let them eat (stale) cake

Much of the world is mourning the tragic losses endured by millions of Haitians these past weeks.  But last Sunday, millions of Americans set aside their concern for several hours to cheer their favorites in the NFC and AFC championships (I was among them).

If you felt a little guilty, here’s something to soothe your conscience: According to the Minneapolis Star Tribune, the NFL is donating to World Vision’s Haiti relief efforts about $2 million of merchandise bearing the names of the losing teams.

Please understand, World Vision is a great organization that does amazing work in the U.S. and around the world.  I support their work philosophically and financially.  I give them kudos for helping to turn this negative into a positive. 

But, really! Can you picture thousands of Haitians running around next month with shirts and caps declaring the 2010 championship status of the New York Jets and the Minnesota Vikings? It is difficult to think of a more striking image of the disparity between Americans’ values and priorities and the world’s condition.

Let’s do the math. 

First, the football games:

• The one-year-old, $720 million Lucas Oil Stadium in Indianapolis holds 63,000, while the Louisiana Superdome holds 69,000 (except during a hurricane, when its capacity drops to 30,000).  That’s a total of 132,000 seats.
• At a conservative estimate, ticket prices averaged $250 (the low end of the secondary market), so fans spent at least $33 million just to get in the door.
• Add to that parking, concessions, souvenirs, etc., and the event easily cost spectators $50 million.
• But wait, many traveled from their home town to be there.  Let’s say one-fourth of the spectators spent $2,500 in travel expenses: Another $82.5 million.

Grand Total for Those Attending the Games: $132.5 million.

Now let’s look at Haiti (pre-earthquake):

• Roughly 9 million people; 80% live in poverty, 54% in abject poverty.
• Two-thirds of Haitians depend on agriculture, severely set back in 2008 by four major tropical storms;
• Haiti’s Gross Domestic Product (GDP): $11.6 billion annually
  • That is $32 million per day – for the nation;
  • Per Capita, that’s $35/day (about $1,300/year);

Hmmmmm.  Looks like 132,000 Americans (1.5% of Haiti’s population), for a four-hour event, spent more than the entire country of Haiti produced in four days – before the earthquake.

And we will do it all again this Sunday– and  next — only bigger and better.

Don’t get me wrong — I like football — and I think it’s great that those shirts and caps will be given to people instead of thrown in a landfill.  But $2 million of discarded clothes from our Sunday sports worship services are just crumbs from our table.  Imagine what would happen if we invited our Haitian neighbors to join us at the table; or at least saved them a seat in front of the plasma TV.

What do you think?

1. Should we be concerned about the economic disparity between the U.S. and other countries, such as Haiti?

2. How can we share more than our scraps with the rest of the world?

By the way, I learned that the NY Jets have a fan club called “Gang Green.” Ironic. Sad.

Jeffrey Lundberg is founder and President of ENTERCHANGE, a fresh voice among leadership and organizational consulting firms.  ENTERCHANGE builds healthy, collaborative organizations with visionary leaders. Learn more at www.ENTERCHANGE.us

Haiti facts source: https://www.cia.gov/library/publications/the-world-factbook/geos/ha.html

[Via http://give4good.wordpress.com]

Friday morning corruption watch

http://thehill.com/homenews/administration/78509-after-obama-rips-k-street-administration-invites-lobbyists-to-private-briefings

Some lobbyists say they are extremely frustrated with the White House for criticizing them and then seeking their feedback. Others note that Democrats on Capitol Hill constantly urge them to make political donations.

One lobbyist said, “Bash lobbyists, then reach out to us. Bash lobbyists [while] I have received four Democratic invitations for fundraisers.”

Me:  Addicted to cash.  Good stuff.

[Via http://thecrosspollinator.wordpress.com]

Disappointing Economic Data Push Markets Lower

Shares on Wall Street slipped in early trading Thursday as upbeat earnings failed to offset uncertainty still swirling around government involvement in the market and disappointing jobless and durable goods orders reports.

Markets also declined in Europe after shares finished higher in Asia.

Politics, not the economy, had been dictating trading over the last week. Concerns about President Obama’s plan to overhaul banking regulation and restrict trading at large financial institutions spooked the market. The possibility that the Federal Reserve Board chairman, Ben S. Bernanke, would not be confirmed for a second term had investors on edge, though those worries have subsided. Stocks have declined five of the last eight days.

During his State of the Union address Wednesday night, Mr. Obama avoided talking about the banking overhaul plan. Uncertainty over details of how that plan might be enacted and how strong trading restrictions would be had helped push the market to its worst three-day stretch since stocks bottomed last March.

Focus on the economy is creeping back to the forefront. The Fed said Wednesday afternoon it would keep interest rates at historic lows and the economy was showing signs of improvement. That helped stocks rally late in the day.

Investors welcomed a new round of earnings Thursday that showed signs of a strengthening economy. However, the Labor Department said weekly jobless claims fell by less than expected last week and the Commerce Department reported durable goods orders did not rise as fast as anticipated last month, providing a reminder the economic recovery will probably be slow.

In late morning trading, the Dow Jones industrial average fell 167.77 points, or 1.6 percent. The Standard & Poor’s 500-stock index fell 17.84, or 1.6 percent while the Nasdaq declined 51.98 points, or 2.3 percent.

In London, the FTSE 100 index was down 24.41 points, or 0 no faxing payday loans.5 percent, at 5,193.06 while Germany’s DAX fell 52.81 points, or 0.9 percent, to 5,590.39 The CAC-40 in France was 37.15 points, or 1 percent, lower at 3,723.65.

In Japan, the Nikkei 225 stock average rose 162.21 points, or 1.6 percent, to 10,414.29 and Hong Kong’s Hang Seng added 323.30 points, or 1.6 percent, 20,356.37. Shanghai’s market was up 0.3 percent, Australia added 0.6 percent and India’s index ticked up 0.1 percent.

The Ford Motor Company said it recorded a profitin 2009 — its first annual profit in four years. The auto maker, which avoided bankruptcy and government bailout money, said it expected to again be profitable in 2010.

The consumer products makers, Colgate-Palmolive, and the Procter & Gamble Company both said quarterly sales improved as consumers continue to spend on necessary goods. The two reports topped analysts’ expectations.

The pharmaceutical company, Eli Lilly & Company, recorded a profit during the fourth quarter as sales of its two top-selling drugs rose sharply.

And AT&T’s profit was in line with expectations, though the telecommunications company added a near-record 2.7 million wireless customers.

New requests for unemployment benefits fell modestly, dropping to 470,000 last week. Economists polled by Thomson Reuters had been expecting a bigger drop to 450,000 new unemployment filings.

Orders to American factories for big-ticket manufactured goods rose less than expected in December, increasing just 0.3 percent. Economists had been expecting a 2 percent increase in orders.

For all of 2009, durable goods orders — items expected to last at least three years — tumbled 20.2 percent. It was the largest drop on records that go back to 1992.

Disappointing Economic Data Push Markets Lower

[Via http://emmanews.wordpress.com]

Housing Index

Take a quick look at this link.  The index tracks home sales over time using the “sales pair” method.  It tracks the changes in price of given units over time between sales.  Check out the methodology section for additional details.  The following is a graphical representation of the data.  We will use the data available to demonstrate the concepts of demand and supply this evening.

[Via http://pinchmehard.wordpress.com]

FED SHRED

WHOA!!    I just had a close encounter with a ‘mommy blogger’.  What the hey was that?!?  It scared the you-know-what outta me (the swirling vortex of the mundane and all) and I decided I’d better get my nasty back on!  Time to shred the Fed!!

It’s what I do.

First up, let’s review everything that’s been happening these days.

1) The deal that was made betwixt the NY Fed, AIG, and Goldman Sachs is slowly coming into the cold, harsh light of day.  It does not look good for Paulson–YES!!

2) Darrel Issa, ranking republican on the house oversight committee, has called lil’ Timmy Geithner in for a meeting Wednesday before the hearing on the AIG bailout.  Issa smells corruption!  Issa is mad!  Issa is rockin’ awesome!!

3) TARP cop Neil Barofsky is opening–count ‘em–TWO investigations into possible insider trading on the part of former NY Fed chair Stephen Friedman, a story broken on Daily Bail.

4) The white house is having a bit more trouble than anticipated garnering support for the reappointment of Ben Bernanke to chair of the Federal Reserve.  Ya think?  If those corrupt and/or stupid senators KNEW the lousy job Bernanke has been doing, they’d kick him out on his keister pronto.  The fact that they are coming around–well, sort of–one by one is good, yes, but IMHO, this should be a resounding “NO” vote on Bernanke’s reappointment.

5) Fight!  Fight!  Between an economist bully pseudo intellectual and the people who actually have to PAY for the dopey ideas he espouses.  It involves food, too!!

6) This one is too awesome to let fade away.  Arianna Huffington gets a proper smackdown by none other than your humble kitty blogger.  Scroll down for full impact.  Believe me, it was ALL my pleasure–well and truly.

Will Martindale at Let Them Fail has a great list of links up, too (his are all Fed related).

Second up–the schedule of fun:

1) THE HEARINGS–today–watch them live either on CSPAN or here at Daily Bail.  Guaranteed high drama!!

2) Bernanke’s re-confirmation.  Vote is planned for tomorrow (Thursday).  Harry Reid is still scrambling to get ‘yes’ votes.  Call some senators now and tell them to vote no!!

This is a big BIG week for the potential strides of liberty and independence from the Federal Reserve, a private bank that has complete and unconstitutional (yet legal) control over our currency.  Fiat money and fractional reserve banking are ruining our economy, people.  Wake up and take control back!  It should be in the hands of congress, whom WE control (or at least have the opportunity to control) via the voting booth.

Primer on the Federal Reserve here.

[Via http://sonicninjakitty.wordpress.com]

Is Wal-Mart killing Christian book retailers?

Maybe it’ll seem odd, but I’m on the Christian bookseller side of this thing. Walmart is a growing shit stain in a retail world already full of crap. The crap involved in this case is Sarah Palin’s self-gratifying brag book, Going Rogue, which normally retails around $28 that Tennessee Walmarts (and others) are or were selling for $9 recently. A Christian bookstore in Nashville is feeling the pressure, willing to sell their books at cost, but can’t afford to go lower. Customers are discount whores, of course.

