Smart Economy: Not-So-Smart Economy

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January 28, 2009

When will the recession end? Part 13 Thirteen economic questions that economists can't answer

I was reflecting on all the economic issues over the last six month, that frankly economists have either given contradictory answers to or simply admitted that they do not know the answers to.

1) Can government spend their way out of a recession or depression and back to prosperity? Isn’t unbridled spending and leveraged debt financing what got us into this mess in the first place? So, is the government trying to tell me that the disease is actually the cure, in the second round of spending? That’s like giving more alcohol to a drunk to cure his hangover.

2) Does stimulus spending really work? How come it didn’t work for over the past two decades for Japan, whose economy has been anemic at best? FDR’s New Deal didn’t actually pull the US out of the depression which lasted 11 years, It was World War II and the shift to the military economy, which got things going again. Short of starting another world war, what crisis should we be fighting? Climate Change? My bet is on global cooling and not global warming as a greater short term risk, which could push us back into a triple dip recession. What if NASA’s warnings of a solar sun spot cycle minimum and resultant decade or even century-long mini ice age (like we experienced in the 17th century) comes to pass by circa 2020-2022?

3) How much stimulus financing is enough? Well, nobody really know? The US still has 14 assets bubbles that have yet to burst.

4) How many rounds of stimulus will we need? Canada thinks it will be out of this recession by mid year 2009. Their logic? Exports are expected to improve by mid year, according to the Bank of Canada. In a synchronous global downturn, who will suddenly decide to buy Canadian exports with renewed enthusiasm? Recovery in 2009? I seriously doubt it.

5) What or who do we spend stimulus funding on? Most countries are spending money on traditional infrastructure, but what we forget is that traditional infrastructure does not produce ongoing revenue for the country or for a municipality. Traditional infrastructure such as new roads are a cost item on a national balance sheet, requiring maintenance and money from fuel taxes, unless you have a toll gate or a congestion tax like we see in London, England. A smart road would incorporate piezoelectric sensors that harvest energy by converting vibrations caused by cars and turning it into electricity that could power lights along the roadway. Intelligent sewers could be coupled with algae streams, that would digest the waste and produce useful biofuels. More natural sewage teatment systems have been proposed by biologists and engineers. " First you'd desludge it. Then you'd filter it through nonedible barrier plants and again through a tower of zebra mussels, the best filtering organism out there. After that, the water would be pristine," says Dickson Despommier at Columbia University

6) What should we be spending stimulus on? Again, governments have a dismal track record of picking new industry winners.

7) What will the recession bottom look like ? We do not know but it will be different from previous recessions / depressions for sure Why? Economist can’t explain the complexity of driving factors to predict the length and depth of the next bottom. Six months ago most of the business community were in denial that a recession was possible and were not considering contingencies or recession-related opportunity scenarios. As the Guardian newspaper is asking this morning about the annual Davos economic love-fest:" Davos is not holding a capitalist show-trial this year. Instead it wants to be the place where the rebuilding of capitalism begins. The event is attempting to slide guiltily into what the organisers call the "post-crisis world" without ever confessing to its role in the crisis....The obvious question is why, if everyone at this meeting is so smart, did almost none of them predict the scale of the crash? The few who did are this year's stars – led by economists Nouriel Roubini and Stephen Roach. And the greatest sinners have stayed away."

8) Who will be the recovery leaders and laggards? We don’t know, despite that stock analysts claim example- Industry x is always a leader or laggard. Not true. Each recession has had a different profile and economists can’t explain why or predict the next one.

9) Will gold and silver be a hedge against future devaluations of currency? Not, if everyone decides to trade in gold back in for cash like we saw in the stock market crash in 2008, when traders suddenly needed cash to cover margin calls.

10) How will the global economy deal with pending strategic material and water shortages that are forecast over the next 15-20 years? Peak materials ? Wars ? Embargoes? Rationing? Prohibition? Substitution?

"If it can't be reduced, reused, repaired, rebuilt, refurbished, refinished, resold, recycled or composted, then it should be restricted, redesigned or removed from production."
Pete Seeger

11) Are we going back to an economy predicated on unsustainable growth or can we develop a steady state, near zero growth and still be economically healthy? The 2 decade long extended L recovery in Japan could be a forwarning of what the USA faces. - the japanese economic flu.

12) What new economy and technologies will replace the one that’s currently crumbling before our eyes? The Smart Technology economy?

