Saturday, January 12, 2008

Google Trends Search for "Recession"

The chart above (click to enlarge) is from a Google trends search for the word "recession" - search volume is above, and news reference volume is below.

Singapore is the city in the world with the most searches for "recession" (as a percent of all searches) and Washington, D.C. is second.

History of U.S. Bank Failures

The chart above shows annual bank failures from 1934-2007 using data from the FDIC. Several facts:

1. There have only been two years since 1934 when NO U.S. banks failed: 2005 and 2006.

2. Only 3 U.S. banks failed in 2007.

3. Besides the 2005-2007 period, there has never been another three-year period since 1934 when only 3 U.S. banks failed.

4. Even at the peak of the S&L banking crisis when more than 1,000 banks failed in 1988 and 1989, at a rate of more than 2 every business day for two consecutive years, the economy survived without going into a recession.

Bottom Line: The U.S. banking system is probably stronger and more stable today than at any time in U.S. history. A subprime crisis by itself will probably not be enough to pull the U.S. economy into a recession in 2008.

Toyota Has 3 of the Top 10 American-Made Cars



What Are the Top American-Made Cars?

Cars.com's 2007 American-Made Index rates vehicles built and bought in the U.S. (see the top 10 in the chart above, click to enlarge). Factors include sales, where the car's parts are made and whether the car is assembled in the U.S. Models with a domestic-parts content rating below 75% are disqualified.

Note that Toyota has 3 out of the top 10 vehicle models, and the Camry ranks higher than the Chevy Silverado, which is one of the vehicles assembled at the Flint Truck Plant. The sign above is right across the street from the Flint Truck plant, in the parking lot of the UAW Local #659.

Just wondering, would it be OK to park a Toyota Camry with a higher domestic content than even the Silverado, in the parking lot, or would that still be considered a foreign-made auto?

What a Country: The Number of Millionaire Households Has Almost Doubled In 5 Years

According to Phoenix Marketing International, the number of millionaire households in the U.S. has almost doubled over the last four years, from 3.3 million in 2003 to almost 6 million millionaire households in 2007 (see chart above, click to enlarge). Over the same period, the percentage of U.S. millionaire households has increased from 3.4% in 2003 to 5.25% in 2007. In other words, 1 out of every 19 American households are now millionaire households, compared to only 1 out of every 30 households in 2003. What a country!

Note: The Phoenix study defines a "millionaire household" as one having at least $1 million in liquid or investable assets, and these figures are not adjusted for inflation.

Friday, January 11, 2008

N.J. Has Highest % of Millionaires, Michigan Is #14

The Phoenix Affluent Marketing Service announced today that New Jersey has become the state with the largest percent of millionaires to total households. Ranked second past two years, New Jersey vaulted past Hawaii, which fell to fourth in the 2007 rankings.

Phoenix’s annual market sizing analysis and aggregate wealth rankings shows that New Jersey’s ratio of millionaires to total households rose to 7.12%, up from 6.5% in 2006. Maryland is now in second place at 7.08%, up from 6.2% in 2006. Connecticut is third, with a ratio of 7.0%, up from 6.2% a year ago. Hawaii’s ratio of 6.7% was unchanged from a year ago. Phoenix defines a millionaire household as one with $1 million or more in investable or liquid assets.

To see the full list,
click here.

Comment: Isn't it interesting that Michigan ranks #14 for millionaires (see chart above), ahead of New York, Florida, and Washington, D.C. In spite of an economic slowdown, a serious loss of manufacturing jobs, the nation's highest unemployment rate (7.4%), there is still a lot of wealth in the state of Michigan, probably a legacy from the decades and generations of automotive-related wealth created here. Michigan also moved up four places from last year, when it ranked #18.

Only 1 Tiny Bank Failed During Fall Subprime Crisis

The chart above is from the FDIC's website. Notice that despite the "subprime crisis," there was only 1 bank failure in the fourth quarter of 2007, out of almost 9,000 FDIC-insured institutions. It's true that subprime troubles have fallen much harder on other sectors of the financial sector, but it's also good to know that the commercial banking sector is healthy, and survived a year of credit trouble with almost no bank failures.

