Wednesday, December 24, 2008

die ohrwürmer von weihnachten

A song, or an advertising jingle, that invades your consciousness and won't leave. There's no word for this in English.... Here's where German comes to the rescue, with Ohrwurm, literally "ear-worm." You can almost picture the cute little fellow camping out in your ear, singing the inane ditty over and over, cheerfully evading your increasingly desperate attempts to silence him.
~~ German Joys.

This is the time of year when I suffer an infestation of ear-worms. I call them die Ohrwürmer von Weihnachten, literally the earworms of Christmas.

I'm talking about Grandma Got Run Over by a Reindeer, dogs barking Jingle Bells, plus many others of which I do not wish to be reminded. Being reminded only awakens the little buggers.

I have only heard part of Leroy the Redneck Reindeer once but now I am afraid to turn on the radio for fear that I might have another Ohrwurm implanted.

To control the infestation I must avoid all commercial radio. If I must have something on, I limit myself to NPR. However, even this strategy is not without risk.

On Christmas Eve, complete radio silence is imperative. On this night you cannot trust anyone.

Die Ohrwürmer von Weihnachten may still come alive without taking countermeasures. So I listen to carefully screened CD's of Christmas songs, carols, and hymns. Yes, these songs may have their own Ohrwürmer as well. However, these ear-worms build you up and cause you to focus on what Christmas should really be about. They actually have a positive, therapeutic effect.

You may not be completely rid of the little buggers, but at least you may be able to influence which ones are active. The right ones can actually help bring alive the original, authentic awe of Christmas to your soul.

Be blessed and Merry Christmas!

Tuesday, December 23, 2008

bailout light

Found here.

Watch and listen to this music video for at least for 1 minute and 11 seconds. You'll be better for it...

Found here.

Thursday, December 18, 2008

more toilet economics: cost-effectiveness in zimbabwe

At around 231 million percent, Zimbabwe’s hyperinflation currently the highest in the world.

Blog reader Ben Saltsman sent us this photo of a restroom sign in South Africa, which hints at one use for Zimbabwe’s severely devalued currency:

But is it cost-effective for Zimbabweans to use money instead of T.P.?

A roll of toilet paper costs about $1.50 U.S. dollars and has about 352 sheets per roll. That means each sheet is worth about US $.004, or 3,600 Zimbabwe dollars, according to

So according to these calculations, using a ZWD 1,000 note in place of a piece of toilet paper is a wise financial decision.

~ source: today's Freakonomics:

Tuesday, December 16, 2008

final exam time and performace-enhancing beverages

Death by Caffeine

How much of your favorite energy drink, soda, or caffeinated food would it take to kill you?

Take this quick test and find out:

click here.

Sunday, December 14, 2008

dogbert and systemic risk.

Found at Greg Mankiw's Blog: The Magic of Financial Engineering

One can diversify to reduce risk but there is also un-diversifiable risk (a.k.a., systemic risk).

Saturday, December 13, 2008

a wonderful day, all day

I had a wonderful day today. Miss Lois is here this weekend. As usual, the first evening and morning she was very clingy with her father. Again, as usual, by this afternoon her daddy-deprivation was relieved enough that she would sometimes play with others.

I was able to play Play-Doh with Miss Lois. We made pizza, hot dogs, grandmas (don't ask), snails, cobras, worms, bowls, spoons, brass knuckles, tunnels, gamma ray thumb shields (sorry, that's classified), and a toothbrush.

I don't think we'll do the toothbrush again. The Play-Doh gets too slobbery.

We made towers out of Duplos. Some towers were as high as 6'8" before they were knocked over. This is quite educational since Miss Lois learns patience to wait until after we're finished to knock it over.

This afternoon I was able to watch a webcast of the Arkansas H.S. Championship. My great nephew Troy is on the team, Shiloh Christian, which won 42-18. He got his team's first sack of the day too!

We celebrated Daddy's birthday today and went out to dinner where Miss Lois charmed everyone. A young lady of style and distinction, she daintily dipped her french fries in nothing but the finest ketchup.

It was fun to open presents. This year she actually let Daddy open his own presents. (Last year she tore the wrapping off before handing them to her father.) There was a certain routine that developed:
1) Lois hands an unopened present to Daddy.
2) Daddy removes paper and and asks, "What is it?"
3) Lois replies, "It Lois's!"
4) Daddy calmly states, "No, it is Daddy's."
5) Lois responds, "Put it down" as she hands another unopened present to him.

Opening presents moved along quite nicely thanks to our little efficiency expert.

Lois also fed Grandpa birthday cake. She must be pretty good at it. Others commented how there was less of a mess on the table than when Grandpa feeds himself.

She helped in the kitchen and put self-designed, tissue paper bows in Grandma's
hair. Also chased Aunt Low'ah and Uncle Ted around with the occasional quick stop to tickle Daddy or Grandpa.

With all that, she should sleep well tonight even though there was an unscheduled nap with Grandpa this afternoon during story time.

Be blessed!

Friday, December 12, 2008

great nephew in big game

RB's sister's grandson, Troy Goss, plays for a high school football powerhouse, Shiloh Christian. Although it has a relatively young team this year, Shiloh Christian is playing for the Arkansas State H.S. 4-A championship tomorrow (Saturday) at noon and Troy should be a starting defensive lineman.

I last time I saw Troy was a couple of years ago. Then I could push him around a bit when we played some basketball. Our BB days are over. Although Troy is only a high school sophomore, he is now 6'2" tall and weighs 250 lbs.

I wonder how big he'll be when he stops growing?

Next time I see him I will need to remind him of the need to be careful around his tottering great uncle who is 40 years his senior.

No contact sports.

Troy is not only a great nephew but a great kid.

There is a webcast of the game starting at noon.


Be blessed!

NOTE: Shiloh Christian's football website is pretty impressive. I think they may take their football seriously.

Thursday, December 11, 2008

the stock market: just how unusual is 2008?

Speaking of investments....
You know your investment portfolio is in trouble when....

(cartoon found here)

Just how bad is the 2008 stock market?

