The World Overreacts

The World Health Organization has raised the level on its six-point pandemic meter to the highest tier. The country of Egypt has begun the mass culling of its pig herds. Vice-President Biden has alarmed Americans by intimating the cautions he is taking with his own family. 176 people have died in Mexico and a small Mexican child has expired in Brownsville, Texas. No deaths have occurred anywhere else and most people are recovering without medicine. The worst complaints are of diarrhea. There is fear of the economic impact a swine flu pandemic could have on the fragile global economy, but there are no signs of struggle outside of an already crippled Mexico. The unfounded fears and the misinformation are rampant, the three biggest sellers on Amazon in the U.S. are types of surgical masks. People are avoiding pork products though the idea of the flu emanating from pigs has been rejected. When this turns out to be an isolated epidemic, will we take the WHO seriously in the future? Click the title above to view an article addressing this wolf cry.

Ah Yes...It's Bonafide!!

How bad have the last two quarters been?

Over the last six months, the economy shrank at its fastest rate since late 1957 and early 1958. That’s the only decline, in fact, that was worse than the current one, since the government began keeping quarterly records just after World War II.

Here are the worst six-month declines in economic activity since 1947:

3rd quarter, 1957 - 1st quarter, 1958: -3.7 percent
3rd quarter, 2008 - 1st quarter, 2009: -3.2 percent
3rd quarter, 1981 - 1st quarter, 1982: -2.9 percent
1st quarter, 1980 - 3rd quarter, 1980: -2.2 percent
2nd quarter, 1953 - 4th quarter, 1953: -2.2 percent

A technical note: These numbers aren’t as scary as the ones being reported in the headlines today, because the official numbers describe the annualized rate of decline. The economy didn’t actually shrink 6.1 percent in the fourth quarter, despite what the government reported. It shrank at a rate that, were it to continue for a full year, would cause the economy to be 6.1 percent smaller at the end of that year. The recession of 1957-58, like the current one, was a deep one and affected much of the world. But by 1958, the United States economy was growing rapidly. Not many economists expect that we’ll be able to say the same anytime this year.

Visualizing The Power Grid

Click on the title above to access a very comprehensive and interactive map of our nation's power grid. You can find out how states generate energy and what is the projected growth of our energy networks in the coming decades. Notice Florida's dependency on oil.

A Recession Era Redefining Of Necessity

A poll's results were released by the Pew Research Center yesterday revealing a significant realignment of priorities among Americans. Throughout the decade most of life's conveniences like microwaves, air conditioning, TV, and computers had been collectively moving up the necessity scale. But recent findings speak of a tide change. For instance, in 2006 70% polled felt that air conditioning was a necessity, now just 54%. Only 52% asked felt that TV was a necessity, the lowest number since 1973. Only 38% of those polled between the ages of 18-29 believe television is a necessity. 50% of those polled felt that a home computer was and on 4% felt they couldn't live without their I-pod. Click on the title above to get a broader scope of results and comment on how your sense of necessity may differ.

Ten Things You Should Know About Earth Day

Click on the title above to get your list of ten things.

Do Schools Have The Right To Strip Search Students?

The Supreme Court heard arguments yesterday over the case of a school strip searching a 13 year old girl six years ago on suspicion of drug possession. The drug in question was a prescription strength ibuprofen and the girl was professionally stripped searched my two female school employees. She was forced to shed clothing to her bra and panties and actually stretch out the elastic on both and shake the garments. No pills were found. The zero-tolerance laws enacted in recent years brought this search to such intrusive levels. Now the young lady is 19 and the question of legality is to be decided by the Supremes. After listening to the arguments the betting money is favoring a decision on the side of the school. Click on the title above to read greater detail about the case, and the arguments, and comment on your impressions of the circumstances. The Court will release its decision in June.

