Forgive the title. I know I shouldn’t be making easy, thoughtless puns on crass holidays, but judge for yourself when you have read.
At the end of every month we are substantially shy of our shipping quota, and at the end of every month the shipping manager asks for any available help from the rest of Click Here to continue reading.
Monthly Archives: October 2007
Pondering the stellar growth rate of the US economy in the third quarter
Tyler Cowen says…
The housing sector is down twenty percent and the price of oil is flirting with $90 a barrel, maybe $100 to come. Yet the quarterly growth rate was just reported at 3.9%, led by surges in consumer spending and exports. It is wrong to think we have turned the corner, but Click Here to continue reading.
More scary reading for your Halloween
I had wondered why, given the swift and brutal contraction of the commercial paper market in August and September, that there weren’t more apparent signs of distress. Outstandings fell an eyepopping $368 billion.
Commercial paper is short-term borrowings, maximum 270 days, but typically much shorter. If a borrower can’t roll his commercial paper but still needs the dough, he has to either find other sources of funding pronto or sell other assets. And given that the contraction was almost entirely in the asset backed commercial paper market, meaning CP supported by mortgages, car loans, credit card receivables, one would have expected to see a change in borrowing terms in those markets.
This Bloomberg article lays out the answer….
Banks shut out of the market for short-term loans are finding salvation in a government lending program set up to revive housing during the Great Depression.
Countrywide Financial Corp., Washington Mutual Inc., Hudson City Bancorp Inc. and hundreds of other lenders borrowed a record $163 billion from the 12 Federal Home Loan Banks in August and September as interest rates on asset-backed commercial paper rose as high as 5.6 percent. The government-sponsored companies were able to make loans at about 4.9 percent, saving the private banks about $1 billion in annual interest.
To meet the sudden demand, the institutions sold $143 billion of short-term debt in August and September, according to the FHLBs’ Office of Finance. The sales pushed outstanding debt up 21 percent to a record $1.15 trillion, an amount that may become a burden to U.S. taxpayers because almost half comes due before 2009.
There is no way to put a happy spin on this one. I agree with Naked Capitalism’s comment section on this one. Except I think that the American people as whole must share some of the blame.
Some scary reading for your Halloween
This article starts off scarily enough….
(Fortune Magazine) — This past summer’s subprime meltdown involved about $900 billion in now-suspect securitized debt, reckless lending, and consumers who buckled under the weight of loans they couldn’t afford. Now another link in the consumer debt chain – credit cards – is starting to show signs of strain. And the fear that the $915 billion in U.S. credit card debt (an uncannily similar figure) may blow up has major financial institutions like Citigroup, American Express, and Bank of America strapping on their Kevlar vests.
But like any good ghost story, it saves the punch line for last….
It’s a sign of the times that, according to one survey last month, 6% of British homeowners have been using their credit cards to pay their mortgages. That’s suicidal, of course, given that credit card interest rates are more than double even the heftiest mortgage. Keep your fingers crossed that it’s not a trend that crosses the Atlantic.
Man, I have read a lot of scary things over the last couple of months. But that has got to be the scariest. 6% of all households pay their mortgages with credit card debt? If this figure was true, it would mean the end of the British financial system. In the first place, it would guarantee that at least 6% of all houses in Britain would have to go into foreclosure. In the second place, it would mean that banks would lose all of the money loaned to those people through unsecured loans (credit cards). In the third place, the banks would not be able to recover very much money from house sales because so many other people would be in the same boat. Bank reserves are not all that high, and I don’t think they could take that kind of loss.
The good news is that it is not really as bad as all that. I did some digging; the survey is counting all the people who had to use their credit cards once or more in the last 12 months to make one mortgage payment. So it’s not like 6% of British homeowners have been depending on their credit cards to keep a roof over their heads month after month.
The bad news is that the fact that 6% of British homeowners have had to make recourse to credit cards to make a mortgage payment is still not good news. Especially if you consider that fact in the light of this graph here and this report here.
It is tough to train the Iraqi army
Using math to predict the future
If you listen to Bruce Bueno de Mesquita, and a lot of people don’t, he’ll claim that mathematics can tell you the future. In fact, the professor says that a computer model he built and has perfected over the last 25 years can predict the outcome of virtually any international conflict, provided the basic input is accurate. What’s more, his predictions are alarmingly specific. His fans include at least one current presidential hopeful, a gaggle of Fortune 500 companies, the CIA, and the Department of Defense. Naturally, there is also no shortage of people less fond of his work. “Some people think Bruce is the most brilliant foreign policy analyst there is,” says one colleague. “Others think he’s a quack.”
The man has a better track record then most quacks. From later on in the article….
He is wildly controversial, though. As one of the foremost scholars of game theory—or “rational choice,” as its political-science practitioners prefer to call it—Bueno de Mesquita is at the center of a raging hullabaloo that has taken over some of the most prestigious halls of learning in this country. Exclusive, highly complex mathematically, and messianic in its certainty of universal truths, rational-choice theory is not only changing the way political science is taught, but the way it’s defined.