The only bank to fail in the fall of 2007 was the tiny Miami Valley Bank in Lakeview, Ohio, with just $87 million in assets, or 5% of the size of the average bank, which has $1.5 billion in assets. For the entire year, only 3 banks failed in 2007; and not a single bank failed in either 2005 or 2006, as I have previously documented.

Boston Mayor: Making $ Off Of Sick People Is Sick

BOSTON GLOBE--Boston Mayor Thomas M. Menino today blasted a state decision that paves the way for CVS Corp. and other retailers to open medical clinics inside their stores (see previous CD post here).

In a statement, the mayor said the decision yesterday by the state Public Health Council "jeopardizes patient safety. Limited service medical clinics run by merchants in for-profits corporations will seriously compromise quality of care and hygiene. Allowing retailers to make money off of sick people is wrong."

Hey, wait a minute Mr. Mayor. Doesn't CVS also sell aspirin, Nyquil, Ibuprofen, Alka-Seltzer, Benadryl, Sudafed, plus hundreds of prescription products at its pharmacies? Isn't that making money off of sick people? Aren't MDs and nurses making money off of sick people? And aren't' grocery stores making money off of hungry people? Isn't selling water making money off of thirsty people?

DJIA Above 15,000 By Year End?

Interesting chart above (click to enlarge) showing the performance of the U.S. stock market in election years (green line) vs. non-election years (blue line) from 1900-present, showing about a 10% average annual stock market return in non-election years, vs. about a 14% annual return in election years. In that case, we can expect the DJIA to reach 15,000 by the end of 2008, and an S&P500 close to 1700 by year end, assuming this is a typical year for the stock market during an election year.

(HT: Fancy Plaid Pants)

More Retail Clinics: Health Care When You Want It

BOSTON GLOBE: After state regulators cleared the way yesterday for store-based medical clinics, CVS Corp. said it plans to open more than two dozen inside Massachusetts drugstores this year, dispensing treatment for bronchitis and earaches a few aisles away from shelves of candy and nail polish.

The vote by the Public Health Council marked a signal and controversial shift in the healthcare landscape: The CVS MinuteClinics will be for-profit operations staffed by nurse practitioners only, in a state where medical treatment historically has been the province of not-for-profit hospitals and physicians working in mostly large group practices. Other pharmacy chains and retail stores, as well as hospitals and community health centers, could also open limited service clinics.

No appointments are necessary, visits typically last 15 minutes, and clinics will be open nights and weekends. Treatment for common illnesses typically costs $59 or $69 at MinuteClinics in Connecticut. In Massachusetts, insurance companies are expected to cover the visits as they do in other states.

Steven Landsburg: The Case for a National Sales Tax

University of Rochester economist Steven E. Landsburg (author of Armchair Economics) comes out in support of Huckabee's national sales tax in his most recent Slate.com column titled "Huckabee's Tax Plan Is Brilliant: So why is it getting trashed?":

A national sales tax is the exact equivalent of an income tax with a provision for unlimited IRA contributions (and no withdrawal penalties). The merits and demerits of the Huckabee tax plan are identical to the merits and demerits of a vastly liberalized IRA policy.

A lot of economists, myself included, think that there's a lot to be said for unlimited IRAs. Any conceivable tax system discourages work, which is unfortunate but unavoidable. But the current system also discourages saving, which is avoidable. A liberalized IRA policy—or, equivalently, a sales tax—eliminates that problem.

Bottom line: Unlimited IRAs, coupled with somewhat higher tax rates, have advantages and disadvantages, but the advantages are bigger. And whatever can be said about unlimited IRAs coupled with somewhat higher tax rates can equally be said of a national sales tax.

Thursday, January 10, 2008

Globalization Makes US Economy Recession-Proof?

