opportunity to use my body as an asset,” Mr. Margolis said. “I deserve to be able to benefit in some way from my age.”
But insurance companies aren't so happy:
Insurance executives, for instance, say transactions like Mr. Margolis’s may cripple their industry and make it harder for the average senior to buy life insurance in the first place. Insurers are worried because they count on many customers canceling their policies before they die, usually because their children grow up and no longer need the financial protection, their pensions kick in or premiums become too expensive. If far more policies result in payouts, the insurance business becomes much less profitable.
....Such policies are known as speculator-initiated life insurance, or “spin-life” policies. Investors estimate that spin-life policies worth as much as $13 billion will change hands next year.
The deals are so lucrative that older people are being wooed in every fathomable way. In Florida, investors have sponsored free cruises for seniors willing to undergo physical exams and apply for life insurance while onboard.
For insurers, such cruises are a financial Titanic. Over the next decade, the insurance industry could be forced to pay out unexpectedly more than $100 billion in death benefits as spin-life policies come to maturity, investors estimate.
....Life insurance companies, in particular, rely on policies lapsing before the policyholder dies. Last year, for instance, insurance companies reduced their financial exposure by $1.1 trillion when 19.8 million policyholders stopped paying premiums, according to the Insurance Information Institute. In comparison, the industry paid death benefits on only 2.2 million policies.
Marvin Margolis, an 80-year-old Manhattan financial consultant, is looking for investors willing to bet on when he will die.
Two years ago, Mr. Margolis bought a large life insurance policy. Now, he’s considering selling it to a group of investors, a deal that should give him as much as $2 million to enjoy in his final years. In return, the investors will get the policy’s $7 million payout when he dies — which they hope will be soon, so they can stop paying his premiums.
“This is a wonderful opportunity to use my body as an asset,” Mr. Margolis said. “I deserve to be able to benefit in some way from my age.”
But insurance companies aren't so happy:
Insurance executives, for instance, say transactions like Mr. Margolis’s may cripple their industry and make it harder for the average senior to buy life insurance in the first place. Insurers are worried because they count on many customers canceling their policies before they die, usually because their children grow up and no longer need the financial protection, their pensions kick in or premiums become too expensive. If far more policies result in payouts, the insurance business becomes much less profitable.
....Such policies are known as speculator-initiated life insurance, or “spin-life” policies. Investors estimate that spin-life policies worth as much as $13 billion will change hands next year.
The deals are so lucrative that older people are being wooed in every fathomable way. In Florida, investors have sponsored free cruises for seniors willing to undergo physical exams and apply for life insurance while onboard.
For insurers, such cruises are a financial Titanic. Over the next decade, the insurance industry could be forced to pay out unexpectedly more than $100 billion in death benefits as spin-life policies come to maturity, investors estimate.
....Life insurance companies, in particular, rely on policies lapsing before the policyholder dies. Last year, for instance, insurance companies reduced their financial exposure by $1.1 trillion when 19.8 million policyholders stopped paying premiums, according to the Insurance Information Institute. In comparison, the industry paid death benefits on only 2.2 million policies.
Friday, December 15, 2006
Go, Johnny, Go
The Elvis of France:
French rock legend Johnny Hallyday has applied for Belgian nationality, and will give up his French passport if he succeeds.
The singer lodged a naturalisation application in November last year. Hallyday, 62, was born Jean-Philippe Smet in Cite Malesherbes, Paris, France to a Belgian father, but only recently realised he did not have dual nationality. His father, Leon Smet, had not been married to his mother but another woman at the time of Hallyday's birth and so could not pass on his citizenship.
....the gravelly-voiced, leather-jacketed, Harley Davidson aficionado once dubbed the French Elvis never made any impact beyond the Francophone markets. His music is blatantly derivative, defiantly American and often consists of French language covers of stateside hits such as Long Tall Sally and Roll Over Beethoven.
That was a year ago, and the legend has decided he can't wait for the process to run its course, so:
A decision by French rock star Johnny Hallyday to settle in Switzerland for tax reasons provoked strong reactions among politicians Thursday, including from Prime Minister Dominique de Villepin.
...."Like many French people, I've had enough of the taxes we are forced to pay and this is it, I've made my choice," Hallyday told French radio during his launch of a Hallyday fashion line in a Paris boutique.
Earlier, L'Express magazine reported that Hallyday would henceforth spend six months and a day per year in Switzerland, just enough to escape the French taxman.
Despite Hallyday's claim that "I love France", French politicians were scandalized by the tax move.
French rock legend Johnny Hallyday has applied for Belgian nationality, and will give up his French passport if he succeeds.
The singer lodged a naturalisation application in November last year. Hallyday, 62, was born Jean-Philippe Smet in Cite Malesherbes, Paris, France to a Belgian father, but only recently realised he did not have dual nationality. His father, Leon Smet, had not been married to his mother but another woman at the time of Hallyday's birth and so could not pass on his citizenship.
....the gravelly-voiced, leather-jacketed, Harley Davidson aficionado once dubbed the French Elvis never made any impact beyond the Francophone markets. His music is blatantly derivative, defiantly American and often consists of French language covers of stateside hits such as Long Tall Sally and Roll Over Beethoven.
That was a year ago, and the legend has decided he can't wait for the process to run its course, so:
A decision by French rock star Johnny Hallyday to settle in Switzerland for tax reasons provoked strong reactions among politicians Thursday, including from Prime Minister Dominique de Villepin.
...."Like many French people, I've had enough of the taxes we are forced to pay and this is it, I've made my choice," Hallyday told French radio during his launch of a Hallyday fashion line in a Paris boutique.
Earlier, L'Express magazine reported that Hallyday would henceforth spend six months and a day per year in Switzerland, just enough to escape the French taxman.
Despite Hallyday's claim that "I love France", French politicians were scandalized by the tax move.
Thursday, December 14, 2006
Litvinenko: Cultural Learnings for Make Benefit Glorious Profit
For bookmakers:
An internet bookmaker based in Kazakhstan is taking bets on who will be accused of murdering former Russian spy Alexander Litvinenko, and most of the bets are being placed by Russians, the Reuters news agency reports.
The GOL+PAS bookmakers said they were accepting stakes of between $1 (51 pence) and $500 on the official outcomes of British and Russian investigations.
....GOL+PAS said in reply to email questions from Reuters.“We reply that it is far more cynical to kill people for money or to sell one’s soul for money than it is to forecast ordinary elements of our lives.”
An internet bookmaker based in Kazakhstan is taking bets on who will be accused of murdering former Russian spy Alexander Litvinenko, and most of the bets are being placed by Russians, the Reuters news agency reports.
The GOL+PAS bookmakers said they were accepting stakes of between $1 (51 pence) and $500 on the official outcomes of British and Russian investigations.
....GOL+PAS said in reply to email questions from Reuters.“We reply that it is far more cynical to kill people for money or to sell one’s soul for money than it is to forecast ordinary elements of our lives.”
Wednesday, December 13, 2006
Betting on Re-Ballasting
And winning in Australia and New Zealand:
They stand 73m tall - 8m higher than the Auckland Harbour Bridge - on a ship the size of 2 1/2 rugby fields.
....Weighing 1250 tonnes each, the cranes were made by the Zhenhua Port Machinery Company on the Yangtze River in Shanghai.
....Though the ship may look ungainly and liable to overbalance, it stays upright in high seas by a process known as reballasting.
The ship contains a number of cells that can be filled with water to give it extra stability.
Ports of Auckland corporate communications manager Karen Bradshaw said the new cranes would be the fastest, biggest and most productive container cranes in the country.
Each crane has longer booms and increased lifting power and speed and at full stretch rises to a height of 103m.
The diesel-electric straddle carriers are more efficient, give out fewer exhaust emissions and can be used as generators to power critical re-frigerated cargo in the case of power failure.
.... The 244m Zhen Hua 11 (by comparison the Queen Mary 2, due here in February, is 345m) can raise itself to dock level, allowing an easy transfer of the cranes using a computerised system that allows it to pump water in and out of the hull.
Nice work, if you can get it, in Europe
Breast research:
AMSTERDAM — Dutch women are getting bigger breasts and 32 percent of them now have a D-cup or bigger compared with 20 percent five years ago.
In Europe, Dutch women are ranked third behind British and Danish women in terms of bra size, research commissioned by Bodyfashion Promotion indicated on Wednesday.
Some 42 percent of women aged 30-39 have D-cup breasts and feel in general okay about that. Women with a large bra size are now the largest group in the Netherlands.
AMSTERDAM — Dutch women are getting bigger breasts and 32 percent of them now have a D-cup or bigger compared with 20 percent five years ago.
In Europe, Dutch women are ranked third behind British and Danish women in terms of bra size, research commissioned by Bodyfashion Promotion indicated on Wednesday.
Some 42 percent of women aged 30-39 have D-cup breasts and feel in general okay about that. Women with a large bra size are now the largest group in the Netherlands.
The Right to be Rich
George Soros provides further evidence he does have a God Complex:
Billionaire philanthropist George Soros lodged a claim Wednesday with the European Court of Human Rights, accusing the French courts of violating his rights by convicting him of insider trading.
The US financier was convicted by a Paris court in 2002 over a share deal involving French bank Societe Generale going back to 1988. He was fined 2.2 million euros ($2.3 million at the time) for insider trading.
....Michael Vachon, a senior aide to Hungarian-born Soros, said the financier's detractors had used the conviction to undermine his reputation.
"George Soros's political opponents have made strategic use of the French decision in their attacks," he said.
Soros has notably aligned himself against US President George W. Bush and the Iraq war.
"By alleging that he engaged in illegal activity, they hope to draw attention away from his criticism of the president and to call into question the legitimacy of his financial support of Democratic causes," he added.
Billionaire philanthropist George Soros lodged a claim Wednesday with the European Court of Human Rights, accusing the French courts of violating his rights by convicting him of insider trading.
The US financier was convicted by a Paris court in 2002 over a share deal involving French bank Societe Generale going back to 1988. He was fined 2.2 million euros ($2.3 million at the time) for insider trading.
....Michael Vachon, a senior aide to Hungarian-born Soros, said the financier's detractors had used the conviction to undermine his reputation.
"George Soros's political opponents have made strategic use of the French decision in their attacks," he said.
Soros has notably aligned himself against US President George W. Bush and the Iraq war.
"By alleging that he engaged in illegal activity, they hope to draw attention away from his criticism of the president and to call into question the legitimacy of his financial support of Democratic causes," he added.
The Lame, The Halt, The Belgians...and
Europeans in line for medical treatment:
Three months ago, Howard Waterfield learned that he suffered from a life-threatening heart condition and would have to undergo surgery.
Faced with a prolonged wait on the National Health Service in the UK, Howard (54), from London, headed for Belgium where he successfully underwent an operation within days of arriving.
Howard, a father-of-three, is typical of a growing number of tourists from around Europe who are flocking to Belgium for treatment.
It is not just NHS waiting lists that are forcing British patients across the North Sea. The high cost of private care in the UK means that treatment in Belgium can be a real bargain, even with travel costs added on.
Of all the treatments available for foreigners through Belgium's 'surgery supermarket', cosmetic and cardio thoracic surgery are two of the hottest items on the shelves and attract increasing numbers of customers from all over Europe.
Prices in these areas are the cheapest in the EU and the standard of hospitals and operations is second to none.
....A spokesman for the British Cardiac Patients Association says that Belgium is already the first choice for British heart patients.
"We know of a man who had been waiting for months for a triple bypass in the UK. So he went to Belgium where the operation was carried out immediately and superbly," she said.
Three months ago, Howard Waterfield learned that he suffered from a life-threatening heart condition and would have to undergo surgery.
Faced with a prolonged wait on the National Health Service in the UK, Howard (54), from London, headed for Belgium where he successfully underwent an operation within days of arriving.