To verify the accuracy of his model, the CIA set up a kind of forecasting face-off that pit predictions from his model against those of Langley’s more traditional in-house intelligence analysts and area specialists. “We tested Bueno de Mesquita’s model on scores of issues that were conducted in real time—that is, the forecasts were made before the events actually happened,” says Stanley Feder, a former high-level CIA analyst. “We found the model to be accurate 90 percent of the time,” he wrote. Another study evaluating Bueno de Mesquita’s real-time forecasts of 21 policy decisions in the European community concluded that “the probability that the predicted outcome was what indeed occurred was an astounding 97 percent.” What’s more, Bueno de Mesquita’s forecasts were much more detailed than those of the more traditional analysts. “The real issue is the specificity of the accuracy,” says Feder. “We found that DI (Directorate of National Intelligence) analyses, even when they were right, were vague compared to the model’s forecasts. To use an archery metaphor, if you hit the target, that’s great. But if you hit the bull’s eye—that’s amazing.”
The whole article is an interesting read. All I have to say on the issue is that quants make predictions about the stock market in a manner similar to Mr. de Mesquita. In the financial markets, this method works until it doesn’t. And when it stops working, the people who depend on the quants are up a river without a paddle.
I imagine that Mr. de Mesquita’s method will have another problem similar to the quants. What happens when everyone starts using his methods?
One of the last successful mounted charges in Western warfare
This piece from the Jerusalem Post brought back memories…
At sunset on October 30, 1917, on the dusty outskirts of present-day Beersheba, more than 500 cavaliers from the Australian and New Zealand Army Corps (ANZACS) charged in what trooper Eric Elliot called “the bravest, most awe-inspiring sight” he’d ever witnessed: the 4th Australian Light Horse regiment overtaking the Turkish trenches and seizing Beersheba.
The victory, later known as the Third Battle of Gaza, took place the “very day the British War Cabinet agreed to the Balfour Declaration,” Australian historian and author Kelvin Crombie told The Jerusalem Post in 2003.
Ninety years after the military triumph, 70 Aussies have returned to Israel to commemorate the Light Horsemen’s success. The highlight of their visit will be the “In the Steps of the Light Horse” three-day trek through the Negev on the same route the original regiment took from Shellal to Beersheba. The group will reenact the charge – one of the last successful mounted charges in Western warfare – on the same ground on Wednesday.
One of my Grandpa’s favorite movies was based on that charge. I watched the movie with him more then once. Rereading accounts of that battle I am struck by how closely my memories of the movie follow what really happened. I guess the story was gripping enough they did not feel the need to embellish it much.
How much can New Urbanism evolve and still be New Urbanism?
This was originally going to be a response to a comment that Mr. Corbusier left on this post. But I got a little carried away so I decided to make it a post of its own.
Mr. Corbusier,
The quality of your response was far more than my off-the-cuff comment deserved. I only wish that I was Click Here to continue reading.
Odds and ends that caught my eye
There was a riot in Berlin between the Turks and Kurds on sunday…
For most Germans, the conflict between Turkey and the Kurdish separatist group PKK on the country’s border with Iraq seems, no doubt, far away. But Berliners on Sunday got a taste of the tiff up close and personal.
An anti-PKK demonstration in Berlin’s Kreuzberg district degenerated into violence between young Turks and Kurds on Sunday afternoon. By evening, a threatening mass of nationalist Turks had gathered around a Kurdish cultural center.
Poor Kurds. No matter where they go they can’t get away from the Turks.
Russia imposed price controls on food….
Russia is introducing Soviet-style price controls on some basic foods in an effort to prevent spiralling prices from denting the Putin administration’s popularity ahead of parliamentary polls in December.
The country’s biggest food retailers and producers have reached an agreement, expected to be signed with the Russian government on Wednesday, to freeze prices at October 15 levels on selected types of bread, cheese, milk, eggs and vegetable oil until the end of the year.
Russia’s move is the latest sign of surging agricultural prices becoming an international political issue. Big retailers will limit their mark-up on those goods to 10 per cent.
China has also agreed to food price controls; Egypt, Jordan, Bangladesh and Morocco are increasing subsidies or cutting import tariffs to lower domestic prices. Rich countries are not immune: Italian consumer groups organised a pasta boycott last month in a protest over prices.
The Russian economy ministry is also examining whether to increase a 10 per cent export tariff on wheat planned for November to 30 per cent to keep its domestic market well supplied. That prospect has pushed wheat prices up 6 per cent in Chicago in the past week, giving Moscow’s fight against rising food prices an effect beyond its borders.
Similar price controls are why it is hard to buy fuel in China.
Egypt is going to build nuclear power plants legitimately….
Egyptian President Hosni Mubarak on Monday announced plans to build several nuclear power plants, joining several Middle East Arab countries that recently have said they are kick starting their nuclear energy ambitions.
Mubarak said in a speech broadcast live on national television that the decision to build the nuclear power stations was to diversify Egypt’s energy resources and preserve the country’s oil and gas reserves for coming generations.