(chart found here)

This is a graphic of the Standard and Poor's stock index's annual returns, placing every year since 1825 in a column of returns from -50% to +60%. As you can see, it is a rough bell curve, with 45 of those 185 years falling in the +0-10% column. There are only 4 years each in the 40-50% and 50-60% return columns, and, through 2007, there were only two years in the -31-40% and -41-50% columns. You can see where 2008 to date falls (source).

Wednesday, December 10, 2008

on the nobel prize in economics

The Nobel Prize in Economics is always awarded during ceremonies on December 10th, the birthday of a great, yet humble, economist. In fact, the very first prize in economics was awarded on his 18th birthday.

UPDATE: Canton Central School District (NY) canceled all classes, K-12, for today. The honors just keep accumulating.

technology and the poor: closing the connection gap

Even without email, the web, or "smart" cell phones, the poorest of the poor can now stay connected to work.

Onion News Network video report from Bangladesh:
New Portable Sewing Machine Lets Sweatshop Employees Work On The Go

Tuesday, December 9, 2008

evolution | the shape of things to come

THE ECONOMIST had this cover five years ago this week.

This time of year I kind of identify with the guy on the right.

Monday, December 8, 2008

ivcf international dinner 22nov@cfc

Over 300 international students and their families enjoyed an over-the-top feast, which included Moroccan Chicken, Chinese favorites, and a vegetarian buffet, in addition to the ever-popular turkey with all the trimmings.... An hour before dinner, I waltzed into the kitchen..."Who is in charge here?" I inquired. No fear, kitchen staff. Laura is in the house. This girl knows what's what and who's who. Do what she says and no one gets hurt.
~ snipped from thisrequiresthought: going international

I was a proud dad that evening. Come to think of it, I was a proud dad before and after that evening as well.

Be blessed!

P.S. A certain Mr. Richards should be a proud dad as well (see entire post).

Saturday, December 6, 2008

being tall isn't everything . . . .

"The quality of a man’s sperm depends on how intelligent he is, and vice versa." At least according to this article in THE ECONOMIST.

Friday, December 5, 2008

evidence & not opinion: tall people are smarter

You have to be smart if you are that tall and can still walk in those heels.

On the frontiers of economics . . .

. . . studies have shown that . . . .

Of course more attractive men are more successful and attractiveness has an even bigger impact on the earnings of women (source).

You may not be surprised to learn that tall people also tend to be more successful (source). . . and being skinny helps (source).

. . . but did you know that tall people tend not only to be smarter, but are smarter from an early age (source)?

Do I get a witness?


Be blessed.

BTW, women from lower socioeconomic families earn more if they have healthier teeth (source).

[source of these sources]

Thursday, December 4, 2008

if your income goes up, will you watch tv in the bathroom?

To students of economics:

True or False: Toilets and TV's have a negative cross-price elasticity of demand.

True or False: Bathrooms with TV & toilet(s) have an income elasticity of demand greater than +1.

For an economic analysis of toilets and TV's see: Freakonomics

Answers? Both TRUE.

Tuesday, December 2, 2008

ugandan water project

You can make a difference . . . .

The Ugandan Water Project is an organization set out to provide clean water for villages in Uganda. Through music, media, and any means necessary we hope to raise awareness and funds for these villages in Africa. We can't be reminded enough of how much need there really is in this land. In this busy and modern age it is so easy to forget how much we really have. So often we take the simple things for granted. This is a very practical way to truly change lives. For us it's such a small sacrifice to help others. Please consider giving in any way that you can. And be encouraged to pass the word along to any and everyone you know.

A compilation of artists who have united for a single mission to provide clean drinking water throughout villages in Uganda. 100% of the proceeds from this creative compilation of worship music go directly to supporting The Ugandan Water Project.

Find it in the Amani Store.

Help change Uganda by donating to the project!

Donate online at PayPal

Mail donation to:
Isaiah Six
PO Box 10A
Lima, NY 14485

Video of First Water Tank

Found at: Isaiah Six.

Be blessed!

Monday, December 1, 2008

carpe diem: miscellany

I found these over the weekend.

The Top Ten Worst Currencies in the World Go Zimbabwe: $35 million for an egg! A prettier version with the full list is HERE.

Gas in St. Louis Falls Below All-Time Historical Low We'll feel a lot better if we just adjust for inflation.

2002-08: 60% Growth in World Per-Capita Real GDP Interesting chart but the IMF's forecast for the next few years may need revising.

Fiscal Stimulus: Permanent, Pervasive, Predictable versus Temporary, Targeted and Timely Check the chart: temp tax cuts or "tax rebates" don't work -- something we've known after 40 years of experience.

Uncorking CDOs: Financial Crisis Explained The best explanation yet of CDO's (collateralized debt obligations) which include MBS's (mortgage backed securities). Faint praise indeed. If you want to begin to understand what set off the credit crisis, the posted video might help. It helped me anyway.

carpe diem: 2 posts on the detroit 3

Tuesday the Congressional hearings begin again. Don't expect anything but Congressional show-boating and posturing.

(1) Here is something I didn't know: The Detroit 3 (D3) have a jobs bank where they pay idled auto workers not to work in their factories. Costs the D3 $80,000 to $120,000 per worker per year for them not to work.
See: CARPE DIEM: jobs-bank-cost-big-three-15-billion-in....

(2) Here is testimony you didn't see during the last round of testimony on the Hill. The only testimony that was not self-serving.

From Maryland Professor Peter Morici's Senate testimony on the Big Three bailout (click arrow above to watch video):

Circumstances are dramatically different today than in 1979 when Chrysler received assistance from the federal government. In those days, the challenge at Chrysler was to become competitive with Ford and GM, and Lee Iacocca had a clear plan to achieve that objective and succeeded. Today, the Detroit Three, though improved in productivity and with lower labor costs thanks to concessions from the United Auto Workers, are still not as competitive as the Japanese transplants.

Margins in automobile manufacturing are thin and there is no such thing as being "almost as competitive." Either a company is competitive or it is not—either it accomplishes the cost structure enjoyed by Toyota and Honda, operating in the United States, or it will continually cede market share and run into financial difficulties.

