Saturday, August 29, 2009

Weather Supercomputer Predicts Climate Change, But Ironically It's One of Britain's Worst Polluters

The machine pictured above was hailed as the 'future of weather prediction' with the ability to produce more accurate forecasts and produce climate change modelling. However, the Met Office has now been named as one of the worst buildings in Britain for pollution - responsible for more than 12,000 tons of carbon dioxide a year. It says 75% of its carbon footprint is produced by the super computer, meaning the machine is officially one of the country's least green machines. Green campaigners say it is "ironic" that a computer designed to help stave-off climate change is responsible for such high levels of pollution.

Originally posted at Carpe Diem.

Markets In Everything: A U.S. Call-Center That Pays $100K a Year And Has Doubled Workforce in Ohio

BUSINESS WEEK -- Consider iQor, a call center and business process outsourcing company based in Columbus, Ohio, that's increased revenues at a 40% clip for the past four years. It's done this primarily by expanding its U.S. operations. IQor also gives its U.S. employees universal health insurance, and pays salaries and bonuses that are nearly 50% above industry norms.

Call centers and back-office work in all but the most specialized areas have been rapidly moving off U.S. soil. iQor, on the other hand, has 12 locations in the U.S. that house nearly half its 11,000 employees, including in such all-American cities as Columbus, Buffalo, and Greensboro It also has operations in Canada, India, the Philippines, and U.K. The best of iQor's front-line call-center workers make more than $100,000 per year, and that's not a typo. During the past four years, iQor added nearly 3,000 jobs in the U.S., making it the company's fastest growing region.

iQor Continues Growth in Columbus, Doubles Employment in Less Than Two Years

COLUMBUS, OH, August 10, 2009 – iQor, Inc., a global provider of business process outsourcing (BPO) services is continuing to hire Agents at its Columbus Center of Excellence. Current plans include hiring as many as 100 Agents in the next two months. The Columbus Center now has over 800 employees.

MP: Despite the U.S. recession and a worldwide economic slowdown, here's an example of a successful U.S.-based company that has continued to expand its global operations, especially in the U.S., and has continued to hire American workers at attractive salaries during "the worst economy since the Great Depression."

Thanks to Arthur Little.

Originally posted at Carpe Diem.

Coupon Queen: $279 of Groceries For Only 39¢

Mom Feeds Family For Under $10 A Week

Isn't this just the epitome and apotheosis of "consumer greed?"

Originally posted at Carpe Diem.

New Age of Cheap Energy Approaches: A Tribute to the Virtues of Markets, Free Trade and Capitalism

UK Telegraph -- We have all become so used to reading that the end of the world is nigh that we tend to close our eyes and stick our fingers in our ears when there is evidence to the contrary. So you have probably missed one of the biggest pieces of good economic news to emerge recently: energy prices are coming down, in some cases to record lows. Furthermore, even if prices start to recover, they are not likely to return to the ridiculous levels of 2008 any day soon.

This is excellent news, of great import. The trend for gas and electricity bills is downwards; diesel is back at the same price as regular gasoline; the world is practically choking on natural gas, and is potentially awash with oil. The main international natural gas price has this week fallen to a record low, due to a surplus of new resources from North America (see chart above). Even the stubbornly high oil price has dropped.

How come natural gas prices have fallen so much? To understand why, you need to get up to speed on the exciting phenomenon of so-called tight gas. This, after coal, could perhaps be the world's most prolific energy source. Hitherto, we have relied on conventional deposits of natural gas. But tight gas is locked into difficult rock formations, such as shale, and in the past couple of years the industry has found low-cost ways of fragmenting those rocks in order to get at the gas, particularly in America. The result is that US gas reserves have effectively doubled, almost unnoticed; and the same technology can be readily applied in Canada, Australia, Asia and even parts of Europe.

As we go into the autumn, US gas storage units are almost full to bursting. Facilities once designed to import are being turned around for export. When it comes to gas, America is the new Russia. And for the rest of the world, tight gas equals one thing: freedom. How has this amazing development come about? Well, my friends, it is the market at work. The high prices of the past decade incentivized a scramble for new technology and projects which are now producing.

An era of cheap and abundant energy will be a much-needed tribute to the unfashionable virtues of markets, free trade, and capitalism.

MP: As the chart above shows, inflation-adjusted natural gas prices have fallen by 80% since the peak in 2005, and are now close to the prices that prevailed in the 1990s. In addition to the significant benefits of falling natural gas prices, another advantage to natural gas is that there is "no OPEC cartel to dominate it," as the article points out.

HT: Arthur Little

Originally posted at Carpe Diem.

Markets in Everything: College-Themed Caskets

Taking School Spirit to the Grave

NEW YORK -- If you thought school spirit meant just plastering your college bumper sticker on your car, think again. These days, devoted alumni and fans of their college team can show their undying school spirit — in a college-themed casket.

"I don't think any of us can deny the experience education has played in our lives," said Scott Walston, president of Collegiate Memorials, which sells the caskets for 46 schools throughout the country. "When families choose the casket, they're setting the stage to conjure up memories to celebrate who the person was."

Originally posted at Carpe Diem.

