Smart Economy

Segway Inc. Owner Dies In Segway Accident

 

Sad news out of England in the Daily Mail:

The multi-millionaire owner of the Segway company died in a freak accident yesterday when he rode one of the high-tech two-wheel machines off a cliff and into a river.

Former miner Jimi Heselden, 62, plunged into the River Wharfe while riding around his West Yorkshire estate in Boston Spa on a rugged country version of the Segway.

He bought the firm last December and was using one of the machines - which use gyroscopes to remain upright and are controlled by the direction in which the rider leans - to inspect the grounds of his property.

see more here

http://www.dailymail.co.uk/news/article-1315518/Segway-tycoon-Jimi-Heselden-dies-cliff-plunge-scooters.html

When will the Recession End? Part 112 Warning Sign--Rating Agencies cut outlook on US Business

From one analyst's newletter (David Rosenberg) which just came into my email inbox:

In this so called Recovery that governments are try to convince us that we are in.....

 "The rating agencies are now in the process of cutting their outlook — Moody’s did so on 120 companies this quarter compared with only 40 upgrades (according to Bloomberg). Last quarter, S&P cut the outlook for 76 issuers and raised them for 51."

[...]

The Fed has cut its growth forecast twice in the past three months and has sliced its inflation forecast three times. This was not was envisaged when the first round of Quantitaive Easing(QE) (or bailout in everyday language,) was unveiled last year. Normally, the pace of economic activity is accelerating to over a 5% annual rate in the second year of recovery, not slowing down to below 2% — especially with all the monetary, fiscal and bailout stimulus that is in the system.

Here’s the bottom line: if not for the stimulus and the inventory swing, the economy would have actually contracted this year.

[...]

 As for the U.S.A. [economy as a whole], everyone will just have to excuse us, but it is very difficult to get excited about the economic landscape when:

1. Initial jobless claims are stuck at 465k.
2. There is no absolutely no recovery in bank lending (especially to households — there was a big $6.3 billion decline in consumer loans and $21.2 billion slide in real estate credit last week).
3. While there was tremendous excitement last Friday over the “core capex” durable goods orders figure for August, what received short shrift was that total orders were down 1.3% MoM and have now declined in three of the past four months. (But hey, why worry about autos just because it is the largest component?)
4. And of course, the four pieces of survey evidence for how the economy is faring in September as opposed to August have all lined up quite poorly — University of Michigan consumer sentiment, NAHB housing market index, Philly Fed and the NY Empire index.

[...]

Back in 2007, nobody believed that a recession could ensue absent a substantial inversion of the yield curve. Well, as it turned out, it turned out to be a case of welcome to the vagaries of a post-bubble credit collapse. Today, we hear about a ‘soft landing’ yet again and that it is impossible to have a double-dip recession since they have never happened in the past. That is a dangerous assumption to make — just like it was a dangerous assumption to say that home prices cannot go down because they never have in the past.

Walter Derzko

 

When will the Recession End? Part 111 Great Recession followed by Great Disappointment?

...from David Rosenberg's insightful analysis yesterday:

September 22, 2010 – BREAKFAST WITH DAVE

SO THE RECESSION IS OVER, EH?

“The economy is not in good shape”.--Robert Hall, Chairman of the NBER business cycle committee.

The NBER is very methodical when it comes to dating the beginning and end to recessions and expansions. It may not be an exact science, but it is scientific nonetheless. The Great Recession ended in June, 2009. Full stop.

But that does not really alter the outlook. As the Financial Times put it, we are now in the midst of the Great Disappointment as it pertains to the recovery phase.

