LyrArc Article Gist
A Sept 2012 Census Bureau report shows the median income of a typical U.S. family declined or was flat in almost all states in 2011. Median household income declined in Nevada by 6%, in California by 3.8%. In Arizona and Florida incomes declined by 2.9%. For the U.S. median income declined by 1.3% to $50,502 in 2011. Poverty continues to increase, with California showing 335,760 people falling into annual income levels below $23,021 for a family of four in 2011, giving the state a 16.6% poverty rate.

LyrArc Article Gist
A 35 year old Engineering professor from Texas who studies how transportation systems propagate infectious diseases and her 2 graduate students from China started and since January maintain the database of coronavirus confirmed cases and deaths. This is one of the widely used databases, also used by public health officials in the U.S. The database was started with a hunch from one of Lauren Gardner's students from China Ensheng Dong who comes from Shanxi province, north of Wuhan. A geography and mapping specialist he had studied in the U.S. since 2012, and spent many hours inputting data by hand following his classes. This WSJ report says the website was built in 1 day and was launched on January 22, when the coronavirus cases were practically nonexistent in the rest of the world and were concentrated in the Wuhan area. This report says behind the data reported in the media everyday is a complicated supply chain filled with challenges that come with data, what is reported, underreported and with what assumptions it is reported. Dr. Gardner says she is dealing with so much data on her dashboard, 4000 points of data, that its hard enough to pull all the data scraped together from different sources, its impossible for her to check the assumptions behind the data for consistency and trying to figure out facts underlying the data.  One of the ways the virus developed in the rest of the world is the surprise with which it caught western countries and then the rest of the world. As a result something that the government authorites would do such as the Centres of Disease Control is being done in a totally ad hoc manner. The U.S. government uses the University of Washington Health Metrics database, and in turn the University of Washington Health Metrics database takes some of the data from the John Hopkins database. Because a complacent population in the western countries were relying on numbers counted as cases to know how serious this epidemic was or whether there was an epidemic, the significance of data count from China assumed a signifcance far out of proportion to what it might normally be. This was because the western countries in Europe and America never encountered an epidemic of this kind in living memory, the last one forgotten from 1917 hundred years ago. Researchers in Gottingen University study in Germany conducted analysis of data in studies of cases published in Lancet Journal and found that only 6% of cases were being shown- that a much larger part of the population was infected. A researcher at Princeton University Ramanan Laxminarayan says countries tend to delay reporting until a problem becomes certain, because telling others comes with economic costs such as a rapid drop in trade and travel. Yet he says early warning systems are key to prevention. Early warning from the different publicly available data bases was not possible for many reasons. Relying on such ad hoc data was hazardous considering that as the NYT reported recently when there was the first confirmed detected case reported in New York there were already 10,000 persons estimated to be undetected. James Glanz and Benedict Carey, say in the NYT.com on May 7, that hidden outbreaks spread through U.S. cities far earlier than Americans knew, estimates show, which makes the publicly available databases giving a false sense of security, and not acting as an early warning because of the inadequacy of the resources for this task for individual researchers to handle. Not depending on  hurriedly put together databases with inadequate resources and having an independent sense of what the danger was as German chancellor Merkel described it in her first coronavirus address in March, was a better early warning signal than the databases in retrospect. And this too had come late. The reason is that the response had to be fast, very fast, and public perceptions had to be shaped quickly about the magnitude and speed of enormous proportions of the coronavirus, so that actions could be shaped quickly and executed quickly to stop it in its tracks.    ...

LyrArc Article Gist
The story of a Syrian Kurdish 4 year old child, Aylani, who died as a small boat making its way from the Turkish coast to the Greek island of Kos capsizes. The mother and two children are drowned and the surviving father tells the story of fleeing from Damascus, to Aleppo, to Kobani, as the war spread in the Syria-Iraq region. The father's sister in Canada sent $4000 to the parents for the perilous journey arranged locally.