Christian retailers believe these extreme discounts are illegal and could drive them out of business, and they’ve asked the government for help. Recently, the Christian retail trade association known as CBA filed a complaint with the Justice Department, accusing Wal-Mart, Amazon.com Inc. and Target Corp. of predatory pricing.

“What happened was that giants were fighting the battle and the little guys were getting trampled,” said Eric Grimm, business development manager at CBA, formerly called the Christian Booksellers Association.

Grimm believes that the price war violated fair trade practices laid down by the federal Robinson-Patman Act. “We think their intent was to dominate the market with predatory pricing,” he said.

But the major retailers deny they’ve done anything wrong.

Greg Rossiter, spokes man for Wal-Mart, said the retailer was giving customers what they wanted. He said the sale was a good business practice.

“We are committed to providing our customers the best prices possible,” he said.

When asked if Wal-Mart sold the books at below cost, Rossiter declined to comment. “We don’t get into the pricing strategy for specific products.”

Of course they don’t. Basically it works as follows – Walmart is such a large company capable of such large orders that it can demand to buy copies of books (or anything else) at a reduced bulk cost that no other company would have the stones to demand and these companies are stuck with it because a) they want to sell the shit and b) they don’t want to piss off Walmart to a point where they never buy from that company again. Walmart has gotten very good at gauging what items are going to be good sellers and they are willing to sell those items below cost at a loss because they know their customers will buy other (+28% above cost) things during the same trip to the store. This kind of “loss leader” approach isn’t illegal but it always damages smaller competitors who unable to provide the same deals and still stay afloat.

Mark Kuyper, president of the Evangelical Christian Publishers Association, said the Christian publishers abide by the Robinson-Patman Act rules. But they have no control over the pricing in stores. And publishers get paid the same wholesale price, no matter what the stores decide to charge for the books.

“We can’t really tell a retailer how to run their business,” he said.

It’s really up to customers to do that.

The article also suggests that “offering such low prices will devalue books in the minds of consumers.” I don’t think that’s the case. Cheap books means more people can afford to buy and read them. I think literacy is so important and it’s great that books can be this affordable.

That said, I think if people really start demanding cheap books, it means publishers will resort to making more books cheaply. And I think a lot of publishers have already gone that route, judging by what the library receives when it orders. Thin book jackets, poor binding, bad glue jobs, crappy cut paper jobs. We had one book that recently made it onto the shelves with 35 pages not included when they bound it. At least someone wanted to read it, which is why the missing pages got noticed. I think many publishers are cutting costs left, right and center and will continue to do so, or risk going out of business altogether.

I think what also concerns me is a future where retail giants like Walmart are the ones who dictate what people should read. They only supply certain titles to their shoppers as it is, so what happens to publishers that Walmart doesn’t support? If independent book sellers are shoved out of business, the only books people will be able to get will be Walmart-approved books and I don’t like that idea at all. That’s not a free press world.

I don’t think I want to see every book go digital either. I’m in no mood to read on a Kindle. I want the smell of a book, the sound of pages flipping, the feel of the ink on my fingers. I want the Printed Page Experience in all its glory.

Walmart and others like it will continue to offer what they’ve got for as cheap as they can sell it. Customers will have to decide what they want to do about that.

[Via http://1minionsopinion.wordpress.com]

Discover your Genius Potential and Master Information Overload with PhotoReading

Professionals everywhere are rushing to learn PhotoReading Whole Mind system to get on top of information overwhelm. Learners will have the opportunity to learn how to get their reading done and to improve their memory and understanding nursing course distance.

FOR IMMEDIATE RELEASE

Log-PR (Press Release) – January 24, 2010 – PhotoReading participants will learn about their brain capacity of information processing power than they imagined. In short, PhotoReading is the door to developing your natural genius ability.Millicent St. Claire, PhotoReading Instructor and trainer High will host a public seminar to be held March 5-7 PhotoReading May 2010 at the Westin Hotel Airport Atlanta. This course is an intensive weekend and participants to experience a real party learning that their perception of themselves as "stressed or slow readers is processed.The course begins on Friday evening from 6:00-9:00 Saturday 9:00-7:00 Sunday 9:00-6:00 pm Graduates of love so that they are invited to review the course again and both deepen their skills and share their progress with beginners. This is a unique one of a nature trail that has practical value and use daily. The seminar is a fine investment and is open to the public.For registration details visit: http://photoreadingatlanta.eventbrite.com/Readers learn to use some of the deepest inner mind to more efficient processing of information. • "A breakthrough method using your subconscious" wrote Success Magazine • "A shovel for the mountain of paper" wrote The Business Journal • "The right brain reading lifts information overload" wrote Calgary Herald • "Books are Now as snacks! – Alisha Hurdle College StudentThe PhotoReading Whole Mind System is a revolutionary way to deal with loads of information in record time and was developed by Paul R. Scheele of Learning Strategies Corporation, Minneapolis, Minnesota and has been around since 1996. http://www.LearningStrategies.com/Millicent St.Claire issue a PhotoReading seminar, interactive, energetic and highly transformational. PhotoReading is his preferred term staff and will be yours too "There is

[Via http://tvidter.wordpress.com]

China’s Currency Policy

China’s Currency Policy

I saw an article on January 21, 2010 by Wharton’s on Chinese currency policy which stated that, in the long run, it is beneficial to China if it allows RMB to float over time. New York Times’ Krugman also warmed that China’s currency is predatory.

I don’t think that’s a good idea.

Critics say that a fixed-currency policy makes Chinese goods artificially cheap on world markets; helps China grow its exports and reduce its unemployment rates. However, these critics argue that this is unfair to competitors in other countries. They say that people buy Chinese goods because it is cheap, not because it is the best.

China is doing that because China is looking after its own interests. And what’s wrong with that? Every country does the same thing.

The other argument against an artificially low currency is that it feeds into inflation. But the central bank can adjust the exchange rate when it sees fit if it deems a stronger RMB is necessary. Raise RMB’s value by 20 to 30% as suggested by many experts means that China’s exports will suffer resulting in higher unemployment rate in these industries. This may cause social upheaval which is highly undesirable when export has down by as much as 30+%.

Keeping RMB low also resulted in huge foreign currency reserves being held by the Chinese government. As such, it helped to lower the interest rate in the United States which stimulated American’s economy. Without a lower RMB, hence a lower interest rate, America’s economy will suffer even more than it has been in 2008 and 2009.

Some experts argued that a higher RMB will reduce trade surplus with the US and create America jobs. But Americans have to pay more for goods at Wal-Mart if RMB is allowed to strengthen. Is that what Americans really want?

I think the biggest reason why China didn’t want to float its currency is this:

Allowing RMB to float freely means that Chinese government has to hand the control of its currency to currency traders and foreign central banks. No matter how much foreign reserves a country has, it is hard to compete with currency traders to manipulate its currency on the open market.

Look at Japan, its currency is so strong it practically killed its export industries except a few that have dominated the world market such as auto, electronics and a few others. It can not compete in many other industries which partially contributed to its stagnant economy and higher unemployment rates during the past 20 years. Japan has limited options to change its currency in order to compete with foreign countries. In this regard, the U.S., British, France and Germany were the key architects who through coordinated effort (The Plaza Accord) forced Japanese Yen to strengthen in the early 1990’s.

As a result, the Japanese economy crushed in early 1990’s and has suffered its worst set back since after WWII till this date.

China is determined not to follow Japan’s footsteps.

[Via http://hslu.wordpress.com]

One quarter of US grain crops fed to cars - not people, new figures show

New analysis of 2009 US Department of Agriculture figures suggests biofuel revolution is impacting on world food supplies

John Vidal | environment editor

guardian.co.uk | 22 January 2010

One-quarter of all the maize and other grain crops grown in the US now ends up as biofuel in cars rather than being used to feed people, according to new analysis which suggests that the biofuel revolution launched by former President George Bush in 2007 is impacting on world food supplies.

The 2009 figures from the US Department of Agriculture shows ethanol production rising to record levels driven by farm subsidies and laws which require vehicles to use increasing amounts of biofuels.

“The grain grown to produce fuel in the US [in 2009] was enough to feed 330 million people for one year at average world consumption levels,” said Lester Brown, the director of the Earth Policy Institute, a Washington thinktank ithat conducted the analysis.

Last year 107m tonnes of grain, mostly corn, was grown by US farmers to be blended with petrol. This was nearly twice as much as in 2007, when Bush challenged farmers to increase production by 500% by 2017 to cut oil imports and reduce carbon emissions.

More than 80 new ethanol plants have been built since then, with more expected by 2015, by which time the US will need to produce a further 5bn gallons of ethanol if it is to meet its renewable fuel standard.

According to Brown, the growing demand for US ethanol derived from grains helped to push world grain prices to record highs between late 2006 and 2008. In 2008, the Guardian revealed a secret World Bank report that concluded that the drive for biofuels by American and European governments had pushed up food prices by 75%, in stark contrast to US claims that prices had risen only 2-3% as a result.

Since then, the number of hungry people in the world has increased to over 1 billion people, according to the UN’s World Food programme.

“Continuing to divert more food to fuel, as is now mandated by the US federal government in its renewable fuel standard, will likely only reinforce the disturbing rise in world hunger. By subsidising the production of ethanol to the tune of some $6bn each year, US taxpayers are in effect subsidising rising food bills at home and around the world,” said Brown.

“The worst economic crisis since the great depression has recently brought food prices down from their peak, but they still remain well above their long-term average levels.”

The US is by far the world’s leading grain exporter, exporting more than Argentina, Australia, Canada, and Russia combined. In 2008, the UN called for a comprehensive review of biofuel production from food crops.

“There is a direct link between biofuels and food prices. The needs of the hungry must come before the needs of cars,” said Meredith Alexander, biofuels campaigner at ActionAid in London. As well as the effect on food, campaigners also argue that many scientists question whether biofuels made from food crops actually save any greenhouse gas emissions.