The chart above (click to enlarge) shows annual world real GDP growth from 1980 to 2008 (IMF estimates growth of 4.8% for 2008), using data from the IMF, along with shaded areas of years during which the U.S. economy was in a recession. During the last four U.S. recessions (1980, 1982, 1990-91, and 2002), world GDP growth fell below 3%, and averaged only 2.1%.

Assuming that world GDP grows at the IMF's forecast of 4.8%, it would either be: a) inconceivable that the U.S. economy could go into a recession with such strong growth in the rest of the world, or at least b) unprecedented that we could suffer a recession while the world economy continues to grow at almost 5%.

I think it is worth considering that in previous U.S. recessions like in 1980, 1982 and 1990-91, there was no, little, or at least much less support from the global economy and emerging markets like there is today. For example, during those recessions, there was no support for the U.S. economy from countries like India, Brazil and China like there is today. And even compared to 2001, the world economy today is much stronger, more integrated, growing much faster; and the strong growth in the emerging markets is providing much more support for the U.S. economy than ever before.

Perhaps the dynamics of the U.S. business cycle are different now because of globalization, increased integration of world markets, and the unprecedented growth of emerging markets like the BRIC countries. Is it possible that globalization has made the U.S. economy recession-proof? At the very least, it's something to think about, and I don't think it has received much attention.

Strong Growth in Emerging Markets Helps DuPont

The IMF forecasts world GDP growth of close to 5% for 2008, continuing a five-year trend of above average growth for the world economy. In a post yesterday, I suggested that continuing, strong economic growth in the developing economies and emerging markets (the IMF forecasts 10% growth in China for 2008, 8.4% in India, 6.5% in Russia, etc.) could help support a weakening U.S. economy and prevent a 2008 recession.

Although anecdotal, here is a story from today's
NY Times Business section to support that the notion that continuing strong growth in emerging markets will help strengthen the U.S. economy in 2008:

Citing strong fourth-quarter results and prospects for growth in emerging markets, the chemical maker DuPont (
NYSE:DD) raised its earning estimate for 2007 on Wednesday as well as its profit forecast for 2008. A DuPont spokesman said the agriculture and nutrition business had been particularly strong in Brazil and that growth in emerging markets like China, India and Eastern Europe had averaged about 15%. Shares jumped $2.03, to $44.78.

Automotive Globalization: Both Low-end ($2500) and High-end ($50k) Car Markets Thrive in India

From two-wheelers (above) to four-wheelers (below)!


Nano, Tata Motors' Rs. 100,000 (US$2500)"people's car" (pictured above) was unveiled at the Auto Expo 2008 in New Delhi today.

"This is a proud moment for India. It demonstrates India's technological and entrepreneurial ability," Commerce Minister Kamal Nath told reporters on Thursday. "It fulfils the need of the common Indian who aspires to move from a two-wheeler to a four-wheeler," he added (see top picture above).

See a picture gallery of the Nano.

Watch the launch video here.

At the same Auto Expo, GM announced it may launch its Cadillac and Hummer models in India this year as incomes surge in the second-fastest growing major economy in the world, after China. The number of high net worth individuals in India rose 20.5% in 2006, the second-fastest growth in the Asia-Pacific region after Singapore, suggesting that there will be a growing demand for high-priced luxury vehicles in the $40-50,000 range at the same time that there is a thriving market for low-end $2,500 Nanos.

Comment: We hear a lot about the loss of U.S. jobs due to outsourcing to India, from Lou Dobbs and presidential candidates like Obama (''I'll be a president who ends the tax breaks for companies that ship our jobs overseas and put a middle-class tax cut into the pockets of working Americans who deserve it.") What receives considerably less attention are the significant number of jobs that are created when U.S. companies expand overseas by SELLING products to Indian consumers, who are becoming increasingly wealthy.

For example, GM already plans to sell 90,000 vehicles this year in India and aims for a 10% market share of the growing vehicle market there, and many other U.S. companies have established a presence in the second fastest growing economy in the world: Dunkin' Donuts, McDonald's, Pizza Hut, Starbucks, Wal-Mart, Foot Locker, Harley-Davidson, etc. Trade works both ways.