Howard, a father-of-three, is typical of a growing number of tourists from around Europe who are flocking to Belgium for treatment.
It is not just NHS waiting lists that are forcing British patients across the North Sea. The high cost of private care in the UK means that treatment in Belgium can be a real bargain, even with travel costs added on.
Of all the treatments available for foreigners through Belgium's 'surgery supermarket', cosmetic and cardio thoracic surgery are two of the hottest items on the shelves and attract increasing numbers of customers from all over Europe.
Prices in these areas are the cheapest in the EU and the standard of hospitals and operations is second to none.
....A spokesman for the British Cardiac Patients Association says that Belgium is already the first choice for British heart patients.
"We know of a man who had been waiting for months for a triple bypass in the UK. So he went to Belgium where the operation was carried out immediately and superbly," she said.
Tuesday, December 12, 2006
Overestimating the Angry Bears
We wouldn't have thought it possible, but after re-reading the latest nonsense from them regarding Social Security privatization about 'free lunches' it appears that the claimants to Phd's in economics don't understand time horizons and their effect on risk/return ratios:
Simply put – the privatization crowd loves to lecture us that stocks pay a higher expected return than bonds, but then the same households they would transfer the Social Security Trust Fund bonds too likely know this as they also recognize the risks from holding bonds. Now perhaps M. Jed thinks these households are irrationally risk averse, while Barro and Becker would view their risk aversion as rational. But it makes no difference as to who is correct as these households would take these bonds and invest them in guess what – government bonds. Which means there would be no change in either risk taking or expected returns.
That bit of confusion being compounded in the comments section:
PRS tells us rational folks can make big returns by doing international diversification. Bruno Solnik vintage 1974! Now since rational person knows this - one would assume that private agents who don't do so are either irrational or more risk averse than PRS recognizes (oh wait, PRS doesn't get the risk point, but never mind). Either one - giving these risk averse or irrational folks (your choice Patrick) their government bonds is going to mean they'll continue to hold government bonds. And the return differential is zero.
And we say compounded advisedly, as that appears to be completely over the head of the author of both the above quoted bits.
Yes, in the short run, the greater risk of stocks (even negative returns are possible) may lead risk averse people to avoid investing in them. However, with retirement assets we are dealing with the long run, and in the long run risk is dominated by the greater returns due to the effects of compounding in the out years. As a simple (and outlandish) example will demonstrate. Suppose a twenty-five year old worker wanting to retire at age 65 ponders two choices of investment:
Each $1 invested at 3% (compounded annually) in a government bond for 40 years would be worth $ 3.26 at the end of the period. Meaning that a $10,000 bond would be worth $32,600.
Each dollar invested in a poorly performing equity mutual fund--averaging 7% compounded annually--would be worth $ 15. Thus a $ 10,000 investment would be worth $150,000.
But, suppose disaster strikes: An even greater market plunge than the Great Depression hits on the day our worker wishes to retire (and purchase an annuity with his retirement monies) and half the value of the mutual fund is wiped out, and our retiree is left with only $75,000.
However he's still better off by a factor of more than 2 than he would be had he taken the less risky route.
And there are three ridiculous assumptions in the above scenario. A riskless rate of 3%, a 4% risk premium over that, and a stock market drop greater than that in October 1929 (33%).
All because after about 15-20 years the greater return on stocks outweighs the greater volatility.
Simply put – the privatization crowd loves to lecture us that stocks pay a higher expected return than bonds, but then the same households they would transfer the Social Security Trust Fund bonds too likely know this as they also recognize the risks from holding bonds. Now perhaps M. Jed thinks these households are irrationally risk averse, while Barro and Becker would view their risk aversion as rational. But it makes no difference as to who is correct as these households would take these bonds and invest them in guess what – government bonds. Which means there would be no change in either risk taking or expected returns.
That bit of confusion being compounded in the comments section:
PRS tells us rational folks can make big returns by doing international diversification. Bruno Solnik vintage 1974! Now since rational person knows this - one would assume that private agents who don't do so are either irrational or more risk averse than PRS recognizes (oh wait, PRS doesn't get the risk point, but never mind). Either one - giving these risk averse or irrational folks (your choice Patrick) their government bonds is going to mean they'll continue to hold government bonds. And the return differential is zero.
And we say compounded advisedly, as that appears to be completely over the head of the author of both the above quoted bits.
Yes, in the short run, the greater risk of stocks (even negative returns are possible) may lead risk averse people to avoid investing in them. However, with retirement assets we are dealing with the long run, and in the long run risk is dominated by the greater returns due to the effects of compounding in the out years. As a simple (and outlandish) example will demonstrate. Suppose a twenty-five year old worker wanting to retire at age 65 ponders two choices of investment:
Each $1 invested at 3% (compounded annually) in a government bond for 40 years would be worth $ 3.26 at the end of the period. Meaning that a $10,000 bond would be worth $32,600.
Each dollar invested in a poorly performing equity mutual fund--averaging 7% compounded annually--would be worth $ 15. Thus a $ 10,000 investment would be worth $150,000.
But, suppose disaster strikes: An even greater market plunge than the Great Depression hits on the day our worker wishes to retire (and purchase an annuity with his retirement monies) and half the value of the mutual fund is wiped out, and our retiree is left with only $75,000.
However he's still better off by a factor of more than 2 than he would be had he taken the less risky route.
And there are three ridiculous assumptions in the above scenario. A riskless rate of 3%, a 4% risk premium over that, and a stock market drop greater than that in October 1929 (33%).
All because after about 15-20 years the greater return on stocks outweighs the greater volatility.
Monday, December 11, 2006
Ring out the new. Bring in the Spalding Classic
David Stern says you have to have leather balls to play in the NBA:
Marc Stein of ESPN.com reports, "NBA commissioner David Stern, in a stunning reversal, has decided to shelve the new microfiber composite basketball after just a few months of use and switch back to the old leather model for all games starting Jan. 1, according to sources close to the situation."
Marc Stein of ESPN.com reports, "NBA commissioner David Stern, in a stunning reversal, has decided to shelve the new microfiber composite basketball after just a few months of use and switch back to the old leather model for all games starting Jan. 1, according to sources close to the situation."
France determined to persecute elderly saviors of Chile
For showing how to claw the way back from socialist chaos.
General Augusto Pinochet, the former dictator of Chile who died yesterday aged 91, saved his country from Communism and created the most successful economy in Latin America....
Any judgment of Pinochet must take account of the rule of his predecessor, President Salvador Allende, who in 1970 had become the first Communist in the world to win power in a democratic election. Allende's programme of nationalising the means of production, and expropriating foreign-owned industries, banks, corporations and estates, brought economic chaos.
Which offends the French, apparently:
French judges still intend to bring 17 allies of Augusto Pinochet to trial over the disappearance of four French citizens in the 1970s despite the Chilean dictator's death, a legal official said Monday. ....
Nineteen people -- Pinochet and top figures from his military dictatorship -- have been targeted by international arrest warrants issued by a French judge over the disappearance of four Frenchmen in Chile between 1973 and 1975.
.... The four Frenchmen were Georges Klein, a political adviser to ousted president Salvador Allende, Etienne Presle, and two members of a left-wing movement, Alphonse Chanfreau and Jean-Yves Claudet-Fernandez.
General Augusto Pinochet, the former dictator of Chile who died yesterday aged 91, saved his country from Communism and created the most successful economy in Latin America....
Any judgment of Pinochet must take account of the rule of his predecessor, President Salvador Allende, who in 1970 had become the first Communist in the world to win power in a democratic election. Allende's programme of nationalising the means of production, and expropriating foreign-owned industries, banks, corporations and estates, brought economic chaos.
Which offends the French, apparently:
French judges still intend to bring 17 allies of Augusto Pinochet to trial over the disappearance of four French citizens in the 1970s despite the Chilean dictator's death, a legal official said Monday. ....
Nineteen people -- Pinochet and top figures from his military dictatorship -- have been targeted by international arrest warrants issued by a French judge over the disappearance of four Frenchmen in Chile between 1973 and 1975.
.... The four Frenchmen were Georges Klein, a political adviser to ousted president Salvador Allende, Etienne Presle, and two members of a left-wing movement, Alphonse Chanfreau and Jean-Yves Claudet-Fernandez.
Saturday, December 09, 2006
It was all hot air
Promises of electricity blowin' in on the wind in Britain:
The claimed benefits of wind energy are called into question today by a study that finds few wind farms in England and Wales produce as much electricity as the Government has forecast.
....Despite millions being spent on wind turbines, the study by the Renewable Energy Foundation shows that England and Wales are not windy enough to allow large turbines to work at the rates claimed for them. ....
The study shows that even wind farms in Cornwall on west-facing coasts, which might be expected to be the most efficient, operated at only 24·1 per cent of capacity on average.
....John Constable, an adviser to the foundation, said: "All the Government's targets are based on wind farms running at 30 per cent of capacity. It is quite clear that if they are built anywhere on land south of the border, the targets will not be met."
The foundation's report found some real "turkeys" in lowland England – some attached to the offices of high profile companies. Worst of all is the turbine close to the M25 at Kings Langley, Herts at the HQ of Renewable Energy Systems, the green energy division of Robert McAlpine group. This produces 7·7 per cent of the electricity it would if there was enough wind for it to run continuously at full power.
The study says the turbine at GlaxoSmithKline's pharmaceutical plant at Barnard Castle, Co Durham, which is in a built up area and uses second-hand turbines, operates at 8·8 per cent of capacity. "We are really talking about a garden ornament, not a power station. These are statements about the company's corporate social responsibility, not efficient generating capacity," Mr Constable said.
The claimed benefits of wind energy are called into question today by a study that finds few wind farms in England and Wales produce as much electricity as the Government has forecast.
....Despite millions being spent on wind turbines, the study by the Renewable Energy Foundation shows that England and Wales are not windy enough to allow large turbines to work at the rates claimed for them. ....
The study shows that even wind farms in Cornwall on west-facing coasts, which might be expected to be the most efficient, operated at only 24·1 per cent of capacity on average.
....John Constable, an adviser to the foundation, said: "All the Government's targets are based on wind farms running at 30 per cent of capacity. It is quite clear that if they are built anywhere on land south of the border, the targets will not be met."
The foundation's report found some real "turkeys" in lowland England – some attached to the offices of high profile companies. Worst of all is the turbine close to the M25 at Kings Langley, Herts at the HQ of Renewable Energy Systems, the green energy division of Robert McAlpine group. This produces 7·7 per cent of the electricity it would if there was enough wind for it to run continuously at full power.
The study says the turbine at GlaxoSmithKline's pharmaceutical plant at Barnard Castle, Co Durham, which is in a built up area and uses second-hand turbines, operates at 8·8 per cent of capacity. "We are really talking about a garden ornament, not a power station. These are statements about the company's corporate social responsibility, not efficient generating capacity," Mr Constable said.
The weather outside is frightful
So, of course, you put up a tent:
Kazakhstan has unveiled a new architectural project for its capital Astana - a giant transparent tent that will contain an indoor city.
The 150m-high (500ft) dome, designed by UK architect Norman Foster, will be built in just over a year.
The tent is being made from special material that absorbs sunlight to create the effect of summer inside.
Astana lies in the very heart of Central Asian steppe. Temperatures there often drop to -30C in the winter.
....The idea is to recreate summer, so that when the outside temperature is -30C, the residents of the Kazakh capital can play outdoor tennis, take boat rides or sip coffee on the pavement cafes.
Called Khan Shatyry, the project is designed by Mr Foster, who has recently built a giant glass pyramid in Astana.
"Nothing of the sort has been done before, and from the engineering point of view it's an extremely difficult project," says Fettah Tamince, the head of Turkey's development company Sembol that is building the tent.
