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Greenspan interview on Age of tirbulence

Interview with  Greenspan on “the age of turbulence”

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Wal-Mart starts ‘Black Friday’ early

Wal-Mart starts ‘Black Friday’ early

Deals on turkey dinners and electronics start this week.

Posted by Teresa Mears on Thursday, November 5, 2009 1:22 PM

At least one store isn’t waiting until Black Friday to unleash its deals. Rather than leaking its ads early, Wal-Mart is starting its electronics sales early, plus offering $20 turkey dinners for eight.

Wal-Mart will begin the first of several one-week “electronics savings events” on Saturday, Nov. 7. Here are the first week’s deals:

  • HP Notebook Computer, $298. 3GB memory, 250 GB hard drive, Windows 7 Premium.
  • Sharp 1080p HDTVs: 42-inch for $498, 46-inch for $698 (120 Hz), 52-inch for $898 (120 Hz).
  • Panasonic 46-inch 1080p plasma HDTV, $788.
  • Xbox 360 Arcade Console, $199 with $100 Walmart gift card (for use on future purchases). The company will stock at least 10 per store, which makes it sound as if you need to arrive early to get this deal.
  • Sony Blu-ray player (model #BDP-S360), $148.
  • Magnavox Upconvert DVD player (model #DP170MGXF, 1080p), $29.

Quantities are limited, no rain checks and there is a limit of two per customer on select electronics. While the Wal-Mart news release says these are one-week specials, the Web site says one-day specials, and it’s likely some will sell out quickly, so be prepared to shop Saturday if you want the electronics deals.

Does this mean you can skip that mad dash the day after Thanksgiving? Probably not, says Jon Vincent, founder of “It won’t replace Black Friday,” he says. The deals are good, but pretty comparable to its offerings last year, including a $298 Compaq laptop and a Playstation 2 bundled with a $30 gift card for $129.

Wal-Mart also is offering 12-pound turkeys for less than $5 (that deal started Nov. 4), or 40 cents per pound. Limit two per customer. This deal is good through Thanksgiving.

Wal-Mart’s $20 Thanksgiving feast for eight includes:

  • One 12-pound Grade A turkey.
  • Three 11 to 15.5-ounce cans Green Giant vegetables.
  • Two 14-ounce cans Ocean Spray cranberry sauce.
  • Three 6-ounce boxes of Stove Top stuffing.
  • One 5-pound bag of red potatoes.
  • One 12-count package of Sara Lee dinner rolls.
  • One 22-ounce pumpkin roll cake.

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The big Casino Market in China

I recently was writting an assignment concerning the Chinese Stock Market. I found it just like a big Casino.
Here is an article from the Economist. The woman in the picture is actually playing poker in the stock market, while waiting for any “desired” changes in the prices.

Another great leap
Aug 27th 2009 | HONG KONG
From The Economist print edition

Share prices in China are once again unhinged

EVEN critics of China’s stockmarket would be hard-pressed to call it dull. After losing almost three-quarters of their value between late 2007 and the end of 2008, shares have gone back on the rampage. They are up by more than 70% this year, and that encompasses a wrenching 15% decline since late July (see chart). Combined, China’s two mainland bourses in Shanghai and Shenzhen are second only to America’s, measured by the value of domestic listings. Activity is frenetic: the average share in China has changed hands three times so far this year.

Since foreigners are largely barred from investing in the mainland Chinese market, what goes on in Shanghai and Shenzhen used to be largely of interest only to local punters. But now China’s position as the only big economy reporting strong growth, and the general scepticism surrounding the accuracy of the government statistics underlying these reports, has transformed the role of its equity market into a potentially unique source of information. Jing Ulrich, a regional strategist for JPMorgan, was bombarded with questions about China’s market on recent overseas travels in the hope they could elicit clues about the future course of the economy. Anecdotally at least, global stockmarkets have become more sensitive to Chinese gyrations, on the premise that they reflect real shifts in the country’s prosperity which have repercussions everywhere.

Whether this reputation is deserved is an open question. The market’s remarkable rise comes with enough caveats to suggest it is priced as much by madness as by reason. On average, shares in China trade at 31 times trailing earnings, double the global average. Although this is less than half the stratospheric valuation that existed prior to the market’s crash last year, it can only be justified by remarkably strong and sustained earnings growth.

There is evidence that business conditions are improving in China, but only by going from abysmal to merely bad. According to JPMorgan’s calculations, the year-on-year decline in industrial profits has ebbed from a dreadful 37% in February to a still awful 21% in June. The same story holds for the profits of companies listed on China’s exchanges. Profits were down by 26% in the first quarter. About half of all companies have reported their figures for the second quarter; earnings declined, on average, by 18% year-on-year.

