Good & Expensive Gas

I am a student of economics. I believe that many of our issues in life can be attributed to economics. Obesity - cheap food. Pollution - unrecognized consequences (and thus no financial consequences). Waste - cheap whatever we are wasting. Lack of Education - cheap jobs. War - underpaid leadership. If things were to appropriately represent their cost and value then our habits would change as the cost of those things changed.

I know I may piss of people when I say this, but like mom or dad said, "You won't understand this until your older, but this is in your best interest." I am HAPPY to see the price of gas go up. We have gotten fat and lazy and because of this we are losing our edge. This "we" that I speak of is mostly aimed at the United States citizenry because that is where I see the consequences of cheap gas. Our electricity is cheap so we leave everything running all day long. Our gas is cheap so we drive down the street to the corner store and eat in our cars (with the AC on). So many things we do, just because we can.

Time.com wrote an article talking about 10 Things You Can Like About $4 Gas and the best part is that none of the things on the list even talk about the international politics or the development of technology.

Lets get on the ball people - accountability pays for itself in the long term - just like mom and dad said.

Economics in the 21st Century

Two separate articles caught my attention on a similar topic - our gaining intelligence in the world of finance and economics.

The first involves a new breed of websites like Prosper.com (by the way I happen to be a lender on this website) which is a peer to peer lending website. Peer to Peer Lending is a form of lending that brings the lenders and the borrowers directly in contact with each other, removing the banks from the equation. The purpose of banks are to use their expertise to do exactly what these sites are doing - find people with capital to invest and find those with a need for loans and then, using their ability to value risk, make loans that bring profit to everyone involved. The study, titled "The Democratization of Personal Consumer Loans?", showed that lenders might be benefiting more from these sites because of higher rates of return than their traditional manner of savings and that borrowers might be benefiting more because of lower rates of interest that are available.

For those of us who believe in The Long Tail this is simply a logical procession. Banks came into being because they were needed - how do we pool resources and find people needing loans on a widespread area? For those of us who have learned to save (and there aren't many) the benefits of long-term compounding interest are significant.

The second article that I found speaks of altruism and how it applies to Economics.

"Sam Bowlers...points to new experimental evidence that people do often act against their own personal self-interest in favor of the common good, and they do so in predictable, understandable ways. Poorly-designed economic institutions fail to take advantage of intrinsic moral behavior and often undermine it."

Our default view on human beings is that we are all self-interested, short minded beasts looking out only for number one, and to a certain level there is some truth to this with a lot of people. But wonderfully things like morals have been ingrained in our culture and society and these things greatly affect how we choose to act. Of course you can argue that that those of us who are following morals are acting in our own interests as we are attempting to help ourselves in the long term by impressing our friends, making ourselves happy, doing it for our religious reasons or a million other excuses - but I see it being closer to human beings looking to benefit their society, which over the long term, benefits them. So long term self beneficial altruism?

A certain phrase comes to mind - "A rising tide lifts all boats."

A Whole New Set of Problems

Mauritius: Call-Centre And BPO Sector Needs Lower International Bandwidth Prices to Stay Competitive

The "great" thing about this article is that the reason for stress here is that competing in the international business world is the greatest concern. Mauritius is a island nation located off of the coast of Madagascar in the Indian Ocean which itself is a much larger island nation located off of the coast of southeast Africa.

"Bandwidth is the petrol of the new global economy and as the price of actual petrol continues to go through the roof, it is an essential component of being able to sell "smart exports" based on "think-work" rather than simply minerals, produce or tourism."

Getting into these "smart exports" for a nation that is lacking in resources, land space or the traditional development path seems to be a very intelligent way to go - Hong Kong, Taiwan and Singapore focused on education, services, exports to wealthy nations and high tech manufacturing to make their moves.

With internet cables being run all over the world there are going to be quite a few groups who will have the potential to create whole new paths to development. Skip the manufacturing and head straight to the knowledge economies. Might we skip the ravaging of the environment that occurs as so many countries develop? And since one key of the knowledge economy is that the populace must be decently educated and one potential trait is a generally higher standard of living- might there also be lesser political strife with that combination of education and wealth?

This is the firt time human beings on Earth have ever developed this world. This is the first time we have built out this planet. This is the first time we have done any of this. You and I are both part of the experiment.

The Economics of Now

I read an article recently, it was titled, "Why the debt crisis is now the greatest threat to the American Republic."

There was one particularly sobering paragraph...it finished with this:

"The historian Thomas E. Woods, Jr., observes that, during the 1950s and 1960s, between one-third and two-thirds of all American research talent was siphoned off into the military sector. It is, of course, impossible to know what innovations never appeared as a result of this diversion of resources and brainpower into the service of the military, but it was during the 1960s that we first began to notice Japan was outpacing us in the design and quality of a range of consumer goods, including household electronics and automobiles."