By assisting the Detroit Three, Congress can delay one or all of them going through Chapter 11 reorganization but sooner or later one or all will face reorganization. The communities and suppliers dependent on these companies would be better off going through that process now than by delaying it with assistance from the federal government.

Without a new labor agreement that brings wages, benefits and work rules in line with those at the most competitive transplant factories, and without reduced debt and other liabilities, the Detroit Three will continue to lag in product innovation and field too few attractive new vehicles, because their higher costs, debt and other liabilities require them to spend less on new productive development than they should. Also, they are inclined to field products with less desirable content to compensate for higher costs. As consumers find vehicles made by Japanese and other transplants more attractive, like those imported from Korea and eventually from China, the Detroit Three will cede market share of one or a few percentage points each year.

If Chapter 11 is put off, the successors to GM, Ford and Chrysler that emerge from a bankruptcy reorganization process will be smaller and support fewer jobs than if these companies endure this difficult transition in 2009. More jobs can be saved among GM, Ford and Chrysler and their suppliers if bankruptcy reorganization is endured now than in the future.

From CARPE DIEM: Professor Morici:"Big 3 Bankruptcy Now, Not Later"

Sunday, November 30, 2008

celebrating 80 years of ford

This is NOT about the auto industry. This is about a very special person, Ford Reynolds. Yesterday there was a surprise party at Richville Christian Fellowship (RCF) to celebrate his 80th birthday.

I’ve known Ford for over 24 years, ever since I came to Canton. Instrumental in starting Christian Fellowship Center (CFC) in the 1970’s, he was an elder there. I met him the very first time I attended CFC (Sunday of Labor Day weekend in 1984). I went forward for prayer at the end of the service and Ford came up to me and asked if I was “born again.” I told him I wasn’t sure what that meant but that I had accepted Christ as my Lord and Savior. With a big smile, he waved his hand in the air and said in his booming voice, “Son, you’re born again!” I fell in love with Ford immediately. Most people do.

Ford Reynolds has had more impact on my walk as a Christian than anyone. No one else is even close. He is like a father to me.

Starting in 1987 or ‘88 Ford and his wife Sarah led cell or home meetings at our house for a number of years. When RCF started in 1992, Ford was of course the pastor and our family of six attended during its first four years before being led to return to CFC. In addition to taking up a row of seats in a new church, we started the “junior church” for the kids and I also did the bookkeeping for 10-years.

I still miss Richville even though I know the Lord doesn’t want me there anymore. To this day when I visit RCF, I find myself more interested in what is happening to the building, the finances, and the people than I am about them at our home church CFC.

Before “retiring” Ford was a dairy farmer. He had never taken a course at a seminary nor at a Bible college, yet no one ever questioned his ordination as a pastor. You didn’t need to be at all spiritual to know that Ford was obviously ordained by God to be a pastor.

If you hang around Ford you’d better be prepared to 1) work hard, and 2) laugh a lot.

Ford is a man without pretense, completely comfortable with himself and with others. All he cares about is seeing God move, to see God do something. He loves to see miracles, especially healings. He has an infectious faith. Although he was saved 40 years ago, Ford still gets excited about individuals coming to Christ and having their lives changed.

Ford is a very bright guy. He had to be to be a successful farmer. However, his most impressive display of intelligence was when he took Sarah as his wife. Sarah is the wisest woman I know. She is very unassuming, not flashy, not outgoing; she seldom speaks – just what you’d expect from a farm girl and farm wife. However, when she speaks you better listen if you have anything at all on the ball. Better yet, go to her for advice and wisdom -- you will not be disappointed. Ask and ye shall receive.

As a pastor, Ford is unusual. At RCF, he would cancel mid-week services while North Country Christian Retreat was in session. He told his flock to go out there and receive the great guest ministry available. Have you ever hear of a pastor telling his people to go elsewhere for preaching and teaching? You see Ford’s ministry, his local church, is about Jesus, not about Ford.

Remember the WWJD (What Would Jesus Do) bracelets? With me, it is what would Ford Reynolds do? If I see someone who is sick, I should pray healing. If I see spiritual oppression, I should pray deliverance. If I see despondence, I should speak encouragement.

That is what Ford would do. You see with Ford, things aren’t that complicated. Ford just takes Jesus at his Word and trusts Him.

Be blessed!

Saturday, November 29, 2008

this would be my tuesday

I found this video here:

As I watched this for some reason I was reminded of my Tuesday of this week.

That morning I awoke at about 3 a.m. and couldn't get right back to sleep. So I prayed quietly and spent some time with the Lord. I also thought about the best thing to happen to me that week as well as the worse thing to happen. Next the thought popped into my head that today is the best day of the week. Right now should be the best day ever. Christ abides in me and I abide in Christ. The more I abide with Jesus, the better it gets. Therefore, right now should be the best so far.

This realization made me feel especially good, content, almost elated while at the same time also quite relaxed. I soon fell back to sleep.

Later the alarm went off and I awoke feeling pretty good. I remembered an appointment in a little over an hour to have some routine blood work done. Since I had to fast, I had plenty of time to shower, shave and get dressed. I took my time getting up.

After my shower, I found I was running late. As I put the key in the ignition the panic alarm in the car went off. I couldn't get it to go off. The doors were locked and I couldn't get out. Finally the horn stopped. Why it stopped, let alone why it started in the first place, I do not know.

I drove toward the Noble Medical Center. I drove a block past the Nobel Medical Center before I remembered that I missed the driveway.

Later that morning I returned home. I had another appointment a few miles out of town at 10 a.m. The plan was to drive her to work and then go to my appointment. So I dropped her off at work and returned home. Five minutes after ten, I remembered the appointment. After a quick call, I still made it but was more than a bit late.

About this time I had to start laughing. So this is the best day ever?

I decided to stay home for the rest of the day and just read. I would operate no machinery, no electronics, no motor vehicle. I would do nothing more complicated than make a sandwich.

Late in the day I found out that someone (not her) had wasted a large sum of my money. I was a bit peeved. It took about a half hour before I could see this was part of the same thing and could laugh about it.

All in all, I had a very good day. Each day since has been even better.

Faint praise indeed!

Be blessed!