Wednesday, January 09, 2008

Corruption Travels Globally

From the conculsion of an NBER research paper titled "CULTURES OF CORRUPTION: EVIDENCE FROM DIPLOMATIC PARKING TICKETS:"

We exploit a unique natural experiment – the stationing in New York City of thousands of government officials from 146 countries around the world – in a setting of zero legal enforcement of parking violations to construct a revealed preference measure of official corruption. We find that this measure is strongly correlated with existing measures of home country corruption. This finding suggests that cultural or social norms related to corruption are quite persistent: even when stationed thousands of miles away, diplomats behave in a manner highly reminiscent of officials in the home country. Norms related to corruption are apparently deeply engrained, and factors other than legal enforcement are important determinants of corruption behavior.

See the top 15 countries for NYC parking violations in the chart above (click to enlarge), Kuwait is #1, by far.

Best Economics Professor Blogs

"The Bayesian Heresy" Economics Blog Awards 2008 (see above, click to enlarge).

IMF: World Economy To Grow At 4.8% in 2008

According to the IMF's most recent "World Economic Outlook," the global economy is projected to grow by 5.2% in 2007 and 4.8% in 2008. The IMF's forecast for economic growth in the U.S. is 1.9% this year.

The expected world real GDP growth of 4.8% in 2008, is just slightly below the average, annual growth of 4.9% since 2003, suggesting a continuation of the very strong record of 5% world GDP growth in the last five years, compared to world growth closer to 4% in the 1990s.

The map above (click to enlarge) from
IMF's Data Mapper shows the IMF's projected real GDP growth rates by country for 2008. Healthy economic growth of between 3-10% is projected for most of the developing economies and emerging markets (10% growth in China, 8.4% in India, 6.5% in Russia, etc.), which could help support a weak U.S. economy and prevent a recession here?

(HT for map:
Fancy Plaid Pants)

Wal-Mart More Selective Than Harvard? Doesn't That Mean That Wal-Mart Wages Are Too HIGH?

According to the NY Times:

Stanford University received a record 23,956 undergraduate applications for the fall 2007 term, accepting 2,456 students, meaning the school took 10.3% of applicants.

Harvard University received applications from 22,955 students, another record, and accepted 2,058 of them, for an acceptance rate of 8.97%.

Applications to Columbia numbered 18,081, and the college accepted 1,618 of them, for what was certainly one of the lowest acceptance rates this spring at an American university: 8.9%.

According to the
Atlanta Journal-Constitution:

They came in droves — high school students, retirees, young moms, the unemployed — all for a shot at a job at a new Wal-Mart on Memorial Drive in central DeKalb County.

In just two days, and with virtually no advertising or even any signs, a staggering 7,500 people filled out applications for one of the 350 to 400 available jobs.

Bottom Line: Wal-Mart accepts only about 5% of its applicants, compared to the most selective universities, which accept 9-10% of their applicants. Alternatively, Wal-Mart has about 20 applicants per available job, compared to Standford, Harvard and Columbia, which have only 10-11 applicants per available opening.

Further, the standard assumption is that Wal-Mart's wages are unreasonably low. A Google search of "Wal-Mart" and "low wages" results
in 122,000 hits. But with Wal-Mart receiving 20 applications per position, you could make a stronger case that Wal-Mart's wages are actually TOO HIGH. That is, Wal-Mart could lower its wages considerably and still have too many applications.

Indian Stock Market Continues to Set Record Highs

MUMBAI--India's Bombay Stock Exchange benchmark index, the Sensex, crossed the 21,000 peak in early morning trading, adding the last 1,000 points in 49 trading sessions (see chart above, click to enlarge).

The BSE benchmark completed its 1,000-point journey in 49 business days after touching the 20K milestone on October 29, last year. In trading today, the BSE reached another new all-time high, trading above 21,100 before closing slightly lower.