There are some out there that will claim that the economy is following a similar recovery path as was the case in 1991-92 and 2002, and in both cases, we went on for solid multi-year expansions and sustainable bull markets. The problem with this analogy is that the recessions of 1991 and 2001 were extremely mild in GDP terms, so one would have expected to see mild recoveries in the initial period coming out of the downturn. The peak-to-trough decline in real GDP in the recession of the early 1990s was only 1.4%, and in 2001 it was 0.3%. So why it is relevant to compare those mild recession-followed-by mild recoveries to the current situation when real GDP plunged 4.1% is a mystery to us. Sharp recessions are generally followed by V-shaped bouncebacks so what is really important here is that there was no such elastic band rebound this time around as there was in the early 1980s when a 2.7% peak-to-trough decline in real GDP was followed by a 7.7% recovery in the first four quarters of the expansion period; the 3.2% decline from 1973 to 1975 was followed by a hefty 6.2% bounceback four quarters later (both times we saw real GDP hit a new record high three quarters into the recovery phase). Aren’t these the The Great Recession ended in June, 2009 appropriate comparisons? Moreover, what ultimately gave the recovery its legs in the mid-1990s was the onset of the Internet mania and beginning in 2003 it was the unleashing of the asymptotic housing and credit bubble. Is there another rabbit in the hat this time around and if there is, what would it be? A government-run economy?

By now, based on when the recession ended, we should be at a new high in real GDP (in fact, back to 1947, real GDP is up 4.5% in the first year of recovery).

That has happened in every other cycle in the post-WWII – including the 1992 and 2002 periods where recoveries were tepid but not that tepid to prevent real output from attaining new all-time peaks. But as things now stand, real GDP is still 1.3% lower now than it was at the end of 2007 (in fact, getting back to that old peak will likely take another year at the very least). This is what makes this cycle so unusual – steep declines in GDP are typically followed by vigorous recoveries but this time we had the largest decline in GDP since the 1930s and despite unprecedented amounts of monetary, fiscal and bailout stimulus, the recovery has been extremely weak – real GDP growth of 3% is far less than half of what one would ordinarily expect to see coming out of such a deep downturn.

• From the lows in real GDP in June/09, 69% of the recession losses have so far been recouped.

• From the lows in employment in Dec/09, 9% of the recession losses have been recouped.

• From the lows in household net worth in 2009Q1, 28% of the recession losses have been recouped.

• From the lows in wages & salaries in March 2009, 36% of the recession losses have been recouped.

• From the lows in housing starts in April 2009, 7% of the recession losses have been recouped.

• From the lows in home prices in April 2009, 13% of the recession losses have been recouped.

• From the lows in consumer sentiment in November 2008, 27% of the recession losses have been recouped.

• New and existing home sales are at all-time lows – they have never recovered.

Hence the label “Great Disappointment” as it pertains to this so-called recovery.

 

Let’s not confuse this cycle with the classic post-WWII recession-recovery phase when downturns were 4 quarter corrections in GDP in the context of what was a secular credit expansion. What we are in today is a totally different animal. The plain-vanilla recession lasts 10 months; the one we apparently completed was 18 months in duration which is far more in line with the cycles that were endured before WWII when recessions lasted an average of 22 months.

As an aside, the NBER declaration is usually the kiss of death because historically it ratifies when the stock market has already priced in – the big gains

By now, based on when the recession ended, we should be at a new high in real GDP usually take place from the time the downturn ended to the actual announcement. Half the time historically the stock market is down the year after the NBER makes the announcement of the recession’s end.

German Military Study Warns of a Potentially Drastic Oil Crisis with Peak Oil

'Peak Oil' and the German Government

By Stefan Schultz

A study by a German military think tank has analyzed how "peak oil" might change the global economy. The internal draft document -- leaked on the Internet -- shows for the first time how carefully the German government has considered a potential energy crisis.

The term "peak oil" is used by energy experts to refer to a point in time when global oil reserves pass their zenith and production gradually begins to decline. This would result in a permanent supply crisis -- and fear of it can trigger turbulence in commodity markets and on stock exchanges.

The issue is so politically explosive that it's remarkable when an institution like the Bundeswehr, the German military, uses the term "peak oil" at all. But a military study currently circulating on the German blogosphere goes even further.