This is an interesting paragraph...and one VERY large rebuttal is that there are quite a few things that have come from that un economically thought out spending that went on and is going on.

But is must be understood that we have sold off the long term in exchange for military might. Our education and infrastructure has crumbled.

Our lack of focus is causing the world significant harm.

The Economy Will Continue On

"Second-lien Loans" are the new group of buyers who are going belly up. These people were getting another one of the magic variants that drove the markets in the past few years. A couple of points about these loans that gives me a bit of solace - 1. There were far fewer given out than the prior ARM sub-prime loans that went crazy (and still are to this day). 2. The rate of default is relatively low. I am hoping this is the first half of the big curve and not some very early beginning to the slope upward on the rate increase chart. Our economy has weathered a lot. The rate of increase on the defaults is still increasing but an end is already seen. The market needs to react. It has overstepped itself a bit. Let it cool.

Then buy. As always.

China - Good Lord

I don't believe we individual citizens of the USA give China the appropriate attention. Recently it executed its former "chief drug regulator" for taking bribes and allowing them to fall into the current international furor related to fake products. The government stated the individual had taken bribes in and allowed "six types of fake medicines" to be approved. The interesting part of the whole issue, to me at least, was the response by China to this issue.

1. They did EXECUTE the person who the blame was placed upon. Now, take this with a grain of salt, in that complicity of an issue like this is far greater than a single individual. There were hundreds, if not thousands, of people in government who probably knew of the issues and that doesn't even count the people who were actually making the fake products. This person was executed as an example.

2. One particular set of words stated was that by 2010 China would have markedly increased its ability to monitor fake products, but that it would take at least five years (2012) for them to make a serious dent and be able to control their manufacturers. The acknowledgment of the issue. The realization of the significance of the issue. And the measured reaction that shows a considerable understanding of the situation. With the MONTHLY surplus of goods traded to the US topping $26 Billion, and the legislative branch of the US fighting for the yuan to be let free to trade in the international monetary markets, China must take action in order to feed it machine.

As a good friend of mine tells me continually, the Chinese history is full of ups and downs and the US is still Number 1. As I tell my friend, do not let that history satiate you adn make you lazy. The Chinese are serious about this world. They are going to be the largest economy in the world. I recently read an article where a comment was made about the inroads that Chinese politicians have made in Asia and the reactions by the peoples there. A particular quote stood out that went something like -

China's Asian partners see the United States as a passing fancy. The US has only been around for about 200 years. China has been here for 3,000 years and they expect China to be here for another 3,000 years.

This is a grand world we live in. Down with the Humans! Long live the Humans!

The Lard of the Land

The Food Supply will Change

"Rice prices are climbing worldwide. Butter prices in Europe have spiked by 40 per cent in the past year. Wheat futures are trading at their highest level for a decade. Global soybean prices have risen by a half. Pork prices in China are up 20 per cent on last year and the food price index in India was up by 11 per cent year on year. In Mexico there have been riots in response to a 60 per cent rise in the cost of tortillas."

What this really means for us is that economics is coming back into play. Maybe this is the best thing for our obesity problem. Life in this universe wasn't designed. It comes through struggle against the continual oncoming rush of entropy in the universe. Change is the only real constant. Maybe we should eat a little less. Maybe we should save some of that food for a meal later on. Maybe we should be a little more mindful.

$465 Billion Dollars ($465,000,000,000)

What would you do with $465 Billion dollars? The Boston Globe put together some pretty pictures.

You really don't even have to read much to get the point here.

Charity As it Should be Done

Kiva is something I have harped on in the past (here and here). I like it because it allows me, on a very micromanaged level, to choose how I wish to develop the world within a set of pre-chosen receivers. Kiva gives me a list of potentials who would like to receive a loan and it gives me a description of them. What there busness will be. A very slight snippet of their life. A talk about where they live. And possibly something of their ambitions. I donate there because I trust. Yes, I do know there are potential risks associated with giving money to groups in far away countries (419) but the risk of me losing my money versus a single individual losing the potential of a proper existence doesn't compare. I like giving. It makes me feel a little more relevant. It almost makes me feel as if I am, in some way, part of the solution. Ode to my emotions...as wild as they might be.

One thing I hear a lot from people is that they don't give because they think their hard earned money will go to inefficiency. Most people don't mind paying taxes. They receive services as a result - roads, police, protection from foreign invasion all the way down to social security, a certain level of available public health and a space program. I like to pay my taxes when I see the deal I get is worth it. I have in the past not donated to churches or groups like the Red Cross because of all of the lacking care I see in spending my money. How much money goes to pay for the executive's suite or the pretty leather chairs located in the Manhattan offices of whomever is collecting my hard work? I work hard and sacrifice for that money and as a result, I want it to be looked at and cared for in a similar manner as I do my own money. That money represents my productivity in life. In the American economy that I exist in, it represents my life's work (in the working sense of the word, my life will one day encompass helping the future of my planet through the raising of healthy children one day). It does matter.