Markets in Everything: Direct Purchase of Drugs

WSJ -- Walgreen Co. will offer prescription drugs directly to Caterpillar Inc. for workers and retirees starting Jan. 1, expanding an unusual approach to cutting corporate health-care costs and improving efficiency.

When Caterpillar is buying drugs, the agreements will allow it to bypass pharmacy benefits managers, or PBMs, the managed-care companies that most large employers use to administer prescription-drug programs for employees. Caterpillar will negotiate pricing directly with Wal-Mart and Walgreen instead of paying a PBM to handle that part of the business. Savings will come through lower prescription drug costs for Caterpillar.

The Caterpillar approach, which comes at a time of heightened uncertainty about the future of health care in the U.S., could serve as a template for other large companies to manage their drug plans in more cost-effective and transparent ways.

MP: Another example of how competitive market forces, not government intervention, result in lower health care costs.

Originally posted at Carpe Diem.

Friday, August 28, 2009

Best Six-Month Stock Market Rally Since 1933


From the early March lows, the Dow Jones Industrial Average has seen a spectacular rise of about 45%, marking the best six-month stock market rally since January of 1933 (see chart above).

HT: Drudge Report.

Originally posted at Carpe Diem.

ECRI: Double-Dip Recession "Out of the Question"

NEW YORK (Reuters) - A weekly measure of future U.S. economic growth slipped in the latest week, though its yearly growth rate surged to a 38-year high that suggests chances of a double-dip recession are slim. The Economic Cycle Research Institute said its Weekly Leading Index for the week to August 21 fell to 124.4 from 124.9 the prior week. But the index's annualized growth rate soared to a 38-year high of 19.6% from 17.4% the prior week. It was the WLI's highest yearly growth rate reading since the week to May 28, 1971, when it stood at 20.5% (see chart above).

"With WLI growth continuing to surge through late summer, a double dip back into recession in the fourth quarter is simply out of the question," said ECRI Managing Director Lakshman Achuthan, reinstating the group's recent warning to ignore negative analyst projections. Achuthan has recently projected that the recovery is moving at a stronger pace than any the United States has seen since the early 1980s.

HT: Al Bellenchia
Originally posted at Carpe Diem.

Markets In Everything: Hourly Car Rental Takes Off

FORTUNE -- For drivers who already share movies via Netflix and stream music rather than buying CDs, the idea of sharing a car is the natural extension of a hip, financially smart, and environmentally conscious urban lifestyle.

After all, drivers who give up their cars and switch to Zipcar say they save an average of $600 per month. Car sharers report reducing their vehicle miles traveled by 44%, according to Susan Shaheen of the University of California at Berkeley, and surveys in Europe show CO2 emissions are being cut by up to 50% per user.

You can now find Zipcars in most major U.S. cities, including Seattle, San Francisco, Atlanta, Chicago, and New York, and in college towns like Ann Arbor and Chapel Hill, as well as in Britain.

Perhaps the clearest indication of how big the car-sharing market could become is the entrance of rental giants such as Hertz (HTZ, Fortune 500), Enterprise, and U-Haul. Hertz launched a service in December in New York, London, and Paris that freely copies Zipcar, right down to the forest-green tones of its website and emphasis on a caring "community" of users.

Originally posted at Carpe Diem.

Compared to Canada, The U.S. Has Way TOO Many Banks: Bank Failures Might Be Good for the U.S.

With more than 8,000 banks, does the U.S. have too many banks? The comparisons to Canada below provide some perspective. According to Wikipedia, Canada has a total of 72 banks, and that number is very high by historical standards.

From 1920 to 1980,
Canada had only 11 banks. By May 2006, that number had increased to more than 60 in the wake of regulatory changes permitting the entry of foreign competitors.

In contrast, the U.S. currently has
almost 8,200 banks, or about 114 banks for each one bank in Canada, see chart below.

Of course, the U.S. population (304 million) is much higher than Canada's (33 million), so the chart below shows the number of banks per million persons in each country, and the population-adjusted number of banks in the U.S. is still more than 12 times larger than Canada (27 banks per million in the U.S. compared to 2.2 banks per million in Canada).

Bottom Line: Maybe the U.S. has too many banks, and the recent bank failures are a positive development for the U.S. economy and banking system. Weak, failing banks can't facilitate the flow of credit in the economy, and the banking system is better off without those banks. Keep in mind that the assets, loans and deposits don't disappear when a weak bank fails, those assets, loans and deposits are usually taken over by a larger and/or stronger bank.

See the FDIC's list here of the 81 banks that have failed in 2009, and notice that in every case the deposits were assumed by another bank, and in most cases either all or most of the assets of the failed bank were purchased by the acquiring bank. It should also be noted that in most cases the assets/loans of the failed bank actually exceed the value of the deposits, although it's not clear how those assets are valued.

Even if we lost another 1,000 banks as some are predicting, we would still have more than ten times the number of banks in Canada, adjusting for the differences in population. We should welcome, not resist the forces of Schumpeterian creative destruction in the banking system.

The Dark Side of Ted Kennedy's Legacy

4-Block World.