LyrArc Article Gist
Declining U.S. birthrate with 63.2 births per 1000 women of childbearing age in 2011, according to the Pew Research Center. The rate declines by 23% for Mexican immigrants to the U.S. from 2007-2010 as a result of the severe economic effects of the financial crisis of 2008 on Hispanic immigrants.

LyrArc Article Gist
The "Burning Platform" memo by CEO Stephen Elop, seeks to confront Nokia with the reality of what is happening, as it has fallen years behind competitors who have completely changed the space Nokia was in. Apple's iPhone has redefined the space for smartphones and Apple now owns the high end market. In 2008, Apple's market share in the $300+ price range was 25%, by 2010 it was 61%. Newcomer Android has in 2 years created a platform that by attracting application developers, service providers and hardware manufacturers, is winning the mid-range down to 100 euros. And in 2008, MediaTek provided complete reference designs for phone chipsets, so that Chinese manufacturers in Shenzen could produce phones at an astonishing pace. They now own the low end of the market, producing an estimated one third of the phones sold globally. A crtical part of the memo is about ecosystems. He says it is no longer about hardware and device to device competition, but about ecosystems that include not just hardware and software. It includes developers, applications, ecommerce, advertising, search, social applications, location-based services, unified communications and so on. And Elop says the decision confronting Nokia, is how to build, catalyse or join an ecosystem....

LyrArc Article Gist
The difficulties increase for Nokia with decrease in sales in emerging markets as it competes with new models from Huawei at the low end. The launch of the Lumia 900 runs into a software glitch and Nokia offers customers buying the phone from AT&T a $100 rebate until April 21- making the phone free on a two year contract. Nokia's global market share declined from 31% in 2010 to 23% in 2011, according to Gartner Inc. Nokia's dominance in India and the Middle East markets is slipping as low end smart phones with the Android operating system software are replacing Nokia phones. The result is that core mobile phone operations show a 3% negative operating margin in the first quarter, with the outlook for further declining margins in the second quarter of 2012. The Lumia 900 which has Microsoft software has fewer apps than the established Android and iPhone models creating more headwinds for the new smartphone. On April 11, 2012 Nokia shares lost 16% of their value and were down to $4.24.

LyrArc Article Gist
Jim Campbell will replace Dewar as head of Chevrolet. He reports to Susan Docherty, head of sales, service and marketing for GM.

LyrArc Article Gist
The Dutch had their tulip bubbble, the Chinese have their Pu-er tea bubble which has just burst. It was a pure speculative bubble with speculators cornering the market and bidding up the price of tea in Yunnan province on the Burmese border. From 1997 to 2007 the price of these green tea leaves from Yunnan- that make a fermented brew called Pu-er- wentup from $15 to $150 a pound. Actually a group of manipulative buyers drove prices up. Production doubled from 2006 to 2007 to 100,000 tons. Unlike other teas this tea is said to grow better with age and is packed into compressed cakes for transport. Now prices of this tea have collapsed to $3 a pound. Russia had its own experiment with unbridled capitalism, now China is struggling with the effects of the aftermath of its own unbridled capitalism.

LyrArc Article Gist
Jordan Bardella's grandparents came from Turin, Italy to Seine-Saint-Dennis, a department north of Paris in the 1960's that was one of the poorest and crime ridden. He saw the condition of immigrants and decided to join the RN at age 16. He had to fight his way through lacking a college degree and connections with a working class name. He speaks some Italian he says and some English, having made an effort to assimilate within France. Here he is interviewed by Adam Sage of The Times of London at the European Parliament in Strasbourg. Bardella says he saw the condition of migrants, and the poverty and violence in neighborhoods of migrants. He says in the sixties there was an effort to assimilate as he had done. Today he say it is different with it not being required of generations who arrive now who have their hearts and souls elsewhere. Bardella says that the French model is "Become what we are" and he is sure that this is the right way. He says during his time in the sixties immigration was mostly southern European and assimilation happened which is not happening now.  ...

LyrArc Article Gist
The German people offer a heart warming welcome to refugees suffering enormous hardships as they make their way through countries in Eastern Europe to Germany.