The study is a product of the Future Analysis department of the Bundeswehr Transformation Center, a think tank tasked with fixing a direction for the German military. The team of authors, led by Lieutenant Colonel Thomas Will, uses sometimes-dramatic language to depict the consequences of an irreversible depletion of raw materials. It warns of shifts in the global balance of power, of the formation of new relationships based on interdependency, of a decline in importance of the western industrial nations, of the "total collapse of the markets" and of serious political and economic crises.

The study, whose authenticity was confirmed to SPIEGEL ONLINE by sources in government circles, was not meant for publication. The document is said to be in draft stage and to consist solely of scientific opinion, which has not yet been edited by the Defense Ministry and other government bodies.

....continued at:

http://www.spiegel.de/international/germany/0,1518,715138,00.html

 

When will the recession End? Part 110 Seven More Years of the Great Recession

 

Much of the talk emerging from last month’s Jackson Hole Economic Symposium, attended by many of the world’s central bankers and economists, has been about a paper presented there that gave a dire long-run assessment of the future of the world’s economies.

The paper, “After the Fall,” was written by economists Carmen Reinhart and Vincent Reinhart...[which Smart Economy Blog readers will recognize-I often quote them--Walter Derzko]

 According to the paper, when compared with the decade that precedes financial crises like the one that started three years ago, “GDP growth and housing prices are significantly lower and unemployment higher” in the subsequent “10-year window.” Thus, one might infer that we face another seven years or so of bad times.

Economic theory is not sufficiently developed to predict major turning points based on first principles or mathematical models. So we have to be historically oriented in our method. History may be a “soft” social science, but we have to look at it — even at distant history — if we are to grasp other examples of major crises.

Moreover, we have to look at the entire world. Most economists study the recent history of their own country, which is easiest to do, and their results sound superficially important to most of their countrymen. But major financial crises are rare by the standards of any one country, and we have to range widely through history to get enough information about how such crises play out.

The Reinharts’ research is an expansion and generalization of many people’s informal economic thinking, which often compares the present to stories of major past episodes.

Ever since the current crisis began in 2007, many people have been wondering whether the Great Depression that followed the 1929 stock market crash and the banking crises of the early 1930s is relevant to our experience today. The troubling fact about the Great Depressionis that it was severe, global and lasted more than a decade — and that it followed the collapse of an equity and real estate boom, roughly what happened before the current crisis.

Likewise, many people have been wondering whether the weakness that followed the equity and real estate crash in Japan at the beginning of the 1990s is relevant to our experience today. They used to refer to Japan’s “lost decade.” Now it is more appropriate to describe that experience as the “lost decades.”

Are these examples models for our future? They certainly make one stop and think. But they do not stand as convincing evidence about what will happen — after all, two observations are hardly enough to prove the point.

But now the Reinharts have systematically studied many more examples in modern financial history. There is also the world financial crisis that surrounded the oil shocks of 1973 and 1979, and there are the country-specific financial crises in Spain in 1977; Chile in 1981; Norway in 1987; Finland and Sweden in 1991; Mexico in 1994; Indonesia, Korea, Malaysia, the Philippines and Thailand in 1997; Colombia in 1998; and Argentina and Turkey in 2001.

So there are many more than just two modern cases. From them, the Reinharts found, for example, that median annual growth rates of real per capita gross domestic product for advanced countries were one percentage point lower in the decade following a crisis, while median unemployment rates were five percentage points higher.

How did this happen? They note that, in general, debt levels and leverage rose during the decade preceding these crises, propelling increases in asset prices for a long time. The authors describe a “this time is different” syndrome during the pre-crisis boom, whereby these bubbles are allowed to continue for far too long, because people think that similar episodes in the past are irrelevant.