Nick Gillespie, Reason Magazine -- The legislation for which Ted Kennedy will be remembered is precisely the sort of top-down, centralized legislation that needs to be jettisoned in the 21st century. Kennedy was in fact a man out of time, a bridge back to the past rather than a guide to the future. His mind-set was very much of a piece with a best-and-the-brightest, centralized mentality that has never served America well over the long haul.

Bigger was better, and government at every level but especially at the highest level, had to lead the way. In an increasingly flat, dispersed, networked world in which power, information, knowledge, purchasing power, and more was rapidly decentralizing, Kennedy was all for sitting at the top of a pyramid and directing activity. In this way, he was of his time and place, a post-war America that figured that all the kinks of everyday life had been mastered by a few experts in government, business, and culture. All you needed to do was have the right guys twirling the dials up and down. As thoughtful observers of all political stripes have noted, this sort of thinking was at best delusional, at worst destructive. And it was always massively expensive.

Alan Bock (via Cafe Hayek) -- In the hoopla over the death of Ted Kennedy a good deal of nonsense is being spewed about the nobility of "public service." Ted spent his entire life in public service -- he never had a private-sector job nor did he need one, given the money he inherited. So we are supposed to be grateful that he spent his whole life serving others.

No doubt he saw it that way, but the only way a politician can "serve others" is to take money and other resources from some people to give it to others. Government has no money of its own, only what it can take as plunder from people who create value in the world. When they do so, they may actually be of help to those who are benefited, but the price is reducing the amount of wealth in a society, meaning there is less to go around. That's what "public service" as a politician -- as compared, for example, to a philanthropist, who uses his own money and/or skills and time to benefit others -- amounts to.

Don Boudreaux -- While Kennedy didn’t choose a life of ease, he did something much worse: he chose a life of power. That choice satisfied an appetite that is far grosser, baser, and more anti-social than are any of the more private appetites that many rich people often choose to satisfy. Americans would have been much better off had Ted Kennedy spent his wealth exclusively, say, on the pursuit of sexual experiences and the building of palatial private homes in which to cavort, or to take drugs, or to engage in whatever private dissipations his wealth afforded him.

Instead, Mr. Kennedy spent much of his wealth and time pursuing power over others (and of the garish ‘glory’ that accompanies such power). He did waste his life satisfying unsavory appetites; unfortunately, the appetites he satisfied were satisfied not only at his expense, but at the expense of the rest of us. Mr. Kennedy’s constant feeding of his appetite for power wasted away other people’s prosperity and liberties.

Originally posted at Carpe Diem.

Thursday, August 27, 2009

America's Smallest Bank: Oakwood Bank of Texas

Oakwood Bank, America's smallest bank, has about $3 million in total assets and about $2.13 million in total deposits (bank data here). In contrast, America's largest bank, Chase, has about $1.60 trillion of assets and almost $1 trillion of deposits, more than 500,000 times the size of Oakwood (bank data here).

Originally posted at Carpe Diem.

81 Bank Failures So Far in 2009: It's All Relative

So far this year, there have been 81 bank failures out of 8,195 FDIC-insured institutions, or slightly fewer than 1% of all banks. How does that compare to previous periods of financial stress and episodes of bank failures?

This first graph below shows annual bank failures (data here) from 1930 to 2009, showing the two most serious banking crises, the Great Depression (9,146 bank failures) and the S&L Crisis (2,935 bank failures).

This chart shows bank failures from 1935 to 2009, and puts the 81 bank failures this year in perspective in comparison to the S&L crisis and the second half of the Great Depression.

This chart below shows bank failures since 1970, and puts some further perspective on the 81 bank failures this year, compared to the S&L crisis.

Caveat: This analysis simply shows the number of bank failures per year, and could obviously be supplemented with data on the number and size of bank failures.

Originally posted at Carpe Diem.

Creative Destruction

1. Mobile phones replace alarm clocks.

2. 158 million U.S. Internet users watched online video in July, the largest audience ever recorded. Online video reached another all-time high in July with a total of 21.4 billion videos viewed during the month.

3. Toyota to Close Union Plant in California, the first time Toyota has ever closed a U.S. plant.

Originally posted at Carpe Diem.

Cartoonify Yourself

Create free cartoons from your photos at BeFunky.

Originally posted at Carpe Diem.

Peak-Oil and Biofuels: Both Running On Empty

Michael Lynch, NY Times -- In the end, perhaps the most misleading claim of the peak-oil advocates is that the earth was endowed with only 2 trillion barrels of “recoverable” oil. Actually, the consensus among geologists is that there are some 10 trillion barrels out there. A century ago, only 10% of it was considered recoverable, but improvements in technology should allow us to recover some 35% — another 2.5 trillion barrels — in an economically viable way. And this doesn’t even include such potential sources as tar sands, which in time we may be able to efficiently tap.

Oil remains abundant, and the price will likely come down closer to the historical level of $30 a barrel as new supplies come forward in the deep waters off West Africa and Latin America, in East Africa, and perhaps in the Bakken oil shale fields of Montana and North Dakota. But that may not keep the Chicken Littles from convincing policymakers in Washington and elsewhere that oil, being finite, must increase in price.

This is not to say that we shouldn’t keep looking for other cost-effective, low-pollution energy sources — why not broaden our options? But we can’t let the false threat of disappearing oil lead the government to throw money away on harebrained renewable energy schemes (see WSJ article below) or impose unnecessary and expensive conservation measures on a public already struggling through tough economic times.