Friday, November 28, 2008

we cannot slip through

I just found this wonderful excerpt on then face to face:

The great Scottish preacher Ebenezer Erskine (1680–1754) once visited a woman on her deathbed and lovingly tested her readiness for heaven. When she assured him that she was ready to depart to be with Christ because she was in that hand from which no one could pluck her, Erskine asked, “But are you not afraid that you will slip through His fingers in the end?”

“That is impossible because of what you have always told us,” she said.

“And what is that?” he asked.

“That we are united to Him, and so we are part of His body. I cannot slip through His fingers because I am one of His fingers. Besides, Christ has paid too high of a price for my redemption to leave me in Satan’s hand. If I were to be lost, He would lose more than I; I would lose my salvation, but He would lose His glory, because one of His sheep would be lost.”

~ Excerpt from Living for God’s Glory

extra-credit test question on auto industry

Last Friday I gave a test in my intermediate microeconomics class with an extra credit question at the end. I thought it was a fairly easy question; a way to boost both scores and morales at the end of a hard test.

EXTRA CREDIT! Due to higher costs to support generous fringe benefits to current and retired employees, the average loss per car is $2000 per vehicle sold for the Detroit 3 (GM, Ford, Chrysler). The foreign nameplate companies also operating in the U.S. (Toyota, Nissan, Honda) have an average profit of $1200 per vehicle. Given this information and assuming a normal profit per vehicle produced in the U.S. is $1000, use economic theory to briefly explain what should happen in the long run to the U.S. auto industry in terms of the number and type of firms.

Except for the $1000 normal profit, the numbers above are real. The answer is that eventually the Detroit 3 would leave or contract in the U.S. (or go broke) while foreign nameplate companies would enter or expand in the U.S. All you need to answer is to know one simple concept concerning firms exiting and entering an industry: higher than normal profits attract and losses repel.

During last week's Congressional grilling of auto execs, Massachusetts Rep. Stephen Lynch asked GM's Rick Wagoner if "...GM was asking China for a bailout too. Mr. Wagoner mildly answered that GM's China operations are profitable. They actually help to underwrite the massive losses in the U.S." (Wall Street Journal, Nov. 26, 2008, p.A13).

POP QUIZ! Here is today's two-part EXTRA CREDIT question:
(A) Why can Ford and GM profitably make cars overseas but not in the U.S? (That is, why doesn't GM need a bailout from China?)
(B) Why do foreign nameplates (Toyota, Honda, Nissan) profitably produce cars in the U.S. but not GM or Ford or Chrysler?
[Hint: (A) and (B) both have the same answer.]

Answer: The $29/hr pay gap. The Detroit 3 have the UAW and the associated legacy costs (generous retirement and health benefits for retired and current workers) in the U.S. while other companies in the U.S., and all companies abroad, do not.

The above is the only answer. No partial credit for mentioning Detroit makes the wrong vehicles with low quality, or dumb CEO's, or lazy workers, or the need for better technology, or CAFE and other government regulations, etc. These are just distractions, side issues, needless complications,that do not explain why the Detroit 3 have higher costs of $3,200 per vehicle only in the U.S.

Any other explanation does not answer both parts (A) and (B).

How'd you do? One of last week's posts had the answer:
random random walk:
what's with the detroit auto bailout?

There'd be no need for pop quizzes if everyone did the reading.

Be blessed.

P.S. How do you think Congressman Lynch would have done on the quiz?

Thursday, November 27, 2008

the audacity of hype


There is no such thing under the Constitution or under any legal authority.

Sure does look official though.

: When posting I thought my title was original, but later found it here, here, and in a million blogs (satirical pic here).

describing obama's fiscal stimulus policy

From Greg Mankiw's Blog: Competing Alliteration

Instead of fiscal stimulus that is temporary, targeted, and timely, John Taylor suggests that it be permanent, pervasive, and predictable.

What the Obama administration is aiming for, it seems, is helpful, hopeful, and humongous.

Critics fear it might end up pointless, political, and pork-filled.

. . . [Obama economic adviser] Larry Summers now calls for stimulus that is speedy, substantial, and sustained.

Other readers think it will be:

* big, bloated, and borrowed.
* immodest, immoral, and imbecilic.
* clumsy, corrupt, and counterproductive.
* expansive, extensive, and expensive.
* weighty, worrisome, and wayward.
* politicized, pandered, and pathetic.
* socialized, silly, and sorry.
* random, record-setting, and ridiculed.
* ultimate utilitarian utopianism.
* absolutely abjectly apocalyptic.

Wednesday, November 26, 2008

puritian preacher & early american medical scientist

In honor of Thanksgiving Day, Saturday's Wall Street Journal had a selection of the five best rare books on early America. One of which was the tract An Account of the Method and Success of Inoculating the Small-Pox . . . by Puritan preacher Cotton Mather (1722). Here is the description:

Cotton Mather is best known for his incendiary influence on the Salem witch trials, but he was also an intellectual omnivore, a prolific science writer whose interests included rainbows and rattlesnakes, cures for syphilis and Indian methods of keeping time. Having witnessed the devastation of smallpox epidemics, Mather was fascinated when one of his slaves told him of a form of inoculation practiced in his native Sudan. Mather found writings on the subject by Turkish doctors and English scientists eager to try it, and he soon threw his religious passion behind a campaign for inoculation trials in Boston. The campaign faced fierce opposition, but American medical history was born here, in a conversation between a Puritan preacher and his African slave.

Source: Rare Books on Early America
~ As Thanksgiving nears, Corinna da Fonseca-Wollheim picks her favorite rare books on early America.
» Full Story in Wall Street Journal (November 22, 2008).

Have a Happy Thanksgiving.

Be blessed!

P.S. Click to see the page images of the original at Harvard University Library.

Saturday, November 22, 2008

a chain of bank failures with few links

Yesterday the FDIC announced one of the banks in the town I grew up in, PFF Bank & Trust (formerly Pomona First Federal S&L), went bankrupt. The FDIC just arranged for a Minnesota bank to take it over. Most customers will not know the difference (source).

There have been a lot of comparisons between our current crisis and the Great Depression. PPF was only the 22nd bank to fail this year. There were more failures during the 1930's -- even after the worst of the bank runs in 1933.