“I announce before you Egypt’s position to prepare the program for building several nuclear power stations. We believe that energy security is a major part of building the future for this country and an integral part of Egypt’s national security system,” Mubarak said at a ceremony inaugurating the second phase of construction of an electrical power plant north of Cairo.
I wonder why it has taken them so long. First, they need to power. And second, it gives them cover should they ever want to build the bomb.
Hamas is trying to one up Hezbollah…
Hamas is trying to establish a bunker system as well as fortified rocket-launching and surveillance positions along the security fence with the Gaza Strip, Brig.-Gen. Moshe (Chico) Tamir, head of the Gaza Division, said Monday.
Tamir said that Hamas was “building an army” in the Gaza Strip and had obtained unprecedented capabilities through smuggling tunnels between Gaza and Egypt. On Monday, head of the Shin Bet (Israel Security Agency) Yuval Diskin said that since Israel’s withdrawal from Gaza in 2005, the Palestinians have smuggled over 112 tons of explosives into the Strip.
“They are trying to dig tunnels, build surveillance positions and mortar-fire stations along the fence,” Tamir told reporters during a briefing concerning the death of IDF reservist Ehud Efrati during clashes with Hamas gunmen early Monday morning. “They are trying to build this up and we are trying to stop them.”
Oil prices hit another record high…
SAN FRANCISCO (MarketWatch) — Crude-oil futures rose past $93 a barrel for the first time on Monday, after bad weather forced a halt to production in Mexico and the dollar touched the lowest level against the euro in more than eight years.
Crude futures for December delivery rose for a fourth day and closed at a new record high of $93.53 a barrel on New York Mercantile Exchange. Earlier it reached an intraday high of $93.8 a barrel.
Mexico’s state-owned Petroleos Mexicanos, one of the largest crude suppliers to the U.S., halted production of 600,000 barrels a day due to inclement weather on Sunday. Petroleos Mexicanos, also known as Pemex, said it hopes to resume production in days.
And this I intend to write more on sometime…
Federal Reserve policymakers meet Wednesday to decide what action, if any, to take on interest rates. Speculation has centered on whether the Fed will keep rates steady, cut a quarter-percentage point or trim a half-percentage point. The consensus is looking for a quarter-point cut, but a few experts expect the Fed may leave rates unchanged at 4.75%.
Infections: The New Cancer?
Every now and again the media gets all hysterical about drug resistant bacteria. If you follow the news, you know that we are going through another bout of hysteria right now due to a Brooklyn kid getting killed by a drug resistant staph infection.
Hysteria is not called for. It too hard to sustain and this does not look like the end of the world as we know it yet. But the problem is getting worse. This quote is from the Houston Chronicles…
Based on data from 2005, the agency estimated that about 94,400 patients nationwide suffer an invasive MRSA infection each year. And in the vast majority of cases, the infections originated in health care settings.
“This is an alarming number of infections and a very significant number of deaths,” said Dr. Monina Klevens, a medical epidemiologist with the CDC. “This is really a call to action for health care facilities to do a better job at preventing MRSA.”
The once-rare, drug-resistant germ causes more than half of all skin infections treated in U.S. emergency rooms, the CDC reported last year. But until now, there was no solid data on the number of cases nationwide to serve as a benchmark.
The federal study tracked only the most serious type of MRSA, the potentially fatal infection that can cause pneumonia, bloodstream infections and surgical wound infections. Staph infections on skin, which look like pimples or boils, are more common and easier to treat. Both spread by person-to-person contact and are resistant to certain antibiotics.
The study referenced in the article also estimate that 18,700 had died from drug resistant infections. If this estimate is accurate, then more people are dying because of drug resistant bacteria than are dying because of aids. And most of the people who are dying because of the drug resistant bacteria are getting these infections simply by being hospitalized. But there is real danger that locker rooms, prisons, and public rest rooms could start spreading these infections.
The steady growth of drug resistant bacteria has got people thinking about what the future of infection fighting is going to look like. Derek Lowe suggests that it may look a lot like the fight against cancer now. As he puts it…
It struck me the other day that antiinfectives, as a drug research field, might be moving toward a similar spot to oncology. In both cases, you have a problem with rapidly multiplying cells, giving you a serious medical outcome – often in cancer, and increasingly with infections. The average tumor is a lot more worrisome than the average infection, of course, but that’s something we can only say with confidence in the industrialized world, and we’ve only been able to say it for the last sixty or seventy years. As cancer gradually becomes more manageable and infections gradually become less so, the two might eventually meet – or even switch places, which would be bad news indeed. (In some genetically bottlenecked species, in fact, the two problems can overlap, which is fortunately extremely unlikely in humans).
There are, of course, a lot of differences between the two fields, not least of which is that you’re fighting human cells in one case and prokaryotes (or worse, viruses) in the other. But many of those differences actually come out making infectious diseases look worse. The transmissibility of bacteria and viruses make them serious contenders for causing havoc, as they have innumerable times in human history, and they can grow more quickly in vivo than any cancer.