But ethanol producers deny that their record production means less food. “Continued innovation in ethanol production and agricultural technology means that we don’t have to make a false choice between food and fuel. We can more than meet the demand for food and livestock feed while reducing our dependence on foreign oil through the production of homegrown renewable ethanol,” said Tom Buis, the chief executive of industry group Growth Energy.

[Via http://alethonews.wordpress.com]

A Cooperative Business Model

My, my. It has been a long time since I’ve posted, hasn’t it? Well, here’s one for you: cooperative business models.

Business in the West has traditionally been seen to be competitive. And it is, of course, to a certain degree. That’s even healthy, of course—to a certain degree. As Pope Pius XI taught us, competition “within certain limits [is] just and productive of good results” (Quadragesimo Anno, p. 44), and no distributist would say that all competition has to be done away with. However, Pius XI also taught us that competition “cannot be the ruling principle of the economic world” (id.), and it’s here that distributists generally part ways with their capitalist confreres on this issue.

How, after all, is innovation and development supposed to occur without competition, the capitalists ask? Without the incentive to beat out their competitors, why would anyone devote money, time, and expertise to solving problems? And if people aren’t devoting these thing to solving problems, how can we expect any industry to advance? Do you want us all plowing with wooden shares on inadequately rotated crops again?

To which the distributists can cite any number of examples, many of which have been cited to directly on this site. One that’s often neglected, however, is one that’s at the forefront of one of the most innovative and quickly-changing industries in the world, computers and the software that runs them. So for purposes of this brief article, I will respond to this capitalist argument with one simple word: Linux.

GNU/Linux, actually. It’s by now a well-known phenomenon that has been enormously successful in the computing world, effectively competing with the likes of Sun Microsystems (once an industry powerhouse with its SPARC servers and Solaris operating system; now much reduced, being purchased by database company Oracle), Microsoft, IBM, and Hewlett-Packard. A clone of Unix, versions of which were sold competitively by IBM, HP, AT&T, Sun, and other companies, GNU/Linux has overtaken all of them.

GNU/Linux is used on an incredible 443 of the top 500 supercomputers in the world. It has become by far the most dominant system in this field. Of the top ten most reliable sites on the Internet in December 2009, six were running some version of Linux. (Two more were running FreeBSD, another free operating system; only one was running a Microsoft server.) Despite being powerful enough to run the world’s supercomputers and the world’s most reliable web servers, it’s still versatile enough to be a strong competitor in the smartphone market (Google’s Android, for example, is based on Linux), and it’s got a small but not negligible share of the desktop market, as well. (The author uses it exclusively himself.)

Whether Linux is better or worse than its competitors is beside the point here; what’s significant is that it is a competitor, and that much no one can deny. How did it get to be such? How did Linux become such a significant player in such a wide variety of operating system markets? Surely it must be by the most cutthroat of competition, doing whatever it can to outsmart and outplay the other players in the field?

No. It did so by cooperation.

It was recently announced by the kernel community (Linux is, technically, a kernel, or the central core of the operating system; in other words, the part of your operating system that interacts directly with the bare metal of your hardware) that a full 75% of developers of the Linux kernel are paid. This is a big deal for a kernel that started out almost twenty years ago with a guy in his dorm room coding an operating system for fun. Red Hat, a Linux corporation, unsurprisingly contributed the most code, some 12%. But Intel, the chip manufacturer, contributed 8%, IBM and Novell contributed 6% each, and Oracle contributed 3%. Some of these companies, like IBM, produce competing operating systems, or once did. Most of them are competitors of each other; for example, Oracle produces its own Linux distribution (Unbreakable Linux), as does Red Hat (Red Hat Enterprise Linux) and Novell (SUSE Linux).

This may bear some explanation. Linus Torvalds, the original coder of the Linux kernel, is still in charge of its development. He is paid by the Linux Foundation, a non-profit which is contributed to by many corporations, from IBM to Google. When people contribute to the kernel, it’s vetted by a huge number of coders and others, until it’s finally (if it’s good enough) approved by Torvalds and put into the kernel itself. Once it’s there, it’s available to everyone on the planet to use as they will. Really; once it’s in the kernel, anybody can use it for whatever they want, as long as they don’t prevent anyone else from doing the same. So when IBM contributes to the Linux kernel, its competitors can take the contribution and use it to compete with IBM. And yet they continue, year after year, to contribute a large part of the improvements to the Linux kernel. And their competitors continue to do the same, even though they’re fully aware that IBM can turn around and use that contribution to compete with them. Essentially, each of these companies, when they contribute to the kernel, is assisting its competitors. This, according to the competition-uber-alles argument, makes absolutely no sense.

These companies have every incentive to improve their product and leave the others in the lurch. So why are they contributing to the Linux kernel, which make all their improvements to that kernel available to all of their competitors?

The simple answer is that doing so makes the world better for everyone.

Companies contribute to the kernel because not only do other companies get the benefit of their work, but they get the benefit of other companies’ work. No one company could possibly have produced an operating system that scales from incredibly massive supercomputers to a cell phone that fits in my pants pocket. It couldn’t happen. It had to be done by an enormous number of developers, all cooperating on the same project; no one company alone could have paid them all. The Unix market was fragmenting and dying when Linux came along; the many different Unix vendors were killing one another by competing instead of cooperating. Linux changed all that; the Unix derivatives are now stronger than ever, and getting stronger by the day. Because companies are cooperating on it, rather than fighting about it.

Their incentive, in other words, doesn’t have to be beating out the competition; it can be making things better for themselves. Certainly, when a company contributes to Linux, it’s not being altruistic; it contributes because it knows that by improving the kernel, it’s making it more useful to others, who will improve it in turn, and that company will then get the benefit of that. And competition isn’t totally out of the picture, either; beating out Microsoft is almost certainly one of the motives that leads these companies to cooperate on the Linux kernel. But it’s not being solely competitive; it’s being cooperative, and competitive within proper limits. It’s recognizing that by cooperating with others to make a better product, it’s able to compete in other areas.

No distributist dislikes competition. But no distributist likes corporate throat-cutting, either. Sometimes competition just isn’t in the best interests of an industry; sometimes the improvement of the industry can only come from cooperation, rather than competition. The sooner many industries realize this, the better off we all will be.

Praise be to Christ the King!

[Via http://dgoodmaniii.wordpress.com]

Getting Superfreaky

I like economics.  Most of the time I don’t understand economics but I do enjoy the subject.  I learnt about it from two professors,  microeconomics from a wonderful old man and macroeconomics from a cantankerous old fool.  Hence while macroeconomics has always been a mystery to me, I know what’s going on in microeconomics and I’ve always found that half of the dismal science much more interesting.  That’s why the “Freakonomics” series appeals to me so much.  It takes microeconomics and just shows off just how cool it is.  I just finished “Superfreakonomics” by Stephen J. Dubner and Steven Levitt and I absolutely loved it.

“Superfreakonomics” was overall,  a very different book from its predecessor, with less of a focus on hard stats and more of a focus on coming up with counter-intuitive conclusions.  It got a lot of controversy when it first came out on almost every conclusion that the authors drew but especially for the chapter on global warming which we’ll get to later.  What I want to focus on is what I think the authors wanted you to take away from the book.

1.  Everyone Respond to Incentives

This is what they talked about in the first book as well and it’s also the first thing you learn in a microeconomics course.  Drawing on Levitt’s and other economists’ research, the two show how an unusual statistical correlation comes about because of an incentive in place that you probably never even thought about.  This point is driven home when they talk about the problems behavioral economists ran into when testing humanity’s inherent altruism.  In a lab, it appears as though humans are all altruistic but when you conduct the same sorts of tests in the real world, the lab results don’t hold up.  This is probably because the lab has incentives to keep people altruistic, such as the fact that a PhD is watching whether you’re going to be a jerk or not.  The authors come to the conclusion that people are altruistic when there’s an incentive for them to be altruistic.

Applying that idea, let’s talk about Haiti.  Recently I was in a grocery store which was running a charity drive.  They were selling books for a dollar each with all money going to the Haitian relief fund.  What incentives are at play here?  If somebody spots a book that they actually want to get then they’d probably be willing to pay much more than a dollar.  But whether they want to buy the book which is worth more than a dollar to them, or they to give their money away, in this situation you’re asking them for only one dollar.  Also, if they don’t spot a book they like, then they probably won’t donate any money at all meaning that there may even be a disincentive to donating money.  Needless to say, I don’t think this strategy is helping the Haitians.

I’d suggest implementing a strategy that some stores in South Africa use to great effect.  On every checkout counter put a small transparent box, half full of money and loudly proclaim that all money in the box is going to charity.  Whenever someone pays with cash, they get a handful of coins and that box becomes an easy place to dump them (Incentive 1).  Also it makes you feel good (Incentive 2).  On top of that, the cashier is standing right in front of you, watching if you’re going to donate anything or just be an uncaring jerk (Incentive 3).  And what do you do with the books?  Give them to a library, why are grocery stores selling books anyway?

2.  Think Outside the Box

I don’t know if this is the point that the book was supposed to make but that’s certainly what I heard, especially in the last two chapters where the authors talk about some simple, cheap fixes that solved seemingly insurmountable problems.  One of the chapters focused entirely on global warming and talked about the difficulties in our current strategies of reducing carbon emissions, how expensive it would be and how uncertain we are whether it would even be effective.  They use the parable of shit (a brilliant story found in the first few paragraphs of this article) to show how similar to the situation at the turn of the 19th century, we are confronting a massive problem and the best way to solve it is some sort of technological advancement that would make the problem go away.  This kind of technological advancement already exists, they say, and it’s called geoengineering.