13) Why did Alan Greenspan warn of "irrational exuberance in 1996, but when he became the US Fed Chairman, did nothing to restrain it back into check?

Walter Derzko, Smart Economy, Toronto

Author of the soon-to-be-released book: Hard Times Golden Opportunities.. about opportunity recognition in a recession/ depression featuring 45 opportunity scenarios.

January 15, 2009

When will the recession end? Part 7 False signals of recovery

Many hopeful economists and political analysts are desperate to find any source of good news signaling that we may be at the bottom of the recession / depression or starting to rebound to coincide with the Barack Obama inauguration. Many will point to the 300 basis point jump in the Baltic Dry Index-the obscure London based indicator that tracks the health of global maritime trade. The index, measures the costs for shipping dry bulk commodities such as iron ore, coal, coke, steel and grains, It topped out at over 13,000 basis points last May and by December nose-dived 96% back down to earth to 663 b.p.as global trade virtually collapsed, pushed down by a credit squeeze and sliding demand for global trade. Now it's started to rebound off its lows, inch up ever so slightly. Yesterday, the index climbed 9 b.p. to 920 points from 911 points on Tuesday.

Some analysts will jump for joy pointing at these Baltic Dry Index rebounds but ship-owners are apparently not as enthused.

This shows the danger of just tracking naked numbers, without digging deeper and exploring the reasons behind these moves. In the stock market they call it a dead cat bounce.

According to my sources, some oil companies are starting to use layed up dry bulk ships as storage vessels for oil. With no where to store & ship oil as it flows out of pipelines, these ships are tied up in dock. Oil companies are waiting it out until oil prices rebound to sell their commodities to overseas buyers-not an encouraging sign. So yes, these ships are consigned, but not actually traveling anywhere yet-so that's why the BDI has inched upward, giving you a false positive signal.

UPDATE- "Bloomberg is quoting Frontline Ltd, the world’s biggest owner of supertankers, as saying that about 80 million barrels of crude oil are being stored in tankers, the most in 20 years, as traders seek to take advantage of higher prices later in the year."

The financials around global maritime trade have not improved either, in fact in some cases have gotten worse.

-Shipping firms are increasingly canceling orders for new dry bulk carriers due to the uncertain business environment.

-Indian & Chinese shipowners are laying up more vessels that carry dry bulk commodities.

-Excess capacity in the business is a major problem says Purchasing.com...."even if demand comes back in 2009, there is still a strong chance of overcapacity due to the shipbuilding order boom that took place when rates were at their peak. According to the Wall Street Journal, in the last two years 50 million tons of capacity have been added to the global fleet of 420 million tons. "But in 2009 and 2010, over 175 million tons is due to come into service."

-Frozen credit lines have paralyzed the shipping trade since mid-September, drastically reducing shipments and, in turn, the use of dry bulk carriers.

-Also a lack of access to letters of credit, in which banks guarantee payment for merchandise, is another major barrier to the resumption of global trade.

“It is not a sustained rally as of now,” said India’s biggest ship-broking firm, Mumbai-based Trans Ocean Agency Pvt. Ltd. “It is momentary. The problems with letters of credit persist.”

Adding...."that given the extent of the fall over the past few months, a minor improvement of even 5% or 10% will not make a difference. ... “It could be a technical bounce-back.” say news reports.

"Conditions should become clearer when China, the world’s biggest importer of iron ore, completes price negotiations with suppliers for its new annual contract beginning February." say shipping experts. Everybody will be waiting with anticipation.

Excess capacity is a problem in many industries including housing and the autosector, and we won't be heading out of the recession / depression until the supply/demand ratio evens out--that's basic economics 101,that all the optimist economists ignore and don't tell us.

Downstream Container traffic is no less robust

"Lloyd's List quotes the Drewry Container Forecaster, who now estimates that global container traffic totalled 153m teu last year, representing growth of 7.2% from 2007. A few months earlier, Drewry had been forecasting trade expansion of 8.6% for 2008.This year, growth is expected to slow to just 2.8%, with a few isolated trades such as the Asia-Middle East and Asia-Africa corridors likely to post some positive figures. The big east-west routes are in terrible shape, with Drewry forecasting that the Asia-Europe trade will shrink by 4.1% in 2009, following growth of just 1.9% in 2008. Pacific traffic is also very weak , with Drewry calculating that eastbound volumes from Asia to
North Americadropped 5.7% last year, with a further contraction of 3.2% forecast for 2009.