This seems to contain the germ of a new economic theory, but it remains ill-defined. It seems to have a behavioral-economics component, since the “this time is different” syndrome seems psychological rather than rational. But it is still not so sharp a theory that we can really rely on it for making confident forecasts.

Moreover, there are reasons to suggest that this time really might be different. I hate to say so, not wanting to commit the sin defined by their syndrome, but this time might be different because all of the modern examples of past crises came during a time when many economists worldwide were extolling the virtues of the “rational expectations” model of the economy. This model suggested that a market economy should be left alone as much as possible — so that is what governments tended to do.

According to “rational expectations,” bubbles simply did not exist, which meant that actual bubbles were allowed to grow. But that mind-set is waning, and government and business leaders now routinely warn of bubbles and adopt policies to counter them. So this time really is at least a little different.

In that case, perhaps all of those crisis-induced bad decades are no longer relevant. But any such hopes that the aftermath of the current crisis will turn out better are still in the category of thoughts, theories and dreams — not science.

It is not true that if you break a mirror, you will have seven years’ bad luck. That is a superstition. But if you allow a financial market to spin wildly until it breaks down, it really does seem that you run the risk of years of economic malaise. That is a historical pattern.

Robert Shiller, a professor of economics at Yale University, is co-author with George Akerlof of “Animal Spirits: How Human Psychology Drives the Economy and Why It Matters for Global Capitalism.” © Project Syndicate

See full story here  http://www.themoscowtimes.com/opinion/article/7-more-years-of-the-great-recession/416879.html

Human-powered aircraft takes flight

 

This is the Snowbird, a human-powered-aircraft from the University of Toronto with flapping wings.

A University of Toronto student has done something nobody's been able to do before -- he built and flew a human-powered aircraft with flapping wings.

Todd Reichert, an engineering PhD candidate at the University of Toronto Institute for Aerospace Studies, achieved the feat, which has alluded humankind since Leonardo da Vinci sketched the first human-powered ornithopter in 1485.

It's called the Snowbird, and on Aug.2, Reichert climbed aboard, flapped its massive wings through a system of pulleys by pedalling his feet, and took off, sustaining altitude and airspeed for 19.3 seconds, and covering a distance of 145 metres at 25.6 km/h.

"The Snowbird represents the completion of an age-old aeronautical dream," Reichert said in a statement. "Throughout history, countless men and women have dreamt of flying like a bird under their own power, and hundreds, if not thousands, have attempted to achieve it. This represents one of the last of the aviation firsts."

The record-setting flight took place at the Great Lakes Gliding Club in Tottenham, Ont., and was witnessed by the vice-president (Canada) of the Federation Aeronautique Internationale (FAI), the world governing body for air sports and aeronautical world records. The record is set to be confirmed in October.

Despite its 32-metre wingspan, which rivals a Boeing 737, the Snowbird weights just 94 lbs. It's so light, Reichert had to shed 18 lbs. to fly it. Reichert said the invention stemmed from a mandate to create sustainable modes of transportation and the desire to promote "the use of the human body and spirit."

"The use of human power, when walking or cycling, is an efficient, reliable, healthy and sustainable form of transportation. Though the aircraft is not a practical method of transport, it is also meant to act as an inspiration to others to use the strength of their body and the creativity of their mind to follow their dreams."

Ukrainians Flew First -2 decades before the Wright Brothers

When asked, every school child in the west will undoubtedly tell you that the Wright Brothers were the first to fly. Well, they would be half right. The Wright Brothers were the first to fly in the western world but few Ukrainians and even fewer westerns know that they were not the very first in the world  to perfect man-made flight. That aeronautic breakthrough and honor goes to a Ukrainian inventor Alexander Mozhayskyi, and predates the Dec 17, 1903 Wright Brother’s attempt by a full two decades.