Overpaying for Educational Underachievement

The consulting firm McKinsey today released its report on the economic implications of America’s two embarrassing educational achievement gaps: the gap between the United States and most other developed countries, and the gap between socioeconomic and racial groups within the United States. Education is a form of investment in a country’s labor force and its overall economy. This means that educational shortcomings drag on economic growth. McKinsey estimates that:
If the United States had in recent years closed the gap between its educational achievement levels and those of better-performing nations such as Finland and Korea, G.D.P. in 2008 could have been $1.3 trillion to $2.3 trillion higher. This represents 9 to 16 percent of G.D.P.
Similarly, if the United States had been able to narrow the achievement gap between white students and their black and Latino peers, the country’s G.D.P. would have been an estimated $310 billion to $525 billion higher, or 2 to 4 percent of G.D.P.
Unfortunately, throwing money at the system doesn’t seem to help, either. As it is, the United States gets comparatively little bang for its buck on education spending. The United States spends more than any other country per point on the PISA math exam, and 60 percent more than the O.E.C.D. average. Click on the title above to read more disheartening facts about the state of our education system.

More American Workers Outsourcing Own Jobs Overseas

More American Workers Outsourcing Own Jobs Overseas

Obama Orders His Cabinet To Cut The Fat

President Obama convenes his cabinet today and will ask for $100 million dollars worth of cost cutting to be delivered within 90 days. Last month, both houses approved the President's $3.5 trillion budget outline to be fine tuned and finalized later this year.
Just to be clear: $100 million represents .003 percent of $3.5 trillion.
To put those numbers in perspective, imagine that the head of a household with annual spending of $100,000 called everyone in the family together to deal with a $34,000 budget shortfall. How much would he or she announce that spending had to be cut? By $3 over the course of the year--approximately the cost of one latte at Starbucks. The other $33,997? We can put that on the family credit card and worry about it next year. Click on the title above to access an article about the budget battles.

What College Freshmen Think

Here is a collection of responses from a recent survey taken by incoming freshmen. Review the responses and discuss how they parallel your own views.

Is The Price Of Cocaine Rising?

Like any business, when production and transportation costs rise it's usually the consumer that feels the pinch. According to recent data released from the DEA, the price of cocaine out of Mexico has risen by 21% and the purity levels have declined. This is being interpreted as a victory for the forces trying to control the violent drug cartels in that beleaguered country. The costs of the ongoing turf wars and the stepped-up crackdown on distribution of the product have forced producers to pass on higher prices and cut corners in quality. As you might imagine, many people don't believe this will be a sustained trend and cite that price spikes in the past have done nothing to the long term viability of the business. Click on the title above to access the fascinating data released by the DEA.

Sick Around The World

Without a doubt, the biggest domestic challenge our nation faces is affordable health care. We currently spend more money per capita than any nation but receive an inadequate product in return. Quality is sporadic, access is frequently out of reach, and cost increases remain unabated. The system threatens to suffocate our economy yet there is little agreement in Washington on how to tackle the beast. President Obama's plan is slowly evolving but it continues to run into the same tired arguments the opposition always offers. It seems clear that Americans will have to forfeit their right to choose freedom from coverage in order to control costs. It also seems necessary that lifestyle changes will have to occur for the millions of Twinkie eating, cigarette smoking, couch potatoes who believe health care is a one way street. Click on the title above to access five video segments on how industrialized countries offer health care to their citizens.

Where It's Worse Than 8.5%

The Pirate Bay Verdict and the Future of File-Sharing

The Pirate Bay Verdict and the Future of File-Sharing

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The four founders of Pirate Bay, a file sharing network, were handed a verdict today sentencing them to jail time and significant fines for creating the means to share illegally accessed files. This is a landmark case in copyright infringement, similar to Napster, but unlike Napster this site is not going away, the four Swedish gentlemen vow to fight on. The issue of copyright laws is so powerful in Sweden that a single issue political party has been born, you guessed it, The Pirate Party. One of the conspirators held a webcam conference today and took questions and support via Twitter. Click on the title above to read about the case and the future of file sharing.

Afghan Women Protest Against Further Restrictions

The sight of 300 women taking to the streets of Kabul yesterday to protest the enacting of Taliban style limitations on their liberties incited a throng three times the size to jeer and throw stones. The level of courage was unmatched but the Shia type restrictions are likely. Regardless, the women faced glaring derision and a pelting of rocks by a predominantly male mob. This impoverished country seems unimpeded by the growing attention it's receiving from the U.S.. Despite the world denouncing these new laws, the majority of Afghans favor them. This is especially true in the communities where these women reside, the most poor and uneducated. Historically, Afghanistan has gone its own way and repelled intruders who would rather it didn't. It seems an incredibly tall task to expect the United States to do any better. Click on the title above to read about the events in Kabul and the unimaginable restrictions that now plague women in this forsaken place.