LyrArc Article Gist
A look at the history of the founding of Pakistan and the 60 years since, looking all the way back to Muslim League's activities in the 1930's under Jinnah, and the failure of politicians and the military to help build Pakistan and improve the lives of its people. One by one the generals and the politicians, including Ms Bhutto and Sharif, have all failed and the dim prospects that it would be different this time with a new elected government.

LyrArc Article Gist
The story of the Vanguard 500 Index Fund's founding in 1976, and the inspiration from Nobel Laureate economist Paul Samuelson, is told by founder John Bogle. On August 31, 1976, the first index mutual fund, First Index Investment Trust was born. It was launched by Bogle at Vanguard. The idea he put forth was that passive index management could outperform active management with its fees, load, commission and other costs. The IPO target was $150 million, but the underwiritng resulted only in $11.3 million. The underwriters suggested cancelling the deal, saying that this was not enough to own all 500 stocks in the S&P 500 Index. Bogle's response was just the opposite- he now had the world's first index mutual fund. Here Bogle talks about the early inspiration. His senior thesis at Priceton University in 1951, in which Bogle broached the idea that mutual funds could not say they were superior to market averages, received support from Samuelson. This was followed by the article 23 years later by Samuelson in "Challenge to Judgement," an article in the Journal of Portfolio Management in summer 1974, that stated: "that some large foundation set up an in-house portfolio that tracks the S&P 500 Index." Bogle took up the challenge and offered well diversified funds at minimal costs, with a focus on the long term investment. Writing in Newsweek in August 1976, Samuelson said that his prayer had been answered. Bogle describes how his inital encounter working with Samuelson's "Economics: An Introductory Analysis," was difficult. He barely made a C-. In 1993 Samuelson offered to write the foreword on Bogle's first book- "Bogle on Mutual Funds." The relationship lasted 61 years!...

LyrArc Article Gist
Brett Arends cites several factors for his skepticism about the 4th quarter 2010 US stock market rally. Cyclically adjusted price to earnings ratios that are 75% above their average value. A market value for US equities excluding financial stocks, that is within 15% of the October 2007 peak. Fed data that shows nonfinancial corporations have debt of $7.4 trillion at the end of the third quarter 2010, an increase of $250 billion in one year, and up from $5.5 trillion in 2005. This Fed data shows the debt for nonfinancial US corporations is 58% of their net worth, up from 41% five years ago. US consumers are still have the kind of debt burdens they had in 2008, with US households having reduced their debt by only about 3.5%. Arends says the leveraging is through the roof when you add up the debt that government and corporations have run up. Total debt has risen to $36 trillion, up 15% from the fall of 2007. He cites other experts who were right for the last decade who are skeptical this time- Rosenberg at Gluskin Sheff, Albert Edwards at S.G. Securities, John Hussman at Hussman Funds. The latest analysis by Jeremy Grantham at GMO is that large cap US stocks are not likely to beat inflation by much over the next 7 years. Arends has not mentioned global risk indicators such as the asset price bubbles developing in emerging markets, and the sovereign debt restructuring needed in debt burdened countries of the European Union. Analysis by the Economist in year-end 2010 points to the diverging directions of austerity in Europe, spending in the US and asset price bubbles in emerging markets, as a disturbing sign for 2011-2012. Risks in the US that Arends has not mentioned include problems in housing. Nouriel Roubini sees problems in housing in 2011. ...