Mr Tamince is nevertheless confident the company can complete the construction in just 12 months.
Friday, December 08, 2006
The Customer is Always...
...or at least usually, not right, in India:
A survey of more than 1,000 men in India has concluded that condoms made according to international sizes are too large for a majority of Indian men.
The study found that more than half of the men measured had penises that were shorter than international standards for condoms.
It has led to a call for condoms of mixed sizes to be made more widely available in India.
We're curious about who is doing the calling.
A survey of more than 1,000 men in India has concluded that condoms made according to international sizes are too large for a majority of Indian men.
The study found that more than half of the men measured had penises that were shorter than international standards for condoms.
It has led to a call for condoms of mixed sizes to be made more widely available in India.
We're curious about who is doing the calling.
Thursday, December 07, 2006
Iraq Silly Group
No, not the one headed by the not-so-Fabulous Baker Boy, the one using stuff found in a can:
In an age of multimillion-dollar high-tech weapons systems, sometimes it's the simplest ideas that can save lives. Which is why a New Jersey mother is organizing a drive to send cans of Silly String to Iraq.
American troops use the stuff to detect trip wires around bombs, as Marcelle Shriver learned from her son, a soldier in Iraq.
Before entering a building, troops squirt the plastic goo, which can shoot strands about 10 to 12 feet, across the room. If it falls to the ground, no trip wires. If it hangs in the air, they know they have a problem. The wires are otherwise nearly invisible.
....The military is reluctant to talk about the use of Silly String, saying that discussing specific tactics will tip off insurgents.
But Lt. Col. Christopher Garver, a U.S. military spokesman in Baghdad, said Army soldiers and Marines are not forbidden to come up with new ways to do their jobs, especially in Iraq's ever-evolving battlefield. And he said commanders are given money to buy nonstandard supplies as needed.
In other cases of battlefield improvisation in Iraq, U.S. soldiers have bolted scrap metal to Humvees in what has come to be known as “Hillybilly Armor.'' Medics use tampons to plug bullet holes in the wounded until they can be patched up.
Also, soldiers put condoms and rubber bands around their rifle muzzles to keep out sand. And troops have welded old bulletproof windshields to the tops of Humvees to give gunners extra protection. They have dubbed it “Pope's glass'' — a reference to the barriers that protect the pontiff.
In an age of multimillion-dollar high-tech weapons systems, sometimes it's the simplest ideas that can save lives. Which is why a New Jersey mother is organizing a drive to send cans of Silly String to Iraq.
American troops use the stuff to detect trip wires around bombs, as Marcelle Shriver learned from her son, a soldier in Iraq.
Before entering a building, troops squirt the plastic goo, which can shoot strands about 10 to 12 feet, across the room. If it falls to the ground, no trip wires. If it hangs in the air, they know they have a problem. The wires are otherwise nearly invisible.
....The military is reluctant to talk about the use of Silly String, saying that discussing specific tactics will tip off insurgents.
But Lt. Col. Christopher Garver, a U.S. military spokesman in Baghdad, said Army soldiers and Marines are not forbidden to come up with new ways to do their jobs, especially in Iraq's ever-evolving battlefield. And he said commanders are given money to buy nonstandard supplies as needed.
In other cases of battlefield improvisation in Iraq, U.S. soldiers have bolted scrap metal to Humvees in what has come to be known as “Hillybilly Armor.'' Medics use tampons to plug bullet holes in the wounded until they can be patched up.
Also, soldiers put condoms and rubber bands around their rifle muzzles to keep out sand. And troops have welded old bulletproof windshields to the tops of Humvees to give gunners extra protection. They have dubbed it “Pope's glass'' — a reference to the barriers that protect the pontiff.
Between Hard Rock Places
Will be Seminoles:
British entertainment company Rank Group has agreed to sell its Hard Rock Cafe chain to an American Indian tribe for $965m (£490m).
The business is being bought by the Seminole tribe of Florida, which already runs Hard Rock-branded hotels and casinos in Tampa and Hollywood.
....The 12,000-strong Seminole tribe has lands in Oklahoma and Florida, and its main business interests are in tobacco, tourism and gambling.
The Florida Seminoles had relied on cattle, citrus fruits and federal loans for economic survival until the late 1970s, when they opened their first bingo hall and tax-free tobacco store.
The tribe now runs two massive Hard Rock hotels and casinos on two of its reservations in Florida and has gaming businesses on three other sites.
It is the only American Indian tribe never to have signed a peace treaty with the United States.
British entertainment company Rank Group has agreed to sell its Hard Rock Cafe chain to an American Indian tribe for $965m (£490m).
The business is being bought by the Seminole tribe of Florida, which already runs Hard Rock-branded hotels and casinos in Tampa and Hollywood.
....The 12,000-strong Seminole tribe has lands in Oklahoma and Florida, and its main business interests are in tobacco, tourism and gambling.
The Florida Seminoles had relied on cattle, citrus fruits and federal loans for economic survival until the late 1970s, when they opened their first bingo hall and tax-free tobacco store.
The tribe now runs two massive Hard Rock hotels and casinos on two of its reservations in Florida and has gaming businesses on three other sites.
It is the only American Indian tribe never to have signed a peace treaty with the United States.
And spread sunshine all over the place,
The Dutch decided to smile. And put on a happy face:
AMSTERDAM — An increasing number of immigrants are attending tertiary education, more mothers have full-time work and a greater number of Dutch residents are paying better attention to their health.
These are just some of the elements included in a report from the Social and Cultural Planning Bureau (SCP) on Thursday summarising recent positive developments in the Netherlands.
....About 70 percent of Dutch residents don't smoke, about half exercise enough and almost 50 percent follow advice to drink alcohol in moderation.
However, the majority of residents are still failing to eat the recommended 200g of vegetables and 200g of fruit each day.
Nevertheless, there is growing interest among the population for physical and mental health.
The SCP hopes its report on positive developments will inspire the public and politicians before the New Year to view the Netherlands in a different light.
AMSTERDAM — An increasing number of immigrants are attending tertiary education, more mothers have full-time work and a greater number of Dutch residents are paying better attention to their health.
These are just some of the elements included in a report from the Social and Cultural Planning Bureau (SCP) on Thursday summarising recent positive developments in the Netherlands.
....About 70 percent of Dutch residents don't smoke, about half exercise enough and almost 50 percent follow advice to drink alcohol in moderation.
However, the majority of residents are still failing to eat the recommended 200g of vegetables and 200g of fruit each day.
Nevertheless, there is growing interest among the population for physical and mental health.
The SCP hopes its report on positive developments will inspire the public and politicians before the New Year to view the Netherlands in a different light.
He/She Sleeps With the Fishes
There's something rotten in the state of the Spanish waters:
MADRID — Scientists have found toxins are turning fish and animals into transsexuals.
Male carp have been discovered with ovaries, while some sheelfish have been discovered to have tiny penises.
The Spanish daily El Pais reported on Thursday exposure to toxic chemicals is blamed for these sex changes.
A compound called tributyltin, widely used on ships since the 1950s to prevent the growth of organisms such as barnacles on the hulls, was discovered to produce sex changesin some species.
The substance was banned in 2003, but its effects areexpected to last for several decades.
MADRID — Scientists have found toxins are turning fish and animals into transsexuals.
Male carp have been discovered with ovaries, while some sheelfish have been discovered to have tiny penises.
The Spanish daily El Pais reported on Thursday exposure to toxic chemicals is blamed for these sex changes.
A compound called tributyltin, widely used on ships since the 1950s to prevent the growth of organisms such as barnacles on the hulls, was discovered to produce sex changesin some species.
The substance was banned in 2003, but its effects areexpected to last for several decades.
Surrender Monkey Seal of Approval
High praise from the French:
"The report made by the Baker-Hamilton committee is lucid. From our point of view, it reflects the actual situation in Iraq," Foreign Minister Philippe Douste-Blazy said in a statement.
"As France has always said, there can be no military solution to the deep crisis that Iraq is going through. The report does not fix a precise timetable for withdrawal, but it does set a horizon. That is also what we are saying," he said.
"To ensure that the withdrawal does not lead to chaos, it is vitally important to have a political process which can bring Iraqis together and isolate the extremists and terrorists," he said.
"The report made by the Baker-Hamilton committee is lucid. From our point of view, it reflects the actual situation in Iraq," Foreign Minister Philippe Douste-Blazy said in a statement.
"As France has always said, there can be no military solution to the deep crisis that Iraq is going through. The report does not fix a precise timetable for withdrawal, but it does set a horizon. That is also what we are saying," he said.
"To ensure that the withdrawal does not lead to chaos, it is vitally important to have a political process which can bring Iraqis together and isolate the extremists and terrorists," he said.
Wednesday, December 06, 2006
Thanks to Pinochet...
Chileans don't have to live like this:
"People don't want the Cubans in Miami to come back," said the young Cuban in his apartment.
"But every month, someone I know leaves. Just last month, one of my friends went to Guatemala, and then to the United States. I have to make new friends all the time."
As he talked, the doorbell rang, signaling the arrival of the daily food delivery. Each family gets a monthly food ration based on the number of people. Today, the food man brought 30 eggs for the month, a ration for three people. (The young man has not bothered to tell the authorities that his mother and brother have moved out, and that he and his girlfriend live alone in the apartment.) A day earlier, the food man brought three small pieces of chicken - a two-week supply.
Like many Cubans, the young man lives in two economies - the official one and the unofficial one. He makes most of his money selling pirated copies of DVDs. He has a friend whose black market business is repairing and selling cars, without government authorization.
"I'd like to open my own business, to work with cars, but that's not allowed now," said the friend.
"People don't want the Cubans in Miami to come back," said the young Cuban in his apartment.
"But every month, someone I know leaves. Just last month, one of my friends went to Guatemala, and then to the United States. I have to make new friends all the time."
As he talked, the doorbell rang, signaling the arrival of the daily food delivery. Each family gets a monthly food ration based on the number of people. Today, the food man brought 30 eggs for the month, a ration for three people. (The young man has not bothered to tell the authorities that his mother and brother have moved out, and that he and his girlfriend live alone in the apartment.) A day earlier, the food man brought three small pieces of chicken - a two-week supply.
Like many Cubans, the young man lives in two economies - the official one and the unofficial one. He makes most of his money selling pirated copies of DVDs. He has a friend whose black market business is repairing and selling cars, without government authorization.
"I'd like to open my own business, to work with cars, but that's not allowed now," said the friend.
No Go at the Go Go
For the VAT on the art of ecdysis in Norway:
The owners of the Diamond Go Go Bar in Oslo had refused to pay VAT of 25% on entry fees as tax authorities demanded.
The local authority had taken the club to court over its refusal to pay tax.
Lawyers for the club's owners argued that striptease dancers were stage artists just like sword-swallowers and comedians and deserved the same status.
"Striptease, in the way it is practised in this case, is a form of dance combined with acting," the judges ruled, according to AFP news agency.
....The court ordered the state to cover the court costs of the owners of the Diamond Go Go Bar.
The owners of the Diamond Go Go Bar in Oslo had refused to pay VAT of 25% on entry fees as tax authorities demanded.
The local authority had taken the club to court over its refusal to pay tax.
Lawyers for the club's owners argued that striptease dancers were stage artists just like sword-swallowers and comedians and deserved the same status.
"Striptease, in the way it is practised in this case, is a form of dance combined with acting," the judges ruled, according to AFP news agency.
....The court ordered the state to cover the court costs of the owners of the Diamond Go Go Bar.
Tuesday, December 05, 2006
Spanish Socialist Squabble
Over terrorists' human rights:
Venezuela is to pay compensation of EUR 325,000 to two convicted ETA terrorists.