What I would like to see created (or, lord knows, help create) is a tool, similar to Kiva in a few ways, to allow me to donate money to groups like the Red Cross but to donate money only to very specific places and parts of that process. I do know on the Red Cross' website they allow for you to specify where your donations go on a very high level (for instance when the Asian Tsunami destroyed so many lives I was able to choose from a drop down menu where I wanted my money to go). But that isn't enough for me. I want to be able to choose to allow my money to go specificially for the blankets of a child in a hospital located in Indonesia or the formula for a baby in the Sudan. Let every cost that is associated with a particular project around the world be paid for on an individual level. Quite possibly we might not choose to give money to the salaried employees of these groups, but I have a feeling that over time these positions will whither away as the collection of monies becomes automated and private enterprise then steps in. If I have chosen to pay for the blankets and you choose to pay for the air transportation from the factory that makes said blankets then what else is needed? I know that is an oversimplification but the world can be that easy if the time is taken in terms of programming the software and the end users appropriately invest their time.

Hospitals in Jakarta should explicitly define their needs. Locals associated with the website should invest their time to check up and verify the quality of the work done by the group and that the product is being appropriately applied to where it is needed. yes, there will always be risk but that is part of the equation when knowledge isn't perfect.

Just an idea at a loony hour of the weekend.

World Economic Movement

U.S. Stocks Gain, Erasing Losses From Rout, on Profit Optimism

G-7 Confident Global Trade, Growth Gaps Shrinking

The US stock market seems to keep pushing upward. The companies keep reporting profits that are increasing. Unemployment seems to be holding steady and possibly dropping from historic levels. Even with all of our issues we are maintaining a solid long term growth.

The world's economy is now pulling the US along a bit. The regions are starting to grow in significance. The world is no longer so influenced by the movement of one country. A multi pole universe will lead to a greater amount of stability and growth. Hopefully people will live better lives...

`Reassuring'

First-quarter earnings among S&P 500 companies probably rose 3.1 percent, ending a 14-quarter streak of at least 10 percent growth, according to analyst estimates compiled by Bloomberg. That streak is the longest since 1950.

Full-year earnings growth may slow to 6.2 percent, before reaccelerating to 10.9 percent in 2008, analyst estimates show.

The World Economic Tail

Kiva – The purpose of this website is to help The Long Tail of the human race to develop. The idea of Kiva is based upon MicroEconomics (a recent winner of the Nobel Prize solidifies the world opinion of microeconomics – it is here to stay, at least for a while).

I have always thought that helping out people far away was good. But I never really put the numbers to it.

Lets say (all of these numbers come from the CIA Factbook..heh)…

(Notable issue with numbers – nothing reported for the Vatican City)

US Economy = $12,982,323,352,500/year
World Economy = $79,422,560,891,818/year
Per Capita World: $11,327
Per Capita US: $43,500

If we remove 300,000,000 Americans from the math we are left with:

World Population = 6,712,879,586
World Economy = $66,440,237,539,318/year
Per Capita = $9,897

If we remove the top 40 countries, we are left with…

World Population = 5,619,236,117 (80% of the people)
World Economy = $32,895,685,600,218 (41% of the business)
Per Capita = $5854.12


Imagine…bringing up the poorest 80% of the world simply up the to average of the entire world ($11,327)…

80% at $11,327 = $63,653,332,143,109


New Grand Totals
World Economy = $110,180,207,434,709
Per Capita = $15,714

The world Economy grew 72%. Even the rich should want this…

That is the spirit baby!

http://www.latimes.com/
"Even though I had a good job, I was tired of living paycheck to paycheck
and not making any headway with my credit cards," he said. "I've learned
that I can push myself, break down my own boundaries. I've been able to
learn that I can change and adapt to different kinds of situations."

Why Social Security "disappearing" in 40 years doesn't worry me.

I won't need it. Simple answer - technology. In 1900 the average age was 47.* Today greater than 75 in America. The world changes. By the year 2040 I am thinking that at the age of 71 I will be going strong and I won't tap into my $$ until I am ready to retire around 85 or so. Cus I will still have another 15 years to jack around playing golf after that. At least. Additionally, the quality of the medical help will be of a different sort as we learn to use robots to do the busy work and allow our professionals to really take care of the people and the pressing needs. The quality of life is always improving. We learn to do things better all the time.

I do actually believe in a small central government and strong state governments, as our states are now turning into mini economies all their own (CA would be the WORLDS 6th largest). The variety is what allows for growth and change and mix. The freedom to move among is what keeps it fresh.

*Source: The Mercury, 11 November, 1997, p.26-27