LyrArc Article Gist
After the financial crisis of 2008-2009, commercial real estate defaults posed a serious threat to the US economy. Now this threat is receding with low interest rates making it easier to get cheap financing, which raises the returns. For banks the rising earnings give a cushion to absorb losses, letting them sell distressed properties and not have to hold onto them. From office towers in Manhattan to Florida apartment buildings and retail properties in Washington, commercial real estate values are going up. Prices of commercial real estate properties sold by institutional investors went up by 19% in 2010, according to an index developed by the MIT Center for Real Estate. Investors have boosted the prices of bonds backed by commerical real estate to the highest level in two years. The managing director at Real Capital Analytics says, that with values going up, both the owners and lenders have more room to work out difficult situations. Real Capital Analytics January 2011 report shows that of the $52 billion in retail properties to fall into default, a little over half have completed workouts. In Feb 2010, the Congressional Oversight Panel of the Troubled Asset Relief Program said that the commercial real estate market had the potential to pose a serious threat to the US economy. The panel estimated that about half of the $1.4 trillion in commercial property real estate loans set to be paid off by 2014 were under water, where the borrower owes more than the property is worth. Market segments for hotel, apartment buildings and retail are going up. Hotel occupancy rates in the top 25 markets went up from 60% to 64%, according to Smith Travel Research. Sales of apartment buildings in the US went up as home ownership hit new lows, and lease rates went up to the highest levels in 4 years, according to Axiometrics....

LyrArc Article Gist
The gridlock in Congress and the housing crisis could postpone an overhaul of Fannie Mae and Freddie Mac for another two years. The housing crisis of 2008 has created a situation in which 9 out of 10 housing loans are guaranteed by Fannie and Freddie. The two agencies were created to buy mortgages from the banks, freeing the banks to make more loans. Fannie and Freddie gurantee the loans and then sell them to investors as securities, a process that lowers borrowing costs and makes 30 year mortgages more easily available to homeowners. The Obama administration and the Democrats want to continue some form of government guarantee, and continue government support for the 30 year fixed mortgage. The Republicans oppose any government guarantee because of the losses imposed on taxpayers by the way these agencies operated in the past, with the government guarantees providing the wrong kind of incentives in a housing market prone to bubbles. The fragility of housing markets means anything that raises borrowing costs could put downward pressure on housing prices. As a result the restructuring of the two housing agencies is in limbo. Republicans who want aggressive changes may wait for housing markets to stabilize, making the overhaul a multiyear process. Meanwhile the US Treasury has promised to inject unlimited sums into the mortgage giants through 2012 and nearly $300 billion after that, so that Fannie and Freddie have positive net worth and not go into receivership. The total cost to taxpayers beyond the $134 billion already incurred, is additional capital injection of $146 billion (for a total of $280 billion), because of further problems in the housing market in future years, and another $400 billion to adequately capitalize the entities that replace Fannie and Freddie, according to Standard and Poor's estimates....

LyrArc Article Gist
A steady decline in the price of Brent crude from $115 to $92 in the period from June to October 2014. Slow or no economic growth in Europe, and declining growth in China was the main reason. A cut in oil price by Saudi Arabia in September with lack of coordination in OPEC to control supplies when prices are declining, and increasing supplies from the U.S., provided additional basis for price declines. This price decline comes as large energy companies invested heavily in mega-projects to bring more oil supplies when prices were up to $128 by mid-2012. Consulting company EY estimate is that there are 163 such mega projects worth $1.1 trillion underway, most behind schedule and over budget. The projects were based on oil prices being over $100. Oil field development costs are increasing rapidly. Douglas Westwood, a consulting firm, estimate is that productivity of upstream capital spending has fallen by a factor of 5 since 2000, declining by 5% a year, as oilfield equipment and services demand exceeds supply. Greater technological sophistication also adds to cost such as Shell's Nobel Bully platform for deep sea drilling. See link- Noble Bully. Oil majors are now cutting spending, and some planned big projects are on hold. About $300 billion in assets may be up for sale. Shell plans to cut spending by 20% in 2014, Exxon and Chevron 5-6%. Shale oil projects in America need about $57 to be profitable with an internal rate of return of 10%, by one estimate. Yet this is an average and does not reflect differing producer costs. This estimate does not reflect the high cost producers, some of whom need closer to $110....