Nobody is happy with this chapter.  Lots of people have written very detailed responses about everything that’s wrong with it.  I have two issues with these critiques.  First, why are people so mad?  The first time I heard about these solutions I thought they were awesome.  We pumped bad stuff into the atmosphere messing up the planet, why not pump some good stuff up there to fix it?  Apparently my reaction was shared only by the minority, with the majority gathering their pitchforks and deciding to raise some hell.  Is this how people are supposed to react to new ideas?  I don’t think anyone who picked up “Superfreakonomics” was expecting to see some concrete solutions to global warming, after all one of the authors is an economist, the other a writer and neither are climatologists.  I’m surprised people weren’t more amused by the chapter than inflamed by it.  It seems like even suggesting that there may be an easy fix to a this problem will get you in trouble.  Why?  I think a lot of that has to do with the way we talk about global warming and conservation in general.  The global warming problem seems to have taken on some of the rhetoric of religion with Al Gore as our savior and humanity atoning for its sins.  We harmed the planet, we’re guilty and we need to pay for our crimes.  It hurts to drive a Hybrid instead of a Hummer and not crank the heat up in winter and it’s easier to digest these changes when they’re not just conservation efforts but the penance that we must undertake.  If you’re saying that we can repent without it being painful, you must be wrong.

Either way, the second problem I have is that debating whether this chapter is the worst or greatest piece of global warming literature ever is completely missing the point.  While the critics do serve an important function, Levitt and Dubner probably weren’t trying to say we should go all out with geoengineering solutions which could significantly harm the planet.  They were pointing out that we’re becoming increasingly narrow minded in the ways we approach climate change and that other solutions can exist which we should be open to.  This isn’t true in just global warming but in many issues that we’re faced with.  It’s time we stopped acting like the world’s going to end and started figuring out what we can do to make it better.  And that doesn’t just mean banning trays at your school’s cafeteria or driving a hybrid.

[Via http://justlikewater.wordpress.com]

The New Republic Scores!

Terrific article in the left-leaning New Republic by a devout Obama supporter“John B. Judis is a senior editor of The New Republic and a visiting scholar at the Carnegie Endowment for International Peace”

It is too long to summarize, but terrific analysis and I’ll just give you the final two paragraphs as a teaser:

The last two Democratic presidents faced similar crises. After the Democrats got drubbed in the 1978 midterms, Jimmy Carter took exactly the wrong course. He replaced mediocre people with even more mediocre people. He allowed intramural squabbles to surface. He lost his focus and ended up blaming the American people for his political problems. Clinton, who had governed his first year as a Rhodes Scholar and Yale Law graduate, rediscovered after November 1994 that he had been a successful governor of Arkansas. He governed for the remainder of his six years as the president of middle America, even resisting a furious attempt by Republicans to impeach him.

I am not sure how Obama can surmount this crisis. Obama does not seem, like Ronald Reagan or Clinton, to be a man of many faces. Even back in Chicago in the 1990s, it was clear that the man who had given up community organizing to become a lawyer and politician was more comfortable in Hyde Park than in Southeast or Northwest Chicago. Obama can try to make himself into a friend of Joe Sixpack and the enemy of Wall Street–he’s certainly trying to do so with his proposal to tax the big banks to pay for their bailout–but it’s not going to come naturally. Still, Obama has surprised his critics before, and perhaps (one hopes!) he will do so again.”

http://www.tnr.com/article/politics/he-doesnt-feel-your-pain?page=0,2

[Via http://usna1957.wordpress.com]

Why Massachusetts Voted Against Health Care

I tuned into a number of Liberal outlets last night and this morning.  Of course, the subject of the conversation is the victory in Massachusetts.  Now, this is politics, so to listen to them spin this is expected, they HAVE to do that.  Literally, it’s their job.  And in this, the Republicans would be spinning in the same way had Brown lost.

But, what I heard the most last night and so far this morning is that the reason Massachusetts voted against this National Health Care is that they already have their own.  And because they already have their own, why would they wanna pony up, tax themselves to provide a plan they already have?  So, according to the Left, this isn’t a referendum on Health Care, it’s a case of not wanting to pay for something they already have.

This tactic is clever.  It allows the Left to sidestep the referendum AND claim that Massachusetts really REALLY likes government provided health insurance.

I think the Left is wrong.

I think Massachusetts voted against Health care because they don’t like their version of it.

Massachusetts’ health law has had a smaller impact on insurance coverage levels and a much higher cost than supporters claim. Gains in coverage have been overstated by nearly 50 percent, while costs have been understated by at least one-third, and likely more. The law has done little to improve overall self-reported health, though it does

appear to have crowded out private health insurance and made Massachusetts a less attractive place to relocate, particularly for young people.

People view taxes as damage and route around it.

[Via http://tarheelred.wordpress.com]

Corrections

A reader took exception to my cheap shot about Don Brash vs academics and pointed out that the TWG is dominated by the private sector. It’s true.

Contra the CW, I’m not sure that the land tax will suck all the money out of property investment, lower house prices, increase rents etc. If you invest your savings in a New Zealand company the directors can steal all of your money and suffer no consequences, something your lawyer and real estate agent can’t get away with. So the industry still has a huge competitive advantage there.

I’m probably the last person to accuse someone of hyperbole, but it seems pretty silly to describe the tax system as ‘broken’, ‘disfunctional’ etc. It still collects enough revenue to fund a high quality welfare state.

One hour ’til Neko Case . . .

[Via http://dimpost.wordpress.com]

Obama Rewards Losers, Punishes Winners

President Obama’s misbegotten bank tax is precisely the wrong policy at precisely the wrong time. It will wind up backfiring across the board. Why? Because bank consumers and borrowers are the ones who will wind up paying this tax, creating an obstacle to economic recovery.

Obama is actually rewarding losers and punishing winners — exactly the reverse of free-market capitalism.

Who’s being rewarded? Obama’s bank-tax penalty is being used to finance the failed government takeovers of GM, GMAC, and Fannie and Freddie. And let’s not forget the $75 billion failure of the so-called foreclosure loan-modification program. To this day, no one knows where that money went. But the big banks are going to be forced to finance this through a tax that will damage lending, stockholders, and consumers.

. . . .

And consider this: One dollar of bank capital generally works out to around ten dollars of potential bank loans. That means this $90 billion tax proposal could very well cut off a staggering $1 trillion of future bank lending when credit demand picks up.

. . . .

And the unfairness continues. Insurer MetLife, a bank holding company, and the regional Hudson City Bank Corp., both of which never took a dime of TARP money, will be penalized by this tax. That just ain’t fair.

President Obama’s crony politics rewards losers and penalizes winners. He is engaging in sheer, raw, left-wing, class-warfare politics. . . .

. . . .  (continue)

[Via http://politicaluniverse.wordpress.com]

Charity and Modeling Natural Disasters

The recent disaster in Haiti prompted some questions about whether or not charity matters in the aftermath of a natural disasters. One place to look is to see what extent charity has been incorporated into models of the economic impact of natural disasters. A recent symposium on economic modeling of disasters in the journal Economic Systems Research provides a little guidance on this issue.

Charity falls under a category of behavioral responses that people have to disasters. Economic impact models have just begun to incorporate societies built-in reactions to disasters, including different adaptive responses of households and businesses in and outside of the disaster areas. A paper by Yasuhide Okuyama from the ERS symposium provides an example of a behavior response that may make the economic impact worse:

Okuyama et al. (1999) included the final demand decrease in the rest of Japan after the Kobe earthquake, since people outside of the damaged region felt sorry for the event and for people in the Kobe area, due to the catastrophic destructions of a major city and a large number of casualties, and tended to reduce their discretionary purchases.

Charity, on the other hand, is a behavioral response that could counteract the negative impacts of disasters:

Alternatively, people may purchase necessary goods for the damaged area, such as blankets and/or food, and may donate them, instead of buying other goods for themselves.

Overall though, the author concludes that the economic impact of charitable responses to disaster is not yet well studied or modeled. It’s unclear whether this is due to the complexity of incorporating such behaviors into CGE and other commonly used types of economic models, or because the empirical parameters are not well known, or because researchers believe that charity does not have much affect on the overall economic impact of natural disasters. My hesitant and tentative conclusion is that the fact that this issue is, by the authors account, ”not well studied” suggests to me that researchers in this area may not consider charity an important determinant in the economic impact of natural disasters. I would be interested to see some actual studies on this issue though.

[Via http://modeledbehavior.com]

Area Sowing of Rabi Crops Crosses Last year Level

Hello Friends here we come up with the Latest Agri Commodities updates from various parts of the country.

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Area sown under Rabi wheat picks up

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Area sown under Rabi wheat picks up . Sowing of Rabi wheat, rice, coarse cereals and pulses has crossed last year’s level but there is a decline of about 6.2 per cent in the acreage of oilseeds.

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The shortfall in oilseed is mainly due to the decline in acreage of mustard in Rajasthan on account of poor weather conditions.

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A crop and weather watch group coordinated by the Ministry of Agriculture reviewed the situation on Friday.

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It was informed that as against a coverage of 88.85 lakh hectares in oilseeds last year, so far 83.33 lakh hectares had been sown this year.

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The shortfall was in mustard, groundnut, safflower, and Seamus sowing.

The area under pulses, however, increased to 125.60 lakh hectares this rabi, against 120.84 lakh hectares in the corresponding period last year.

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The highest area coverage was in Madhya Pradesh, followed by Uttar Pradesh and Karnataka. . In the case of wheat, the area sown so far is 260.71 lakh hectares compared to 255.62 lakh hectares last year.

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Sowing in Uttar Pradesh was delayed owing to a late harvest of the kharif sugarcane crop. The area under coarse cereals stood at 326.20 lakh hectares as against 324.04 lakh hectares in the corresponding period last year.

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Rabi rice was sown in 4.55 lakh hectares against 3.61 lakh hectares last year.

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In Other major Commodities Updates there is news of government allowing import of refined sugar at zero duty up to December 31 this year.

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Govt allows duty free sugar imports till Dec end . The government allowed import of refined sugar at zero duty up to December 31 this year in the wake of sweetener prices nearing Rs 50 a kg in the retail market. . The Cabinet Committee on Prices (CCP) also decided to permit UP mills to process imported raw sugar outside the state due to restrictions there. . Import of white sugar was allowed till March 31 this year earlier. .

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Note : For More Latest Industry, Stock Market and Economy News and Updates, please Click Here

[Via http://smcinvestment.wordpress.com]

Referendum on Debt?

http://www.economist.com/businessfinance/displayStory.cfm?story_id=15213705

The economist has a great article on the Icelandic debt woes.  It outlines the possibility of a future flood of government and international defaults.