Wall Street Journal -- The biofuels revolution that promised to reduce America's dependence on foreign oil is fizzling out. Two-thirds of U.S. biodiesel production capacity now sits unused, reports the National Biodiesel Board. Biodiesel, a crucial part of government efforts to develop alternative fuels for trucks and factories, has been hit hard by the recession and falling oil prices.

The global credit crisis, a glut of capacity, lower oil prices and delayed government rules changes on fuel mixes are threatening the viability of two of the three main biofuel sectors -- biodiesel and next-generation fuels derived from feedstocks other than food. Ethanol, the largest biofuel sector, is also in financial trouble, although longstanding government support will likely protect it.
Originally posted at Carpe Diem.

Turf War Smackdown: The AMA and MDs vs. DNPs

CHICAGO TRIBUNE -- The University of Michigan-Flint is launching an online doctoral program in nursing this fall. The university says the nurse practitioners it trains will be able to assess and manage medical and nursing problems in a variety of specialties and settings. It says the new degree program is a response to a looming shortage of nurses and doctors. The four-year Doctor of Nursing Practice (DNP) program is aimed at skills needed for advanced nursing practice in primary health care.

And what does the AMA think about the DNP alternative to a "looming shortage of nurses and doctors?"

Delegates at the recent annual meeting of the AMA left little room for doubt when it came to their views on the appropriate role of nurses in patients' medical care. Although nurses -- including those with a terminal degree in nursing -- are welcomed as part of the medical team, physicians still need to take the lead.

Despite strongly worded opposition from national nursing organization representatives who attended the meeting, the delegates adopted a resolution that called for new AMA policy stipulating that doctors of nursing practice, or DNPs, "must practice as part of a medical team under the supervision of a licensed physician who has final authority and responsibility for the patient." The delegates further directed the AMA to oppose a recent move by the National Board of Medical Examiners, or NBME, which earlier this spring announced it would develop and administer a certification exam for graduates of DNP programs.

Originally posted at Carpe Diem.

Markets In Everything: Creative Poodle Grooming

DailyMail -- They may resemble pandas, buffalos and camels - but these animals are actually poodles, all competing for the title of top dog at 'creative grooming' shows across the U.S.

HT: Adam Smith Institute

Originally posted at Carpe Diem.

Spending on Lobbying Doubled From 2000 to 2008

The top chart above shows that spending on lobbying in the U.S. more than doubled between 2000 ($1.56 billion) and 2008 ($3.30 billion), according to the searchable lobbying database of The bottom chart shows the top 20 organizations that spent the most on lobbying between 1998-2009.

One of the indirect, and often hidden costs of increased government spending, changes in tax policy, or increased government regulation, or even the potential for increased government regulation of industries (pharmaceuticals, health care) or higher taxes (windfall oil profits tax), or the threat of deregulation of industries controlled by trade groups like the AMA, is the cost of potentially wasteful "rent seeking," aka lobbying. From the list of top lobbying spenders, it looks a lot like the industries and companies that had the most to gain or lose from government action (health care, real estate, mortgage, GM, and Exxon) over the last ten years spent the most on lobbying to influence legislation in their favor.

Maybe it's also the case that some of the most heavily regulated industries (health care, health insurance, oil, telecommunications, real estate) spend the most on lobbying. For example, in the largely unregulated high-tech sector, large industry leaders spent relatively small amounts on lobbying in 2008: Dell Computer ($160,000), eBay ($2 million), Amazon ($1.3 million), Google ($2.8 million) and Yahoo! ($2.35 million). Compare those amounts to the heavily regulated and heavily taxed Exxon, which spent $29 million on lobbying in 2008, or more than 10 times more than Google or Yahoo!
Originally posted at Carpe Diem.

Wednesday, August 26, 2009

It's A Sweet Deal for Sugar Growers, But A Sour Deal for Consumers Who Pay Twice World Price

The chart above displays refined sugar prices (cents per pound) using annual data from the USDA for a) U.S. wholesale refined beet sugar price at Midwest markets and b) the world refined sugar price. Due to trade restrictions on imported sugar coming into the U.S. at the world price, the U.S. sugar beet producers have a sweet deal, assisted by their government enablers, who protect them from more efficient foreign sugar growers who can produce cane sugar in Central America, Africa and the Caribbean at half the cost of beet sugar in Minnesota and Michigan. Of course, there's no free lunch, and this sweet trade protection comes at the expense of American consumers and U.S. sugar-using businesses, who pay twice the world price of sugar on average (26.6 cents for domestic sugar from beets vs. 13.1 cents for sugar from cane, see chart).

The cost of most trade protection is largely invisible, but the cost of sugar protection is directly visible and measurable, since the USDA and the futures markets regularly report prices for both domestic sugar and world sugar.

Markets In Everything: Kaiser Microclinics At 50% of the Cost of a Full-Service Hospital

WIRED.COM -- Kaiser Permanente has long relied on a simple strategy of building complete, self-sustaining hospitals—employing 50 doctors or more—in each region it serves. "It's an efficient model," says Michele Flanagin, Kaiser's vice president of delivery systems strategy. "It offers one-stop shopping: pharmacy and radiology and everything you want from health care in one building." But that approach forces patients who don't live near a hospital to drive a long way for even the most routine doctor's appointment.