Trade data from Asia's export tigers has been disastrous over recent weeks, reflecting the collapse in US, UK and European markets. South Korea's exports fell 30% in January compared to a year earlier. Exports have slumped 42% in Taiwan and 27% in Japan, according to the most recent monthly data. Even China has now started to see an outright contraction in shipments, led by steel, electronics and textiles.
A report ING yesterday said shipping activity at US ports has suddenly plunged. Outbound traffic from Long Beach and Los Angeles, America's two top ports, has fallen by 18% year-on-year, a far more serious decline than anything seen in recent recessions. Source- Denmark's A.P."

Walter Derzko, Smart Economy, Toronto

Author of the soon-to-be-released book: Hard Times Golden Opportunities.. about opportunity recognition in a recession/ depression featuring 45 opportunity scenarios.

82 Signposts to the current Recession Depression Summary from 2008

When will this recession end?

When will this recession end ? Part 2 Do you listen to the Optimists or the Pessimists in 2009?

When will the recession end? Part 3 The coming collapse of the American Middle Class into an Underclass

When will the recession end? Part 4 The double dip housing crash in the USA

When will the recession end? Part 5 Stop Auto Industry Bailouts, start buying Electric

When will this recession end? Part 6 The USA Paradox; Cheer vs Fear vs Transformation

When will the recession end? Part 7 False signals of recovery

When will the recession end? Part 8 Lessons Learned from the last Post 9/11 recession; designing brilliant winning business models

Walter Derzko -"Changing the world, one idea at a time"©

The Smart Technology Blog: The Smart Economy -- Read, enjoy, explore, speculate, comment !!

To arrange for an in house presentation or briefing on smart technology see here

To explore the opportunities and threats of any new smart technology in your industry - Contact Me or explore how we can work together

".....Strategy without action is a day-dream; action without strategy is a nightmare"-old Japanese proverb
".......Ours is the age that is proud of machines that think and suspicious of men who try to." -- H. Mumford Jones
".......Without changing our patterns of thought, we will not be able to solve the problems we created with our current pattern of thought." --A. Einstein
".......Change is difficult, but complacency and stagnation are surefire showstoppers..." --Walter Derzko

".......Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever has." -- Margaret Mead

".......Small minds discuss people; Average minds discuss events; Great minds discuss ideas; --Anon

P. S. if this is your first visit to my blog, please go to our Welcome page

January 15, 2009 in Not-So-Smart Economy, Scenarios, Smart Business, Smart Complexity, Smart Data Visualization, Smart Economy, Smart Food, Smart Forecasts, Smart Future, Smart Predictions, Smart Sensemaking, Smart Strategy, Smart Technology Forecasts, Smart Transportation, Smart Trends | Permalink | Comments (0) | TrackBack (0)

Technorati Tags: Baltic Dry Index, Depression, false signals, rebound, Recession, recovery, Walter Derzko

January 12, 2009

When will the recession end? Part 5 Stop Auto Industry Bailouts, start buying Electric

Instead of offering more unconditional bailouts to the big three North American automakers, the Canadian government should shift from supply to demand and change its procurement policy to promote green electric vehicles. When it comes time to replacing fleet vehicles, vans, trucks and buses or trains they should purchase electric vehicles from local manufacturers including Bombardier, GM, Ford or Chrysler or Toyota or Honda if they are made in Canada. This procurement policy could be extended to the army, crown corporations, provincial governments, municipalities and utilities. That would provide a financial incentive to the auto industry to retool and take them through dificult recessionary / depressionary times as well as indirectly supporting the auto-parts manufacturers. Increased production runs should bring down the costs eventually to normal consumers.

Walter Derzko, Smart Economy, Toronto

Author of the soon-to-be-released book: Hard Times Golden Opportunities.. about opportunity recognition in a recession/ depression featuring 45 opportunity scenarios.

82 Signposts to the current Recession Depression Summary from 2008

When will this recession end?

When will this recession end ? Part 2 Do you listen to the Optimists or the Pessimists in 2009?

When will the recession end? Part 3 The coming collapse of the American Middle Class into an Underclass

When will the recession end? Part 4 The double dip housing crash in the USA

When will this recession end? Part 6 The USA Paradox; Cheer vs Fear vs Transformation

Walter Derzko -"Changing the world, one idea at a time"©

The Smart Technology Blog: The Smart Economy -- Read, enjoy, explore, speculate, comment !!