My analysis of this is that the investors took the risk in this case.  The “savers” in this case should have exercised more caution in picking their accounts.  A higher rate of return should be assumed to come with a higher rate of risk or volatility.  My suggestion?

• Consider any investment/savings in a foreign country with “high returns” to be a risky investment, even if it is a “savings” account.
• Never use a savings account without a Government or Government corporation (ie FDIC) guarantee.  In the case of Icesave, even the savings insurance plan failed investors and savers.

Below are some great links that illustrate how much we underestimate endemic risk.

http://www.moneyweek.com/personal-finance/which-bank-will-give-you-52-on-your-savings.aspx

http://www.lovemoney.com/news/manage-your-finances/is-saving-with-icelandic-banks-safe-2954.aspx

An investor or saver reading one of the above articles might think they were secured by a government guarantee.  However the Economist article clarifies in the text I copied below.

“Landsbanki’s products were not covered by the domestic deposit-insurance schemes of the target countries. Under a passport system covering the European Economic Area (a broader, watered-down version of the European Union), investors were supposedly covered by the Icelandic deposit-insurance scheme.”

Clearly now that the European countries paid back their savers and they now want to money from Iceland.  Now a vote will decide the issue.

My advice to savers? Find a good domestic Credit Union or established bank.

[Via http://ecocinar.wordpress.com]

I think we know how this one turns out

The Husban is not a big reader. Mostly because he has an obsession with Thomas Hardy and Jane Austen.  Nothing else will quite do; and those two aren’t exactly churning them out any more, so he is stuck.

That means, when he does find something he enjoys, he is super happy.  The latest is “Too Big To Fail” which is by a Wall Street Journalist about the financial crisis. 

Last night he looked up and said: “Things are getting really exciting.  There’s a big meeting at Merril Lynch and the families are getting together to decide whether to help them out.”

There’s not going to be a happy ending, is there?  Should I break it to him?

[Via http://teadevotee.wordpress.com]

The "Cadillac" tax can't finance health care reform, or Why health care reform is not deficit neutral

MIT Economist Jonathan Gruber recently wrote in the Washington Post in support of the Senate proposal to enact an excise tax on “Cadillac” health care plans, a “40 percent assessment on insurance plans with premiums of more than $8,500 for singles and $23,000 for families. In the House, the gap is closed with a surtax on those earning more than $500,000.” He argues that the tax works because it bends the curve, is eminently progressive, and because it corrects an existing tax bias.

The assessment proposed in the Senate is not a new tax; it is the elimination of an existing tax break that is provided to exactly these firms. Under current law, if workers are paid in wages, they are taxed on those wages. But if they receive the same amount of compensation in the form of health insurance, they are not taxed. As a result, the tax code has for years provided a large subsidy to the most expensive health plans — at a cost to the U.S. taxpayer of more than $250 billion a year. To put this in proportion, the cost of this tax subsidy to employer-sponsored insurance is more than twice what it will cost to provide universal health coverage to our citizens.

I completely agree that the Cadillac tax will, as Gruber predicts, “bend the curve” and change the incentive structure for employers. As he writes, “it would reduce the incentives for employers to provide excessively generous insurance, leading to more cost-conscious use of health care and, ultimately, lower spending.”

For that exact reason, taxing health benefits seems  counterproductive. I think what will likely happen is the market will reconfigure, as Gruber says, and companies will start offering fewer ‘Cadillac’ health plans. The reason they offered them in the first place was that it was the cheapest way of differentiating benefits with other firms since the plans aren’t taxed and taken, as I understand it, out of gross earnings instead of net profit. It  doesn’t seem like a good long-term way of funding public health programs or rebates because if behavior actually changes (as is the goal of any excise tax), then the funding source dries up.

It’s sort of odd that the CBO doesn’t seem to be taking this into account very much. The CBO estimates that revenue from the excise tax will go up every year that it’s collected, from $7 billion in 2013, $13 billion in 2014, all the way to $35 billion in 2019. The numbers should naturally go up as health care becomes more expensive, and with inflation, but there’s no evidence that there is accounting for a reverse effect when employers decide they no longer want to pay the excise tax (at least the CBO isn’t explicit about it, and I guess technically the rate of increase is slowing). Why aren’t the numbers going down every year as businesses stop providing, as Gruber predicts, excessively expensive health care plans? Why would any business keep the Cadillac plans once they are being taxed on it (and which are less visible as a benefit), and not just divert the difference to increased salaries?

I started writing this before the recent “accord” in which America’s future is sold out once again to labor unions. Labor unions, which negotiate these excessively expensive health care plans, would be exempted from paying the new tax for 5 years. According to the unions (not even the CBO), this would reduce the revenue of this tax by 40 percent, to $90 billion from $149 billion over ten years. I suspect the true reduction is a lot more. Let’s also keep in mind that while the unions are scheduled to start paying the tax in five years, reasonable people suspect that the Democrats will cave in again and give the unions another exemption when the time comes. As in their analysis for the rest of the health care bill, the CBO must assume Congress will actually keep its word and start charging unions in 5 years, so we can be sure that whatever the new cost estimate is, it will be far less than the true cost to America. If Gruber thinks that it’s unfair that businesses basically steal billions from the taxpayers every year through their lavish tax breaks, he (and the voting public) should be just as incensed now that the unions, like the Nebraskans, are getting special benefits at the cost of the American taxpayer.

What’s deceptive is that the Cadillac tax in the Senate bill gets a lot of press, but it represents only about 15% of the estimated offsets from revenue expansions and spending cuts that will keep the spending bill in the black. If the tax is as good as affecting behavior as other excise taxes, and Congress caves in as easily to other special interests as it did to unions, I foresee little long-term “deficit reduction” or “deficit neutrality” from  health care reform. The real key to offsets is not reducing overspending by businesses, but by (get this) government-run healthcare plans. Just as Congress has waived “automatic” cuts in Medicare (provided by the Sustainable Growth Rate formula) each year since 2003, politicians in Congress will indubitably start waiving the Medicare spending cuts that make up about 50% of the offsets in the Senate bill as soon as the AMA and AARP start clamoring. And what about after 2019? Are there still going to be Cadillac taxes, or billions more that can be cut from Medicare to keep financing increasingly expensive subsidies?

Deficit neutrality is a pipe dream that’s used to sell gullible voters on the health care bill. Federal savings are fungible, and we could be saving money on Medicare cuts or excise taxes even without adding billions in subsidies for health insurance. It’s time for people to face the truth. If we want universal health care in America, or anything close, we need to be willing to pay for it.

p.s.

One final word is that I’d encourage people to actually read the CBO reports on the House and Senate bills, rather than getting all of their information filtered by the press. Check out this proposed spending cut in the Senate bill, that I bet you never read in the NYTimes:

“Reducing Medicaid and Medicare payments to hospitals that serve a large number of low-income patients, known as disproportionate share (DSH) hospitals, by about $43 billion—composed of roughly $22 billion from Medicaid and $21 billion from Medicare DSH payments.”

[Via http://stonesoup.wordpress.com]

Haiti disaster and the end of the world

Like you I haven’t switched channels all day either. My eyes and ears have been permanently fixed on CNN’s anchors and reporters.

But as I see more images and hear more of the stories from Haiti’s earthquake disaster zone I can’t help but be reminded of those end of the world/mega disaster shows that air repeatedly on the History Channel.

This earthquake in Haiti was what those experts on those shows were talking about!  

Haiti was a disaster before this natural disaster I can’t imagine what this country will be like in a few months..a few years.

How will Haitians respond not just in the first few days but in the months and years to come?

How long can the national solidarity last?

How much daily suffering can a people take and for how long?  

Will the world respond fast enough to avert a global catastrophe?

Obviously we haven’t been listening to what the experts have been saying about Port-au-Prince and the possibility of an earthquake occurring there..hmm..I wonder if we will be listening the next time?

What a horrible way for the world to begin the new year..

[Via http://blackliberal.wordpress.com]

A Silver Lining

In these economic times, uncertainty has been the prevailing reason why buyers, sellers, professionals and lenders have been slow to act.  Regardless of all the government sponsorships, bailouts, promises and incentives, there are few professionals that have truly been able to navigate the market, it takes hard work, discipline and commitment to ones profession to travel through the debris of collapse.

There is always an adjustment period when a market shifts dramatically, a period of time where industries need to adjust to the new terms and conditions of the business environment, lenders hedge their losses, consumers tighten their belts all in the name of coming out a survivor.  It is this adjustment period that often creates the harder times, simply because no one knows how to navigate the ever changing rules…in the case of commercial lending, the ever changing qualifications, underwriting, and credit.

There have always been programs out there for small cap and middle market buyers to take advantage of higher return commercial property, but even in good times the number of brokers claiming to understand, have and utilize these programs has made it difficult for some buyers to find the loans to achieve their dreams.  This is why every now and then we need to have a shake up;  “Shake the tree and let the dead wood fall” I was once told, “Get rid of the useless debris in order for the old oak to flourish” is what a Real Estate Broker once said to me, an ancient man in the business who was around before there were laws.

This isn’t a wise old saying, or some ancient wisdom, it is hard fact and we need these shake ups to get rid of those unscrupulous people who make it difficult for integral professionals to flourish.  We’ve always believed that and made sure our relationships with lenders was real, we’ve always tried to help our borrowers fit into the programs the lenders offered and for a time just about anyone could get a loan, but today…it’s not the same.  And, today, over the last couple of years, commercial lenders and commercial buyers have been seriously misaligned.

By the end of 2008 we were still getting requests from commercial buyers for 100% financing…we can laugh about it now, but it was frustrating to have buyers/borrowers completely unaware that the economy and lending climate was not the same as 3 years earlier…and it was actually disheartening that we couldn’t accommodate those loan requests nor create a structured deal that would provide for fulfillment of the request.  But now borrowers have woken up a bit more and long time, strong financial groups are still here, as both the fly by night lenders and unscrupulous professionals have been washed out by the tidal wave of economic downturn.

