Wednesday, November 5, 2008
Tuesday, November 4, 2008
Financial Crisis & Recession
In case you're wondering about the roots of the current financial crisis, here's a summary by Professor Simon Johnson from his testimony before the Joint Economic Committee of Congress on October 30, 2008.
"In the United States, we have been aware of an impending economic slowdown for over a year. We will never know how pronounced the slowdown would have been in the absence of the acute credit crisis that began in mid-September. That crisis has triggered an ever-expanding series of impacts on the global economy that have almost certainly plunged our economy into a serious recession. The constriction in the availability of credit itself has a real impact on spending and investment by consumers and businesses. The widespread fear generated by events over the past six weeks has had an additional chilling effect on consumer and business confidence. The financial crisis has triggered severe economic problems in emerging markets, which have spilled back into the economies of some of our most important trading partners. Some prominent economists are raising warnings that de-leveraging in the "shadow banking system," such as by hedge funds, could trigger another wave of asset price falls across global markets.
"I am not saying that the sky is falling on the US economy. As of now, most forecasts indicate that we will experience a serious recession, perhaps comparable to the recession of the early 1980s, but nothing like the Great Depression. However, I want to underline the point that most of the most pedigreed economists and policy makers have failed to anticipate the serial effects that the crisis has had, and that it may yet have more surprises for us."
Professor Johnson goes on to give his views on the need for an economic stimulus. A breakdown of the summary can be found in his testimony.
Click here for a link to another of his articles: Recession for Beginners.
Monday, November 3, 2008
Sunday, November 2, 2008
Cinderella's Diary
Cinderella's Diary
by Ron Koertge, from Fever. © Red Hen Press.
From Writer's Almanac
I miss my stepmother. What a thing to say
but it's true. The prince is so boring: four
hours to dress and then the cheering throngs.
Again. The page who holds the door is cute
enough to eat. Where is he once Mr. Charming
kisses my forehead goodnight?
Every morning I gaze out a casement window
at the hunters, dark men with blood on their
boots who joke and mount, their black trousers
straining, rough beards, callused hands, selfish,
abrupt ...
Oh, dear diary—I am lost in ever after:
Those insufferable birds, someone in every
room with a lute, the queen calling me to look
at another painting of her son, this time
holding the transparent slipper I wish
I'd never seen.
by Ron Koertge, from Fever. © Red Hen Press.
From Writer's Almanac
I miss my stepmother. What a thing to say
but it's true. The prince is so boring: four
hours to dress and then the cheering throngs.
Again. The page who holds the door is cute
enough to eat. Where is he once Mr. Charming
kisses my forehead goodnight?
Every morning I gaze out a casement window
at the hunters, dark men with blood on their
boots who joke and mount, their black trousers
straining, rough beards, callused hands, selfish,
abrupt ...
Oh, dear diary—I am lost in ever after:
Those insufferable birds, someone in every
room with a lute, the queen calling me to look
at another painting of her son, this time
holding the transparent slipper I wish
I'd never seen.
To Buy or Not to Buy
To Buy or Not to Buy
From Baseline Scenario
Judging by the traffic on the Planet Money blog, many people are wondering if now is the time to be spending money. On the one hand, we hear that the economy is crashing because of a decline in consumer spending. On the other hand, we hear that the economy is crashing, which frightens us to consuming less and saving more for the rainy days ahead. Real economists worry about these things, too - see Paul Krugman and Tyler Cowen, for example. But at the end of the day, all economists can do is speculate and watch what happens, because aggregate consumption is just the sum of hundreds of millions of individuals making their own purchasing decisions.
I’m not a personal financial advisor, but I think this can be broken down logically. Let’s assume that, before the current downturn, you chose with your level of spending (and, by implication, your level of saving) rationally. Then there are three main reasons why you might want to reduce spending today:
(1) you don’t have the purchasing power you need to maintain your spending
(2) you are going to lose your job (I know there’s a problem with that statement, and I’ll come back to it)
(3) the assets you are counting on for retirement have fallen enough that you need to increase savings in order to replenish them.