This was one of the historical curiosities that was highlighted at the 2010 Bloor West Village Ukrainian Festival in Toronto this past weekend.  One of the most popular displays that garnished the most visitor attention was the collection from the national historical museum in Kyiv, the world heritage site of Kyiv’s St. Sofiya cathedral and others, that featured vignettes of Ukrainian history.  Produced by Taras Hukalo, assisted by Victor Glasko -this quote caught most people’s attention: 

“In 1876 ALEXANDER MOZHAYSKYI flew 20 meters in steam-powered heavier than air aircraft of his own design in Voronovytsia, Vinnytsia region, Ukraine. He flew again twice in 1886. That is why Ukrainians call Voronovytsia the cradle of aviation.”

One article written in Ukraine’s Castles called “Voronovystia’s Wings   opines:  “Disputes about the question of who invented the first aircraft, Alexander Mozhayskyi or the Wright Brothers,  can make for fascinating fireside chats and will never be settled.  However, Ukrainians keep calling the Voronovysia village in Vinnytsia the cradle of aviation. The fact remains that in 1876, a strange machine built by Mozhayskyi , took off and flew in the Ukrainian skies.”

So Ukraine has a century old tradition of avionics.

Ukrainians and westerners are likely more familiar with Ihor Sikorsky. Hukalo’s display offers the following about Sikorsky:  “Loosing friends in the midst of rising communist terror and mounting oppression, in 1919, after building the world’s first four engine bomber and other aircraft for the Tsar, Ihor Sikorsky , immigrated from Kyiv, Ukraine to USA. In 1923 he established the first aircraft manufacturing company in the world and created the world’s first commercially produced helicopters, taking the lead in the world of design and manufacture of military, civil, commercial helicopters and fixed wing aircraft. Sikorsky’s helicopters are reputed to be the best in the world. “  Torontonians will remember Sikorsky helicopters, that were used to finish off the top sections of the CN Tower.

The other jewel in Ukrainian industrial aviation crown are Antonov and Motor Sich.

Hukalo & Glasko add:  “Ukraine is one of just nine countries worldwide currently designing and building transport and top class civil aircraft. One plane, the Ukrainian AN-225 “Mriya”, NATO designation “Cossack”, is the largest aircraft in the world. General designer Petro Balabuyev said the Mriya can lift a payload of 250 metric tons in its huge belly or outside firmly secured to the top of its fuselage. Further more, despite its heavy weight (628,315 lbs. empty), with its 32 wheels it is capable of landing and taking off from sodden grass and /or ice covered fields.”

“The Antonov Design Center built the AN-225 in Kyiv, Ukraine where it also produces the second largest plane in the world, the AN-124 “Ruslan”. Involved in producing the Antonov Mriya and Ruslan’s engines model D-18T, in Zaporizhia, Ukraine, is Sich Motors. Founded in 1907, it is one of the largest enterprises in the world, the only one in Ukraine, manufacturing airplane and helicopter engines as well as industrial gas turbines.”

But Ukraine’s pre-eminence in aviation may be at risk from Russia.

On Sept 18, 2010 Interfax reported that “Ukraine is ready to offer Russia a number of joint ventures in various fields.”, Ukrainian President Viktor Yanukovych said  during a meeting with President Dmitry Medvedev last week, the eight since Yanukowych came to power.

One such proposal is Zaporizhia-based OJSC Motor Sich, who  plans to set up a joint venture with the Defense Ministry of Russia in Gatchina in Leningrad region by the end of 2010 to manufacture at least 100  TV3-117VMA-SBM1V helicopter engines per year .

Red flags and alarm bells should be ringing right across Ukraine.. Politicians in Ukraine who have an interest in protecting Ukraine’s strategic national interests should be protesting this Party of Regions decision at all costs. There is no economic benefit to Ukraine in this JV, since Russia brings nothing to the table. Most importantly, Russia will gain access to and steal world-class Ukrainian engine design know-how and intellectual property, which Russia desperately needs to fulfill its military contracts with India and China to supply future unmanned aerial vehicles (UAV’s) and next generation helicopters.