Share prices should reflect future, not past profits, hence the hope that the rally in China cleverly looks beyond today’s problems to better times. In support of this, the consensus estimates of Chinese security analysts are that earnings will rise by 9% this year and 22% in 2010. A big bounce is not unprecedented. Demand for housing, which uncharacteristically (for China) dried up earlier in the year, has rebounded sharply. Only in southern China, hit particularly hard by the collapse in exports, do prices remain below their prior peaks. Retail sales continue to be strong.

Taking a break

Taking a break from the serious gambling

But even that sort of growth, if not followed by more of the same, does little to justify current prices and there are any number of reasons to be pessimistic. Exports, a core component of the Chinese economy, remain soft. Critical demand has come from a huge government stimulus plan that, by design, is transient.

Of even greater concern is that much of the market’s strength may be the result of the abundant money sloshing around China, rather than a fundamental change in profit expectations. This would help explain why companies with dual listings in Hong Kong and the mainland have seen disproportionately large rises in their mainland shares.

One source of this liquidity is individuals, usually responsible for about three-quarters of all share purchases in China. Capital restrictions limit investment options to bank deposits (at low, government-mandated, rates), property, or the stockmarket. That the vertiginous rise in mainland share prices accompanied a decline in the rate of growth for money in longer-term time deposits suggests small investors may have shifted from the safety of banks to riskier market punts.

More controversially, there is widespread speculation that the tidal wave of bank lending initiated by the government as part of its stimulus plan has made its way into the stockmarket. The proportion of loans going into shares is hotly debated (see article). Executives at Chinese firms and the chastened survivors of other Asian stockmarket collapses worry that despite government restrictions lending trickles into the market indirectly.

Redirecting bank loans is typically a violation of credit agreements, but the main impact of such rules is likely to ensure any diversion is not reported. Recently rumours have circulated that the People’s Bank of China has initiated investigations to determine if these claims have merit—a move which, by itself, may have put a damper on the market.

Equally jarring, after an extraordinary lending binge, the country’s leading banks are abruptly pulling back on credit expansion, a move that could affect the funds available for investment in the stockmarket, and indirectly undermine the market by reducing the near-term prospects for growth. Rumours are rife that banks’ capital requirements are being tightened, as are the conditions for various kinds of loan. A decline in new lending in the second half of the year had been expected; the rate of decline has, for many, been a shock. As share prices rose earlier in the year, numerous private companies and their bankers began the lengthy process of preparing for public offerings. In June debt was abundant and there was every reason to expect equity would soon be as well. Such confidence is now frayed.

China’s mainland market has come a long way since its relaunch almost 20 years ago in an old hotel on the Bund in Shanghai. It is now the world’s second-largest on most measures, but a second speculative bubble in three years raises real questions about its credibility. The job of a stockmarket is to provide useful signals to help allocate capital. However thrilling, China’s market is a long way from doing that.

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Economics of Christianity (Part 1)

Based on a previous article I posted and some of your articles (such as ‘economics of happyness) I did a little search for ‘ Economics of Christianity’ and this showed up.
It nicely shows how you can fit the bible to almost any store you like, in this case that the bible is libetarian and that you ‘transfer’ the ownership of your body from yourself to God which means you must be very good for ‘your’ (or actually God’s) body.

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Economics In Bed

When I decided I would study economics 9 years ago,  what I liked about this science was that “the fundamental laws of economic science, in fact, were the laws of life”. The term “economic imperialism” that we did in class has made me think a lot since that week’s assignment! I believe we can talk about “economic imperialism” when we apply economics’ scientific methodology into other fields; yet when it comes to the reasoning and not the equations or models, I would not distinguish economics from everyday life. The way we function in our relationships and in our non-economic decision making is the same one as in our economic thinking: seeing the pros and cons, gains and losses and picking the one that would make us feel best. Not in a way that other people would describe as rational, but in a way that always seems rational to us, where “prices” would be replaced by “value” (how we value things and situations) – always a subjective definition of course!

Yet I do strongly believe that there are certain aspects of life that economics should really be out of! Still, we might enjoy some posts like this one 🙂 ( )

Why don’t people have more sex?

We need not just reasons, but rather gains-from-trade-defying reasons.  I can think of a few:

1. The long-run lifestyle costs of being “more open to sex” involve a loss of integrity and control.  (OK, but I know many married couples, not all of whom hate each other, who don’t seem to have much sex.)

2. The average utility of sex is high but the marginal utilities are falling off a cliff.  You just don’t want any more.  But how many people are at this margin?

3. Freud was right and we are all repressed.  The will is not unitary and the utility-maximizing part is not always in control.

4. There has been a market failure, but the Internet is remedying it.  People are having more sex and this will only go up.

5. Sex stops being fun when you do it to close a gap between your marginal utilities.  It requires spontaneity or some other quality inconsistent with the classical model of the consumer and the equation of marginal rates of substitution.