The Venezuelan government has also offered Venezuelan nationality to four other suspected ETA terrorists who are at present living there, which will shield them from extradition.
....The move brought a swift, angry response from Spain.
....The row started when lawyers for Sebastián Etxaniz and Juan VÃctor Galarza claimed Venezuela was wrong to rule they should be handed over to the Spanish government.
....The Vasco Press news agency reported on Tuesday the government of Venezuelan president Hugo Chavez admitted its original ruling was wrong, would pay the compensation and grant both men Venezuelan nationality, which will make it harder for Spain to extradite them.
According to a document seen by the Vasco Press, Venezuela "accepted its responsibility for violating the rights of both Basque citizens".
It also said they had "agreed to an illegal deportation" of both ETA terrorists to Spain.
Etxaniz is serving 95 years in jail for three murders, while Galarza is free after completing three years in jail.
Caracas will pay Galzara EUR 132,000 and Etxainz is to get EUR 193,000 and his wife will receive EUR 750 index-linked every month.
Venezuela is to pay compensation of EUR 325,000 to two convicted ETA terrorists.
The Venezuelan government has also offered Venezuelan nationality to four other suspected ETA terrorists who are at present living there, which will shield them from extradition.
....The move brought a swift, angry response from Spain.
....The row started when lawyers for Sebastián Etxaniz and Juan VÃctor Galarza claimed Venezuela was wrong to rule they should be handed over to the Spanish government.
....The Vasco Press news agency reported on Tuesday the government of Venezuelan president Hugo Chavez admitted its original ruling was wrong, would pay the compensation and grant both men Venezuelan nationality, which will make it harder for Spain to extradite them.
According to a document seen by the Vasco Press, Venezuela "accepted its responsibility for violating the rights of both Basque citizens".
It also said they had "agreed to an illegal deportation" of both ETA terrorists to Spain.
Etxaniz is serving 95 years in jail for three murders, while Galarza is free after completing three years in jail.
Caracas will pay Galzara EUR 132,000 and Etxainz is to get EUR 193,000 and his wife will receive EUR 750 index-linked every month.
Assume the Pension
On a desert isle filling up with retired lucky Frenchmen:
Under rules dating from the 1950s, civil servants who serve out the end of their career on — or decide to retire to — one [five French overseas] territories receive bonuses to their pensions of between 35 and 75 percent.
The territories concerned are the Indian Ocean islands of Reunion and Mayotte, New Caledonia and French Polynesia in the Pacific, and Saint Pierre and Miquelon off the coast of Canada.
There are increasing concerns that civil servants are exploiting the system, some by simply setting up a bogus postal address overseas.
From 9,618 in 1989, the number of beneficiaries has jumped to 32,172 last year, with mainlanders now making up 83 percent of all civil service pensioners in New Caledonia, and 60 percent in Polynesia.
Not that the French legislature is all that concerned since they just voted, '186 votes to 16 to uphold the system, which cost the state EUR 250 million last year'.
Under rules dating from the 1950s, civil servants who serve out the end of their career on — or decide to retire to — one [five French overseas] territories receive bonuses to their pensions of between 35 and 75 percent.
The territories concerned are the Indian Ocean islands of Reunion and Mayotte, New Caledonia and French Polynesia in the Pacific, and Saint Pierre and Miquelon off the coast of Canada.
There are increasing concerns that civil servants are exploiting the system, some by simply setting up a bogus postal address overseas.
From 9,618 in 1989, the number of beneficiaries has jumped to 32,172 last year, with mainlanders now making up 83 percent of all civil service pensioners in New Caledonia, and 60 percent in Polynesia.
Not that the French legislature is all that concerned since they just voted, '186 votes to 16 to uphold the system, which cost the state EUR 250 million last year'.
Monday, December 04, 2006
A billion here, a billion there...
Pretty soon you're talking about a pharmaceutical company that could be in trouble:
The news came to Pfizer’s chief scientist, Dr. John L. LaMattina, as he was showering at 7 a.m. Saturday: the company’s most promising experimental drug, intended to treat heart disease, actually caused an increase in deaths and heart problems. Eighty-two people had died so far in a clinical trial, versus 51 people in the same trial who had not taken it
Within hours, Pfizer, the world’s largest drug maker, told more than 100 trial investigators to stop giving patients the drug, called torcetrapib. Shortly after 9 p.m. Saturday, Pfizer announced that it had pulled the plug on the medicine entirely, turning the company’s nearly $1 billion investment in it into a total loss.
Which nicely illustrates Richard Epstein's argument in this Boston Globe piece:
...critics treat the industry's multibillion dollar profits as a sure sign of its permanent robust economic status. But those numbers conceal deep vulnerabilities. It is no accident that the shares of major pharmaceutical houses have been hammered over the past three of four years, even as profits appear to be at record highs. Wall Street values companies not only on current earnings, but also on long-term prospects, which are cloudy at best for research pharmaceutical firms. Just this past week, for example, Pfizer announced plans to cut one-fifth of its United States sales force, with a promise of further restructuring in January.
We shouldn't be surprised. The huge profits of major drug firms are often tied to one or two drugs, such as Pfizer's Lipitor or Viagra -- profits that evaporate when their patents expire and generics enter the marketplace. The Standard & Poor's review of pharmaceuticals thus starts somberly, noting that products with $21 billion in US drug sales are going off patent in 2006, with another $24 billion to follow over the next three years -- a sharp dent for an industry that today generates about $250 billion in revenue. All the while, the pharmaceutical houses also must absorb the legal and business risks needed to identify, patent, test, license, and market any new drug.
The news came to Pfizer’s chief scientist, Dr. John L. LaMattina, as he was showering at 7 a.m. Saturday: the company’s most promising experimental drug, intended to treat heart disease, actually caused an increase in deaths and heart problems. Eighty-two people had died so far in a clinical trial, versus 51 people in the same trial who had not taken it
Within hours, Pfizer, the world’s largest drug maker, told more than 100 trial investigators to stop giving patients the drug, called torcetrapib. Shortly after 9 p.m. Saturday, Pfizer announced that it had pulled the plug on the medicine entirely, turning the company’s nearly $1 billion investment in it into a total loss.
Which nicely illustrates Richard Epstein's argument in this Boston Globe piece:
...critics treat the industry's multibillion dollar profits as a sure sign of its permanent robust economic status. But those numbers conceal deep vulnerabilities. It is no accident that the shares of major pharmaceutical houses have been hammered over the past three of four years, even as profits appear to be at record highs. Wall Street values companies not only on current earnings, but also on long-term prospects, which are cloudy at best for research pharmaceutical firms. Just this past week, for example, Pfizer announced plans to cut one-fifth of its United States sales force, with a promise of further restructuring in January.
We shouldn't be surprised. The huge profits of major drug firms are often tied to one or two drugs, such as Pfizer's Lipitor or Viagra -- profits that evaporate when their patents expire and generics enter the marketplace. The Standard & Poor's review of pharmaceuticals thus starts somberly, noting that products with $21 billion in US drug sales are going off patent in 2006, with another $24 billion to follow over the next three years -- a sharp dent for an industry that today generates about $250 billion in revenue. All the while, the pharmaceutical houses also must absorb the legal and business risks needed to identify, patent, test, license, and market any new drug.
Turnabout not fair play, rules Justice
Steven Breyer on Fox News Sunday says 'nevermind' to Chris Wallace. The interview opens with:
WALLACE: Let's start with the title of your book, "Active Liberty." I'm sure that there are some conservatives out there who break out in hives when they hear a judge talking about activism. They get the idea you think it's OK to read all sorts of things into the Constitution so you get the results you want.
BREYER: I think the best description in one sentence of that title, "Active Liberty," is that the point of the book is we don't need activist judges; we do need activist citizens. And it's about not how judges should be activists. To the contrary, it's about how every citizen should participate in government.
But shortly later Breyer decides that not every citizen should participate in every decision:
WALLACE: You talk a lot in the book about the fact that the Constitution promotes active liberty and, as you put it in the answer to my first question, encouraging democratic participation, encouraging democratic conversation.
From that point of view, isn't one of the reasons that abortion has remained such a hot-button issue in this country because the Supreme Court took it out of the political process, took it away from the legislatures when it was being decided as part of that democratic conversation in 1973?
BREYER: Well, I purposely chose my examples in this book to illustrate a theme. And I didn't choose abortion as one of them. Because more important to me in writing a book -- I mean, I'll decide abortion cases when they come up, but I know perfectly well that anything I say on that subject is enormously volatile. And so, I don't want to talk about that subject, particularly in a public forum that isn't the court.
WALLACE: Even the question as to whether or not...
BREYER: No, not any question to do with abortion.
WALLACE: Let's start with the title of your book, "Active Liberty." I'm sure that there are some conservatives out there who break out in hives when they hear a judge talking about activism. They get the idea you think it's OK to read all sorts of things into the Constitution so you get the results you want.
BREYER: I think the best description in one sentence of that title, "Active Liberty," is that the point of the book is we don't need activist judges; we do need activist citizens. And it's about not how judges should be activists. To the contrary, it's about how every citizen should participate in government.
But shortly later Breyer decides that not every citizen should participate in every decision:
WALLACE: You talk a lot in the book about the fact that the Constitution promotes active liberty and, as you put it in the answer to my first question, encouraging democratic participation, encouraging democratic conversation.
From that point of view, isn't one of the reasons that abortion has remained such a hot-button issue in this country because the Supreme Court took it out of the political process, took it away from the legislatures when it was being decided as part of that democratic conversation in 1973?
BREYER: Well, I purposely chose my examples in this book to illustrate a theme. And I didn't choose abortion as one of them. Because more important to me in writing a book -- I mean, I'll decide abortion cases when they come up, but I know perfectly well that anything I say on that subject is enormously volatile. And so, I don't want to talk about that subject, particularly in a public forum that isn't the court.
WALLACE: Even the question as to whether or not...
BREYER: No, not any question to do with abortion.
Baa Baa Baa, Merry Christmas
Sweden thinks you won't get its goat:
Arsonists who enjoy burning down a festive Swedish straw goat may have met their match this year.
In the 40 years since the tradition started, the giant goat of Gavle has often gone up in flames within days.
But this year the 13-metre (43ft) high goat has a coat of flame-resistant chemicals, and the authorities are determined it will see in the New Year.
"No-one is going to get our goat this year," says a local spokeswoman with confidence.
....It is not the first time authorities have put their faith in a flame-proof coating - a substance tried before washed off in the rain.
This one is waterproof, says Gavle spokeswoman Anna Oestman, and while its paws could still be singed, a full scale torching would now be "impossible".
Goats have a special place in Swedish tradition, and it was a goat which in earlier centuries delivered festive gifts before Santa Claus took over that role.
Arsonists who enjoy burning down a festive Swedish straw goat may have met their match this year.
In the 40 years since the tradition started, the giant goat of Gavle has often gone up in flames within days.
But this year the 13-metre (43ft) high goat has a coat of flame-resistant chemicals, and the authorities are determined it will see in the New Year.
"No-one is going to get our goat this year," says a local spokeswoman with confidence.
....It is not the first time authorities have put their faith in a flame-proof coating - a substance tried before washed off in the rain.
This one is waterproof, says Gavle spokeswoman Anna Oestman, and while its paws could still be singed, a full scale torching would now be "impossible".
Goats have a special place in Swedish tradition, and it was a goat which in earlier centuries delivered festive gifts before Santa Claus took over that role.
Friday, December 01, 2006
'No Brainer' may be a big headache
For British drivers who have to pay through the nose, above that stiff upper lip, to drive at rush hour:
Motorists should pay at least £1.28 a mile to drive on the country's busiest roads at the height of the rush hour, the Government's transport adviser said in a report published today.