There were far, far more bank failures during the S&L crisis of the late 1980's and early 1990's. You can see this by checking out following graph showing the number of bank failures since the creation of the FDIC in 1934.

Click image to enlarge in a new window.

To put this in perspective, there have only been 22 bank failures this year out of over 8,400 FDIC-insured banks.

A big difference today is that banks are much larger so a single bank going under may have a bigger impact. The graph below shows bank failures in terms of deposits (blue) and assets (red):

Click image to enlarge in a new window.

Now this makes the current crisis look much worse than it really is for two reasons. First the dollar amounts are not adjusted for inflation.

Second and more importantly, over three-fourths of the dollars in the current year are just from one bank, Washington Mutual (WaMu). The FDIC arranged WaMu to be purchased by JPMorgan Chase Bank at no cost to the insurance fund or taxpayers.

Take out WaMu and 2008 looks not so bad.

There will be more failures coming up but the number and relative dollar amounts should much lower (excluding WaMu) than during the S&L crisis of twenty years ago.

Don't buy into the fear-mongering. We've seen and survived worse. Not to say there aren't bad things coming, but banks are the least of our economic worries.

Be blessed!

Source: Calculated Risk: Graphs: FDIC Bank Failures

Friday, November 21, 2008

10 principles of economics - the rap version

Just click the triangle play button to listen.

Audio file found here and here.

Thursday, November 20, 2008

a sustainable auto industry

Dartmouth economist Matthew Slaughter:

On Sunday, President-elect Barack Obama asked, "What does a sustainable U.S. auto industry look like?"

Well, it looks a lot like the automotive industry run by "foreign" car companies that insource jobs into the U.S. In 2006 these foreign auto makers (multinational auto or auto-parts companies that are headquartered outside of the U.S.) employed 402,800 Americans. The average annual compensation for these employees was $63,538.

At the head of the line of sustainable auto companies stands Toyota. In its 2008 fiscal year, it earned a remarkable $17.1 billion world-wide and assembled 1.66 million motor vehicles in North America. Toyota has production facilities in seven states and R&D facilities in three others. Honda, another sustainable auto company, operates in five states and earned $6 billion in net income in 2008. In contrast, General Motors lost $38.7 billion last year....

Will fewer companies look to insource into America if the federal government is willing to bail out their domestic competitors?

The answer is an obvious yes. Ironically, proponents of a bailout say saving Detroit is necessary to protect the U.S. manufacturing base. But too many such bailouts could erode the number of manufacturers willing to invest here.

Found at Greg Mankiw's Blog: A Sustainable Auto Industry

tough times for detroit execs

Los Angeles Times (November 20, 2008)

But under scornful questioning by members of the House Financial Services Committee, the CEOs conceded that when they came to Washington to plead for government aid, each of them had traveled on a private plane.

"There's a delicious irony in seeing private luxury jets flying in to Washington, D.C., and people coming off of them with tin cups in their hands saying that they're going to be trimming down and streamlining their businesses," said Rep. Gary L. Ackerman (D-N.Y.) "There's a message there.

"I mean, couldn't you all have downgraded to first class or jet pooled or something to get here? It could have at least sent a message that you do get it."

Three executives, three private jets. CNN estimated that the cost of flying GM's $36 million private jet roundtrip from Detroit to DC is about $20,000. I checked some airfares online. Last minute non-stop coach fares on a commercial airline are about $500 and often less. First class tickets are "only" about a thousand dollars more than coach.

Suggestion: Sell the jets.

an underserved market

Found at Greg Mankiw's Blog: An Underserved Market

Wednesday, November 19, 2008

what's with the detroit auto bailout?

Time for a bailout? GM is near bankruptcy. Ford not far behind, maybe Chrysler as well. The auto industry bailout is a very bad idea, an unbelievably bad idea. The bailout will not solve the problems of the auto industry and just end up causing the taxpayers to waste money to help a very few people in a very expensive way. It avoids dealing with problems rather than confronting them. Let's see why.

Is this going to be hard to understand? Nope. The auto industry's problems are relatively simple and straightforward. (Hey, NO ONE completely understands the financial market meltdown mess.)

The problem? The $29/hr pay gap (Source: CARPE DIEM)

Why is GM (and Ford and Chrysler) seeking taxpayer subsidies when Toyota, Honda, Nissan, Kia, BMW, Daimler, Hyundai and other foreign nameplate producers, who are facing the same contracting demand and credit crunch quietly weathering the storm, are not? Because the latter have costs structures that haven’t been made obsolete and uneconomic by ludicrous union demands (see chart above, data here). ~ Dan Ikenson, "A Cancer on the Big Three."

The Detroit 3 have high legacy costs, costs of giving retirees generous pension benefits and expensive health care with low deductibles and co-pays. Current employees also have these benefits. Thus Detroit has higher costs for current benefits and are required to currently put money in funds to pay the future benefits. These are obligations that the bailout will not and can not change.

This $29 pay gap is the key to understanding Detroit's problem. Everything else, any other reason put forth, is just noise, just a side issue diverting attention from the real problem.

Will bailout help fund better technology? Nope. The problem isn't the lack of technology. The Detroit 3 have invested heavily in new technology. Other auto companies can operate in the US profitably. Other auto companies aren't weighed down by high pension, health insurance, and other labor costs. That is, the $29 pay gap.

You will hear the myth that the US auto industry needs the bailout to invest in better technology in order to compete. Please don't swallow that b.s.

Will bankruptcy throw hundreds of thousands out of work? Nope. Chapter 11 bankruptcy does not mean liquidation. Did US Airways, Delta, United, and other airlines disappear when they went into bankruptcy? Neither will the auto companies. They will reorganize, forcing the restructuring of labor agreements that are the cause of the problem.

[There is overcapacity in the auto industry: too many plants producing too many cars to remain profitable even in good times. There will be some job loses due to plant closings whether or not any of the Detroit 3 go into bankruptcy. This is a side issue that has nothing to do with the bailout.]