We are very prideful of ourselves that we have survived and will continue to thrive, as our professional habits and relationships have afforded us the opportunity to fund loans, and we are very happy to see that the consumer has come to terms with the way things are.  For us, we are seeing less resistance from both borrower and banker in making commercial loans and while the small cap and mid market borrower is still seemingly under-served, we feel that there is a huge opportunity for these loans to be written.  We’ve watched our lender pool grow to 200 lenders, then over the last couple of years dwindle down to a mere dozen and grow over the last 6 months to 52, for us this is a significant sign and we are diligent in working with these lenders and their core products to serve these small and mid cap markets.

We never really noticed, but as we look at our lender line, we realize that these companies, with whom we submit loans to, are all well established long standing firms that have enjoyed success through all types of markets, and for us that is a realization that we’ve chosen the right path in our profession.

As much as we would love to close 25 million dollar hotels every month, that doesn’t serve the need of an economy at large, we believe the $250,000 mixed use SBA borrower is as important if not more important than the large cap hospitality owner and we will not treat either one any different than the other and that is another philosophy that we didn’t realize we worked by…it has always been that way.

Maybe this is just an advertisement for touting how good we are and why you should do business with us for your small commercial clients, but then again, it is a statement that says no matter how bad the RE and CRE markets have been, we can all learn something about ourselves from what some see as economic tragedy (we see it as opportunity).

There is a sliver lining to every dark cloud.

http://www.Precisionfinanceandrealtypartners.com

[Via http://pfrpconsulting.wordpress.com]

Perbankan : Kisruh Skandal Century

Rabu, 13/01/2010 12:49 WIB

Sri Mulyani laporkan ke Presiden soal Century

oleh : Hendri T. Asworo

JAKARTA (bisnis.com): Mantan ketua Komite Stabilitas Sistem Keuangan (KSSK) Sri Mulyani mengatakan pengambilan kebijakan terkait dengan penyelamatan Bank Century telah dilaporkan kepada Presiden dan Wapres waktu itu.

Pernyataan Menkeu itu menjawab pertanyaan Legislator Fraksi Hanura Akbar Faisal yang mempertanyakan kehadiran Marsilam Simanjuntak yang juga selaku Ketua Unit Kerja Presiden Untuk Pengelolaan Reformasi (UKP3R) dalam rapat rangkaian rapat KSSK.

Sri Mulyani menyampaikan kehadiran Marsilam adalah sebagai narasumber. Namun, satu sisi dia membenarkan bahwa Marsilam juga pejabat UKP3R. “Kalau pertemuan itu sebagai narasumber Pak dalam rapat konsultasi KSSK,” ujarnya dalam rapat Pansus Angket Bank Century di Gedung Kompleks Parlemen siang ini.

Dia menjelaskan pihaknya tetap melaporkan kepada Presiden setiap perkembangan kondisi keuangan yang telah diambil oleh KSSK. Menurut dia, KSSK juga telah melaporkan rapat konsultasi pada 13 November 2008 di Gedung Bank Indonesia.

“Pada 13 November 2008 setelah teleconference keesokan hari kami sampaikan rapat hasil rapat konsultasi. Waktu itu presiden dalam pertemuan tingkat pimpinan G20. Kami sampaikan bahwa kondisi perbankan mengalami tekanan serius, tapi saya lupa apakah menyebut nama Bank Century,” paparnya.

Dalam kesempatan itu, sambungnya, Presiden memberikan arahan bahwa Indonesia tidak boleh kembali pada krisis 1997-1998. Namun, ungkapnya, satu sisi wapres meminta tidak dilakukan penjaminan penuh.

“Presiden memberikan garis kebijakan kita tak boleh mengalami krisis seperti 1997-1998. Wapres mengatakan kita tak boleh memberikan penjaminan penuh,” jelasnya.

Terkait dengan pengambilan kebijakan KSSK bahwa Bank Century diselamatkan karena berdampak sistemik, kata Sri Mulyani, pihakya juga melaporkan kepada presiden. Dia menambahkan tidak hanya Presiden saja, tapi wapres juga.

“Pada 21 November 2008 setelah keputusan dibuat kami mengirim laporan sekitar pukul 8.30 pagi. Saya juga laporkan CC ke wapres. Saya kirim melalui SMS ke presiden dan wapres mengenai keputusan itu,” tuturnya.

Namun, Faisal mempertanyakan bahwa wapres mengaku tidak mendapat laporan. Sri Mulyani menjawab, “Kita bisa buktikan saja CC SMS-nya,” tegasnya. (tw)

[Via http://jakarta45.wordpress.com]

Increasing Returns and The Fall

So, I’ve been thinking a lot this holiday season about increasing returns. For those who don’t know, this is the “rich get richer” phenomena which seems pretty pervasive to me. Good college football teams get the best recruits, a few popular artists (music, theatrical, etc.) get a majority of the popularity, ‘hot’ technology companies attract the best talent and thus gain more advantage. Those are just a few examples – you can likely think of more. It may be harder to think of something where this is not true. The opposite would be a dampening process, sort of like your air conditioner – when it gets hotter, cool air comes out to reverse the rise, not reinforce it. Can you think of any societal process which is naturally dampening? I haven’t yet, but I’ve not given up either.

The popular get more popular, the rich get richer, the powerful get more powerful. And there are cycles/crashes, obviously – exponential increases aren’t sustainable, and so the same reinforcing process that gave you popularity can also crush you. Ask Britney Spears.

And then I think of socialism/communism. As I’ve stated previously, my primary gripe with those political theories is that they inevitably lead to centralization of power when the group size gets at all large (bigger than a small commune) because it gets too big to self-govern. Then, you get a situation like communist Russia, which is again a rich-get-richer phenomenon. Those in power use that power to stay in power and profit for themselves at the expense of the masses. And socialism inevitably leads to centralization of power as we discover more social problems that need to be solved by the government to be sure that things are done equitably. But this leads to a very large and powerful government, which the larger it gets, the less accountable it becomes to voters. Rinse, dry, repeat and viola, you have an unaccountable, totalitarian government.

So, how much of this is due to the fall? Doesn’t it seem that humanity at some level was designed to live together in a way that the rich give more away, and the poor find themselves to be the major benefactors of that largess without even needing to ask? This is a big part of Jesus’ counter-cultural message – to give away your riches, to give away power, and to eschew the praise of men (popularity). On the one hand, it is better for you – your soul is less tied to those things when you are able to give them away and you live in freedom and not slavery to them. But it is also better for society. We as Christians are the dampening mechanism, at least in some sense. In another sense, that seems impossible.

A lot of what I’ve said here is probably obvious to some. I guess what feels new to me is that this seeming inexorable push for increasing returns to various things is embedded deep on our society and must be a major target of Christ’s redemptive work.

[Via http://thecenterway.wordpress.com]

Job Market Ideas I Can Explain In Words

Regular readers of this blog will know that I consider that a good thing.

The financial crisis is motivating a search for new models of asset markets and their interaction with the real economy.  It seems obvious that, for example the housing bubble can only be explained by a model in which asset prices are bid up by the activity of highly optimistic investors or speculators.  Models which build in these divergent beliefs (and not just differences in information) are, perhaps very surprisingly to outsiders, only recently coming to mainstream economic theory.

Alp Simsek asks whether the presence of optimistic traders can inflate the price of assets, say housing prices.  It seems obvious, but remember that investment in housing is leveraged using collateralized loans where the house itself is the collateral.  If the optimists are borrowing from the “realists” to buy houses at overinflated prices, and they are offering up the house as collateral, then surely the realists aren’t willing to lend?

Alp shows that this logic sometimes holds, but not always.  And he formalizes a precise way of measuring optimism which determines whether the presence of optimists will inflate asset prices, or alternatively their optimism will be filtered due to realists’ witholding of credit.

Suppose that you are a realist and you are making a loan to me to purchase a house.  A year later we will see whether housing prices have gone up or down.  If they go up, I will pay off the loan and realize a profit.  If they go down I will default on the loan.  A key idea is to understand that the loan effectively makes us partners in the purchase of the house.  I own it on the upside (and I pay you back your loan) and you own it on the downside.  We pay for the house together too: you contribute the loan amount and I contribute the down pament.

The equilibrium price of the house will be determined by how much we, as partners, are willing to pay.  I am an optimist and I would like to pay a lot for it, but I am financially constrained so my contribution to the total price is some fixed amount, my down payment.  Thus, our total willingness to pay is determined by how much you are willing to pay to enter this partnership.

Now we can see how my optimism plays a role.  Suppose I am more optimistic than you in the sense that I think there is a lower probability of default than you.  It turns out this doesn’t make our willingness to pay any higher than it would be if I were a realist just like you.  That’s because you own the house in the event of default so it’s the probability that you assign to default that enters into our total value, not the probability that I assign.  It’s true that I assign a higher probability to the good event that the price goes up, but I am already putting all of my cash into the partnership.  I can’t do anything more to leverage this form of optimism.

But suppose instead that the way in which I am more optimistic than you is slightly different.  We both assign the same probability to default, i.e. the event that the price falls.  Where we differ is in terms of our beliefs conditional on the price going up.  In particular I think that conditional on the upside, the expected price increase is higher than you think it is.  Now we have a new way to leverage our partnership.  Since I expect to have a higher upside, I am prepared to offer you a higher payment in the event of that upside.  (That is, I am willing to pay back a larger loan amount.)  And the promise of that higher payment on the upside coupled with the same old house on the downside makes this a strictly more attractive partnership for you and you are willing to pay more to enter it.  (That is, you are willing to loan more to me.)

Indeed these collateralized loans seem to be the ideal contracts for us to make the most of our differences in beliefs.  And once we see how that works, it is easy to go from there to a theory of a dynamic housing bubble.  Tomorrow there might be optimistic investors who will partner will creditors to bid up housing prices.  Today, you and I might have differences in beliefs about the probability that those optimistic investors might materialize.  If I am more optimistic than you about it, you and I can enter into a partnership which leverages our different beliefs about tomorrow’s differences in beliefs, etc.

There is an important thing to keep in mind when considering models with heterogenous beliefs.  We don’t have a good handle on welfare concepts in these models.  For example, in Simsek’s model the efficient allocation is to give the asset to the optimists.  Indeed, the financial friction is only an impediment to achieving an efficient allocation.  A planner, faced with the same constraint, would not do anything different than the market.  If we apply standard welfare notions like this, then these models are not a good framework for discussing financial reform.