Sir Rod Eddington said that without such a scheme in place by 2015 the taxpayer would face a vast bill for a new highway building programme to cope with the mounting congestion.
"For me in the end, road pricing is an economic no-brainer," the former British Airways chief executive said today.
A national road pricing scheme would be worth £28 billion to the economy by 2025 and congestion would be cut by half, which alone would be worth £22 billion.
Which would appear to be saying that the fees would be higher than the benefits!
Let the recriminations begin:
• Liberal Democrat transport spokesman Alistair Carmichael: "Sir Rod Eddington was asked for a 30-year strategy: he has given us a businessman's analysis which might have been acceptable to more people a few months ago but since the Stern Report it looks a bit thin and outdated in its thinking.
• Environmental group Transport 2000: "We will support Eddington on road pricing, but only if revenues go back into public transport and other measures to give people real choice, and if pricing helps cut overall pollution levels as well as congestion. We will oppose funding going towards big new roads programmes.
....
• The Rail Maritime and Transport Union said the report had recognised the urgency of reducing road congestion but failed to seize the opportunity to recommend the "massive" increase needed in public transport capacity.
General secretary Bob Crow said: "Urgent decisions are needed on major infrastructure projects, such as Crossrail and a new north-south high-speed rail link, as well as a commitment that all road-pricing revenue is ring-fenced for investment in less polluting transport modes."
Motorists should pay at least £1.28 a mile to drive on the country's busiest roads at the height of the rush hour, the Government's transport adviser said in a report published today.
Sir Rod Eddington said that without such a scheme in place by 2015 the taxpayer would face a vast bill for a new highway building programme to cope with the mounting congestion.
"For me in the end, road pricing is an economic no-brainer," the former British Airways chief executive said today.
A national road pricing scheme would be worth £28 billion to the economy by 2025 and congestion would be cut by half, which alone would be worth £22 billion.
Which would appear to be saying that the fees would be higher than the benefits!
Let the recriminations begin:
• Liberal Democrat transport spokesman Alistair Carmichael: "Sir Rod Eddington was asked for a 30-year strategy: he has given us a businessman's analysis which might have been acceptable to more people a few months ago but since the Stern Report it looks a bit thin and outdated in its thinking.
• Environmental group Transport 2000: "We will support Eddington on road pricing, but only if revenues go back into public transport and other measures to give people real choice, and if pricing helps cut overall pollution levels as well as congestion. We will oppose funding going towards big new roads programmes.
....
• The Rail Maritime and Transport Union said the report had recognised the urgency of reducing road congestion but failed to seize the opportunity to recommend the "massive" increase needed in public transport capacity.
General secretary Bob Crow said: "Urgent decisions are needed on major infrastructure projects, such as Crossrail and a new north-south high-speed rail link, as well as a commitment that all road-pricing revenue is ring-fenced for investment in less polluting transport modes."
Thursday, November 30, 2006
Flip a coin
The Man Who Saved Britain from the trauma of Empire Withdrawal, didn't know up from down about martinis, according to the Huns:
According to some experts in Germany, Bond's eccentric drinking habits are proof that he enjoys breaking the rules of alcoholic beverage etiquette. It seems he orders his martini "the wrong way," contravening what every novice barkeeper is taught.
"A classic Martini is stirred. This is always done when two alcohols are mixed with one another," explains Bernd Ohlmeier, a Hamburg-based of the respected German Barkeeper Union (DBU).
Cocktails are generally shaken when two liquids of a different consistency are combined, such as a clear alcohol and a cloudy juice. From a taste point of view, there is scarcely any difference between a stirred or a shaken Martini, admit the top barkeepers.
"The shaking motion does make the ice cubes melt more quickly and this may diminish the flavour of the drink," said Ulf Neuhaus, another expert who heads the DBU's Dresden branch.
These nuances are too subtle for most people's taste buds to detect, said Neuhaus, who pointed out that the easiest way to spot the two types of martini drink is by looking at them - shaken martinis appear cloudier than those which are stirred.
There is also disagreement over what constitutes a genuine "James Bond-style martini." The classic martini drink consists of four centilitres of gin along with two centilitres of vermouth and an olive, said Ohlmeier. Mixing four parts of vodka with two of vermouth results in a rather un-Bond-like creation known as a "vodkatini."
According to some experts in Germany, Bond's eccentric drinking habits are proof that he enjoys breaking the rules of alcoholic beverage etiquette. It seems he orders his martini "the wrong way," contravening what every novice barkeeper is taught.
"A classic Martini is stirred. This is always done when two alcohols are mixed with one another," explains Bernd Ohlmeier, a Hamburg-based of the respected German Barkeeper Union (DBU).
Cocktails are generally shaken when two liquids of a different consistency are combined, such as a clear alcohol and a cloudy juice. From a taste point of view, there is scarcely any difference between a stirred or a shaken Martini, admit the top barkeepers.
"The shaking motion does make the ice cubes melt more quickly and this may diminish the flavour of the drink," said Ulf Neuhaus, another expert who heads the DBU's Dresden branch.
These nuances are too subtle for most people's taste buds to detect, said Neuhaus, who pointed out that the easiest way to spot the two types of martini drink is by looking at them - shaken martinis appear cloudier than those which are stirred.
There is also disagreement over what constitutes a genuine "James Bond-style martini." The classic martini drink consists of four centilitres of gin along with two centilitres of vermouth and an olive, said Ohlmeier. Mixing four parts of vodka with two of vermouth results in a rather un-Bond-like creation known as a "vodkatini."
The Dutch are Shocked
Shocked!
To find money being exchanged in a brothel:
A large amount of the window prostitution in Amsterdam's red light district will be shut down as the city council gets tougher on criminal activities.
Amsterdam City Council said investigations had revealed about one-third of the prostitution sector is allegedly involved in money laundering.
About 100 of the 350 prostitution windows in the Dutch capital's red-light district will be forced to close by the end of the year.
....Amsterdam introduced a new law in 2003 which made it possible to investigate the operational management in the sex industry.
The new law was designed to prevent authorities unintentionally supporting criminal activities by issuing permits and subsidies.
To find money being exchanged in a brothel:
A large amount of the window prostitution in Amsterdam's red light district will be shut down as the city council gets tougher on criminal activities.
Amsterdam City Council said investigations had revealed about one-third of the prostitution sector is allegedly involved in money laundering.
About 100 of the 350 prostitution windows in the Dutch capital's red-light district will be forced to close by the end of the year.
....Amsterdam introduced a new law in 2003 which made it possible to investigate the operational management in the sex industry.
The new law was designed to prevent authorities unintentionally supporting criminal activities by issuing permits and subsidies.
Nobody does it better
Nobody does it quite the way the French do:
PARIS, Nov 30, 2006 (AFP) - The French government, facing a presidential election in April, got a double dose of bad news Thursday as official figures showed that consumer confidence contracted in November while a decline in joblessness ground to a halt in the previous month.
The results reflected France's stagnant economic momentum in the third quarter.
...."It's a serious warning," said Nicolas Bouzou of the economic research group Asteres.
"It is striking that the unemployment rate interrupts its decline at a time when economic growth is zero and when all economic indicators are pointing downward."
He said French companies managed to create fewer than 15,000 jobs in the third quarter and that economic layoffs were rising sharply.
France's stubbornly high jobless rate is frequently attributed by economists to an inflexible labor market, which saddles employers with high social charges and constraints to laying off staff and makes them reluctant to take on workers.
"In the last 20 years France on several occasions has found itself in the same situation," noted Alexander Law of the market research firm Xerfi.
"The unemployment rate can fall sharply for exceptional reasons but cannot go below the 8.5 percent threshold. At the moment, France is approaching its structural rate of unemployment but nothing suggests that it can break through this barrier."
Call it l'economie ennui?
PARIS, Nov 30, 2006 (AFP) - The French government, facing a presidential election in April, got a double dose of bad news Thursday as official figures showed that consumer confidence contracted in November while a decline in joblessness ground to a halt in the previous month.
The results reflected France's stagnant economic momentum in the third quarter.
...."It's a serious warning," said Nicolas Bouzou of the economic research group Asteres.
"It is striking that the unemployment rate interrupts its decline at a time when economic growth is zero and when all economic indicators are pointing downward."
He said French companies managed to create fewer than 15,000 jobs in the third quarter and that economic layoffs were rising sharply.
France's stubbornly high jobless rate is frequently attributed by economists to an inflexible labor market, which saddles employers with high social charges and constraints to laying off staff and makes them reluctant to take on workers.
"In the last 20 years France on several occasions has found itself in the same situation," noted Alexander Law of the market research firm Xerfi.
"The unemployment rate can fall sharply for exceptional reasons but cannot go below the 8.5 percent threshold. At the moment, France is approaching its structural rate of unemployment but nothing suggests that it can break through this barrier."
Call it l'economie ennui?
Wednesday, November 29, 2006
No Growth Industry
Rental fees are up, delivery area limited; guilt isn't selling this year:The price to rent a Living Christmas Tree is 75$ (yup 75). Each order also requires a separate $15 deposit check which we don't cash- we give it back to you when we get the tree back. Make checks out to TOLCTC. ....
Delivery is 12/15 through 12/17. Pickup is Tuesday January 2nd.
We are doing trees this year (it's our fifteenth in a row)
We are sorry to our past customers who have been shut out of our delivery area. I'm sorry i don't do this live tree and replanting idea more credit by doing a better job, i apologize.
Compared to his jerk of a father?
Senator-elect from Virginia doesn't get the old joke, instead enlists in the Democrat Fight Club:
At a private reception held at the White House with newly elected lawmakers shortly after the election, [George W.] Bush asked Webb how his son, a Marine lance corporal serving in Iraq, was doing.
[Jim] Webb responded that he really wanted to see his son brought back home, said a person who heard about the exchange from Webb.
“I didn’t ask you that, I asked how he’s doing,” Bush retorted, according to the source.
Webb confessed that he was so angered by this that he was tempted to slug the commander-in-chief...
The Senator has now revised and extended his remarks to: 'That's between my son and me.'
At a private reception held at the White House with newly elected lawmakers shortly after the election, [George W.] Bush asked Webb how his son, a Marine lance corporal serving in Iraq, was doing.
[Jim] Webb responded that he really wanted to see his son brought back home, said a person who heard about the exchange from Webb.
“I didn’t ask you that, I asked how he’s doing,” Bush retorted, according to the source.
Webb confessed that he was so angered by this that he was tempted to slug the commander-in-chief...
The Senator has now revised and extended his remarks to: 'That's between my son and me.'
Boarish Behavior
The hunted turn the tables in Bavaria:
Shaken burghers in the quiet Bavarian country town of Veitshoechheim were left licking their wounds and counting the cost after a herd of wild boars went on the rampage.
Chaos erupted in the market town near the city of Wuerzburg when more than a dozen frightened and aggressive animals invaded the town centre after fleeing a boar hunt.
Shoppers were taken by surprise when one of the animals bulldozed its way into a fashion boutique, frightening staff and leaving a trail of destruction.
....Eyewitnesses said further mayhem ensued when one of the wild boars attacked a 44-year-old man in the street. He needed hospital treatment after being bitten on the leg.
Another boar knocked a 76-year-old woman off her bicycle and was then struck down and killed by a passing car. There was an estimated €5,000 worth of damage to the blood-spattered vehicle.
Police marksmen intervened after receiving dozens of phone calls from townsfolk. One of the boars was cornered in a back garden and shot dead. Another was shot and killed by police while trying to swim across the nearby river Main. "It took more than two hours before peace could be finally restored," Mr Schmidt said .
Shaken burghers in the quiet Bavarian country town of Veitshoechheim were left licking their wounds and counting the cost after a herd of wild boars went on the rampage.
Chaos erupted in the market town near the city of Wuerzburg when more than a dozen frightened and aggressive animals invaded the town centre after fleeing a boar hunt.