However, let's get back to the real problem of labor costs. That is, the $29 pay gap. Reducing labor costs is the only real solution. That will only happen if GM and its two US rivals seek bankruptcy protection. Unions and politicians will never agree to reduce these costs if they have a choice.

The myth of automakers and parts suppliers having massive job losses will be voiced. Please don't swallow that b.s.

Any other myths? Yes. Several. The Detroit 3 are better companies than their public perception. It is not a matter of producing gas guzzling SUV's and trucks or making cars that are lousy. (For more: 6 myths about the Detroit 3)

The myth that there are major reasons other than the $29 pay gap will be voiced. Please don't swallow that b.s.

Who gets bailed out? The auto execs may keep their jobs if they stay out of bankruptcy. The bailout will help maintain the value of their stock options.

More importantly, you must understand bailout's main goal is to bail out Big Labor; to keep the high-priced union benefits that are the cause of the problem. Big Labor wants the $29 pay gap to remain.

Is there a leak in the bottom, a gap between the boards?

Got a better idea than the bailout? Yes. Like in the photo above, we need to fix the leak or the bailout will not work. Realize the Detroit bailout, or loans, will not solve the problem of the $29 pay gap. The loans will not allow them to do anything to become more profitable as long as the $29 pay gap remains. The loans will just subsidize the pay gap until the money runs out. The Detroit 3 will still not be able to compete and probably won't be able to pay back the loan.

A solution? Let them go into bankruptcy and go as quickly as possible. That is the only practical way the $29 pay gap can be removed or reduced.

If you want to bailout the pension funds or subsidize other labor benefits then go ahead. It will be a lot cheaper to do so directly rather than have it trickle down through the auto companies.

Or let the federal government guarantee pensions. Oh wait a does that already!

Got a link with a good explanation? Try this one:

The Becker-Posner Blog:
Bail Out the Big Three Auto Producers? Not a Good Idea-Becker

Be blessed.

P.S. The auto bailout is altogether different than the financial bailout. The financial bailout was and is intended to keep capital markets functioning, not to protect the workers and fat cats on Wall Street. For example the bailout of AIG didn’t help, nor was it intended to help out AIG. With a financial sector seized up, you get a depression. With it only sort of seized up, you get a lost decade – like Japan in the 1990s – stagnant growth and high unemployment. It is absolutely essential to get the financial markets working.

Tuesday, November 18, 2008

almost certainly innocent?

The December issue of National Geographic arrived yesterday. The cover story "The Real King Herod" had this large-print statement inserted on page 42, "Herod is best known for slaughtering every male infant in Bethlehem in an attempt to kill Jesus. He is almost certainly innocent of this crime."

I found this claim interesting. So I started reading the article. In the first paragraph of the text (p.40) the author offered as his only evidence for his conclusion, "...that there is no report apart from Matthew's account."

The very next sentence states that Herod certainly had killed "three of his own sons, along with his wife, his mother-in-law, and numerous other members of his court." Later the author claims they were killed because their "frequent conspiracies brought out Herod's cruelty and paranoia" (p.46).

Would Herod ever order mass murder? According to the author Herod did indeed order "...his army to imprison a crowd of leading Judean citizens in the hippodrome in Jericho, and to massacre them when his death was announced" (ibid).

Hmmm.... Paranoid. Cruel. Fond of killing people, especially when threatened. How would such a guy react to the Magi stopping by his palace to ask directions to the location of the new king of the Jews (Matthew 2:2)? That new king would be replacing Herod.

Let's put this together. Good-looking (as we can see on the right) but quite paranoid Herod kills at the hint of anything that threatens his position as king. There is a historical account of Herod sending the Magi to Bethlehem with instructions to return and let him know the precise location of the usurper to his throne. When they don't come back Herod has all the baby boys two years old and under killed in and around Bethlehem (Matthew 2:1-16). This slaughter of non-Romans in an unimportant town isn't noted in the very few Roman records surviving to the present.

Sound far fetched? Apparently it does to the author, as well as to the editors of National Geographic. They conclude King Herod is almost certainly innocent.

For this fine bit of historical analysis to make sense, it must rest on the the "educated" inference that any account in the Bible is so extremely unreliable that it is wrong unless proved otherwise.

Lacking confirming evidence of a historical account is a long way from concluding "almost certainly" that the account is wrong

Is it just coincidence that this example of bad reasoning and poor scholarship related to the Christmas story is foisted on readers just before Christmas?

The really sad thing is that these smart people think they are coming to the smart conclusion.

Be blessed.

P.S. I wonder if the folks at National Geographic think O.J. is almost certainly innocent too.

Monday, November 17, 2008

1st john and outsourcing

Saturday morning I was reading the first couple of chapters of 1 John. This letter is amazing in a number of ways. Heard of comfort food? Well, 1 John is my comfort Scripture. When I read it, it calms me down. I feel peaceful. It seems the love of John, which is from Christ, just radiates from the pages and engulfs me.

Engulfed in a sort of bubble of love, I’m thinking to myself as I read, “Yeah that’s nice; gimmee more; ahhh...thank you Jesus." If I'm outside this love bubble and read the verses carefully, I start to wonder if I am really saved. Check out these verses:

Whoever says “I know him” but does not keep his commandments is a liar, and the truth is not in him (2:4).

No one born of God makes a practice of sinning, for God’s seed abides in him, and he cannot keep on sinning because he has been born of God (3:9).

We know that we have passed out of death into life, because we love the brothers. Whoever does not love abides in death. Everyone who hates his brother is a murderer, and you know that no murderer has eternal life abiding in him (3:14-15).

Anyone who does not love does not know God, because God is love (4:8).

This may or may not surprise you, but I don't always obey God. I don't always love people. Sometimes I don’t really like any people at all; many times I don’t like just some people. When I read the above verses while in the love bubble, I feel great. Pop the bubble and it is “oh-oh” time.

John also exhorts us to “practice righteousness" (3:7;10). Yeah, right. With my flesh? Get real. Telling me that seems a lot like exhorting an insomniac to get plenty of sleep.

After complaining to God about this, I then realized that 1 John also shows me how to practice righteousness: remove unrighteousness!

If we confess our sins, he is faithful and just to forgive us our sins, and to cleanse us from all unrighteousness (1:9).