In 2007, Flanagin and her colleagues wondered what would happen if, instead of building a hospital in a new area, Kaiser just leased space in a strip mall, set up a high tech office, and hired two doctors to staff it. Thanks to the digitization of records, patients could go to this "microclinic" for most of their needs and seamlessly transition to a hospital farther away when necessary. So Flanagin and her team began a series of trials to see what such an office could do. They cut everything they could out of the clinics: no pharmacy, no radiology. They even explored cutting the receptionist in favor of an ATM-like kiosk where patients would check in with their Kaiser card.

What they found is that the system performed very well. Two doctors working out of a microclinic could meet 80% of a typical patient's needs. With a hi-def video conferencing add-on, members could even link to a nearby hospital for a quick consult with a specialist. Patients would still need to travel to a full-size facility for major trauma, surgery, or access to expensive diagnostic equipment, but those are situations that arise infrequently.

Flanagin believes these clinics will enable Kaiser to add thousands of new members. And they'll do it for less. The per-member cost at a microclinic is roughly half that of a full Kaiser hospital. The first microclinic is set to open in Hawaii early next year.

MP: Would we get this type of cost-saving innovation under government-run health care?

Originally posted at Carpe Diem.

New Homes For Sale At 16 Year Low

WASH POST -- Builders have made huge strides in whittling away at the over supply of homes, which is key to regaining their footing in the market. The builders have instituted dramatic cutbacks in home construction, either voluntarily or because they were forced to after their financing was cut off. The end result is that the raw number of new homes for sale at the end of July was 271,000, the lowest reading since March 1993 (see chart above).

MP: The new homes for sale at the end of July (271,000) is less than half of the peak levels in 2007, and are even below the average since 1963 of 329,300. One more sign of a significant correction in the real estate market, and further evidence that the recession is ending.

Housing Market Emerges From Slump

WASHINGTON/WSJ -- New-home sales climbed more than anticipated in July, staging their fourth straight month of strong gains to add to evidence that the housing market is emerging from its long slump. Sales of single-family homes increased by 9.6% to a seasonally adjusted annual rate of 433,000 compared to the prior month, the Commerce Department said Wednesday.

That was the highest number sold since September 2008 and well above projections for a 1.6% gain to 390,000 by economists surveyed by Dow Jones Newswires. The increase was the fifth in seven months, as buyers are returning to the market in search of bargains. The market for new homes appears to have bottomed in January, when sales hit 329,000 (see chart above).

MP: Commerce also reported that the supply of new homes fell in July to 7.5 months, the lowest inventory of new homes in more than a year (see chart above), and almost 5 months below January's peak reading of 12.4 months, providing more evidence that the real estate slump is ending.

Originally posted at Carpe Diem.

Markets In Everything: Domestic Medical Tourism

BUSINESS INSURANCE -- When Scarborough, Maine-based supermarket chain Hannaford Bros. announced last year that it would begin sending its employees to Singapore for knee and hip replacements to save the company money, it attracted the attention of several hospitals in Boston that offered to match the price. What the company probably did not realize at the time was that it was at the forefront of an emerging market: domestic medical tourism.

Unlike foreign medical tourism, patients don't leave the country. Instead, they travel to another city within the United States to have procedures for up to 75% less than they would pay if they were treated closer to home. One of the primary reasons some U.S. medical facilities are willing to be paid less is that they are generally compensated upfront, before the procedures are conducted, which enables them to avoid the arduous task of seeking reimbursement afterward from insurers and third-party administrators. The facilities also receive a single package price that is negotiated beforehand.

MP: Market competition is a wonderful antidote to rising medical care costs. Even if there's no interstate competition for health insurance (see related CD post), there appears to be a growing market for interstate hospital care.

Originally posted at Carpe Diem.

HSAs: Putting Patients In Charge of the Rationing

Investor's Business Daily -- Health savings accounts (HSAs) are still alive and growing. Not only that, they seem to be working as planned.

From 2007 to 2008, the total cost of premiums and employer cash contributions to HSAs rose by 2.3% for family coverage, less than half the 4.7% rise in premiums for family coverage overall. HSA-linked coverage is also much cheaper than conventional plans. Its average annual total costs to employers and employees, according to Kaiser, were $10,623 for a family plan in 2008 vs. $12,680 for all family plans. This alone means HSAs would help hold overall premium costs down if they continue to get a larger market share.

HSAs reward consumers for price-conscious decisions by giving them a tax-sheltered account to salt away the money they save. Patients get a little richer by choosing generics over brand-name drugs and staying alert to overbilling. Where there's rationing — in the sense of deciding whether this procedure or that drug is worth the cost — it's the patients themselves who make that call.

This is true reform because it fundamentally changes the way people pay for health care. The role of the third-party payer shrinks, and medicine starts returning to what it once was: a two-way relationship between patients and providers.

Originally posted at Carpe Diem.

Baltic Dry Index Update

From Calafia Beach Pundit:
A loyal CD reader has been "jonesing" for an update on the Baltic Dry Index and Scott Grannis provides an excellent "fix," and also reports on several other shipping indexes.