Shoppers were taken by surprise when one of the animals bulldozed its way into a fashion boutique, frightening staff and leaving a trail of destruction.
....Eyewitnesses said further mayhem ensued when one of the wild boars attacked a 44-year-old man in the street. He needed hospital treatment after being bitten on the leg.
Another boar knocked a 76-year-old woman off her bicycle and was then struck down and killed by a passing car. There was an estimated €5,000 worth of damage to the blood-spattered vehicle.
Police marksmen intervened after receiving dozens of phone calls from townsfolk. One of the boars was cornered in a back garden and shot dead. Another was shot and killed by police while trying to swim across the nearby river Main. "It took more than two hours before peace could be finally restored," Mr Schmidt said .
Threepeat! Threepeat!
Exclusive: The Fly Under the Bridge Academy has learned that Northwestern University has won--for the third year in a row--the national 'Fed Challenge' held Tuesday November 28th in Washington DC.
Josh Goldstein, Frederick Herrmann, Rosa Li, Joshua Plavner and Jeanne Ruan beat 12 teams from other universities at the Oct. 31 regional competition that tested their knowledge of how the Fed creates policy to foster a strong and stable economy.
And in the finals yesterday, Northwestern defeated three other teams. Second place went to
Boston College, Rutgers University was third, and Virginia Commonwealth University got honorable mention.
Northwestern's coach is Mark Witte, senior lecturer in economics and director of undergraduate studies. Dr. Witte is also Chairman of the Council of Economic Advisers to the Fly Under the Bridge Academy. And, with whom, we are well pleased.
Josh Goldstein, Frederick Herrmann, Rosa Li, Joshua Plavner and Jeanne Ruan beat 12 teams from other universities at the Oct. 31 regional competition that tested their knowledge of how the Fed creates policy to foster a strong and stable economy.
And in the finals yesterday, Northwestern defeated three other teams. Second place went to
Boston College, Rutgers University was third, and Virginia Commonwealth University got honorable mention.
Northwestern's coach is Mark Witte, senior lecturer in economics and director of undergraduate studies. Dr. Witte is also Chairman of the Council of Economic Advisers to the Fly Under the Bridge Academy. And, with whom, we are well pleased.
Tuesday, November 28, 2006
Queen of Pork...in Charge of the Sty
Heretofore only known for being the stupidest member of the Senate, now Patty Murray is in a position to bring home even more bacon to her state:
Murray has just been named secretary of the Democratic caucus, a nebulous title that makes her part of the Senate Democrats' leadership quartet.
More important, Murray is poised to become chairwoman of the Appropriations subcommittee for transportation and other areas.
....U.S. Rep. Norm Dicks, a Bremerton Democrat, noted that Murray's ascension to the chairmanship of a powerful subcommittee will mean that "everybody has to talk to you. ... Every chairman has to come to you, and ask: 'Can you help me on my project?' "
"This chairmanship will give her a lot of leverage in the Senate. Patty is an activist. She will use that leverage."
....Murray is dismissive of criticism of her and other lawmakers' attitude about spending.
Particularly under fire is the use of so-called earmarks, narrowly tailored appropriations that allow senators to skip the normal budget process for some of their favorite projects.
The Appropriations Committee is where most of the budget pork is doled out, and the transportation subcommittee is one of the biggest smokehouses. That panel approved 2,820 earmarks, worth nearly $5 billion for fiscal year 2006 alone.
Earmarks are often quietly slipped into legislation as favors among politicians. Murray has been a player in the earmark process and was dubbed "the Queen of Pork" last year by Taxpayers for Common Sense, a group sharply critical of congressional spending.
Asked if she favors reforming the earmark system, as some fellow senators have proposed, Murray paused before answering.
"I think all of us believe that earmarks have to be transparent," she said of the need to identify which senator is behind each funding request.
But she is unabashed about her willingness to use earmarks for her home state.
"Earmarks are how those of us who lives 2,500 miles from the nation's Capitol ensure projects critical to our state are funded," she said. Otherwise, she said, bureaucrats in D.C. would be making all the decisions "with their own friends."
"We would get lost in the process, and I'm not going to lose," she added. "Washington state will be feet first at the table."
Murray has just been named secretary of the Democratic caucus, a nebulous title that makes her part of the Senate Democrats' leadership quartet.
More important, Murray is poised to become chairwoman of the Appropriations subcommittee for transportation and other areas.
....U.S. Rep. Norm Dicks, a Bremerton Democrat, noted that Murray's ascension to the chairmanship of a powerful subcommittee will mean that "everybody has to talk to you. ... Every chairman has to come to you, and ask: 'Can you help me on my project?' "
"This chairmanship will give her a lot of leverage in the Senate. Patty is an activist. She will use that leverage."
....Murray is dismissive of criticism of her and other lawmakers' attitude about spending.
Particularly under fire is the use of so-called earmarks, narrowly tailored appropriations that allow senators to skip the normal budget process for some of their favorite projects.
The Appropriations Committee is where most of the budget pork is doled out, and the transportation subcommittee is one of the biggest smokehouses. That panel approved 2,820 earmarks, worth nearly $5 billion for fiscal year 2006 alone.
Earmarks are often quietly slipped into legislation as favors among politicians. Murray has been a player in the earmark process and was dubbed "the Queen of Pork" last year by Taxpayers for Common Sense, a group sharply critical of congressional spending.
Asked if she favors reforming the earmark system, as some fellow senators have proposed, Murray paused before answering.
"I think all of us believe that earmarks have to be transparent," she said of the need to identify which senator is behind each funding request.
But she is unabashed about her willingness to use earmarks for her home state.
"Earmarks are how those of us who lives 2,500 miles from the nation's Capitol ensure projects critical to our state are funded," she said. Otherwise, she said, bureaucrats in D.C. would be making all the decisions "with their own friends."
"We would get lost in the process, and I'm not going to lose," she added. "Washington state will be feet first at the table."
Doing what comes naturellement
The manuevering to control Airbus continues:
The French government is seeking to take control of European aerospace giant EADS by pushing for a capital increase to finance development of the new A350 long-haul jet, German newspapers reported on Monday.
Paris surprised the industrial shareholders of the European Aeronautic Defence and Space Company — namely DaimlerChrysler which holds a stake of 22.5 percent and French group Lagardere which holds 7.5 percent — by proposing a capital hike to finance the A350, the business daily Handelsblatt reported.
The newspaper said that DaimlerChrysler and Lagardère both rejected the idea. But if the capital increase went ahead and they refused to participate, then France, which holds 15 percent of EADS via Sogeade, would effectively gain a dominant position in the company's share capital.
....Handelsblatt said that the aim of the French government was to prevent a far-reaching and painful restructuring of EADS's troubled aircraft maker Airbus.
The French government is seeking to take control of European aerospace giant EADS by pushing for a capital increase to finance development of the new A350 long-haul jet, German newspapers reported on Monday.
Paris surprised the industrial shareholders of the European Aeronautic Defence and Space Company — namely DaimlerChrysler which holds a stake of 22.5 percent and French group Lagardere which holds 7.5 percent — by proposing a capital hike to finance the A350, the business daily Handelsblatt reported.
The newspaper said that DaimlerChrysler and Lagardère both rejected the idea. But if the capital increase went ahead and they refused to participate, then France, which holds 15 percent of EADS via Sogeade, would effectively gain a dominant position in the company's share capital.
....Handelsblatt said that the aim of the French government was to prevent a far-reaching and painful restructuring of EADS's troubled aircraft maker Airbus.
Karl Marx is Back
And the documentarians have got him!
"Black Gold," now being screened at festivals and art houses, is the latest in a growing genre of documentary films shaking up the business world. They are taking critiques of corporate power that would once have been the province of newspapers and magazines to movie theaters and DVD shops, where they're finding an increasingly receptive audience.
The trend, which started with "Roger and Me" in 1989 and more recently featured "Super Size Me" and "Enron: The Smartest Guys in the Room," is forcing some corporate targets to counterattack — and, some say, even change business practices — to dodge claims of unfair wages, unhealthy products or environmental degradation.
"When you're talking about a documentary, it's something that's being presented as if it's fact, so that's a huge problem for companies," said Paul Argenti, a professor at Tuck School of Business at Dartmouth University.
....This year's "Iraq for Sale: The War Profiteers" from director Robert Greenwald was bankrolled by thousands of individual donors who responded to a fundraising e-mail from the filmmakers.
Despite the relatively small budgets, many of the films have drawn big attention.
....Even less broadly distributed documentaries are finding wider interest than a liberal screed in The Nation or an expose in The New York Times Magazine with similar ideas might reach.
....Web sites for documentaries like "Black Gold" and "Wal-Mart: The High Cost of Low Price" list dozens of screenings each month at repertory theaters, universities and churches where they're presented by advocacy groups and often followed by discussion sessions.
"They become events in themselves," Nick Francis said.
"Black Gold," now being screened at festivals and art houses, is the latest in a growing genre of documentary films shaking up the business world. They are taking critiques of corporate power that would once have been the province of newspapers and magazines to movie theaters and DVD shops, where they're finding an increasingly receptive audience.
The trend, which started with "Roger and Me" in 1989 and more recently featured "Super Size Me" and "Enron: The Smartest Guys in the Room," is forcing some corporate targets to counterattack — and, some say, even change business practices — to dodge claims of unfair wages, unhealthy products or environmental degradation.
"When you're talking about a documentary, it's something that's being presented as if it's fact, so that's a huge problem for companies," said Paul Argenti, a professor at Tuck School of Business at Dartmouth University.
....This year's "Iraq for Sale: The War Profiteers" from director Robert Greenwald was bankrolled by thousands of individual donors who responded to a fundraising e-mail from the filmmakers.
Despite the relatively small budgets, many of the films have drawn big attention.
....Even less broadly distributed documentaries are finding wider interest than a liberal screed in The Nation or an expose in The New York Times Magazine with similar ideas might reach.
....Web sites for documentaries like "Black Gold" and "Wal-Mart: The High Cost of Low Price" list dozens of screenings each month at repertory theaters, universities and churches where they're presented by advocacy groups and often followed by discussion sessions.
"They become events in themselves," Nick Francis said.
We're all professionals here
And millionaires too, but our feelings are hurt when someone points out that we're shooting 15%:
Sunday it was Earl Watson, and Monday it was coach Bob Hill.
"Every time the team struggles, it's always the coach's fault," Hill said. "I understand that. Whoever the coach is, it's his fault. He's not doing this or he's not doing that. Then when you're winning, it's the players. I understand that. But it's [crap]. It's [crap].
"This is a player's league and they have to be held accountable for their play. I'm not going to leave a guy out there who's struggling, and we're trying to win games and we're losing, so he can maybe find his shot. That's his job. This is professional sports. It's not the role of the coach to threaten him to play. But blame it on me. That's fine. I have no trouble with it. Blame it all on me and protect them."
Hill's statements were tongue-in-cheek, meant to show just how out of whack the NBA's star system has become, and an indication just how out of sync Hill is with two of his top reserves, Damien Wilkins and Watson.
....When the subject switched to Wilkins, Hill admitted he's considered benching the disgruntled swingman in favor of rookie Mickael Gelabale, who the coach believes will mature into a solid NBA player.
Coincidently, before Hill could explain why he hasn't made the move to Gelabale, Wilkins, dressed in street clothes, walked out of the weight room and stepped on the practice floor. He had a meeting with the Sonics coach, and Hill asked him to wait in his office.
Wilkins complied, although he didn't look happy. "You see, he's pouting today," Hill said. "He's pouting. How can you do that? He's got a nice life."
Sunday it was Earl Watson, and Monday it was coach Bob Hill.