(1) applies if, for example, you were going to remodel your kitchen but you can’t tap your home equity line anymore because you have less equity than you used to, or your bank has cut your credit card limit below the level you need to maintain your spending. In these cases, you have no choice. If, however, your bank just reduced your credit card limit from $20,000 to $10,000, but you never use more than $5,000 of the limit anyway, then this doesn’t affect you.
(3) applies if you are relatively close to retirement and you didn’t have a big cushion to begin with. If you were just barely on track to meet your retirement savings objectives, and now your 401(k) has lost 40% of its value along with the stock market, then you may have to boost your savings rate. However, if you are in your 20s (or your 30s, if you spent an inordinate amount of time in school), you probably don’t have enough assets to have suffered much losses. What you care about (roughly speaking) is the value of the global stock market when you retire in 2045, which depends on the state of the global economy in 2045, which, one can argue, is pretty much unaffected by whatever happens now. In fact, the fall in asset values may be good for you, because most of your wealth accumulation is ahead of you, meaning you will be able to buy the same assets more cheaply than you could have a year ago. (If you are one of the many people who never earned enough to accumulate much for retirement - and I know this is a huge problem in our society - and are therefore relying on Social Security, then (3) doesn’t affect you either.)
(2) applies if you are going to lose your job. But even in a deep recession, not that many people lose their jobs. The forecasts I see are roughly that unemployment will rise from about 6% now to about 8.5% in a bad recession - could be better, could be worse. That means that 2.5% more people will be unemployed than are unemployed now, or 1 in 40 people. (This is a simplification, because more than 1 in 40 people will be laid off, but some people currently unemployed will get jobs, and some people will get laid off more than once, and so on.) The problem is that most people don’t know if they will be laid off or not. If you think there is a decent chance that you will get laid off, and that you will have trouble finding a job afterward, then it makes sense to increase your savings to protect against that possibility. But if you are sure that you won’t be laid off, or sure that you could find another job relatively easily, then (2) doesn’t affect you.
(1), (2), and (3) collectively will apply to a fair number of people. But if you are young, are secure in your job and your employment prospects, and still have enough credit to buy what you want to buy, then I don’t see why a recession should cause you to change your habits significantly.
In any case, you shouldn’t buy or not buy because of what you think the US economy needs. It’s not your responsibility. If collective thrift by the American people threatens to plunge us further into recession, then it’s the government’s job to compensate by increasing spending, as Krugman argues (and as we’ve been repeating on this blog). So do what you need to do for yourself and your family.
From Baseline Scenario
By Peter Boone, Simon Johnson, and James Kwak, copyright of the authors
Judging by the traffic on the Planet Money blog, many people are wondering if now is the time to be spending money. On the one hand, we hear that the economy is crashing because of a decline in consumer spending. On the other hand, we hear that the economy is crashing, which frightens us to consuming less and saving more for the rainy days ahead. Real economists worry about these things, too - see Paul Krugman and Tyler Cowen, for example. But at the end of the day, all economists can do is speculate and watch what happens, because aggregate consumption is just the sum of hundreds of millions of individuals making their own purchasing decisions.
I’m not a personal financial advisor, but I think this can be broken down logically. Let’s assume that, before the current downturn, you chose with your level of spending (and, by implication, your level of saving) rationally. Then there are three main reasons why you might want to reduce spending today:
(1) you don’t have the purchasing power you need to maintain your spending
(2) you are going to lose your job (I know there’s a problem with that statement, and I’ll come back to it)
(3) the assets you are counting on for retirement have fallen enough that you need to increase savings in order to replenish them.
(1) applies if, for example, you were going to remodel your kitchen but you can’t tap your home equity line anymore because you have less equity than you used to, or your bank has cut your credit card limit below the level you need to maintain your spending. In these cases, you have no choice. If, however, your bank just reduced your credit card limit from $20,000 to $10,000, but you never use more than $5,000 of the limit anyway, then this doesn’t affect you.