To arrange for an in house presentation or briefing on smart technology see here

To explore the opportunities and threats of any new smart technology in your industry - Contact Me or explore how we can work together

".....Strategy without action is a day-dream; action without strategy is a nightmare"-old Japanese proverb
".......Ours is the age that is proud of machines that think and suspicious of men who try to." -- H. Mumford Jones
".......Without changing our patterns of thought, we will not be able to solve the problems we created with our current pattern of thought." --A. Einstein
".......Change is difficult, but complacency and stagnation are surefire showstoppers..." --Walter Derzko

".......Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever has." -- Margaret Mead

".......Small minds discuss people; Average minds discuss events; Great minds discuss ideas; --Anon

P. S. if this is your first visit to my blog, please go to our Welcome page

January 12, 2009 in Not-So-Smart Economy, Smart Business, Smart Business Models, Smart Economy, Smart Environment, Smart Forecasts, Smart Future, Smart Government Incentives, Smart Pattern Recognition, Smart Predictions, Smart Transportation, Smart Trends | Permalink | Comments (0) | TrackBack (0)

January 09, 2009

When will the recession end? Part 4 The double dip housing crash in the USA

Back in November 2008 I predicted that we may go through a double or even tripple dip recession or depression, due the the protracted list of speculative leveraged asset bubbles, about 15 at my last count.

Now two US economists provide more evidence to support this view, speculating that a possible double dip housing crash might be in the cards. As the U.S. housing recession enters its fourth year, there’s no sign of a recovery because speculators account for most of the rise in sales, and not honest home buyers. Speculators that bought and flipped property, as well as toxic sub prime mortgages to people who could not afford homes under normal circumstances, were the two main drivers that drove up housing prices and inflated the first US housing bubble from 2000 to 2007. Now these same speculators are back in the market, snapping up foreclosed properties at rock-bottom, pennies-on-the-dollar prices. On the surface, this sounds like good news, the right way to go. Everyone starts buying up distressed property, taking the excess supply of foreclosed homes off the market that has been dragging down prices. But two American economists, Joseph Stiglitz, the Nobel winner from Columbia University, and Robert Shiller of Yale warn that the opposite may happen--these speculative investors will rent out property in the mean time, and sit on their newly bought bargains, only to throw them back on the market when prices start to rise. This new sudden supply glut will drag the market back down again. Stiglitz even talks of a potential “double dip’’ in the housing downturn if this were to happen.

"We’re creating a shadow inventory of homes that will be right back on the market as soon as the economy and the housing market begin to improve,” Stiglitz tells Bloomberg. “We could see a double-dip in the housing recession if that happens.” Stiglitz predicts that housing prices could begin to stabilize in 2010, but worries that this positive step could get delayed by a deteriorating economy and rising speculation. Shiller contends that the frenzy of bargain shopping by speculators may be preventing the market from truly hitting bottom now. And when all those homes come back on the market, it could send prices crashing down again. “These speculators are preventing the market from crashing now, and when they get out it could fall again.” says Shiller.

U.S.real estate prices and sales may begin to stabilize in 2010, said Stiglitz. A worsening economy and growing speculation will delay the recovery further, he said.

“Assuming we don’t overshoot, we could be back at equilibrium in 12 to 18 months, but there are reasons to believe we might overshoot,” Stiglitz said.

In November 2008 there were 4.2 million homes on the market, falling from an all-time high of 4.6 million in July, the National Association of Realtors said in a Dec. 23 report. The U.S.median home price plunged 13 percent from a year ago, the fastest pace since the 1930s, the trade group said.

Banks and othe lenders repossessed about 850,000 US properties in 2008, according to RealtyTrac. The $11.5 billion of homes held by U.S.banks at the end of the third quarter, the highest on record, was more than double the $5.3 billion of the year-earlier period, according to the Federal Deposit Insurance Corp. in Washington.

Walter Derzko, Smart Economy, Toronto,

Author of the soon-to-be-released book: Hard Times Golden Opportunities.. about opportunity recognition in a recession/ depression featuring 45 opportunity scenarios.

When will this recession end?

When will this recession end ? Part 2 Do you listen to the Optimists or the Pessimists in 2009?