Note: India's stock market has increased by 50% over the last year.


Ron Paul Unplugged

Ron Paul on Personal Freedom, Drugs, Prostitution and Gay Marriage:

1. A video of John Stossel's interview of Ron Paul here (click on Ron Paul's picture on the right side of the screen).

2. John Stossel's article about Ron Paul, "Live and Let Live, Says One Candidate."

Wal-Mart's Diffusion: A Slowly Blooming Flower

Wal-Mart started with its first store near Bentonville, Ark., in 1962. The diffusion of store openings radiating out from this point was very gradual. And this diffusion didn't just occur in one direction, but spread out in all directions, with the same measured deliberation. Imagine a slowly blooming flower, or a pebble dropped in a pond, with the waves moving across the water in slow motion.

It is useful to contrast Wal-Mart with Kmart, as both opened their first stores in 1962. Wal-Mart, from the very beginning, was different from Kmart. Wal-Mart built up its store network gradually from the center out; Kmart (and Target, for that matter) began by scattering stores all over the country. Early on, Wal-Mart focused on logistics, with things like daily deliveries from its distribution centers, early adoption of advanced communication technology and so forth. Kmart did not do these things. A customer going into these two stores might not be able to see much of a difference between the two stores. But underneath, in the way that merchandise was getting on the shelves, these stores were very different.

I don't think that Wal-Mart's logistics strategy was appreciated at the time. Its model, now being replicated by others, was a new model.

From an interview with University of Minnesota economist Thomas J. Holmes in the Minneapolis Federal Reserve's "FedGazette" on
Wal-Mart's location strategy.

Watch
an incredible video of Wal-Mart's entire year-by-year diffusion path and location strategy throughout the United States, beginning in Arkansas in 1962.

Tuesday, January 08, 2008

The People's Car and Automotive Globalization

How about a car expected to retail for only $2,500, or about the price of the optional DVD player on the Lexus LX 470 sport utility vehicle? India's Tata Motors (NYSE:TTM) will release the world's cheapest car on Thursday, read more here in the NY Times.

Tata Motors is also the likely candidate to acquire Jaguar and Land Rover from Ford for about $2 billion.

And at the same time, Ford plans to more than double its investment in India to produce a small car for the fast-growing local market and to build an engine manufacturing plant there. Ford will likely increase spending in India by $500 million, raising its total investment to $875 million, as it focuses on making the country a regional hub for small-car manufacturing.

Bottom Line: Think about it - Ford will get about $2 billion from an Indian company for its British vehicle division, and at the same time it will invest almost $1 billion back into India for its expansion of operations there. Tata Motors will introduce the world's cheapest car, and at the same time will probably be selling one of the world's most expensive cars - Jaguar. What a flat world.

Carpe Diem on CNBC's "Kudlow and Company"

The CD graph above (from this recent CD post) was featured last night on CNBC's "Kudlow and Company." Here is a video link of the 14-minute segment, the discussion of the graph above occurs at about 4:30.

Comeback for the USD?

The USD has been gaining strength vs. the euro, and is now selling at a .54% one-year forward premium (spot rate of $1.4718/EUR and one-year forward rate of $1.4639/EUR), the highest one-year forward premium for the dollar (vs. euro) in at least several years.

Ron Paul on the Tonight Show



From last night (Monday).

For the second part of the interview, go here.


Monday, January 07, 2008

Retail Clinics and Competition Are Forcing Change

I posted recently about Target's retail health care clinics that opened recently in Minnesota and Maryland offering "quick, convenient care from a certified profession for a variety of everyday illnesses - no appointment necessary." What do primary care physicians think about this competition from retail clinics at Target, Wal-Mart and Walgreens? Any time consumer options increase and demand becomes more elastic, you can be pretty sure that status quo suppliers must be feeling some pressure from the increased competition. Here some evidence:

According to FierceHealthcare: Primary care physicians may not be sure what to do about competition from retail clinics--but this may be an option. Slowly but surely, clinics are trying new ways to make themselves flexible and accessible in ways that hadn't been common before. In Portland, for example, ZoomCare is open 362 days a year, offers evening hours, and accepts walk-in patients. Not only can they walk in, they can go online to schedule appointments and see how long their wait time will be. Zoomcare was profitable in 2007, and patient volume is growing 20 percent per quarter.