Has The Increase In The Drinking Age Saved Lives?

In 1984, the federal government forced states with a sub-21 drinking age to uniformly increase the age of consent to 21. The argument was that it would save young people from alcohol related accidents. With little exception (South Dakota sued the federal government) most states accepted the change because Washington threatened to withhold highway funds with non-compliance. A new set of research has been released questioning the benefits of the 21 limit. Click on the title above to view the research and the renewed call for a debate over federal mandatory guidelines.

The Opportunity Cost of Oversleeping

Reality is going to bite you pretty soon and one of the harshest elements is facing the consequences of being late. How many times have you hit the snooze button confident in your ability to slide into 2nd period class without being noticed? The future doesn't look kindly on slackers and public school is the last place in which we're conscious of you enough to give you a second chance. Since no one will care about you in two months, you better get a new line of defense against missing the menu of opportunities ahead. If you click on the title above you'll see the latest tool in behavioral economics...The SnuzNLuz. Every time you hit the snooze button it automatically debits your checking account and sends cash to charities you would never support. Tree huggers send cash to the American Coal Industry, cattle ranchers donate to PETA....you get the picture.

Unintended Consequences

Here is the story: Congress passes bill a to encourage fuel mixtures as a way to weaning the economy off oil. Subsidises usage of that fuel to the tune of 50c per gallon. Paper producers, who had been using a by-product of their process as a fuel for decades, now add diesel to it in order to claim the subsidy. On March 24 International Paper (IP) announced it had received its first check from the IRS for a one-month period this past fall. The total? A whopping $71.6 million. “It’s probably close to a billion a year of cash,” McClay said. “If you look at the economics of this business, to make that kind of money today you’d have to be on another planet.” IP’s stock rose 12 per-
cent on the news. This might be fine if it were just a subsidy to the inframargin (that is, a deal that encourages behavior you were doing anyway); that happens all the time with these things. But the fact that it is encouraging diesel oil use is where the inefficiency lies. Oh yeah, one final twist. Apparently, consultants are useful. By adding diesel fuel to the black liquor, paper companies produce a mixture that qualifies for the mixed-fuel tax credit, allowing them to burn “black liquor into gold,” as a JPMorgan report put it. It’s unclear who first came up with the idea–Wrobleski told me it was “outside consultants”–but at some point last fall IP and Verso, another paper company, formerly a part of IP, began adding diesel to its black liquor and applied to the IRS for the credit.

The Dream Act

The Development, Relief and Education for Alien Minors Act (The "DREAM Act") is a piece of proposed federal legislation that was introduced in the US senate, and the US house of representatives in March 26, 2009. This bill would provide certain immigrant students who graduate from US High Schools, are of good moral character, arrived in the US as children, and have been in the country continuously for at least five years prior to the bill's enactment, the opportunity to earn conditional permanent residency. The students will obtain temporary residency for a fixed frame of six years. Within the six year period, a qualified student must attend college, and earn a two year degree, or serve in the military for two years in order to earn citizenship after the six years period. If student does not comply with either his/her college requirement or military service requirement, temporary residency will be taken away and student will be subjected to deportation. This is controversial because it's meant to benefit undocumented individuals who are living here illegally. Critics contend the legislation would spend federal money on undocumented immigrants at the expense of American citizens, and that the bill would encourage illegal immigration. They also argue that citizens and residents would be forced to compete with undocumented immigrants for spots in college and university classes. Click on the the title above to gather further information and then weigh in with a thoughtful comment of your own.

What Do You Mean You're Not Frugal?

Like the fashion trends that now populate the back of your closet, people have begun to reject their conspicuous nature and embrace their thrifty side. Whether out of necessity or emancipation, frugal people are emerging from the closet and celebrating their ability to pinch pennies. Defined in the past by how much they had, the point now is how much can you save. Whether this is a complete paradigm shift or merely a temporary pause in excessiveness, the culture of frugality is in full bloom. New websites like stretcher.com and allthingsfrugal.com are popping up to guide folks through this alternative lifestyle. Another website, meetup.com which provides a connection for citizens to form support and hobby groups, reports the creation of dozens of sites dedicated to communities of misers. I would be interested in knowing whether you think this movement has staying power or not.