(3) applies if you are relatively close to retirement and you didn’t have a big cushion to begin with. If you were just barely on track to meet your retirement savings objectives, and now your 401(k) has lost 40% of its value along with the stock market, then you may have to boost your savings rate. However, if you are in your 20s (or your 30s, if you spent an inordinate amount of time in school), you probably don’t have enough assets to have suffered much losses. What you care about (roughly speaking) is the value of the global stock market when you retire in 2045, which depends on the state of the global economy in 2045, which, one can argue, is pretty much unaffected by whatever happens now. In fact, the fall in asset values may be good for you, because most of your wealth accumulation is ahead of you, meaning you will be able to buy the same assets more cheaply than you could have a year ago. (If you are one of the many people who never earned enough to accumulate much for retirement - and I know this is a huge problem in our society - and are therefore relying on Social Security, then (3) doesn’t affect you either.)
(2) applies if you are going to lose your job. But even in a deep recession, not that many people lose their jobs. The forecasts I see are roughly that unemployment will rise from about 6% now to about 8.5% in a bad recession - could be better, could be worse. That means that 2.5% more people will be unemployed than are unemployed now, or 1 in 40 people. (This is a simplification, because more than 1 in 40 people will be laid off, but some people currently unemployed will get jobs, and some people will get laid off more than once, and so on.) The problem is that most people don’t know if they will be laid off or not. If you think there is a decent chance that you will get laid off, and that you will have trouble finding a job afterward, then it makes sense to increase your savings to protect against that possibility. But if you are sure that you won’t be laid off, or sure that you could find another job relatively easily, then (2) doesn’t affect you.
(1), (2), and (3) collectively will apply to a fair number of people. But if you are young, are secure in your job and your employment prospects, and still have enough credit to buy what you want to buy, then I don’t see why a recession should cause you to change your habits significantly.
In any case, you shouldn’t buy or not buy because of what you think the US economy needs. It’s not your responsibility. If collective thrift by the American people threatens to plunge us further into recession, then it’s the government’s job to compensate by increasing spending, as Krugman argues (and as we’ve been repeating on this blog). So do what you need to do for yourself and your family.
Things you always wanted to know but didn't realize it
Why Do Animals' Eyes Glow In The Dark?
by Andrea Seabrook
To Listen Click Here and then click on Listen Now.
All Things Considered, November 1, 2008 ·
Eyes that glow in the pitch-black night make for many a scary tale. But why do some animals' eyes glow at night?
"A lot of the animals we see, especially the ones that go out at night, have a special, reflective surface right behind their retinas," says Dr. Cynthia Powell, a veterinary ophthalmologist at Colorado State University. That light-reflecting surface, called the tapetum lucidum, helps animals see better in the dark.
When light enters the eye, it's supposed to hit a photoreceptor that transmits the information to the brain, Powell explains. But sometimes the light doesn't hit the photoreceptor, so the tapetum lucidum acts as a mirror to bounce it back for a second chance.
A large number of animals have the tapetum lucidum, including deer, dogs, cats, cattle, horses and ferrets. Humans don't, and neither do some other primates. Squirrels, kangaroos and pigs don't have the tapeta, either.
And not all eyes animals' glow the same color. Powell says this is due to different substances — like riboflavin or zinc — in an animal's tapetum. "Also," she says, "there are varying amounts of pigment within the retina, and that can affect the color." Age and other factors also can change the color, so even two dogs of the same species could have eyes that glow different colors.
Cats often have eyes that glow bright green, though Siamese cats' eyes often glow bright yellow. Cat tapeta also tend to reflect a little bit more than dogs, Powell says.
"One of my favorites are miniature schnauzers," she says, which have eyes that tend to glow turquoise. "It's really beautiful."
by Andrea Seabrook
To Listen Click Here and then click on Listen Now.
All Things Considered, November 1, 2008 ·
Eyes that glow in the pitch-black night make for many a scary tale. But why do some animals' eyes glow at night?
"A lot of the animals we see, especially the ones that go out at night, have a special, reflective surface right behind their retinas," says Dr. Cynthia Powell, a veterinary ophthalmologist at Colorado State University. That light-reflecting surface, called the tapetum lucidum, helps animals see better in the dark.
When light enters the eye, it's supposed to hit a photoreceptor that transmits the information to the brain, Powell explains. But sometimes the light doesn't hit the photoreceptor, so the tapetum lucidum acts as a mirror to bounce it back for a second chance.