Read a related Portland Business Journal article here.

MP: Isn't it interesting that starting in the 1960s Wal-Mart pioneered an entirely new method of discount retailing and in the process broke up the old, static, stagnant retail model of high-priced department stores of that era. Perhaps the new retail model of providing low-cost retail healthcare at Wal-Mart and Target will ultimately have the same effect on the medical status quo and the AMA's cartel?

Workers Pay the Burden of Higher Corporate Taxes

Democratic front-runner Obama wants to raise corporate taxes, and taxes on capital gains and dividends. John Edwards says he will stand up to the interests in Washington that run government for the "glorification of corporate profits," as he has been regularly condemning the top six oil companies for collecting over $477 billion in profits over the past six years and often criticizing Exxon Mobil for earning $40 billion last year, the largest annual corporate profit in history.

But who actually bears the burden of higher corporate taxes? The standard assumption is that shareholders absorb the impact of higher corporate taxes, and not workers. But a new Treasury research paper, "A Review of the Evidence on the Incidence of the Corporate Income Tax," questions that assumption:

From the paper's conclusion: The incidence of the corporate income tax is an important issue for designing tax policy. Who bears the corporate income tax can affect overall conclusions about the progressivity of the tax system. Policy analysts have often made assumptions about how to allocate the corporate income tax in measuring the distribution of tax burdens.

A common assumption, based on theoretical models of tax incidence, is that capital (i.e. shareholders) bears the burden of the corporate income tax. Recent empirical work using cross-country data on corporate taxes and wages suggests reconsidering this assumption; labor may actually bear a substantial burden from the corporate income tax.

Empirical evidence from three different studies cited in the paper includes:

1. It is estimated that 61% of any additional corporate tax is passed on in lower wages in the short run, and around 100% in the long run.

2. Using cross-country panel data from the Luxembourg Income Study, it is estimated that a 10% increase in the corporate tax rate decreases annual gross wages by 7% percent.

3. The results in this paper suggest that corporate tax rates affect wage levels across countries, and that higher corporate taxes lead to lower wages. A 1% increase in corporate tax rates is associated with nearly a 1% drop in wage rates.

Bottom Line: Corporations don't pay taxes, individuals pay taxes in their roles as shareholders, workers and consumers. Higher corporate taxes translate to lower dividends for shareholders, lower wages for workers and/or higher prices for consumers. According to the empirical evidence presented in this paper, it appears that a substantial burden of increases in corporate taxes fall on the workers employed by corporations. Higher corporate taxes = lower wages.

(HT: Ben Cunningham)

Philippines: The New Destination for IT Outsourcing

In a bid to manage costs, rising salary levels, and attrition, Indian IT-BPO companies are now expanding to other low-cost destinations like the Philippines. In the last eight months, 12 tier I IT-BPO firms have set up shop in the country.

IT giant Wipro Technologies, for instance, opened a business process outsourcing (BPO) center in Cebu, one of the Philippine islands, as a part of its strategy to build global delivery capabilities.


And it is not just Indian firms that are lining up. American-based companies like IBM, Accenture and Citigroup are also present in the country.

Read more here.

Sunday, January 06, 2008

If Pitchers, Batters Both Cheat, Is It Still Cheating?

From tonight's "60 Minutes": With 354 wins, Roger Clemens is one of the best pitchers in the history of baseball. There's no question about it. But as Mike Wallace reports, there are questions now about whether Roger Clemens cheated to enhance his record and prolong his career.

At a steroid hearing in March 2005, numerous members of the House Committee on Government Reform, led by Chairman Tom Davis, R-Va., denounced performance-enhancing drugs. They offered three arguments: The drugs are illegal, they're harmful, and they're cheating.