Now this is practical. I can be real with this.

I just need to outsource my righteousness to Jesus!

That works for me.

Be blessed!

Note: All Scripture references are to the English Standard Version (ESV).

Sunday, November 16, 2008

on the intolerance of religion

The 20th century gave rise to one of the greatest and most distressing paradoxes of human history: that the greatest intolerance and violence of that century were practiced by those who believed that religion caused intolerance and violence.
~ Alister McGrath, The Twilight of Atheism: The Rise and Fall of Disbelief in the Modern World, p.230
(cited in Timothy Keller, The Reason for God: Belief in an Age of Skepticism, p.5).

For more from Tim Keller, including audio files, click here.

Saturday, November 15, 2008

german consistency and islamic scholarship.

Germans are known and stereotyped for their logic and consistency. One of the few joys I encountered studying the German language is the consistency of its grammar and other rules. However one German scholar, Muhammad Sven Kalisch, is in hot water for being as consistent as, well, as a German.

Germany's first professor of Islamic Theology, a native ethnic German convert to the religion, Kalisch "...wanted to subject Islam to the same scrutiny as Christianity and Judaism. German scholars of the 19th century, he notes, were among the first to raise questions about the historical accuracy of the Bible."

Kalisch "...devoured works questioning the existence of Abraham, Moses and Jesus. Then 'I said to myself: You've dealt with Christianity and Judaism but what about your own religion? Can you take it for granted that Muhammad existed?'"

The result was that using similar methodology which led to doubts about the Jesus or Moses ever existing, also led to a similar conclusion: Mohammad probably never existed.

His bosses at Münster University, as well as many academics, are distancing themselves from Kalisch. "Alarmed that a pioneering effort at Muslim outreach was only stoking antagonism, Münster University decided to douse the flames. Prof. Kalisch was told he could keep his professorship but must stop teaching Islam to future school teachers."

German intellectual tradition bows to political correctness?

It is a strange day when Germans are so obviously inconsistent.

Jolt From an Islamic Theologian

The research of Muhammad Sven Kalisch, Muslim convert and Germany's first professor of Islamic theology, is causing outrage among Muslims. His theory: The Prophet Muhammad probably never existed.
» Full Story in Wall Street Journal (15 November 2008)

Friday, November 14, 2008

an economist's advice to mr. obama

From Harvard economist Greg Mankiw, former chairman of President Bush's Council of Economic Advisors:

Greg Mankiw's Blog:
Memo to the POTUS-elect

For a related post on economic advisors:
random random walk: economist quick quip

Thursday, November 13, 2008

the grand weenie of the disciples: peter’s great wimp-out

I have always admired Peter despite his famous denial of Christ. At least Peter tried to hang around to find out what was happening to Jesus while everyone else ran off. All four Gospels have accounts of Peter's denial. However in John 18 there is an added detail. A detail I’ve supposedly read many times but this morning I seem to have noticed for the first time. After the arrest of Jesus,

Simon Peter followed Jesus, and so did another disciple. Since that disciple was known to the high priest, he entered with Jesus into the court of the high priest, but Peter stood outside at the door. So the other disciple, who was known to the high priest, went out and spoke to the servant girl who kept watch at the door, and brought Peter in. The servant girl at the door said to Peter, “You also are not one of this man’s disciples, are you?” He said, “I am not.”
~ John 18:15-17 (ESV)

So Peter wasn’t the only one not to run away; there were two disciples who trailed Jesus. The other disciple had connections which allowed Peter and him to enter into the court of the high priest. Now this is what I find strange. The other guy with connections is known to be a follower of Jesus. We know this by the servant girl’s question asking if Peter was also a disciple; also meaning in addition to the disciple who got him in to the court.

What was Peter thinking when he denied Christ? It must have been really quite obvious since he was following Jesus with a known disciple of Jesus. As if Peter’s Galilean accent wasn’t enough of a tip-off. That is one extreme wimp-out, denying the obvious. The other guy went in there knowing that everyone knew he was a disciple.

This morning I suddenly lost my respect for Peter. It turns out he was the Grand Weenie of the Disciples.

Then it happened. It usually happens when I judge others. It seems whenever I point my finger at someone I soon notice that three others are pointed back at me.

Just before his denial, maybe at most one or two hours before, Peter had pulled out a sword and was ready to take on a whole squad of Roman soldiers in order to try to stop Jesus from being arrested. That was not a good move for someone who was worried about dying.

Peter was no coward in the garden.

What happened? Maybe it was the same sort of thing that has happened to me far too many times. I take a stand; maybe I have victory over some temptation. I think, “I’ve licked that sin, full-of-faith, mighty man of God that I am.” Soon after I cave into the same sin as a result of some temptation that is minor by comparison. It is often an embarrassingly minor temptation at that.

Nope. I think I have Peter beat for deserving the title, “Grand Weenie of the Disciples.”

It was Peter’s flesh that caused him to pull out the sword in the garden. It was Peter’s flesh that later caused him to wimp out in the court of the high priest. Peter didn’t, and I won’t, have victory by relying on the flesh. If you struggle in the flesh with sin, you end up fighting flesh with flesh. That is foolish. What is going to win? Sinful flesh!

How did we become justified, achieve victory over sin when we were saved? Repent and receive the grace of God. How do we achieve victory over sin after we are saved? The same way: Repent and receive the grace of God. Past guilt of sin, present failures, and future unfaithfulness all are dealt with in the same way: Repent and receive the grace of God.

Remember dear soul, how you then were led contrary to all that your experience, and your feelings, and even your sober judgment said, to take Jesus at His word, and how you were not disappointed. He did receive you, and pardon you; He did love you and save you –you know it. And if He did this for you when you were an enemy and a stranger, what think you, now that you are His own, will He not much more fulfil his promise?
~ Andrew Murray, Abide in Christ (5th Day, italics added)

I am learning, albeit excruciatingly slowly, not to struggle with sin; to lose all self-confidence in my self-effort. Sometimes I remember to not even attempt to partner with God so as to leverage my prideful, fleshly strength with God’s strength. Should I think for even a second that God wants to use His strength to glorify my flesh, to glorify the utter corruption of all that is in my nature?