"Every time the team struggles, it's always the coach's fault," Hill said. "I understand that. Whoever the coach is, it's his fault. He's not doing this or he's not doing that. Then when you're winning, it's the players. I understand that. But it's [crap]. It's [crap].
"This is a player's league and they have to be held accountable for their play. I'm not going to leave a guy out there who's struggling, and we're trying to win games and we're losing, so he can maybe find his shot. That's his job. This is professional sports. It's not the role of the coach to threaten him to play. But blame it on me. That's fine. I have no trouble with it. Blame it all on me and protect them."
Hill's statements were tongue-in-cheek, meant to show just how out of whack the NBA's star system has become, and an indication just how out of sync Hill is with two of his top reserves, Damien Wilkins and Watson.
....When the subject switched to Wilkins, Hill admitted he's considered benching the disgruntled swingman in favor of rookie Mickael Gelabale, who the coach believes will mature into a solid NBA player.
Coincidently, before Hill could explain why he hasn't made the move to Gelabale, Wilkins, dressed in street clothes, walked out of the weight room and stepped on the practice floor. He had a meeting with the Sonics coach, and Hill asked him to wait in his office.
Wilkins complied, although he didn't look happy. "You see, he's pouting today," Hill said. "He's pouting. How can you do that? He's got a nice life."
Monday, November 27, 2006
No word for 'diplomacy' in French?
'This is a fine mess you've gotten us into', says the Ambassador to the Foreign Ministry:
KIGALI, Nov 27, 2006 (AFP) - Thousands of Rwandans staged anti-French protests here Monday while the last French diplomats flew out of Rwanda amid a growing diplomatic row centered on the central African nation's 1994 genocide.
In remarks that could further erode bilateral relations, Rwandan President Paul Kagame suggested Monday evening that Paris was deliberately trying to hinder the country's recovery from the horrific massacres.
Indeed, in an interview on Rwanda's national television, Kagame asserted Rwanda was in better shape than it had ever been in its history.
"Some enemies of Rwanda are not happy with that," he added. "The French, I believe, didn't want to see us develop. Their whole objective is to push us back. We have done what we humanly could."
Meanwhile, the last French diplomats and civil servants posted in Kigali took an evening flight to Uganda where they were to later transfer to another flight for Brussels. France's ambassador to Rwanda, Dominique Decherf, left Saturday.
....Relations between Rwanda and France soured in the recent months over recriminations in the 1994 mass slaughter that claimed an estimated 800,000 lives within a space of 100 days.
Rwanda accuses French troops deployed at the height of the genocide of training and arming Hutu Interahamwe militia blamed for the mass murder, and has established an inquiry panel to probe those claims.
...."We had warned Paris several times that this (Bruguiere) report would be negatively received here and that the Rwanda government would break diplomatic relations," a French diplomat said earlier, as he finalized his departure from Rwanda.
KIGALI, Nov 27, 2006 (AFP) - Thousands of Rwandans staged anti-French protests here Monday while the last French diplomats flew out of Rwanda amid a growing diplomatic row centered on the central African nation's 1994 genocide.
In remarks that could further erode bilateral relations, Rwandan President Paul Kagame suggested Monday evening that Paris was deliberately trying to hinder the country's recovery from the horrific massacres.
Indeed, in an interview on Rwanda's national television, Kagame asserted Rwanda was in better shape than it had ever been in its history.
"Some enemies of Rwanda are not happy with that," he added. "The French, I believe, didn't want to see us develop. Their whole objective is to push us back. We have done what we humanly could."
Meanwhile, the last French diplomats and civil servants posted in Kigali took an evening flight to Uganda where they were to later transfer to another flight for Brussels. France's ambassador to Rwanda, Dominique Decherf, left Saturday.
....Relations between Rwanda and France soured in the recent months over recriminations in the 1994 mass slaughter that claimed an estimated 800,000 lives within a space of 100 days.
Rwanda accuses French troops deployed at the height of the genocide of training and arming Hutu Interahamwe militia blamed for the mass murder, and has established an inquiry panel to probe those claims.
...."We had warned Paris several times that this (Bruguiere) report would be negatively received here and that the Rwanda government would break diplomatic relations," a French diplomat said earlier, as he finalized his departure from Rwanda.
You're gonna have to answer to the Coca-Cola company.
And your excuse won't be that you were trying to to avert nuclear war:
Vienna - Santa Claus is being banned from Christmas markets in the European countries of Germany and Austria.
Anti-Santa campaigners say that Father Christmas was invented by Coca-Cola and detracts from the true spirit of the festive season.
Austria's biggest Christmas market is in front of the Vienna city hall where thousands of visitors stroll past stalls offering everything related to Christmas - everything, that is, except Santa.
....A Vienna city hall spokesperson said: "There are rules governing what stallholders can do and one of them is to agree not to use the image of Santa as a condition of being able to trade there.
"Santa is an English language creation, people who want to see him should go to America where I am sure Coca Cola will be happy to oblige."
The move in Vienna has been copied by Christmas markets across Austria and Germany where St Nicholas is the traditional bearer of Christmas gifts.
Bettina Schade, from the Frankfurter Nicholas Initiative in Germany, commented: "We object to the material things, the hectic rush to buy gifts, and the ubiquity of the bearded man in the red suit that are taking away from the core meaning of Christmas.
Vienna - Santa Claus is being banned from Christmas markets in the European countries of Germany and Austria.
Anti-Santa campaigners say that Father Christmas was invented by Coca-Cola and detracts from the true spirit of the festive season.
Austria's biggest Christmas market is in front of the Vienna city hall where thousands of visitors stroll past stalls offering everything related to Christmas - everything, that is, except Santa.
....A Vienna city hall spokesperson said: "There are rules governing what stallholders can do and one of them is to agree not to use the image of Santa as a condition of being able to trade there.
"Santa is an English language creation, people who want to see him should go to America where I am sure Coca Cola will be happy to oblige."
The move in Vienna has been copied by Christmas markets across Austria and Germany where St Nicholas is the traditional bearer of Christmas gifts.
Bettina Schade, from the Frankfurter Nicholas Initiative in Germany, commented: "We object to the material things, the hectic rush to buy gifts, and the ubiquity of the bearded man in the red suit that are taking away from the core meaning of Christmas.
Sunday, November 26, 2006
We're...like...Number 1, Dude
Czech happens, you know:
The Czech Republic has the highest consumption of hemp products (marijuana) and meta-amphetamine (pervitine) among European countries, according to the annual report of the Lisbon-based EU drugs agency (EMCDDA) for 2006, which was released in the EU member states´ capitals today.
Marijuana consumption in the Czech Republic is comparable to the US, the largest marijuana consumer in the world.
The Czech Republic has the highest consumption of hemp products (marijuana) and meta-amphetamine (pervitine) among European countries, according to the annual report of the Lisbon-based EU drugs agency (EMCDDA) for 2006, which was released in the EU member states´ capitals today.
Marijuana consumption in the Czech Republic is comparable to the US, the largest marijuana consumer in the world.
This Just In
They couldn't find it when it happened, but the NY Times gets around to recognizing the deaths of 10 million Ukrainians:
KIEV, Ukraine (AP) -- Holding candles and standing silent, thousands massed on a fog-shrouded square Saturday to mourn 10 million Ukrainians killed by a famine orchestrated by Soviet leader Josef Stalin -- an ordeal many insisted must be recognized as genocide.
Some 33,000 people died every day during the 1932-33 famine, wiping out a third of Ukraine's population in a calamity known here as Holodomor -- Death by Hunger. Cases of cannibalism were widespread as desperation deepened. Those who resisted were shot or sent to Siberia.
The Times couldn't bring themselves to write about it themselves, instead running an AP story. Maybe because they aren't totally beyond being embarrassed:
Pulitzer Prizes board decides not to revoke 1932 prize awarded to New York Times reporter Walter Duranty for 1931 series of articles about Soviet Union that were later discredited as too credulous of Soviet propaganda; cites lack of evidence of deliberate deception by Duranty; award has been subject of protests by Ukrainian and other groups angry over his failure to report vast famine of 1932-33; board calls famine 'horrific' and notes it deserved more international attention; Times publisher Arthur Sulzberger Jr lauds board; admits defects in Duranty's journalism
KIEV, Ukraine (AP) -- Holding candles and standing silent, thousands massed on a fog-shrouded square Saturday to mourn 10 million Ukrainians killed by a famine orchestrated by Soviet leader Josef Stalin -- an ordeal many insisted must be recognized as genocide.
Some 33,000 people died every day during the 1932-33 famine, wiping out a third of Ukraine's population in a calamity known here as Holodomor -- Death by Hunger. Cases of cannibalism were widespread as desperation deepened. Those who resisted were shot or sent to Siberia.
The Times couldn't bring themselves to write about it themselves, instead running an AP story. Maybe because they aren't totally beyond being embarrassed:
Pulitzer Prizes board decides not to revoke 1932 prize awarded to New York Times reporter Walter Duranty for 1931 series of articles about Soviet Union that were later discredited as too credulous of Soviet propaganda; cites lack of evidence of deliberate deception by Duranty; award has been subject of protests by Ukrainian and other groups angry over his failure to report vast famine of 1932-33; board calls famine 'horrific' and notes it deserved more international attention; Times publisher Arthur Sulzberger Jr lauds board; admits defects in Duranty's journalism
Saturday, November 25, 2006
A Day Without Ukrainians...
...coming soon to Moscow. And it doesn't sound as though they'll like the results:
Russian farmers are flocking to Preobrazhensky Market in northeast Moscow, filling stalls where foreign vendors used to hawk their produce.
The farmers are coming in response to the government's ongoing effort to rid the country's markets and kiosks of foreign workers by April 1.
And Preobrazhensky Market is having trouble keeping up with demand, said Nikolai, the market's director of sales, who declined to give his last name.
....Some Moscow markets are filled to just between 20 percent and 40 percent of capacity as they wait for Russian vendors to move in, said Vladimir Malyshkov, head of the City Hall department for retail markets and services.
Several stalls at a small, covered market near the Belorusskaya metro station were standing empty Thursday as the result of the city's new quota system, under which half of all stalls in produce markets are reserved for Russian farmers.
A Tajik fruit seller in an adjacent stall said he knew Azeri vendors who wanted to fill the empty slots but who had been turned down.
"Russians don't like this kind of work. It's too hard," said the vendor, who spoke on condition of anonymity because he feared retribution from the market's owners.
Despite such mixed success at the city level, the federal government is pushing ahead with tough new regulations on foreign workers.
Earlier this month, Prime Minister Mikhail Fradkov signed a decree that imposed a total ban on foreign vendors in all markets, kiosks and other small retail outlets as of April 1 next year.
While some food vendors will remain until next April, foreigners will be banned from the retail trade in pharmaceuticals and alcohol Jan. 1, 2007.
During a transition period from Jan. 15 to April 1, the share of foreigners in small retail outlets is set to fall to 40 percent, Fradkov told President Vladimir Putin during a meeting at the president's Novo-Ogaryovo residence last week. ....
Putin told Fradkov that he saw no reason to amend the decree down the line.
"This is not a sector of the economy where we have a labor shortage," Putin said.
Malyshkov, of the city's department for retail markets and services, told a different story. He said Moscow would have trouble filling vacancies in the retail sector without migrant workers.
"I shudder to think what would happen if the Georgians, Tajiks, Uzbeks and Azeris leave this sector," Malyshkov said.
Russian farmers are flocking to Preobrazhensky Market in northeast Moscow, filling stalls where foreign vendors used to hawk their produce.
The farmers are coming in response to the government's ongoing effort to rid the country's markets and kiosks of foreign workers by April 1.
And Preobrazhensky Market is having trouble keeping up with demand, said Nikolai, the market's director of sales, who declined to give his last name.