LyrArc Article Gist
A way of gauging the extent of a bubble in the internet IPO's in 2013, says Hulbert, is the first day return on IPO's in the U.S. of 25% in mid-Aug to mid-Nov 2013 compared to 96% in the first quarter of 2000. He cites a study by finance professors Jerry Wurgler of New York University's Stern School of Business and Malcolm Baker of Harvard Business School, which stresses the need to use objective indicators in assessing the current equity markets and not relying on memories alone. Investor caution after two bubbles since 2000, active regulatory oversight of markets, and legal frameworks updated for changes in financial markets have provided additional safety and stability to markets. The study authors cite evidence for the changes in the way investor sentiment values speculative stocks compared to established stocks. The price/book ratio per share or net worth of established stocks is way higher compared to speculative stocks in 2013 compared to 2000. In 2013 established companies in the S&P 1500 index, according to FactSet, had a 49% higher price/book ratio on average than speculative stocks. Wurgler and Baker used dividend paying stocks as "established" stocks compared to non dividend paying stocks as "speculative." Another piece of evidence that companies are also adjusting to sentiment this time is that less money is coming from stock issuance in 2013 of 11% compared to 20% in 2000. Visible evidence of company behaviour is also telling- banks are changing bahaviour after tougher regulatory oversight and settlements in 2013. GE is planning to shrink GE Capital and put it on sale. Investors have sharply cut back allocations to stocks and are returning to modestly higher allocations from much lower levels and memories of 2000 and 2008 are still present....

LyrArc Article Gist
The Harz labor reforms in Germany in 2003 changed the way unemployment was treated. The idea was to get the government to work more closely with private employers through several initiatives to fund jobs that did constructive work within these companies. This helped reduce structural unemployment because of the almost indefinite unemployment benefits that existed earlier, reducing it from 12.7% in 2005 to 7.1% in November 2008. In November 2009 even after a year of recesion it stands at 8.6%. Are there lessons for other countries in the German experience? THe Harz reforms directed the German Labor Agency to work closely with private employers to fund newly created jobs. One such program paid a Dutch staffing agency Randstad to teach 15,000 Germans information technology, business English an other skills. THe Labor agency funds jobs at a Daimler truck facility in Worth, near Stuttgart, where short term employees instead of being laid off work as mechanic trainees. Another initiative pays parts of the wages of workers hired from those who are jobless, so that the costs of retraining are shared by the government and the employer, making it more attractive to take a chance and go out and hire. And if you lose your job the Harz reforms made it possible to get unemployment benefits for an additional 6 months, if you went out and started a small business. Like the case of an employee who worked at a Kawasaki motorbicycle dealership, who started his own bike repair shop. There are political pressures to extend unemployment benefits as the recesssion becomes more severe. And the structural mismatch in jobs going unfilled, and the number turned out by universities is still a problem. One study by Adecco Institute, shows 29% of large German companies having trouble filling technical jobs, which is why these companies try to keep all their experienced employees....

LyrArc Article Gist
How bankruptcy courts can offer a solution to the foreclosure crisis or at least mitigate its effects on the economy and on people. Senator Durbin of Illinois is expected to introduce legislation to put this into effect. It was adopted as a Chapter 12 provision to save farmowners in distress in Iowa in the 1980's, and helped keep many farming families on the farm in that situation. Not all families would be helped as some will not be able to make even the reduced payments given by a bankruptcy judge. But it gives bankruptcy courts the authority to cut through all the red tape and reluctance of bankers and mortgage securities owners to take the initiative and reduce payments, and in the end may actually generate more money for lenders than foreclosure, which has high costs on several dimensions. One cost and one dimension that is not considered is the cost to the economy and to all businesses, from retail to other products, as foreclosures lead to declines in housing prices. This leads in a downward spiral to more homeowners going under water with their homes being worth less than the mortgage, and this in turn leading to foreclosures that lead to further house price declines. The decline in housing prices adds to the incentive to save and reduce spending, which leads to inventory buildup and layoffs. This is why the situation cannot be seen in isolation, and becomes an area where interests of individual parties like lenders and securities holders tend not to be maximized when they follow their personal interest. And there is no party that can take the collective interest in this case except the federal government. ...