A large number of animals have the tapetum lucidum, including deer, dogs, cats, cattle, horses and ferrets. Humans don't, and neither do some other primates. Squirrels, kangaroos and pigs don't have the tapeta, either.
And not all eyes animals' glow the same color. Powell says this is due to different substances — like riboflavin or zinc — in an animal's tapetum. "Also," she says, "there are varying amounts of pigment within the retina, and that can affect the color." Age and other factors also can change the color, so even two dogs of the same species could have eyes that glow different colors.
Cats often have eyes that glow bright green, though Siamese cats' eyes often glow bright yellow. Cat tapeta also tend to reflect a little bit more than dogs, Powell says.
"One of my favorites are miniature schnauzers," she says, which have eyes that tend to glow turquoise. "It's really beautiful."
Saturday, November 1, 2008
Render unto Caesar
Rendering Crisis Hits Oregon Livestock Industry
Portland, OR
October 21, 2008 5:32 a.m.
You might be forgiven for not knowing this, but Oregon is in the middle of a ‘rendering’ crisis.
Rendering is the process by which dead farm animals like cows and horses are turned into products like dog food and leather.
As it stands now, there are no such processing plants in the entire state. And as Kristian Foden-Vencil reports, about 100 cows a week are going straight into Oregon's landfills.
For a state with a glowing reputation for environmental policies, Oregon has a dirty little secret.
Old and sick farm animals are being tossed into landfills after they die or are killed -- instead of being used to make leather, animal feed, fertilizers and other products.
At Coffin Butte Landfill for example -- just outside Corvallis -- an average of 50 cows a week are buried -- from the Tillamook County Creamery Association.
Lissa Drewbeck is with the Department of Environmental Quality.
Lissa Drewbeck: "The animals are only taken by appointment only, and in the case of Coffin Butte, they're taken only outside of the hours that the public is there. And then the special waste management plan requires that the land fill dig a large hole, put the animals in it and then cover them with four feet of waste -- so that you don't have odors generated from that or flies or any other vectors that would be attracted if it was left just out and uncovered."
The Tillamook County Creamery Association didn't want to answer questions about the cows.
It referred OPB to the Oregon Dairy Farmers Association. Spokesman Jim Krahn says farmers have tried to come up with other ways of dealing with the animals.
Jim Krahn: "However, every direction we have attempted, we've hit a roadblock. Most of it's been financial frankly."
The problem started a couple of years ago, when Carl Cacho closed the state's last rendering plant -- Redmond Tallow.
Carl Cacho: "The economy was bad on it and everything else was expensive to run. And then I had people complaining about odor issues. And then we had DEQ requirements we had to do a bunch of them. Some worked, some didn't and we just decided to, you know what, it was best to just get out."
The main problem was Mad Cow disease.
New regulations banned animals from being used in cattle feed --- so the disease wouldn't spread.
Already low bone meal prices dropped through the floor.
Cacho says many farmers and ranchers now just turn sick animals lose.
Carl Cacho: "You know, what else are they going to do? They can't afford to feed them. Hay is so expensive. And to have them put down by a vet and me to pick them up, they're going to have a $500 or $600 bill -- depending on what the vet is going to charge them."
Letting a horse free on BLM land is one thing. But large farms and co-ops have dozens of sick cows and chickens to get rid of every week.
There are out-of-state rendering companies that can pick up animals, but it's expensive.
Cam Callahan of The Butcher Shop in Eagle Point, says his bill increased 200 percent last year.
Cam Callahan: "I just hope people realize how important it was for us to have tallow company. It isn't just the tallow, but they are also the people that pick up the grease from the restaurants, they suck out the grease traps from all of the businesses. So all those services, even though we don't like the smell of a tallow company and stuff, all those services are gone to the public now."
The problem is bad enough that the governor set up a task force last year. It came up with a series of ideas: from composting to cremation.
Jerry Gardner is a spokeman with the state Agriculture Department. He says many farmers end up using the plan of last resort -- landfills.