Question: If the best pitchers in MLB like Roger Clemens are using performance-enhancing drugs at the same time that the best hitters in baseball like Mark McGwire and Barry Bonds are using performance-enhancing drugs, how can that really be cheating? Wouldn't the enhanced performance of pitchers exactly cancel out the enhanced performance of hitters, with a net effect of zero?

Inconvenient 2007 Weather: Year of Global Cooling

Exhibit A: Buenos Aires Gets First Snow Since 1918 (pictured above)

Exhibit B: The weather phenomenon La Nina will bring Canada the coldest winter in nearly 15 years.

Exhibit C: Peru has been in the grip of extremly cold weather with temperatures ranging between -22º and -15º C (July 2007). The record breaking cold spell has caused the death of 55 children under five and is responsible for over 6,000 cases of pneumonia. The Government of Peru has declared a National Emergency in 14 of the 24 Peruvian provinces as severe weather continues to sweep the country.

Exhibit D: “This has been Chile's toughest winter in the past 50 years, and the latest snow storms means less exports, job losses, less fresh vegetables and an overall negative impact for regional and local economies,” said Chile's Agriculture Minister Alvaro Rojas. Rojas added that 30 to 40 percent of citrus and 30 percent of avocados crops “can be considered as lost.”

Exhibit E: There’s snow on the ground in Johannesburg (South Africa) today (June 27, 2007), for the first time in 26 years. The Johannesburg airport shut down, hundreds of bus passengers and 20 trucks were stranded, and one man died from exposure.

Exhibit F: Following the snowiest December on record, many areas of New Hampshire got about a foot of snow on New Year's Day, with a couple of inches added during the night and a couple more likely Wednesday. December's snowfall at Concord, N.H., totaled 44.5 inches, toppling a record of 43 inches that had stood since 1876. Burlington, Vt., got 45.7 inches, far above its 17.2-inch December average, and Portland, Maine, amassed 37.7 inches for its third-snowiest December on record.

Source: "Br-r-r! Where Did Global Warming Go?" by Jeff Jacoby in the Boston Globe

Globalization's Creative Destruction and The Fate of Letter Writers in India

G.P Sawant, a professional letter writer in Mumbai for 25 years, is a winner and loser due to globalization. Mr.Sawant had made a profession out of writing more than 10,000 letters in Hindi for the poor and illiterate, who often traveled miles to the city to get letters written by him. With the telecom revolution, the price of telecommunication has dropped and his customers now use cell phones and ubiquitous telephone booths and stands. Mr. Sawant hasn't written a letter now in three years.

But the same telecom revolution that effectively killed Mr.Sawant's business has created an economic wave for his children's generation to ride. In the very years that the telecommunications revolution was squashing the letter writing business, it was plugging India into the global networks that would allow its IT industry to explode. Mr. Sawant's daughter works for India's IT giant Infosys and earns $9,000 per year, three times as much as her father did at his peak.


Read more here in the NY Times, and watch a video here.

(HT: Sanil Kori)

Cartoon of the Day and Mencken's Political Wisdom

H.L. Mencken is often regarded as one of the most influential American writers of the early 20th century. Here are some of his quotes on politics, democracy, government and elections.

1. Every election is a sort of advance auction sale of stolen goods (see cartoon above).
2. A good politician is quite as unthinkable as an honest burglar.
3. A politician is an animal which can sit on a fence and yet keep both ears to the ground.
4. Democracy is a pathetic belief in the collective wisdom of individual ignorance.
5. Democracy is also a form of worship. It is the worship of jackals by jackasses.
6. Democracy is the art and science of running the circus from the monkey cage.
7. Democracy is the theory that the common people know what they want, and deserve to get it good and hard.
8. Every decent man is ashamed of the government he lives under.
9. If a politician found he had cannibals among his constituents, he would promise them missionaries for dinner.

Read more here.