May 13, 2004

Gasoline stealing the gas from recovery

From Rob Black -

Economist Irwin Kellner says there is a rule of thumb that every penny per gallon that gasoline prices rise takes $1 billion out of the economy. Since the end of 2001, gasoline prices have jumped by over 80-cents a gallon, effectively negating more than one quarter of the $316 billion in stimulus that was provided by the three Federal tax cuts

May 13, 2004 in Dismal science | Permalink | Comments (0) | TrackBack

February 14, 2004

What runs in the family isnt success

Socialist Don Conley , also a director of the Center for Advanced Social Science at New York University has come out with some startling findings in his new book - "The Pecking Order: Which Siblings Succeed and Why".

Findings which will generate more debate and interest (and can also affect family planning) : -

- differences between families explain only 25 percent of the nation's income inequality; the remaining 75 percent is explained by differences between siblings

- middle offspring are less likely to receive financial support for their education and may do less well in school than their older and younger siblings. Unlike typical first- and last-borns, he reasons, middle children never experience family life as an only child; instead, they are forced to compete with their siblings for money and attention.

- women are more likely to be as successful as their brothers if their mothers worked outside the home

NYT article on this refers to previous work on the lines of Birth Order theory. Frank J. Sulloway, a historian of science, published the controversial best seller "Born to Rebel: Birth Order, Family Dynamics and Creative Lives" (Pantheon, 1996). Book purported to show the Darwinian logic by which firstborns grow up to be rule-abiding conformists and political leaders, while later-borns become rebellious innovators and revolutionaries.

Though Mr. Conley is deeply skeptical of birth order theory, calling it "next after astrological signs as people's favorite folk explanation for why things turn out."

To get an idea how studies like this affect people, hear what Conley has to say about his own family - "thanks in part to his findings on middle-borns, he said, he was no longer considering having a third child".

February 14, 2004 in Dismal science | Permalink | Comments (0) | TrackBack

December 01, 2003

Productivity Paradox

[Stephen S. Roach is a chief economist for Morgan Stanley ]
Productivity growth is sustainable when driven by creativity, risk-taking, innovation and, yes, new technology. It is fleeting when it is driven simply by downsizing and longer hours. With cost cutting still the credo and workers starting to reach physical limits, America's so-called productivity renaissance may be over before Americans even have a chance to enjoy it.

Time duration between the emergence of next new technology/innovation and the current cost cutting phase will dictate how acrimonious socio-political debate will be.

December 1, 2003 in Dismal science | Permalink | Comments (0) | TrackBack

October 15, 2003

10 Commandments of Research

From Big Picture

10 Commandments of Research

1) Be right on the fundamentals. Earnings growth drives stock price. There is essentially a 100% correlation with how a company does and how its stock performs over time.

2) Be Proactive -- Not Reactive. Reporting what happened is what a news reporter does. We get paid to look over the horizon and around corners.

3) When in Doubt -- Get it Out. The difference between value-added information and a commodity could be minutes.

4) When Wrong -- Admit it. The best investors and analysts are wrong a lot. The worst thing to do is rationalize a mistake. Be intellectually and morally honest.

5) The Cockroach Theory. You seldom find just one cockroach in a kitchen. Likewise, if you find a problem at a growth company, there are always more behind it. It's rarely a one-quarter issue -- the first loss is the best loss.

6) Research is About Information and Insight. Information is valuable if it is proprietary. Insight is valuable if we know what that information means.

7) The 4 Ps are Key for any Successful Growth Company. People, Product, Potential, Predictability. The first "P" (people) is the most important.

8) 5 Independent Sources for Each Initiation of Coverage. We will have regular dialogue with company management, but they will always see the glass as "half full."

9) 3 Main Reasons for a Stock to Move Up or Down. In addition, we will identify near term catalysts for price movements.

10) Make Clients Money -- and everything will take care of itself.

October 15, 2003 in Dismal science | Permalink | Comments (0) | TrackBack

October 07, 2003

Study: U.S. gap in higher ed on the rise

Historically US supremacy in higher education area has been its magnet. Policy makers have something to worry about.

Study: U.S. gap in higher ed on the rise

"Human capital is the coin of the realm," it reads. "Educational attainment, measured in terms of the highest degree or level of schooling attained by the adult population, is the international currency used to assess the strength of a country's economy and its standard of living."