When will the recession end? Part 3 The coming collapse of the American Middle Class into an Underclass

When will the recession end? Part 4 The double dip housing crash in the USA

When will the recession end? Part 5 Stop Auto Industry Bailouts, start buying ElectricWhen will this recession end? Part 6 The USA Paradox; Cheer vs Fear vs Transformation

82 Signposts to the current Recession Depression Summary from 2008

Walter Derzko -"Changing the world, one idea at a time"©

The Smart Technology Blog: The Smart Economy -- Read, enjoy, explore, speculate, comment !!

To arrange for an in house presentation or briefing on smart technology see here

To explore the opportunities and threats of any new smart technology in your industry - Contact Me or explore how we can work together

".....Strategy without action is a day-dream; action without strategy is a nightmare"-old Japanese proverb
".......Ours is the age that is proud of machines that think and suspicious of men who try to." -- H. Mumford Jones
".......Without changing our patterns of thought, we will not be able to solve the problems we created with our current pattern of thought." --A. Einstein
".......Change is difficult, but complacency and stagnation are surefire showstoppers..." --Walter Derzko

".......Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever has." -- Margaret Mead

".......Small minds discuss people; Average minds discuss events; Great minds discuss ideas; --Anon

P. S. if this is your first visit to my blog, please go to our Welcome page

January 09, 2009 in Not-So-Smart Economy, Smart Economy, Smart Forecasts, Smart Future, Smart Pattern Recognition, Smart Predictions, Smart Sensemaking, Smart Trends | Permalink | Comments (0) | TrackBack (0)

Technorati Tags: double dip housing crash, recession depression

December 04, 2008

Roadmap to the financial crisis

Ever wonder how we got into this financial mess? Thanks to one of our blog readers (who wishes to remain anon) for sending me this picture from blog.mint.com (original source ) If you're a visual thinker like me, you'll appreciate this system dynamics-like flow chart chartof activities and consequences ranging from now vintage Greenspan (circa 2003) to recent Bush (2008). Here is a visual guide to help you to understand the events leading up to the government bailouts.

This is also an unprecidented time for opportunity-sensitive and change-savvy entrepreneurs that can take advantage of the changing trends and unevitable uncertainty and chaos, resulting in obvious and more subtle opportunity scenarios.

{Click picture to enlarge and get full view]

December 04, 2008 in Not-So-Smart Economy, Scenarios, Smart Economy | Permalink | Comments (0) | TrackBack (0)

Technorati Tags: financial crisis, roadmap, visual guide, Walter Derzko

December 03, 2008

US bailouts. A trillion here and a trillion there, in case someone is keeping score

Bernanke says crisis 'no comparison' to Great Depression

Bernanke said the situation at that time represented "very difficult circumstances," because "we didn't have the social safety net that we have today. So let's put that out of our minds; there's no -- there's comparison in terms of severity."

He added, "We're very lucky to live in a country as rich and diversified as the one we have. And I hope that we will have a quick and rapid recovery from the current slowdown.

Well now I feel safe and reasurred - NOT !!!

( he is right though, there is no comparisions to the 1930's Depression..[...]....it will be much worse...more like the Great Depression of the 1870's

Ever wonder how much all these US bailouts are going to cost? and who gets the money? and who pays for it in the end?

Almost $8.5 Trillion ( and growing)

See the spread sheet here for detailed numbers up to Nov 2008

and a hat tip to David Pollard's Blog today , where I found this goodie, which I've renamed....(The United) States of High Anxiety (source and author unknown)

We all live in million dollar homes
With mortgages to match,
When we learned that they were worth much less
We found there was a catch --
We had borrowed all we could
To buy that mansion by the sea,
Now we're living in the sorry State
of High Anxiety.

(insert short instrumental riff between verses e.g. tra la-la la-la-la-la la fiddle diddle diddle dee)

Since that mansion was a hundred miles
From where we earned our pay
Now we live our lives in traffic jams
For four hours every day --
So we borrowed all we could
To buy that monster SUV,
Now we're driving in the sorry State
of High Anxiety.

By the time we'd driven home
We were all wound up like a kite
So we went back to the store
For toys to make our lives seem bright --
And we borrowed all we could
To buy that sixty inch TV,
That we're watching in the sorry State
of High Anxiety.

But the news on that TV was bad --
Iraq, Afghanistan --
We decided we'd prefer
The entertainment in a can --
So we borrowed even more
To play those Hi-Def DVDs,
We're escaping in the sorry State
of High Anxiety.