6. Sex isn’t as much fun as the studies indicate.  Perhaps people lie about their quality of their sex or remember only the better experiences.

7. People want their sex to consist of peaks, rather than seeking to maximize lifetime utility.  Tom Schelling once told me this is why he did not listen to Bach more.

8. The market-clearing price for more sex is positive, and people feel shame about paying too explicitly; see also #5.

9. We are biologically programmed to “stick to our guns,” rather than just kiss and make up; read more here.  Or perhaps your wife has read my earlier post on why it is hard to avoid torture.

10. People are having sex in other ways.  Maybe that is really good too.

11. Everyone else is having sex all the time — Michael Vassar simply doesn’t know about it.

12. You’re all addicted to reading blogs.

My wife’s question: “Should you be flattered or insulted that you are considered an expert on this?”

Although I find that prostitution is a very very sensitive subject, I’ll publish this link not because I agree with what the writers say in the article but because I find interesting the economic approach:

Is sex a female resource and could sexual interaction be viewed as a marketplace? This article really made me want to shout “Come on people! Leave some things alone! Don’t kill the magic! Don’t rationalize and economize everything!”. Yet I still find it more interesting to read about this than, let’s say, finance 🙂 so here goes:

In this article sex is considered the good, and the probability of getting a sexually transmitted disease is its price. Interesting what it might say about people’s sexual preferences!

and the last one for today: when it comes to risk taking can hormonomics explain why men are from Mars and women from Venus? Or are we all from planet Earth in the end?

Man, interesting topics people find for research sometimes! So much for late-night posting.. hope you found something interesting at least.  🙂

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Eisenhower on the Military Industrial Complex

President Eisenhower, in his farewell address to the American people in 1961, expressed his concerns that the military industrial complex were getting to powerful in Washington. He was right and the U.S. have taken military actions in about one country per year ever since. Some private military contractors (e.g. Blackwater, Halliburton, KBR and Dyncorp) have got enormous contracts from the government to provide security services, war supplies or rebuild what they have destroyed (the money is usually used to make oil pipelines but not roads for the locals like they promised). They all have one thing in common and that is their ties to politicians. Even worse is how politicians have made profits through investment firms, like Carlyle Group, that specialize in defence. The owners of Carlyle Group are close to 800 families including the Bush family, Bin Laden family, Donald Rumsfeld and John Major.

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The Social Responsibility of Business is to Increase its Profits

According to Friedman, businessman who talk about “social responsibility of business in a free-enterprise system” are preaching pure and unadulterated socialism. In his view, corporate executives shall exclusively strive after increasing the company’s profits. If businessmen don’t act like this, they consequently act in some way that is not in the interest of the employers. “For example, that he is to refrain from increasing the price of the product in order to contribute to the social objective of preventing inflation, even though a price in crease would be in the best interests of the corporation.”

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Do macroeconomists deserve this mistreatment?

Mainstream economics and specially macroeconomists have been highly critized due to the current crisis.

In this article, professor Lucas explains why the market hypothesis is “efficient” even in the current crisis by explaining the actual meaning of Fama’s work. Furthermore, he explains how these so badly critized models actually work by intaking information at everytime.  Few people recognize that Bernanke’s actions, thanks to the outcome of these models, prevented a worse situation for the current crisis. So, are the mainstream macroeconomists really that useless? Must-read article.

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“The violence inherent in the system”

I know to most people, the thought of having to watch Monty Python is simply horrifying- but it truly is comedy at its best.

After watching and posting the last Monty Python (and the Holy Grail) clip I decided it was high time to watch the whole movie again. Low and behold, I found yet another excerpt that took my fancy. This clip is rooted in “democratically elected leaders”. It’s quite fitting in the sense that, there are tensions with the recent elections in Afghanistan.

You may wonder about the economics of the clip. Economists are present everywhere- division of tasks, hierarchy and voting strategies. Further, I think Dennis and the lady is a representation of Marx “mandate of the masses”.

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An Economic Perspective on Football Wisdom

What happens when Simon Kuper, a columnist at Financial Times, and Stefan Szymanski, an economist who specialises in sport get together and write a book? According a book review by the Economist, “they combine their skills to entertaining and mostly convincing effect” while exposing many common myths surrounding modern football.

It is often claimed that football supporters are die-hard fans. From the analysis of the authors it appears that only about half of English fans are likely to support the same team, explained by the fact that people are likely to move to other towns.

Another myth they tackle is that clubs cannot buy success. Here they report that almost 90% of the variation in position (in the league table) is explained by wage bills, and so they conclude that it is possible to buy success, as long as money is spent on wages rather than transfers.

Although there appear many more interesting results in this book (have to admit I haven’t read it, yet), it is clear that economic imperialism is going strong and entering new grounds. In the least, this book offers a fresh perspective on the always debated and never concluded sports wisdom.


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