October 7, 2003 in Dismal science | Permalink | Comments (0) | TrackBack

September 27, 2003

Count on Mr Feynman

Its hard to beat his sense of humour:

There are 10^11 stars in the galaxy. That used to be a huge number. But it's only a hundred billion. It's less than the national deficit! We used to call them astronomical numbers. Now we should call them economical numbers.
Richard Feynman

September 27, 2003 in Dismal science | Permalink | Comments (0) | TrackBack

August 31, 2003

Wealth of Nations Hangs on WTO Talks

Wealth of Nations Hangs on WTO Talks

Alan Wheatley, Asian Economics Correspondent has written this report on coming globalization trade issue arising due to subsidies :

Is it fair that every European cow laps up $2.50 a day in subsidies while half the people in the world live on less than $2 a day?
Cutting through the technical jargon, that is the crucial political question that trade ministers from 146 countries must answer when they meet next week in the Mexican resort of Cancun.

The gathering will assess the prospects for the World Trade Organization's Doha round of market-opening talks, launched in the Qatari capital in November 2001 and ambitiously scheduled to be wrapped up by the end of next year.

The omens could be better. True, the talks got a confidence booster on Saturday when WTO envoys in Geneva agreed after endless haggling to let poorer nations override patent rules and import cheap generic drugs to fight deadly diseases such as AIDS.

But countries remain far apart on the issue that will make or break the Doha round: how far to lower barriers to business in manufactured products, services and, crucially, farm goods.

With 70 percent of the world's poor dependent on agriculture, increasingly assertive developing nations insist they will block the Doha round unless rich states get serious about cutting farm subsidies and opening their protected markets.

"Those that have more should be in a position to listen to those that have less," says Thomas Aquino, the Philippine undersecretary for international trade.

And there's the rub.

Many independent experts as well as developing countries believe that global trade rules as they now stand, especially in agriculture, mean the rich get richer and the poor get poorer.


Rich countries spend some $300 billion a year on farm subsidies, about six times more than on development aid. The European Union cow is not the most pampered: the average Japanese cow receives $7.50 in subsidies, according to the World Bank (News - Websites).

Japan also provides support to its cosseted rice farmers that comes out to seven times more than the cost of production.

The United States funnels more than $3 billion a year in subsidies to its cotton farmers, three times its aid to Africa.

"Agricultural trade rules are among the most distorted in the world. They tilt precipitously in favor of rich countries. The many rules that must be rebalanced in agriculture are deeply entrenched and guarded by powerful political interests in the developed world," the Carnegie Endowment for International Peace, a Washington-based think tank, concluded in a recent report.

The World Bank estimates that scrapping farm protection and output subsidies in rich countries would boost global agriculture production by 17 percent, adding $60 billion a year, or six percent, to the rural incomes of low and middle-income states.

The British-based relief agency Oxfam points to Mexico, next week's host, as an example of the raw deal the poor are getting.

It calculates that U.S. corn growers receive an effective subsidy for exporting to Mexico of $105 million to $145 million a year, more than the total household income of the 250,000 corn farmers in the poor southern state of Chiapas.

"Over the past two years since Doha we've seen business as usual -- that is, the rich countries making very few concessions on development while pursuing very aggressively their short-term interest. Cancun is the moment when that must change," said Phil Bloomer, Oxfam's head of advocacy.


Any grand bargain, then, in Cancun would need to involve more radical farm reforms than proposed so far by Washington and Brussels. In return, western firms would be given easier access to sell goods and services, such as banking and telecommunications, to poor countries.

Yet there are few saints in international trade, and many developing countries are reluctant to lower their barriers even to each other. Latin America imposes average tariffs on manufactured goods from the continent that are seven times higher than tariffs in industrial nations, according to the World Bank.

"The real value-added from this round, once the EU and the U.S. have sent the right signals, is developing-country liberalization," says Razeen Sally, a trade expert with the London School of Economics.

The thousands of anti-globalization protesters expected in Cancun will disagree, but a welter of academic evidence suggests that countries open to trade and investment grow faster than those that are not. North Korea was once richer than South Korea; after 50 years of hermit economics, it is now 16 times poorer.

If the Doha round fails, Sally is optimistic the world will not relapse into destructive 1930s-style protectionism. But the WTO could become an irrelevant talking shop and trade deals would be increasingly struck between pairs or groups of governments.

Countries in sub-Saharan Africa, or the likes of Pakistan or Bangladesh, would be the big losers if that were to happen: they would either have to accept tough conditions for improved market access or find themselves driven to the margins of the world economy -- with the attendant risks of political radicalization.

Instead, under the WTO's multilateral umbrella where every country has one vote, they have the chance to work for a deal that the World Bank estimates could yield gains of $2.8 trillion by 2015, of which $1.5 trillion would go to developing countries.

"When that trickles down, it's the equivalent of raising about 300 million people out of poverty," Sally said.

August 31, 2003 in Dismal science | Permalink | Comments (0) | TrackBack