....Some Moscow markets are filled to just between 20 percent and 40 percent of capacity as they wait for Russian vendors to move in, said Vladimir Malyshkov, head of the City Hall department for retail markets and services.
Several stalls at a small, covered market near the Belorusskaya metro station were standing empty Thursday as the result of the city's new quota system, under which half of all stalls in produce markets are reserved for Russian farmers.
A Tajik fruit seller in an adjacent stall said he knew Azeri vendors who wanted to fill the empty slots but who had been turned down.
"Russians don't like this kind of work. It's too hard," said the vendor, who spoke on condition of anonymity because he feared retribution from the market's owners.
Despite such mixed success at the city level, the federal government is pushing ahead with tough new regulations on foreign workers.
Earlier this month, Prime Minister Mikhail Fradkov signed a decree that imposed a total ban on foreign vendors in all markets, kiosks and other small retail outlets as of April 1 next year.
While some food vendors will remain until next April, foreigners will be banned from the retail trade in pharmaceuticals and alcohol Jan. 1, 2007.
During a transition period from Jan. 15 to April 1, the share of foreigners in small retail outlets is set to fall to 40 percent, Fradkov told President Vladimir Putin during a meeting at the president's Novo-Ogaryovo residence last week. ....
Putin told Fradkov that he saw no reason to amend the decree down the line.
"This is not a sector of the economy where we have a labor shortage," Putin said.
Malyshkov, of the city's department for retail markets and services, told a different story. He said Moscow would have trouble filling vacancies in the retail sector without migrant workers.
"I shudder to think what would happen if the Georgians, Tajiks, Uzbeks and Azeris leave this sector," Malyshkov said.
Friday, November 24, 2006
Tolls, and You Tolls Alone
In your Ford or other fine automobile, you will be led, as if by an invisible hand, to reduce congestion, even though that was no part of your intention. And in Washington state they've got the data to prove it:
For about eight months, drivers in 275 Seattle-area households agreed to pay for something the rest of us get for free: The right to drive on the region's freeways and streets.
They were guinea pigs in a pioneering study that explored how motorists' behavior might change if they had to pay tolls — not just on a few bridges or highways, but on almost every road with a yellow center line.
Researchers established virtual tolls ranging from a nickel to 50 cents a mile. They gave participants pre-paid accounts of between $600 and $3,000, and told them they could keep whatever the tolls didn't eat up.
The experiment ended in February. Preliminary results, released this month, suggest that if such so-called "road pricing" were widespread, it could make a significant dent in traffic.
....The promise of keeping some of that money proved to be a powerful incentive. Nearly 80 percent of the participants drove less than they did before, or they changed their routes or travel times to avoid the highest tolls, said Matthew Kitchen, the study's director.
When the study was finished, the average payout was nearly $700 per household.
When other variables are factored out, Kitchen said, participants took 5 percent fewer auto trips and drove 2.5 percent fewer miles each weekday because of the tolls.
The drop was even more dramatic during peak-traffic periods, when tolls were highest: 10 percent fewer trips and 4 percent fewer miles in the morning, 6 percent fewer trips and 11 percent fewer miles at night.
Participant Kathi Hardwick, an executive assistant at a downtown Bellevue bank, started riding the bus to work from her home in Bothell. It wasn't as convenient as driving, she said, but it saved her about $5 each way in tolls on Interstate 405.
She also began combining errands and driving less on weekends.
For about eight months, drivers in 275 Seattle-area households agreed to pay for something the rest of us get for free: The right to drive on the region's freeways and streets.
They were guinea pigs in a pioneering study that explored how motorists' behavior might change if they had to pay tolls — not just on a few bridges or highways, but on almost every road with a yellow center line.
Researchers established virtual tolls ranging from a nickel to 50 cents a mile. They gave participants pre-paid accounts of between $600 and $3,000, and told them they could keep whatever the tolls didn't eat up.
The experiment ended in February. Preliminary results, released this month, suggest that if such so-called "road pricing" were widespread, it could make a significant dent in traffic.
....The promise of keeping some of that money proved to be a powerful incentive. Nearly 80 percent of the participants drove less than they did before, or they changed their routes or travel times to avoid the highest tolls, said Matthew Kitchen, the study's director.
When the study was finished, the average payout was nearly $700 per household.
When other variables are factored out, Kitchen said, participants took 5 percent fewer auto trips and drove 2.5 percent fewer miles each weekday because of the tolls.
The drop was even more dramatic during peak-traffic periods, when tolls were highest: 10 percent fewer trips and 4 percent fewer miles in the morning, 6 percent fewer trips and 11 percent fewer miles at night.
Participant Kathi Hardwick, an executive assistant at a downtown Bellevue bank, started riding the bus to work from her home in Bothell. It wasn't as convenient as driving, she said, but it saved her about $5 each way in tolls on Interstate 405.
She also began combining errands and driving less on weekends.
Thursday, November 23, 2006
Bulldogs bite Men of Tar
And give thanks for the recognition:
Men's College Basketball 2006-2007
1 Gonzaga
2 Duke
3 Maryland
4 Marquette
5 Alabama
6 Butler
7 Pittsburgh
8 North Carolina
9 Ohio State
10 UCLA
Men's College Basketball 2006-2007
1 Gonzaga
2 Duke
3 Maryland
4 Marquette
5 Alabama
6 Butler
7 Pittsburgh
8 North Carolina
9 Ohio State
10 UCLA
Wednesday, November 22, 2006
Professorial Pilfering
Big bucks in Ivy League royalty avoidance:
Book publishers say professors who post long excerpts of protected texts on the Internet without permission cost the industry at least $20 million a year.
Cornell University, the Ivy League college in Ithaca, N.Y., agreed in September to regulate work its faculty puts on the Web, in response to a threatened lawsuit from the Association of American Publishers.
Professors are making material available free rather than requiring students to buy $100 textbooks. While faculty members from Harvard University to the University of Pennsylvania complain of a restricted flow of ideas, publishers say they must protect $3.35 billion in annual U.S. college textbook sales.
"We can't compete with free," says Allan Adler, vice president for legal and governmental affairs with the Washington-based publishers group, whose members include McGraw-Hill Cos. and Pearson Plc.
....Cornell, like other large universities, offers hundreds of courses each semester, with professors using the Internet for making articles or excerpts from books available to students at no charge, Adler says. Each item would typically generate royalties of $10 to $30, he says.
"Professors were putting up multiple chapters from books on course Web sites, and it would be repeated from semester to semester with successive classes, with students purchasing nothing," Adler says, referring to Cornell and other schools.
In a Cornell course in late 2005, 25 separate works on the syllabus were freely available to students as reserved electronic postings on an internal Web site.
Book publishers say professors who post long excerpts of protected texts on the Internet without permission cost the industry at least $20 million a year.
Cornell University, the Ivy League college in Ithaca, N.Y., agreed in September to regulate work its faculty puts on the Web, in response to a threatened lawsuit from the Association of American Publishers.
Professors are making material available free rather than requiring students to buy $100 textbooks. While faculty members from Harvard University to the University of Pennsylvania complain of a restricted flow of ideas, publishers say they must protect $3.35 billion in annual U.S. college textbook sales.
"We can't compete with free," says Allan Adler, vice president for legal and governmental affairs with the Washington-based publishers group, whose members include McGraw-Hill Cos. and Pearson Plc.
....Cornell, like other large universities, offers hundreds of courses each semester, with professors using the Internet for making articles or excerpts from books available to students at no charge, Adler says. Each item would typically generate royalties of $10 to $30, he says.
"Professors were putting up multiple chapters from books on course Web sites, and it would be repeated from semester to semester with successive classes, with students purchasing nothing," Adler says, referring to Cornell and other schools.
In a Cornell course in late 2005, 25 separate works on the syllabus were freely available to students as reserved electronic postings on an internal Web site.
Tuesday, November 21, 2006
We told you so...
A few years ago.
And if anyone thinks the Fed isn't targeting the money supply by manipulating overnight interest rates...well...they're just naive.
As did Milton Friedman.
That is a question not of basic principle, but of technique. When they so-called 'target the interest rate', what they're doing is controlling the money supply via the interest rate. The interest rate is only an intermediary instrument.
Now, the Wall Street Journal says that, yes, inflation is always and everywhere, a monetary phenomenon:
Of all the legacies left behind by Nobel Prize-winning economist Milton Friedman, who died last week in San Francisco at age 94, the idea that central banks should focus on money supply to manage inflation is one that largely fell out of fashion years ago. Now, though, some policy makers in Europe are taking a second look.
....But while many central bankers still believe his dictum, few, including those at the Fed, allow their policy to be guided by a target for money-supply growth. That's because the quantity of money in the economy -- which, depending on the definition, can include currency in circulation, commercial-bank reserves at the central bank, bank deposits and money-market mutual funds -- is hard to measure, and its relationship to overall spending, which tends to drive prices up or down, often shifts.
European central banks acknowledge the data can be tough to decipher. As money-supply growth rates rise, however, the European Central Bank, the Bank of England and Sweden's Riksbank all have cited the data as a factor in their decisions to raise interest rates lately.
....The ECB, which sets monetary policy for the 12 nations that share the euro, has kept the monetarist faith throughout, maintaining a target for money growth since the euro's launch in 1999. Hoping to infuse the fledgling currency with credibility, the ECB borrowed a page from the Bundesbank, the German central bank that kept prices steady for several decades before the euro's introduction.
The ECB's president, Jean-Claude Trichet, providing a rare peek at how money-supply numbers affect the bank's decision making, revealed this fall that strong money growth prompted the ECB to start raising rates last December. At the time, other economic signals were mixed and international organizations, such as the International Monetary Fund, advised holding steady. "In retrospect, money turned out to be a good trigger, which put them ahead of the curve," says Thomas Mayer, chief European economist for Deutsche Bank in London.
And if anyone thinks the Fed isn't targeting the money supply by manipulating overnight interest rates...well...they're just naive.
As did Milton Friedman.
That is a question not of basic principle, but of technique. When they so-called 'target the interest rate', what they're doing is controlling the money supply via the interest rate. The interest rate is only an intermediary instrument.
Now, the Wall Street Journal says that, yes, inflation is always and everywhere, a monetary phenomenon:
Of all the legacies left behind by Nobel Prize-winning economist Milton Friedman, who died last week in San Francisco at age 94, the idea that central banks should focus on money supply to manage inflation is one that largely fell out of fashion years ago. Now, though, some policy makers in Europe are taking a second look.
....But while many central bankers still believe his dictum, few, including those at the Fed, allow their policy to be guided by a target for money-supply growth. That's because the quantity of money in the economy -- which, depending on the definition, can include currency in circulation, commercial-bank reserves at the central bank, bank deposits and money-market mutual funds -- is hard to measure, and its relationship to overall spending, which tends to drive prices up or down, often shifts.
European central banks acknowledge the data can be tough to decipher. As money-supply growth rates rise, however, the European Central Bank, the Bank of England and Sweden's Riksbank all have cited the data as a factor in their decisions to raise interest rates lately.
....The ECB, which sets monetary policy for the 12 nations that share the euro, has kept the monetarist faith throughout, maintaining a target for money growth since the euro's launch in 1999. Hoping to infuse the fledgling currency with credibility, the ECB borrowed a page from the Bundesbank, the German central bank that kept prices steady for several decades before the euro's introduction.
The ECB's president, Jean-Claude Trichet, providing a rare peek at how money-supply numbers affect the bank's decision making, revealed this fall that strong money growth prompted the ECB to start raising rates last December. At the time, other economic signals were mixed and international organizations, such as the International Monetary Fund, advised holding steady. "In retrospect, money turned out to be a good trigger, which put them ahead of the curve," says Thomas Mayer, chief European economist for Deutsche Bank in London.
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