I need to remember that my confidence comes from knowing that being justified by faith, I have peace with God. The righteous shall live by faith. My confidence is that He put sin to death and that he will continue to put sin to death. He is my justification. He is my righteousness.

When I forget all that, when I struggle with sin, when I fight the flesh with flesh, when I think that my own strength is even partially necessary, that is when I set the stage for me becoming the Grand Weenie of the Disciples.

Be blessed.

Sunday, November 9, 2008

a post-election thought

The early Christians did not say in dismay: ‘Look what the world has come to,’ but in delight, ‘Look what has come to the world.’

- E. Stanley Jones, Abundant Living

(originally posted here)

Saturday, November 8, 2008

the first kenyan-american president

One of my advisees, a wonderful young lady from Kenya, came into my office this week, her feet more than a few inches above the floor, beaming a huge, even bigger than usual smile. One look at her and I asked, "Happy there's a Kenyan-American President?"

"YES! We should forget calling him an African-American. He is Kenyan-American!"

To tease her a bit I replied, "Shouldn't we call him a Luo-American?" knowing full well that she wasn't Luo.

"No, Kenyan-American is just fine."

When CNN called the election for Obama, it was about 7 a.m. Wednesday morning in Kenya. The President of Kenya declared Thursday a national holiday.

It wasn't just Kenyans. I heard that some found it hard to sleep election night because of the noisy celebrations of African students.

Africans are generous people and like to share their joy.

Be blessed!

Friday, November 7, 2008

private vs. public response to katrina

A colleague of mine, SLU's very own Steve Horwitz, was interviewed by John Stossel of ABC's 20/20 about the public vs. private response to Hurricane Katrina.

Click here to see the video.

Thursday, November 6, 2008

obama victory brings bad news

The Dow falls 486 points, a stock market drop of 5%, the day after the election. Did Obama's victory cause this? Nope. Market traders knew he was going to be elected over a month ago.

There is other bad news though. This video shows the tragic aftermath of the Obama victory:

Be blessed.

P.S. Last week, "analysts" in the media claimed the Fed changing the target for the federal funds interest rate spurred a one-day stock market rally. Nope. Market participants already anticipated that obvious move long before.

Wednesday, November 5, 2008

at least this didn't happen yesterday

Sorry I didn't find the one below soon enough to help you with this election. You can file it away for future use.

Tuesday, November 4, 2008

and now the steelers - is dp happy?

Forget prediction markets. The best predictor of 17 of the last 18 presidential elections has been the team which wins the last home game of the Washington Redskins before the election. A win by the visiting team foretells a change in the party holding the presidency.

The only time in the past 75 years where the football game failed to predict correctly was in 2004. John Kerry failing to win Ohio ruined a perfectly good streak.

Last night the Pittsburgh Steelers stomped the home team Redskins 23-6. Obama wins.

I hope Mr. Paladin enjoyed the game.

abc's 20/20 explains intrade - the prediction market.

Monday, November 3, 2008

where's the 364 from?

Prediction markets have Obama with 364 electoral votes against McCain's 174.

Below are's chances of winning each of the "close" states below. Note that these percentages are the betting odds of winning, NOT a prediction of the percentage of the actual votes cast. Percentages in bold are states McCain is expected to win.

There is only one close state race in terms of bets: Missouri. That is a true toss up.

State (votes)~~Obama/McCain
Florida (27) ) ~~ 80% / 22%
Pennsylvania (21) ~~ 89% / 11%
Ohio (20) ) ~~ 83% / 20%
Georgia (15) ) ~~ 21% / 75%
North Carolina (15) ~~ 70% / 37%
Virginia (13) ) ~~ 86% / 14%
Missouri (11) ) ~~ 51% / 45%
Indiana (11) ) ~~ 41% / 64%
Nevada (5) ) ~~ 82% / 15%
New Mexico (5) ~~ 92% / 11%
North Dakota (3) ~~ 29% / 73%
Montana (3) ~~ 29% / 79%
[as of 12:00PM ET]

Iowa Electronic Market
, the University of Iowa's well-known prediction market, has Obama with a seven point vote share margin over McCain. Winner-Take-All bets, it is 10-to-1 Obama.

Sunday, November 2, 2008

gop out for a generation?

This presidential election was always the Democrats' to lose. They won't. Obama will take at least 353 electoral college votes. (My bet is 364, see Even if McCain took all the so-called toss-up states, he would still not have the 270 votes needed to win. Democrats will increase control of the House and Senate.

I am afraid this election may be a turning point, as bad as 1964, in terms of the GOP becoming a minority party for a very long time.

In 1964 the Civil Rights Act was passed. A majority of Democrat Senators, mostly from the South, opposed the bill which was only passed because of the courageous stand of Senate Republicans. In 1964, Republican Candidate Goldwater of Arizona voted against the Civil Rights Act. He carried only his home state and a few states in the Old South. African-American voters were up to that time pretty equally divided between the two parties. It has been about 90% for the Democrats since. Couple this with President Nixon's Southern Strategy a few years later, and Black Americans permanently became the strongest supporters of the Democrat Party.

Now the GOP is offending an even larger minority group, a group of generally socially conservatives which should be drawn to the Republicans. President Bush was making inroads but Republicans have lost the Hispanic vote due to the vocal opposition to immigration reform. The irony is that McCain is losing states like Colorado and especially New Mexico because of the reaction of Hispanics despite supporting immigration reform. Immigration reform almost killed his chances for his party's nomination in late 2007.

The primary, but certainly not the only, motivation for the shrill and hostile reaction to immigration reform is racist. Hispanics recognize the racism, or at least the appeal to racism by outspoken Republicans.

Barry Goldwater was not racist and had principled reasons for opposing the Civil Rights Act of 1964. Not all who oppose immigration reform today are racist, but the appeal to bigotry should not be denied. Even if you are a Republican who does deny it, you should find the long term impact on our political process tragic.

If you are a Democrat, try not to gloat over the self-inflicted wound of the now, and for a long time to come, minority party.

Be blessed.

P.S. For an interesting take on immigration, please read her post from last week.