LyrArc Article Gist
Will the long awaited Obama plan do enough to reduce foreclosures and help the economy? $75 billion will go to help homeowners facing foreclosure. But it continues the earlier course of letting it be voluntary for banks and lending institutions to decide if they in fact want to reduce the mortgage payment to 38% of the borrower's income. If they do the government provides an incentive of $1000 for every loan modified, and more payments if the borrower stays current. If the lender decides that its not in its interest to make concesssions to reduce the payments to 38% of the borrower's income, in exchange for the $1000 incentive, it could well decide to do nothing, and even continue the current practice of adding on interest and penalties that actually increase the mortgage payment in many cases. Is it enough? Clearly no, if Mark Zandl, chief economist at Moody's Economy.com is right, and helps only 1 million of the estimated 14 million people who are under water, and the homes are worth much less than the outstanding mortgage. As Martin Feldstein has pointed out for the last year since early 2008, its these people who are under water that need to be helped, and not in a piecemeal or voluntary way as Obama is suggesting. It only goes to show that after all the rhetoric, Government both Republican and Democratic, differ only in degrees in the way they are responding to the foreclosure crisis, that is at the root of the financial crisis. The tidal wave of foreclosures, the other 13 million borrowers that are not helped by this plan but are under water, with growing numbers because of growing layoffs, suggest a serious failure to tackle the problem, with serious consequences for 2009 and beyond....

LyrArc Article Gist
Case-Shiller home price index shows 18.5 % drop year over year for December 2009, for single family homes in 20 major metropolitan areas. The Conference Board Index for consumer confidence dropped from 37.4 in January 2009 to 25 in February 2009. Of the 5000 households surveyed more 90% said they expected conditions would be the same or worse in the next 6 months. The Obama $275 billion plan for homeowners does not address the weakest cities in the market which are in places like Phoenix, Las Vegas, and much of Florida and Southern California, where prices have fallen 40% or more from their peak. This is because mortgages that are under water are not included, these are mortgages where more is owed on the house than the house is worth, and is ocurring faster in places where price declines are the steepest. One expert Martin Feldstein who is also on the Obama advisory panel has insisted since early 2008 that these homeowners under water have no rational incentive to continue making payments. What this does is to make consumers to postpone purchases like autos and hold back or cut back on all kinds of spending. In this global economy this means places like China's coastal regions which export to the US get hit hard and in turn exporters to china like Germany also get hit hard as what starts in the USA gets passed on theough the global economy from one region to another. Which also means US exports to Asian and other emerging market countries of tech goods and aircraft are in turn hit hard. As Republicans and Democrats follow their ideological leanings they cancel each other out in the debate, as Prof. Potter at Harvard an expert on economic strategy points out in a link, resulting in necessary actions not being taken and no clear direction. ...

LyrArc Article Gist
As a federal criminal probe gets underway into AIG, questions remain about whether AIG misled investors, and whether AIG executives themselves suppressed information from their own internal auditors and ignored the advice of their external auditors Price Waterhouse. The internal auditor raised questions with his boss Mr Cassano about the credit default swaps that AIG had written for its clients. An requests for collateral from AIG to support the credit default swaps were kept hidden. The internal auditor Mr. St. Dennis wrote" I was gravely concerned about this (the request by clients for collateral from AIG worth billions for the derivatives called credit default swaps AIG had sold) and AIG believed that the likelihood of makig payouts was remote." Mr Cassano kept Mr Dennis out of important meetings because he said "I was concerned that you would pollute the process." An important aspect of all this is how it relates to executive compensation that has motivated some of these actions. Mr. Cassano according to the audit committee chairman, earned $280 million over 8 years at AIG, left the company in March and was slated to receive $1 million a month through the end of 2008. The contract was terminated the day before the Congressional hearing. This is a huge amount about $35 million a year and not only is this executive compensation but it is paying someone enough that he would do something that is unethical, or lead to large negative consequences, or even commit fraud, depending on the ethical base of that individual. And this is where executive compensation has ceased to be executive compensation but almost enough to pay someone to do something equivalent in consequences to robbing the bank....