Originally posted at Carpe Diem.

Tuesday, August 25, 2009

2009 Math SAT Scores Are In: Gender Gap Persists

SAT test scores for 2009 were released today by the College Board, and the male-female gender gap for the mathematics test increased to 35 points to the highest level since 2004, reversing the narrowing gender gap over the previous 4 years (see bottom chart above). The average male score for the math exam was 534 points compared to the average female score of 499 points (see top chart above). What should also be noted is:

1. The variability of male math test scores (standard deviation of 118) was significantly higher than the variability of female math test scores (standard deviation of 112).

2. For math test scores above 700, males outnumbered females by a ratio slightly greater than 2:1 (8.7% of males vs. 4.32% of females scored above 700).

3. Females have higher overall GPAs than males, 3.39 vs. 3.24, and females outnumber males at the highest GPAs: more than 60% of students with GPAs equivalent to A and A+ are female.

4. For mathematics courses only, female and male students both have average GPAs of 3.14.

Bottom Line: Based on both overall GPAs and GPAs for math courses, we would expect female students to perform as well as, or better than, males on the math SAT exam, and yet we find exactly the opposite: a gender gap on the math exam in favor of males that persists over time.

Yale's Econ Ph.D. Program Summer Math Camp

2009 Math Camp Syllabus, topics include linear algebra (lecture notes), real analysis (notes), calculus with one variable (notes), multivariate calculus (notes), convex analysis (notes), optimal control theory (notes), and dynamic programming (notes).

Problem Set 1
Problem Set 2
Problem Set 3
Problem Set 4
Problem Set 5
Problem Set 6
Problem Set 7
Problem Set 8
Problem Set 9
Problem Set 10
Problem Set 11

Main website for Yale's Economics Ph.D. Summer Math Camp.

Originally posted at Carpe Diem.

Kauffman Foundation's Economics Blogger Forum

The 20-minute video above (direct link here) features a diverse group of writers whose wide-ranging intellectual and political vantage points were recorded during the first-ever Economics Bloggers Forum hosted early this year by the Kauffman Foundation. "The piece highlights some of America’s top economics bloggers, including professional and academic Ph.D. economists and journalists who have built loyal Web audiences by offering in-depth economic analysis and provocative commentary."

MP: I make several brief appearances between 15:00 and 16:00.

Originally posted at Carpe Diem.

Russia's Magnificent Metro Stations

THE ECONOMIST -- One of the first things you notice when using mass transportation in Moscow or St. Petersburg is the depth and beauty of the two cities' metro systems. Gulliver recently spent some time in both cities' subway systems, but there aren't any photos to show you: it's still illegal to snap pictures in Russian metros (one of the reasons they were built so deep underground was to serve as bomb shelters.)

Despite the restrictions, some fearless Wikipedians and flickr users have taken some beautiful pictures of metro systems all across the former Soviet Union, and Treehugger has put them together into a gorgeous (and informative) slide show (see samples above).

MP: For some stats on the Moscow subway system, see Wikipedia listing here, e.g. daily ridership of 7 million, 177 stations, 12 lines. Especially compared to the U.S., the Russia metro stations are more like museums, basilicas or churches than grimy, subway stations, with marble, chandeliers, columns, and stained glass.

Originally posted at Carpe Diem.

Big Sugar's Sickeningly Sweet Deal

WASHINGTON POST -- Down on the farm, the latest dispute pits America's sugar producers against their biggest customers: food manufacturers that add the sweetener to everything from raisin bran to raspberry yogurt. The food makers are unhappy with a recent tightening of supplies that has pushed the wholesale price of refined sugar to 35 cents per pound (see sugar futures prices above at 28-year highs). Warning of higher grocery prices and lost jobs, the manufacturers want Agriculture Secretary Tom Vilsack to allow more imports. Domestic sugar growers insist that supplies are adequate, thanks in part to imports of Mexican raw sugar to U.S. refineries, which were allowed on a tariff-free basis for the first time last year as part of the North American Free Trade Agreement.

Since 1982, domestic sugar producers have lobbied for, and gotten, a government-guaranteed share of the market. Today, their guaranteed share is up to 85%; the rest gets divided up among some 40 countries lucky enough to hold quotas of varying sizes. The advent of free Mexican imports upset this scheme somewhat, which is why the 2008 farm bill promised that the government would offset them by purchasing excess U.S. sugar and shipping it to ethanol factories. In addition, the federal government guarantees minimum prices for both raw cane sugar and refined beet sugar. Pretty sweet.

To be sure, the various sugar programs don't involve the huge direct outlays of taxpayer money that other farm supports do. In a way, though, they're even worse, since the blatant protectionism operates as a non-transparent tax on every product that uses sugar as an input. Free trade in sugar would bring short-term disruptions for domestic refineries and the growers who own them but, ultimately, greater efficiency and fairness for U.S. consumers and our trading partners. Alas, we're probably stuck with the status quo -- and the wasteful inter-industry political battles it engenders -- at least until Congress writes a new farm bill in about four years.

MP: Couldn't we apply our current energy policy to sugar, and significantly restrict domestic sugar production and open up our borders to lower-priced world sugar?