There was something going wrong, we knew
The mainstream press was mum,
And we knew we'd have to go online
To find out what's to come --
We went deeper into hock
To buy a Pentium PC,
Now we're blogging in the sorry State
of High Anxiety.

And we learned of CDSs**,
Freddie Mac and AIG
Fannie Mae and Lehman Brothers,
Plus Bear Stearns' ABCP** --
We had borrowed all we had
For "leveraged fixed annuities"
And investing in the sorry State
of High Anxiety.

Now they print two trillion dollars
"To create liquidity"
So the bankrupt banks can pass it on
To spend by you and me --
So we'll buy more we cannot afford
For "Our Economy",
Though we're living in the sorry State
of High Anxiety.

Doesn't help to know the government's
As broke as you and me,
And we've bet it all on bailout plans
By Paulson*-Bernancke;
With a 14 trillion dollar debt
It's obvious to see
We are trapped within the sorry State
of High Anxiety.

We cease to buy, the markets crash,
Our savings, jobs are gone,
Our pension plans are worthless,
A "For sale" sign's on the lawn --
When you live beyond your means
Without sustainability
You'll live forever in the State
of High Anxiety.

To live with less, to make your own
Within community --
Not glamorous I must admit,
But it can set you free --
A better way to live and work
In peace and harmony,
A self-sufficient way
With no more High Anxiety.

* Once Obama takes office in 2009, replace with "Geithner-Barnancke". The other lyrics remain, alas, unchanged.
** CDSs = credit-default swaps, all $70T of them, unregulated; ABCP = asset-backed commercial paper, the junk that started the collapse.

December 03, 2008 in Not-So-Smart Economy | Permalink | Comments (0) | TrackBack (0)

November 21, 2008

Time to be blunt with the American people Mr Treasury Secretary, Henry M. Paulson!

US Treasury Secretary Henry M. Paulson, Jr. delivered remarks on the financial system yeterday afternoon at the Annual Reagan Lecture at the Ronald Reagan Presidential Library, Simi Valley, California

The Treasury Secretary was later asked 'When do you expect our economy to finally hit bottom so we can begin the process of recovery?' He had no direct answer for the questioner. ..providing the following excuse that he apreciated straight blunt questions, but as treasury secreatry, he could not always be so blunt with answers

What ? I can't believe he said that!!!

Mr Secretary--It's time to be blunt with the American people and everyone else in the world who is looking to America for leadership in this recession and financial crisis which the US now reluctantly admits they instigated.

What's even more scary...the USA Treasury Secretary admitted at the end of his speech:

""Until the financial crisis is behind us, we must remain vigilant, ready to respond and to manage unpredictable events as they occur. Our first priority is on recovery. And then we will need to repair our financial system and the global system to help prevent this from ever happening again," Paulson said."

What unpredictable events? Most people with half a brain see that we are heading for more inflation in some sectors if not the risk of deflation, as this recession or depression (take your pick) gets worse.

I listed more then a dozen bubbles which have yet to burst and if the Treasury Secretary can't see them or won't admit to seeing or anticipating them then he shouldn't be in office-come to think of it he won't be for much much longer. I hope that Obama's cabinet is much more transparent.

How ironic that just two years ago exactly to the date on Nov 20, 2006 Mr Paulson was defending the American financial system and the economy as the best in the world. What a difference just two years make !

"The U.S.economy is the envy of the world, and we must keep it that way.

Capital markets are the lifeblood of our economy. They connect those who need capital with those who invest or lend capital. They play a vital role in helping entrepreneurs implement new ideas and businesses expand operations, creating new jobs. They give our citizens the confidence to invest, earn higher returns on their savings, and reduce the cost of borrowing for student loans, mortgages, and consumer credit.

Our capital markets are the deepest, most efficient, and most transparent in the world. We are the world's leader and innovator in mergers and acquisitions advice, venture capital, private equity, hedge funds, derivatives, securitization skills, and Exchange Traded Funds. This expertise has made our leading financial institutions, many of them headquartered right here in New York, leaders in Asia, Europe, and Latin America. U.S.commercial and investment banks contribute greatly to economic success all around the globe."