[Via http://cheeptalk.wordpress.com]

Will Targeting Reforms In China With The Yuan Work?

Ever since former Secretary of the Treasury, Henry Paulson, began his strategic dialog with China, the de facto consensus in Washington and in Europe has been to pressure China to appreciate the yuan. On the face of it, it seems an absurd thing to ask of China, which cannot afford a stronger yuan. However, a closer look reveals the method to the madness behind the consensus in the West, which is turning out to be as discredited as the Washington Consensus before it.

The expectation among the G7 countries appears to be to commit China to reforms by committing it to a stronger pegged exchange rate, because to sustain the higher rate, the rest of the G8 is expecting that China will be forced to reform. That China ought to reform is true, but is exchange rate a viable instrument to trigger Chinese reforms must be a question for serious consideration.

Exchange rates, fixed or floating, of any country are strongly linked to the country’s economic fundamentals. They are indicators of how robust the underlying economy is. The capacity of the country’s economic and political systems to efficiently allocate resources to raise its economic output and hence its standard of living constitute its economic fundamentals. Targeting the exchange rate of the Chinese currency to improve its economic fundamentals is the equivalent of targeting symptoms to cure the underlying disease.

If one were to assume that China consents to a higher fixed exchange rate for the yuan, it must increase the pace of its domestic reforms to match the higher rate so as not to collapse. And doing so could be in the interest of China in the present circumstances if it is to avoid inflation, a credit bubble or undue asset appreciation. Still, from the Chinese perspective, China may not want to commit ex ante to a higher exchange rate for the yuan without knowing if its reforms will succeed, even if it were to increase their pace for other reasons because a natural consequence of successful reforms is a stronger exchange rate, whether that be China or the United States. Simply put, China may not want to put the cart before the horse and is wisely discarding the unrest in Washington which, in the name of Washington Consensus, had done the same in the ‘90s before the Asian crisis with other countries not just in Asia, but in Latin America and Europe ― from the U.K to Russia ― spanning the breadth of Europe.

The United States should not predicate its budgets or China policy on the capacity of the Chinese or other foreigners to send their savings into U.S financial assets.  It is best if China is urged to diversify its domestic investments across domestic sectors and industries to absorb the liquidity to raise its level of employment and domestic consumption and work on creating a social safety net and a more robust banking sector to reduce its level of domestic savings and to direct savings toward more gainful domestic investments to reduce its reliance on exports.

China must also prepare to face competition from its colleagues on the G20 for resource acquisitions in foreign markets in the immediate term, supported by the lending programs of international organizations and private donors, especially in oil, as the world secures its short term supplies of energy while it expects to transition out of it in the long term. The scarce non-Chinese oil in the world’s energy markets is better allocated to less oil rich economies of the world than it is to China. The same rule should also apply to the United States and Canada.

The nations of the world with at least adequate domestic oil supplies in the short run must rely on their own resources, because there is not much room for conservation or hoarding in a world of steeply rising energy demand and hence, inflation if the energy prices of 2006-2007 are any indication. China is rich in oil, gas and coal and must correlate its development and growth to first what it can domestically source. Trade in other commodities would follow the potential growth of the world’s largest economies per these constraints on energy, assuming that no country would want to either conserve or hoard other minerals which it can first domestically source.

Chinese pace of reforms under such an international arrangement of resource consumption to avoid conflicts over mutual accusations of resource grabs on the part of the large economies of the world and to raise both the allocative and technical efficiency of scarce natural resources to increase the longevity of domestic natural resource endowments would then dictate the evolution of China’s economy and its exchange rate, because the true constraint on production and hence output and growth of any country is its natural resource endowment. It may, in the end, even determine the contours of geopolitics of the rest of the world, similar to that of the European Union, as smaller countries pool resources and markets to develop their economies.

The greatest risk to China is the internal tension over the political sustainability of its one-party rule. These tensions should in and of themselves be sufficient to determine the pace of Chinese reforms as China and the Greater China region, comprising of Hong Kong, Taiwan and Mongolia attempts to integrate better, and as the G7 foreign direct investment gradually diversifies out of China to foster the dependence of the country on its own consumption and to create a better global value chain in production to more equitably distribute the benefits of globalization across all the major trading partners of any country to help China consummate its compliance with its World Trade Organization (WTO) obligations (noting duly that Russia has not been admitted yet).

[Via http://ctamirisa.wordpress.com]

Happiness and Growth

This time I feature an interesting commentary from a friend of mine with an sharp and controversial mind.

Enjoy the different view of the world as you experienced already in the commentaries before.

It was in the 1980s that the king of Bhutan, Jigme Singye Wangchuk declared that :

“Gross National Happiness is more important than Gross National Product.”

He was of course referring to his country at the time but the concept has universally gained ground over the last two years.

Gross National Happiness comprises of four pillars that embody national and local values, aesthetics, and spiritual traditions.

1. equitable and equal socio-economic development,

2. preservation and promotion of cultural and spiritual heritage,

3. conservation of environment and

4. good governance which are interwoven, complementary, and consistent.

The dogma of growth at all costs is over.  Economists led by the flagship, the Economist magazine, have traditionally argued that economic growth is the essential basis for the continued well-being of society and GDP is the statistic used to measure it.  From a political viewpoint, growth means employment. Even Angela Merkel has been talking of growth at all costs. On the other hand, President Sarkosy of France has established a Commission on the measurement of Economic Performance and Social Progress which has attempted to replace GDP with a broader measurement including the quality of ordinary lives.

The US declaration of independence

WE hold these Truths to be self-evident, that all Men are created equal, that they are endowed by their Creator with certain unalienable rights that among these are Life, Liberty, and the pursuit of Happiness.

I do not dispute the fact the economic growth is essential for businesses to grow and prosper. Then again periods of slow growth or recessions are also essential for the shake out of non-productive and inefficient industries and companies to allow for the rise of new technologies and innovations.

Unfortunately the recent history of present governments has been to prevent this natural process by subsidising ailing industries at all costs to prevent rising unemployment. The concept of short-term growth became a religion in it‘s own right.  So far, this still seems to be the case as governments do not seem to have any other solution to the present debt crisis than by providing more debt, or pouring more petrol on the fire with the hope of putting it out.

In all previous recessions over the last thirty years the mood of the people hit their lowest points in those periods. Why is it then that, despite the recession, the Happiness index in the US has increased this year?

According to Nancy Gibbs in a Time article, it is all about what she calls, the “expectation index.” During periods of economic growth, our expectations for the future outpace our growth of income, or spending power.  We expect our overall living standards to continually improve with better cars, new stereo systems, strawberries at Christmas, etc….

These expectations were magnified by the huge artificial wealth created by the arrival of the credit card, hire purchase and other means of cheap debt that the governments encouraged and supported to achieve the goal of short-term growth.

This inflation of expectations is a burden on our happiness just as much as the inflation of money is a burden on our wealth.

So now, as the reality of the severity of the crisis sinks in and people start to earn and save once more rather than borrow and spend, the inflation of expectations reduces and there is almost a relief that it is over.

[Via http://ksobczyk.wordpress.com]

What is seen and ...

There are truisms in economics.  Frederick Batiat didn’t “invent” the broken window no more than Adam Smith invented the invisible hand nor Isaac Newton invented gravity.  All were simply observations of naturally occurring phenomena.

U.S. Loan Effort Is Seen as Adding to Housing Woes

The Obama administration’s $75 billion program to protect homeowners from foreclosure has been widely pronounced a disappointment, and some economists and real estate experts now contend it has done more harm than good.

When the NY Times reports this, then the news has to be very bad.

Some experts argue the program has impeded economic recovery by delaying a wrenching yet cleansing process through which borrowers give up unaffordable homes and banks fully reckon with their disastrous bets on real estate, enabling money to flow more freely through the financial system.

“The choice we appear to be making is trying to modify our way out of this, which has the effect of lengthening the crisis,” said Kevin Katari, managing member of Watershed Asset Management, a San Francisco-based hedge fund. “We have simply slowed the foreclosure pipeline, with people staying in houses they are ultimately not going to be able to afford anyway.”

It’s good that the article makes clear that fallacy of intervention.  And the “necessary cleansing process” would of course be the real recovery, the required liquidation of malinvestment.  One wonders if the author has ever heard of the ABCT?

Only after banks are forced to acknowledge losses and the real estate market absorbs a now pent-up surge of foreclosed properties will housing prices drop to levels at which enough Americans can afford to buy, he argues.“Then the carpenters can go back to work,” Mr. Katari said. “The roofers can go back to work, and we start building housing again. If this drips out over the next few years, that whole sector of the economy isn’t going to recover.”

No!!!  Only after the liquidation can resources be directed to more productive ends.  Putting carpenters, et al., back to work is not that.  The administration’s goal of propping up housing prices has delayed recovery, and worse, hurt the economy.

But here’s where the author falls into Keynesian fallacies or perhaps recognizes the administration’s Keynesian errors:

But behind the scenes, Treasury officials appear to have concluded that growing numbers of delinquent borrowers simply lack enough income to afford their homes and must be eased out.

It isn’t incomes at all.  It isn’t about incomes matching housing prices.  This is the Keynesian fallacy about income and spending.

“I don’t think there’s any way for Treasury to tweak their plan, or to cajole, pressure or entice servicers to do more to address the crisis,” said Mark Zandi, chief economist at Moody’s Economy.com. “For some folks, it is doing more harm than good, because ultimately, at the end of the day, they are going back into the foreclosure morass.”

Mr. Zandi argues that the administration needs a new initiative that attacks a primary source of foreclosures: the roughly 15 million American homeowners who are underwater, meaning they owe the bank more than their home is worth.

Increasingly, such borrowers are inclined to walk away and accept foreclosure, rather than continuing to make payments on properties in which they own no equity. A paper by researchers at the Amherst Securities Group suggests that being underwater “is a far more important predictor of defaults than unemployment.”