Originally posted at Carpe Diem.

Richmond Fed Still Signals Recession Is Ending

In August, manufacturing activity in the central Atlantic region expanded for the fourth straight month, according to the Richmond Fed's latest survey (see chart above). Looking at the main components of activity, shipments expanded further, while new orders grew at a slightly slower rate and employment steadied. Correspondingly, solid activity was evident in other broad indicators. Capacity utilization continued to strengthen notably, while backlogs and vendor delivery times matched July's pace. In addition, manufacturers reported considerably quicker growth in raw materials inventories, but noted slower growth in finished goods materials inventories.

MP: Although the Current Conditions Index remained unchanged, the Richmond Fed is still reporting an expansion of manufacturing activity in August for the fourth consecutive month.

Originally posted at Carpe Diem.

Case-Shiller Home Price Index Rises for Second Straight Month, First Time In Almost 3 Years

NEW YORK (Reuters) - Prices of U.S. single-family homes rose for the second consecutive month in June, exceeding expectations and adding to evidence that the three-year housing slump is easing, Standard & Poor's reported on Tuesday.

The S&P/Case-Shiller composite indexes of 10 and 20 metropolitan areas both rose 1.4 percent in June from May, almost three times the 0.5 percent increases of the month before. May's increases were the first in nearly three years (see chart above, data here).

Optimism over a housing recovery blossomed last week after reports showed rising confidence among homebuilder and sales of existing homes rose in July for the fourth consecutive month. Economists expect the sector's recovery could help the nation emerge from recession and further stabilize financial markets that have suffered their worst crisis since the 1930s.

MP: The increases in May and June for the Composite-20 Index marks the first time in almost three years of back-to-back monthly increases, and the June increase was the largest monthly increase since October 2005 (see chart above,
data here).

Originally posted at Carpe Diem.

Watch Perfectly Good Assets Being Destroyed

From Brad Smith at Division of Labour:

Thanks to the glories of YouTube, we can watch as the government mandates the destruction of perfectly good automobiles to "help the economy." Here is a very nice 1990s Dodge Dakota 4X4 being destroyed. It is a much better vehicle than my pick up truck.

This is a Corvette that looks to be in pretty good condition. Black, pretty sharp car. I'm sure there are a lot of young men crammed into 2001 Malibus who would have liked this car.

In this video, a '98 Cadillac DeVille with less than 80,000 miles meets its end. Just 68,000 miles on this Chevy Caprice wagon.

A nice looking 2001 Mazda light truck with 75,000 miles bites the dust here. Here's a good looking Volvo prematurely destroyed. This SUV would look at home in any tony U.S. suburb.

Really, you ought to look at at least a couple of these videos, and the hundreds more like them on YouTube. Are these "clunkers?" Can it really help the economy to destroy perfectly good assets? Are the people running the government the most economically illiterate bunch since FDR ruled the roost? Or are they dumber?

Originally posted at Carpe Diem.

Facts About Infant Mortality

Steve Chapman -- African-American babies are far more likely to die than white ones, which is often taken as evidence that poverty and lack of health insurance are to blame. That's entirely plausible until you notice another racial/ethnic gap: Hispanics of Mexican or Central or South American ancestry not only do consistently better than blacks on infant mortality, they do better than whites. Social disadvantage doesn't explain very much.

Thomas Sowell -- While it is true that black mothers get less prenatal care than white mothers and have higher infant mortality rates, it is also true that women of Mexican ancestry also get less prenatal care than white women and yet have lower infant mortality rates than white women. But, once people with the prevailing social vision see the first set of facts, they seldom look for any other facts that might go against the explanation that fits their vision of the world.

Originally posted at Carpe Diem.

Signers of "Tax-Me" Petition Can Pay Right Now

Christian Science Monitor -- Raise my taxes, says millionaire Chuck Collins. The scion of the Oscar Mayer family supports a House panel’s healthcare plan that would boost taxes for families earning more than $350,000 a year. He also advocates ending the Bush tax cuts for the rich right away, rather than when they expire at the start of 2011, and closing foreign tax havens to Americans.

Although the financial burden would be sizable, Mr. Collins is busy urging other wealthy Americans to sign a tax-me petition. “The good news is there are still people out there willing to pay for the common good,” says Collins, whose nonprofit Wealth for the Common Good is collecting the names. As of July 21, some 210 wealthy people had signed. Collins hopes to get more than 1,000 signatures before delivering it to President Obama and House leaders.

MP: They now have more than 1,000 names on the "Tax-Me" petition to reverse the Bush-era tax cuts on wealthy households and "almost 200 of these signers have household incomes over $235,000 and would pay the tax" (full list here). I guess that means the other 800 signers either don't make more than $235,000 or just aren't willing to pay the higher taxes themselves?

But if these individuals are willing to pay higher taxes in the future once the Bush tax cuts expire in 2011, they should be willing to pay those higher taxes right now if they are so "willing to pay for the common good." So why wait? Here are the instructions from the Treasury Department's website for making a gift to the United States government today:

Citizens who wish to make a general donation to the U.S. government may send contributions to a specific account called "Gifts to the United States." This account was established in 1843 to accept gifts, such as bequests, from individuals wishing to express their patriotism to the United States. Money deposited into this account is for general use by the federal government and can be available for budget needs. These contributions are considered an unconditional gift to the government. Financial gifts can be made by check or money order payable to the United States Treasury and mailed to the address below.