U.S. Power Grid Infiltrated By Spies

It is strongly believed that our power system has been breached by spies, thought to be from China and Russia, who have left software triggers behind to sabotage the infrastructure. Click on the title above to access an article reviewing the potential for utility terrorism. Incidents have already occurred outside of the U.S..

At Least We're Not Oregon

Who would have imagined that Nebraska would be the happiest place in the country and Florida would be next to last? The title to the post takes you an article summarizing the Happiness Index numbers released this week. This is a new take on the old Misery Index of the 1970s tying together more contemporary concerns like home foreclosures and household debt to the ageless malady of unemployment. The Midwest can revel in its moderation for it never got caught up in the housing boom and speculation that plagues flashier states like California, Nevada, Arizona, and our own Florida.

I Think America's Had A Heart Attack

America has had a significant heart attack, and like a human heart patient must now contemplate, then implement a lifestyle change. The country has been munching on a toxic mix of krispy kreme doughnuts, fatty beef, cheese and bacon with little concern for the consequences of those choices. The financial equivalent, of course, has been an economy driven by conspicuous consumption without the means to support it, unrealistic profit expectations, an unbelievable widening of the income gap, and a government more interested in spoiling the constituents than fiscal responsibility and oversight. In your comments, I would like you to thoughtfully prescribe a remedy. Once the patient (America) emerges from the ICU, what modifications will the new and improved nation manifest? How must our country and its people change the way we function in the aftermath of this life altering event?

Americans Staggering Under A Broader Definition Of Unemployment

The newspapers announced the new unemployment rate for March to be 8.5%. But in a broader definition of the malady, we could actually be experiencing a number closer to 15.6%. An unemployed person is defined as someone "without work, available for work, and [who] has actively searched for work." The Bureau of Labor Statistics defines that as the U3 measurement. But, an alternative measurement known as U6 includes people not "actively" looking for work -- referred to by the BLS as the "marginally attached," meaning people are unemployed but have not looked for work in the past month because they got discouraged and gave up. U-6 also measures the number of people who aren't able to find enough work, i.e. people who are working part-time when they want to work full-time, called the "under-employed". According to this calculus, 15.6% of the labor force fits this broader description. Click on the title above to feel the impact of these labor shortfalls on the U.S. economy.

President Obama Makes Some Tough Decisions

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What If All The World Used The Same Currency?

The recent struggles in the U.S. economy and the government's penchant to throw money at the problems have led to a chorus of nations, led by China, calling for a new world currency. The dollar is currently the world's "reserve" currency which means that most of the world's transactions are brokered with dollars. China has a horde of our dollars and a lot of our I.O.U.s, if America inflates its dollar it will diminish the return on the credit and the buying power of their savings. Click on the title above to read of the troubles a new world currency might cause.

Will We See A Change In Consumer Psychology?

The dramatic decline in consumer spending over the last year has knocked the wind out of many retailers. If they don't listen to the signals being sent from consumers in both America and Europe then they will be swept aside before the recovery begins. Click on the title above to read a collection of the declarations from newly humbled shoppers.

Why Have So Many Musicians Died At The Age Of 27?

Sunday is the 15th anniversary of Kurt Cobain's death, lead singer and songwriter for the early 90s grunge band Nirvana. That may or may not evoke an emotion in you but if you click on the title above you'll be taken to a fascinating story and slide show about all of the 27 year old rock stars who have lost their lives in various ways. It makes you wonder what it is about the 27th year? Where do you suspect you'll be when you're 27? Guess where I was, you'll see me there just about every weekday....sigh!

We Will Never End World Poverty Unless Women Have Fewer Children

Click on the title above to read an excellent article on the inadequate efforts behind family planning in impoverished nations. With a change in the White House, more dollars will now flow to struggling nations to pay for contraception, clinics, and education for women and their partners. But the neglect over this issue in recent decades has led to an imprisonment of sorts for women who have yet to experience the enlightenment enjoyed by their peers in developed nations.