The communist government in China is using a similar tactics to Russia, trying to pressure US auto manufacturers in establish JV’s in China if they want to sell electric cars to the Chinese. The USA fears losing their electric battery technology know-how to China (Wall Street Journal Sept 16 2010). Ukraine should have similar fears about aviation and Russian attempts to muscle in.

Walter Derzko is a Senior Fellow at the Strategic Innovation Lab (S-Lab) at OCAD University in Toronto and teaches at the MA program in Strategic Foresight and Innovation (SFI) at OCAD University in Toronto.

Solar Storms can Change Directions, Accelerate Surprising Forecasters

Solar Storms can Change Directions, Accelerate Surprising Forecasters


NASA Science News for Sept. 21, 2010

Researchers using data from NASA's STEREO spacecraft have found that solar storms don't always travel in a straight line. This adds a surprising new twist to the science of space weather forecasting.

Solar storms don't always travel in a straight line. But once they start heading in our direction, they can accelerate rapidly, gathering steam for a harder hit on Earth's magnetic field.  So say researchers who have been using data from NASA's twin STEREO spacecraft to unravel the 3D structure of solar storms. Their findings are presented in today's issue of Nature Communications.

FULL STORY at  http://science.nasa.gov/science-news/science-at-nasa/2010/21sep_zigzag/

Walter Derzko

Queen's University researchers in Canada locate impulse control center in brain

Impulsive behaviour can be improved with training and the improvement is marked by specific brain changes, according to a new Queen's University study.

A research team led by neuroscience PhD student Scott Hayton has pinpointed the area of the brain that controls impulsive behavior and the mechanisms that affect how impulsive behavior is learned. The findings could have a significant impact on the diagnosis and treatment of several disorders and addictions, including ADHD and alcoholism.

"In the classroom, kids often blurt out answers before they raise their hand. With time, they learn to hold their tongue and put up their hand until the teacher calls them. We wanted to know how this type of learning occurs in the brain," says Mr. Hayton, a PhD student at the Centre for Neuroscience Studies at Queen's. "Our research basically told us where the memory for this type of inhibition is in the brain, and how it is encoded."

The team trained rats to control impulsive responses until a signal was presented. Electrical signals between cells in the brain's frontal lobe grew stronger as they learned to control their impulses. This showed that impulsivity is represented, in a specific brain region, by a change in communication between neurons.

Impulsivity is often thought of as a personality trait, something that makes one person different from another.

Children who have difficulty learning to control a response often have behavioral problems which continue into adulthood, says Professor Cella Olmstead, the principal investigator on the study. She notes that impulsivity is a primary feature of many disorders including addiction, ADHD, obsessive compulsive disorder and gambling. Identifying the brain region and mechanism that controls impulsivity is a critical step in the diagnosis and treatment of these conditions.

"In conditions where learning does not occur properly, it is possible that it is this mechanism that has been impaired," adds co-investigator neuroscience Professor Eric Dumont.

The findings were recently published in The Journal of Neuroscience.

When will the Recession End? Part 109 Over 50 in the USA and Unemployed: Will they ever work again?

From Mokoto Rich at the NY Times: For the Unemployed Over 50, Fears of Never Working Again

Of the 14.9 million unemployed, more than 2.2 million are 55 or older. Nearly half of them have been unemployed six months or longer, according to the Labor Department. The unemployment rate in the group — 7.3 percent — is at a record, more than double what it was at the beginning of the latest recession.

After other recent downturns, older people who lost jobs fretted about how long it would take to return to the work force and worried that they might never recover their former incomes. But today, because it will take years to absorb the giant pool of unemployed at the economy’s recent pace, many of these older people may simply age out of the labor force before their luck changes.

It is hard for people in their 50s to change careers, or rebuild their savings after a long period of unemployment. And, as in the story, they may end up taking Social Security early - just to get by - and that means they will receive a significantly lower monthly payout than if they waited until 66. A very tough situation.