Gifts to the United States
U.S. Department of the Treasury
Credit Accounting Branch
3700 East-West Highway, Room 622D
Hyattsville, MD 20782

Why doesn't the Wealth for the Common Good publish this information on its website for those signers of the petition who are willing to declare "I Will Pay Higher Taxes to Invest in My Country and I Am Willing to Pay Right NOW." Chuck Collins could be an example and inspiration to his signers by being the first to make such a gift.

HT: Dennis Gartman

Monday, August 24, 2009

July California Home Sales Highest Since August 2006; 13 Consecutive Monthly Sales Increases

DQNews -- An estimated 45,079 new and resale houses and condos were sold statewide last month. That was up 2.1% from 44,167 in June, and up 14.1% from 39,507 for July 2008. Sales have increased on a year-over-year basis the last thirteen months. Last month's sales were the highest for any month since 51,054 homes were sold in August 2006. The median price paid for a home last month was $250,000, up 1.6% from $246,000 in June, and down 21.4% from $318,000 for July a year ago. The upturn in median the last three months is the result of a relative increase in sales of more expensive homes.

Originally posted at Carpe Diem.

New Big Mac Index: Working Time To Buy Big Mac

THE ECONOMIST -- The size of your pay packet may be important, but so is its purchasing power. Helpfully, a UBS report published this week offers a handy guide to how long it takes a worker on the average net wage to earn the price of a Big Mac in 73 cities. Fast-food junkies are best off in Chicago, Toronto and Tokyo, where it takes a mere 12 minutes at work to afford a Big Mac. By contrast, employees must toil for over two hours to earn enough for a burger fix in Mexico City, Jakarta and Nairobi.

Originally posted at Carpe Diem.

Cash for Clunkers, Bad News for Repair Shops: "The Gov.t Is Using My Own Money to Hurt My Business"

Fairfax Times -- "Cash for Clunkers" is bad news for Bill Wiygul, whose family owns several automotive repair shops in northern Virginia. Starting with one repair shop in Alexandria in 1976, the family now runs four automotive centers, two in Alexandria and one each in Reston and Herndon.

Shortly before the CARS program was initiated, Wiygul’s family purchased some property next to its Herndon location and planned to expand that location. Business was booming, in part because of an economy that forced many consumers to hold on to their older vehicles and keep them up in lieu of spending much-needed money on newer models.

“We put $1 million into that location,” Wiygul said of his Herndon site. “And now the federal government is subsidizing my competition. It is the most infuriating thing I have seen in 30 years of business.”

Wiygul said that among his four locations, he has lost at least 20 customers, including eight in Reston. “They are telling me they are going with the federal program,” he said of his disappearing clientele.

Wiygul said he does not blame consumers for joining the federal gravy train, he just wishes his tax dollars were not being used to help them do it. “,” he said. “And the thing that really gets me is that they are clearly favoring one segment of the auto industry over another. And of course it is the segment that they have a vested financial interest in.”

As part of the federal bailout plan, the U.S. government has invested about $65 billion and currently owns approximately 61% of General Motors and about 10% of Chrysler. “It is a very slippery slope,” Wiygul said.

Others in the auto repair business are also feeling the pain. Roy Page, who owns Advanced Auto Tech in Newington, said his business has dropped off 25% since the inception of the “cash for clunkers” program. “The older cars that we used to see are just no longer there,” he said. “Customers are telling us they are going with the program.”

Wiygul says that because of the program, potentially viable cars are also being taken off the market, limiting the affordable options that those in the market for a used vehicle can choose from. “This thing will have consequences that no one has thought of yet,” he said.

“For example, newer cars have hidden costs to consider, such as higher insurance, more expensive tires, and car payments that will still need to be paid long after the program is a memory.”

First Trust Portfolios

Originally posted at Carpe Diem.

Rx: The Interstate Insurance Competition Cure

Click to enlarge.
Wall Street Journal -- Allow us to suggest a path to competition that will be a lot easier than erecting the impossible dream of a public option: Let insurance companies sell health-care policies across state lines. Interstate competition made the U.S. one of the world's most efficient, consumer driven markets. But health insurance is a glaring exception.

Affordability would improve if consumers could escape states where each policy is loaded with mandates. "If consumers do not want expensive 'Cadillac' health plans that pay for acupuncture, fertility treatments or hairpieces, they could buy from insurers in a state that does not mandate such benefits," Devon Herrick (senior fellow with the National Center for Policy Analysis) has written.

MP: The chart above (click to enlarge) is based on this study from the America’s Health Insurance Plans (Table 3), and shows the huge variation in the average annual premium for single health insurance coverage by state (2006-2007). The average health insurance ranges from a low of $1,254 in Wisconsin to a high of $8,537 in Massachusetts, and the national average is $2,613. That kind of variation couldn't exist in a competitive market for health insurance. Interstate competition for health insurance would go a long way towards bringing health insurance costs down.

Originally posted at Carpe Diem.