From its inception, the Obama plan has drawn criticism for failing to compel banks to write down the size of outstanding mortgage balances, which would restore equity for underwater borrowers, giving them greater incentive to make payments. A vast majority of modifications merely decrease monthly payments by lowering the interest rate.

Of course, a new initiative this time will work because even though all the others have failed…  What is truly amazing is that it is presumed acceptable that one can walk away from a house because of no or negative equity.

The best passage is the “compel” part, because that is exactly what this administration is about: force and compulsion.  If you don’t hew the administration line, then you’ll be forced to.

Mr. Zandi proposes that the Treasury Department push banks to write down some loan balances by reimbursing the companies for their losses. He pointedly rejects the notion that government ought to get out of the way and let foreclosures work their way through the market, saying that course risks a surge of foreclosures and declining house prices that could pull the economy back into recession.

How that would happen, or even why, nobody ever seems to explain.  Perhaps it’s because they can’t, because it won’t.  Housing prices have absolutely nothing to do with anything.  They, as all prices do, simply reflect the current market clearing price.  There is simply no way falling home prices have any effect on the economy.  None whatsoever.  However, the housing boom, the constant refinancing, flipping, et al., did create the malinvestment and bust.  So, propping up home prices artificially will only prolong and deepen the crisis.

As of mid-December, some 759,000 homeowners…

If you put nothing down and paid interest only on the loans then you aren’t an owner.

“Almost three-quarters of a million Americans now are benefiting from modification programs that reduce their monthly payments dramatically, on average $550 a month,” Treasury Secretary Timothy F. Geithner said last month at a hearing before the Congressional Oversight Panel. “That is a meaningful amount of support.”

But mortgage experts and lawyers who represent borrowers facing foreclosure argue that recipients of trial loan modifications often wind up worse off.

Three quarters of a million Americans benefitted…tens of millions were harmed.  And still, they end up worse off.  Well of course they do.

What the article clearly misses is the unseen.  Those who were duped into “buying” homes with little to no ability to make the payments could have used the money for other, better, purchases.  In artificially creating millions of new home “buyers”, vast resources were diverted to building these homes which ought to have gone to other, better, uses.  In bailing out the banks and the “buyers”, billions are stolen from taxpayers which ought to go towards other, and better, uses.  And still, all the intervention in the world will not stop the markets from doing what markets do best: evaluate and allocate resources.

At least the NY Times recognizes that the housing bailouts are a failure.  Maybe they’ll see every intervention results in the same.  What was true in 1850 is still true today: there is no gain from destruction, and we must always look at what is seen and what is unseen.

[Via http://tunecede.wordpress.com]

...and now a Commercial from Bill

Hi. You are one of over 128,000 readers have come to this blog since I started it in 2004. I spend hours every day seeking out information and putting up three or four posts for your entertainment and amusement, and I’d like to keep it up.

So I’m hoping you will see your way to making a small contribution, by PayPal or credit/debit card to support Under The LobsterScope. You’d be amazed at how much $5.00 can do to help me bring more and more to these pages.

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[Via http://underthelobsterscope.wordpress.com]

Wolfers on cheap economists and comparative advantage

Lynne Kiesling

Count me among the economists who enjoyed the Wall Street Journal’s funny article about how cheap we are. But I also get a lot of pleasure out of trimming the Christmas tree, so I’m not inclined to be so stringent in following comparative advantage that I want to hire someone to do so. I do, however, agree with Justin Wolfers that hiring someone to take it down is very, very appealing. Instead, though, the KP Spouse is bribing me with pizza to do so this evening.

[Via http://knowledgeproblem.com]

Belonging To The Same Religion Enhances The Opinion Of Others’ Kindness And Morality

Abstract: Several theories suggest that religion evolved because it enhanced group cooperation; those individuals who professed a common religious belief cooperated better and therefore enhanced their individual fitness. The present experiment tested this hypothesis by asking participants to assess personality characteristics of unknown individuals who either wore a cross pendant, a symbol of Christianity, or a plain chain, using the Evaluation Of Others Questionnaire (EOOQ). The results indicated that participants who scored high on the Doctrinal Orthodoxy subscale of the Religious Orientation Scales gave greater scores to those wearing the cross pendant on the Kindness/Morality subscale of the EOOQ. This result is consistent with others that reported greater cooperation in economic games. However, here, we show that there does not need to be a competitive environment in order to reveal the increased assessment of kindness and morality, suggesting a potential mechanism for the enhanced cooperation seen in the competitive economic games.

A Sense of Place:  http://wp.me/pISTJ-2v

Subscribe to A Sense of Place:  http://lbwedes.wordpress.com/about

Full Text: http://www.jsecjournal.com/WidmanV3I4.pdf

Authors:  David R. Widman*

Department of Psychology, Juniata College

Katherine E. Corcoran

Department of Psychology, Juniata College

Rachel E. Nagy

Department of Psychology, Juniata College

Full Text: http://www.jsecjournal.com/WidmanV3I4.pdf

Journal of Social, Evolutionary, and Cultural Psychology

www.jsecjournal.com – 2009, 3(4), 281-289.

Proceedings of the 3rd Annual Meeting of the NorthEastern Evolutionary Psychology Society

[Via http://lbwedes.wordpress.com]

Online Highlights

1. Video: Jan Paulsen on Poverty (Carpenter, Spectrum, 24 Dec 2009)
2. Understanding the Economic Situation (Sahlin, Faith in Context, 6 Dec 2009)
3. Discerning The Times (Bussey, The Liberty Blog, 3 Jan 2010)
4. Feeding Hope (Gang, The Suburban Pastor, 31 Dec 2009)
5. The Gospel and Empire: A Wake-up Call from New Testament Scholarship (Adv Peace Messenger,31 Dec 2009)
6. Prince of Peace – God of War (Adv Peace Messenger, 18 Dec 2009)
7. LAPD Officers are not immigration agents (Bell, Intersections, 18 Dec 2009)
8. Letting Roman Catholics Off the Hook (Seibold, Adv Today, 4 Jan 2010)
9. Young Adventists Giving Their Lives for Christ’s Mission (Sahlin, Adv Today, 11 Dec 2010)
10. Love Actually (Pearson, Spectrum, 9 Jan 2010)
11. Blackwater, Human Grease, and Harvesting Organs: More Articles of Note (Gerard, Notes from the Fault, 22 Dec 2009)
12. Bono’s “Top Ten for the Next Ten” (Gang, Suburban Pastor, 3 Jan 2010)

[Via http://advactivism.wordpress.com]

KC Earnings Tax: Slowly Going The Way Of The Buffalo?

Mayor Mark Funkhouser dropped something of a political and fiscal bombshell yesterday when he said that he’d be open to repealing KC’s notorious earnings tax, which levies a one percent tax against those who live and work in the friendly confines of the city. The tax has long been a source of consternation among our libertarian-minded brethren, who call it an unfair imposition on citizens who choose to live in a particular locale. There’s another pesky little matter: the tax brings in $200 million a year. And in case you hadn’t gazed upon the streets this morning, we’re not exactly swimming in cash around here.

When there’s a gap, however brief, in the provision of city services, people start to ask again exactly what we’re paying for with that collective one percent. This isn’t quite fair; snow removal is a tricky process that’s all too contingent upon temperature, and sometimes it’s just too cold to use salt. (The city’s predilection for ignoring each and every side road — at least here in Midtown — is another matter.) But it’s easy to caricature this kind of thing (e.g., “This city can’t do anything right!”) and turn the earnings tax into the fall guy for the occasional lapse in services. The larger issue, of course, is the very fairness of the tax; is it right that on top of federal, state, and property taxes people should pay an extra one percent to the city? Maybe. Maybe not. I suppose that’s for tax experts and con law experts to figure out.

What matters here is exactly what the city will do in the absence of an annual $200 million in the general fund. The threatening quotes are already emerging from downtown:

“It is not hyperbole to state that elimination of the earnings tax without replacement revenue could render the city of Kansas City unlivable,” City Hall officials said in a document submitted to the auditor’s office…

“Property taxes would need to be increased by about 500 percent,” officials wrote. “Utility taxes, which are passed through to customers, would have to more than triple. Court fines would have to increase by 1,100 percent.”

The ostensible purpose of the repeal idea would be to attract people to the idea of living in the city. One of the reasons KCMO has become an unsustainable operation is because residents of the entire metro area can take advantage of city-funded activities, at no cost to those who live, for example, in the Sunflower State. Repeal the earnings tax, the thinking goes, and people will flock to the city to live, work, create jobs, spend money in city restaurants, et cetera. A nice notion — but is that really what’s keeping people from living in the city? I’m skeptical. Ask some people in Kansas why they chose PV over KC and you’ll likely hear the same things: crime, services, streets, and schools. I’m willing to bet that no more than one in ten people would list the earnings tax as a reason.

Besides, what’s the use of attracting people to the city by eliminating the catalyst for things that make the city livable? If ten thousand new residents move in and generate economic growth, how long will they stay if the municipal service level fails to meet even the lowest expectations as a result of funding cuts? Imagine if a star football recruit was drawn to Oklahoma State by the Pickens-funded plethora of athletic resources: he’s told that if he comes to OSU, he’ll have access to the best and brightest of practice space, coaches, trainers, equipment, et al. Upon arrival, though, he’s told that the funding for those things is eliminated — but hey, welcome to State!

The underlying fairness of the tax is debatable. It’s deployment as a city living recruiting tool is pretty clear: illogical.

Kansas City has larger, more systemic problems when it comes to funding. Like many other post-industrial Midwestern cities, KC is groping for a path to the future and trying to determine how one pays for things like schools and services given the recession and an ever-shrinking tax base. How to fund Missouri-based attractions when Kansas residents use them? How to create good schools with no funding and a generation of mismanagement? How to justify continued taxpayer support of sports stadiums, especially when economic studies continue to indicate little benefit?

We’ve started some band-aid solutions: downtown redevelopment (another economically unsound idea), a new arena, and others. These are, like the welfare system, solutions that address the consequences instead of the problems. The consequence is that KC is broke; the problem is that entrenched city interests have for a few decades prevented most heterodox thinking about what this city’s future looks like.

[Via http://stateoftheline.wordpress.com]