What's With All Of The Violent Crime Recently?

It is an easy hypothesis to draw that hard economic times will lead to increased criminal activity. The recent rash of very violent crime is something a little more puzzling. In the last couple of weeks, dozens of people have been abruptly shot by cowards with personal axes to grind and no capacity to seek answers. In a nation where assault rifles are perversely protected by our Constitution, it's no wonder that our citizens are not. One might conclude that this is an after-shock of the post-Bush lunacy defined by a "cowboy" mentality and fanatically embraced by people who professed their misguided interpretation of the Bible and the 2nd amendment to be gospel. Now that the dark ages are over in Washington D.C. and an age of enlightenment may be returning, it's not surprising that those who celebrated the idiot in charge would give up their "rights" with varied levels of reluctance.

If You Like Indicators, Keep Your Laggards and Leaders Separate

So much of the casual conversation I hear about the direction of the economy is downright confused — not only because the economy is legitimately confusing, but because people don’t know what metrics to keep their eye on, and especially because they jumble their leading and lagging indicators. A leading indicator fortells of an approaching change and a lagging indicator confirms the change has begun. The stock market could still recover as unemployment remains high. Wall Street will just want some signs that the prospects for the labor market aren’t getting far worse. In downturns during the past 60 years, the S&P 500 index has hit bottom an average of four months before a recession ended and about nine months before unemployment hit its peak. So say it to yourself three times over — and say it especially to your confused friends: the stock market is a leading indicator; unemployment is a lagging indicator. In other words: markets move fast and assimilate lots of information and are therefore somewhat predictive; layoffs are messy, unappealing, and above all take some time to unfold — as does the hiring that eventually replaces them. This doesn’t mean that the recent market uptick means the recession is easing up, nor does it mean that recent high unemployment numbers aren’t relevant. It does mean, however, that the two metrics lie in different columns when assessing where things are heading.

Unemployment Hits 8.5%

The latest unemployment numbers were released and the country is currently facing the highest rate of joblessness in 26 years. The recession in the early eighties was accelerated by monetary policy moves out of the Fed to quell inflation. So, this time around is different because the loss of jobs is the cyclical response to a lack of consumption. Meanwhile, government data for January was revised to show monthly job losses of 741,000 — more layoffs for a month than at any time since October 1949. The decline in nonfarm payrolls in February was not revised, remaining at 651,000.
Manufacturing was hardest hit in the new report, with the sector losing 161,000 jobs in March. Construction industries lost 126,000 jobs, and the service sector axed 358,000 positions. The average work week in March dropped to 33.2 hours, a new record low, indicating that many companies are reducing workers' hours. The deterioration in the jobs market comes despite a few hopeful signs recently that the recession — now the longest since World War II — could be easing.

Click on the title above to view an interactive map of the distribution of unemployment across the country.

I'm Leaving Spanish River

After careful consideration, my wife and I have decided to leave South Florida. I've been interviewing and found a new job with the National Council for Economic Education in Washington D.C.. I've enjoyed my time immensely at SRHS and if you click on the title above you'll read a special letter I've written to express my feelings. Thank you.

Affluenza

How will we as a nation overcome the virus that led us to live larger than we can afford? Can you imagine anyone, in their right mind, developing and promoting the Hummer as a rational transportation option? Will we return to being a nation willing to throw away the future for the immediate gratification of a new kitchen or swimming pool? This can not be a recovery led by consumers, it can only be meaningful if it's driven by new technologies and new ideas. We must create a paradigm where saving has its rewards and conspicuous consumption is condemned. The sliver of our population who followed that mantra are sitting on the sidelines watching this collapse thankful that they didn't fall prey to the temptations. If you're generation doesn't fix this, we are doomed to be an aging nation without direction. We'll forever follow an undesirable course of short-term flurries of unsubstantiated growth only to be disappointed when they fail to sustain. We must become a nation that produces things again, that develops innovations and then nurtures them in our own backyard. The old market system has been corrupted and should be discarded, it lacks the means to stage recovery. The government must reacquaint us with an equitable system, plant the seeds for recovery, and then let American ingenuity take over. Anything less will seal our departure from world leadership.