Source: From the Remarks by Treasury Secretary Henry M. Paulson on the Competitiveness of U.S. Capital Markets Economic Club of New York New York, NY November 20, 2006

Walter Derzko

November 21, 2008 in Not-So-Smart Economy, Smart Economy | Permalink | Comments (0) | TrackBack (0)

Technorati Tags: depression, Henry Paulson, Recession, Treasury Secretary, unpredictable events

November 12, 2008

The no-strings-attatched US bailouts

Doesn’t this just make you boil…talk about greed, sloppy governance and corporate irresponsibility.

Goldman Sachs and Morgan Stanley are accepting a combined $20 billion in taxpayer money under the federal economic stabilization plan or the TARP. According to SEC filings, instead of helping homeowners who are or have defaulted on their mortgages, Goldman Sachs and Morgan Stanley have set aside a combined $11 billion for bonuses in the first nine months of this year. The Dow Jones responded by dropping 400 points.

Source: Wall Street: Taking Bailouts, Giving Bonuses?

Financial Firms Still Offer Year-End Bonuses Despite Receiving Government Aid

November 12, 2008 in Not-So-Smart Economy | Permalink | Comments (0) | TrackBack (0)

Technorati Tags: no-strings-attatched US bailouts

August 10, 2008

Ghost in the Hall? Haunted High School?

Haunted High School ?

Is a ghost roaming the halls of a North Carolina school? An unexplained image that triggered a motion detecting surveillance camera has some officials at Asheville High wondering. The mysterious figure appeared to cast a shadow as it moved through the school's hallways at 2:51 am last Friday. Click here to view the CNN video news report. File under unexplained.

August 10, 2008 in Not-So-Smart Economy | Permalink | Comments (0) | TrackBack (0)

February 25, 2008

What do horses, railway tracks and the space shuttle have in common? A lesson in technology history? 08-079

(O.S. sent this to me today. Can’t vouch for the historic accuracy, but if it’s true, it’s quite amusing—Walter Derzko)

"Railroad tracks….This is fascinating.

(Be sure to read the final paragraph, Your understanding of it will depend on the earlier part of the content.)

The US standard railroad gauge (distance between the rails) is 4 feet, 8.5 inches. That's an exceedingly odd number.

Why was that gauge used? Because that's the way they built them in England, and English expatriates built the US railroads.

Why did the English build them like that? Because the first rail lines were built by the same people who built the pre-railroad tramways, and that's the gauge they used.

Why did "they" use that gauge then? Because the people who built the tramways used the same jigs and tools that they used for building wagons, which used that same wheel spacing.

Why did the wagons have that particular odd wheel spacing? Well, if they tried to use any other spacing, the wagon wheels would break on some of the old, long distance roads in England , because that's the spacing of the wheel ruts.

So who built those old rutted roads? Imperial Rome built the first long distance roads in Europe (and England ) for their legions. The roads have been used ever since.

And the ruts in the roads? Roman war chariots formed the initial ruts, which everyone else had to match for fear of destroying their wagon wheels. Since the chariots were made for Imperial Rome, they were all alike in the matter of wheel spacing. Therefore the United States standard railroad gauge of 4 feet, 8.5 inches is derived from the original specifications for an Imperial Roman war chariot.

Seems bureaucracies live forever.

So the next time you are handed a Specification/ Procedure/ Process and wonder "What horse's ass came up with it?" You may be exactly right. Imperial Roman army chariots were made just wide enough to accommodate the rear ends of two war horses. (Two horses' asses.)

.......Now, the twist to the story:

When you see a Space Shuttle sitting on its launch pad, there are two big booster rockets attached to the sides of the main fuel tank. These are solid rocket boosters, or SRBs. The SRBs are made by Thiokol at their factory in Utah The engineers who designed the SRBs would have preferred to make them a bit fatter, but the SRBs had to be shipped by train from the factory to the launch site. The railroad line from the factory happens to run through a tunnel in the mountains, and the SRBs had to fit through that tunnel. The tunnel is slightly wider than the railroad track, and the railroad track, as you now know, is about as wide as two horses' behinds.

So, a major Space Shuttle design feature of what is arguably the world's most advanced transportation system was determined over two thousand years ago by the width of a horse's ass. And you thought being a horse's ass wasn't important? Ancient horse's asses control almost everything....and CURRENT Horses Asses are controlling everything else."

..Thanks for the heads up Olia !!! Funny

February 25, 2008 in Not-So-Smart Economy | Permalink | Comments (1) | TrackBack (0)

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