Jerry Gardner: "We've had in the last year about six different private companies that have been interested in looking at this issue and trying to figure out how to establish a business. We've had several people that have looked at composting this, we've had other people in central Oregon that's trying to establish a rendering plant in connection with a bio-energy facility. It's generally a problem of this not penciling out in bringing in the kind of revenue to make this kind of an investment worthwhile."
One alternative that's being tried on road kill is composting. ODOT is collecting dead animals around Morrow County and using the compost to improve the soil for highway landscaping.
Plans to compost farm animals have worked, but so far not in any great numbers.
© 2008 OPB
Portland, OROctober 21, 2008 5:32 a.m.
You might be forgiven for not knowing this, but Oregon is in the middle of a ‘rendering’ crisis.
Rendering is the process by which dead farm animals like cows and horses are turned into products like dog food and leather.
As it stands now, there are no such processing plants in the entire state. And as Kristian Foden-Vencil reports, about 100 cows a week are going straight into Oregon's landfills.
For a state with a glowing reputation for environmental policies, Oregon has a dirty little secret.
Old and sick farm animals are being tossed into landfills after they die or are killed -- instead of being used to make leather, animal feed, fertilizers and other products.
At Coffin Butte Landfill for example -- just outside Corvallis -- an average of 50 cows a week are buried -- from the Tillamook County Creamery Association.
Lissa Drewbeck is with the Department of Environmental Quality.
Lissa Drewbeck: "The animals are only taken by appointment only, and in the case of Coffin Butte, they're taken only outside of the hours that the public is there. And then the special waste management plan requires that the land fill dig a large hole, put the animals in it and then cover them with four feet of waste -- so that you don't have odors generated from that or flies or any other vectors that would be attracted if it was left just out and uncovered."
The Tillamook County Creamery Association didn't want to answer questions about the cows.
It referred OPB to the Oregon Dairy Farmers Association. Spokesman Jim Krahn says farmers have tried to come up with other ways of dealing with the animals.
Jim Krahn: "However, every direction we have attempted, we've hit a roadblock. Most of it's been financial frankly."
The problem started a couple of years ago, when Carl Cacho closed the state's last rendering plant -- Redmond Tallow.
Carl Cacho: "The economy was bad on it and everything else was expensive to run. And then I had people complaining about odor issues. And then we had DEQ requirements we had to do a bunch of them. Some worked, some didn't and we just decided to, you know what, it was best to just get out."
The main problem was Mad Cow disease.
New regulations banned animals from being used in cattle feed --- so the disease wouldn't spread.
Already low bone meal prices dropped through the floor.
Cacho says many farmers and ranchers now just turn sick animals lose.
Carl Cacho: "You know, what else are they going to do? They can't afford to feed them. Hay is so expensive. And to have them put down by a vet and me to pick them up, they're going to have a $500 or $600 bill -- depending on what the vet is going to charge them."
Letting a horse free on BLM land is one thing. But large farms and co-ops have dozens of sick cows and chickens to get rid of every week.
There are out-of-state rendering companies that can pick up animals, but it's expensive.
Cam Callahan of The Butcher Shop in Eagle Point, says his bill increased 200 percent last year.
Cam Callahan: "I just hope people realize how important it was for us to have tallow company. It isn't just the tallow, but they are also the people that pick up the grease from the restaurants, they suck out the grease traps from all of the businesses. So all those services, even though we don't like the smell of a tallow company and stuff, all those services are gone to the public now."
The problem is bad enough that the governor set up a task force last year. It came up with a series of ideas: from composting to cremation.
Jerry Gardner is a spokeman with the state Agriculture Department. He says many farmers end up using the plan of last resort -- landfills.
Jerry Gardner: "We've had in the last year about six different private companies that have been interested in looking at this issue and trying to figure out how to establish a business. We've had several people that have looked at composting this, we've had other people in central Oregon that's trying to establish a rendering plant in connection with a bio-energy facility. It's generally a problem of this not penciling out in bringing in the kind of revenue to make this kind of an investment worthwhile."
One alternative that's being tried on road kill is composting. ODOT is collecting dead animals around Morrow County and using the compost to improve the soil for highway landscaping.
Plans to compost farm animals have worked, but so far not in any great numbers.
© 2008 OPB
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