One hundred guests attended the Mathematical Institute Christmas party ...
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One hundred guests attended the Mathematical Institute Christmas party. How many handshakes must take place for all 100 guests to shake hands with each other?
When Money Goes Down the Toilet
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At around 231 million percent, Zimbabwe’s hyperinflation rate (which we’ve written about before) is currently the highest in the world.
Blog reader Ben Saltsman sent us this photo of a restroom sign in South Africa, which hints at one use for Zimbabwe’s severely devalued currency:
The Federal Reserve Board, the Office of Thrift Supervision and the National Credit Union Administration approved the regulation, which prohibits banks from certain practices like applying interest payments in ways that maximize penalties, and forces lenders to be more transparent about their billing practices.
"These protections will allow consumers to access credit on terms that are fair and more easily understood," Federal Reserve Chairman Ben Bernanke said in a statement.
The regulations mark an end to double-cycle billing, which averages out the balance from two previous bills. That means that consumers who carry a balance will no longer get hit with retroactive interest on their previous month's bill. And credit card companies will no longer be able to raise the interest rates on pre-existing credit card balances unless a payment is over 30 days late.
Consumers will also be given a reasonable amount of time to make payments, and payments will be applied to higher-rate balances first, to reduce interest penalties and fees.
Credit card statements will clearly list the time of day that a payment is due, and any changes to accounts will be in bold or listed separately.
And, finally, no more universal defaults - a policy that allowed credit card issuers to increase the interest rate on one card if a customer missed a payment on another card.
That might sound good if you're those borrowers, but for everyone else it will mean higher rates even if you treat credit responsibly. If the banks can't raise prices on the riskiest borrowers, they will either limit to whom they lend or raise rates on everyone -- or both.
...
The new rules will also appeal to those who think Americans spend too much, and save too little, and blame credit cards for encouraging the trend.
But now seems like a particularly inopportune moment to tell banks that they should do less to manage their exposure to credit risk. Banks are already pulling back on consumer credit as the economy worsens and the credit crisis drags on, with lower credit limits and higher rates. If the Fed votes in favor of its new rules Thursday, expect that trend to accelerate.
In the midst of a credit crunch, Americans have about $976.3 billion in revolving credit and 4.9% of all credit cards were delinquent in the third quarter, according to the latest data from the Federal Reserve.
Mayors' infrastructure request full of pork
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The U.S. Conference of Mayors went to Capitol Hill earlier this month with a report listing 11,391 infrastructure projects proposed by 427 cities. The mayors claimed the proposal would create 847,641 jobs in 2009 and 2010.
The more than 800-page document is titled "Main Street Economic Recovery: 'Ready To Go' Jobs and Infrastructure Projects."
"Our plan calls for investments that will stimulate our economy by quickly creating jobs, fixing our aging and crumbling infrastructure, increasing our global competitiveness, and further reducing our carbon footprint," Miami, Florida, Mayor Manny Diaz said at a news conference last week. Accompanied by other big-city mayors, he held up a copy of the hefty report to stress its importance.
"To reverse the current economic crisis, we must invest wisely. We must invest where we get the greatest return. We must invest in Main Street," said Diaz, who is the president of the mayors' group.
But a close examination of the projects by CNN shows proposals that go far beyond basic infrastructure plans for roads, bridges and other traditional public works projects.
Comment: I am on a teleconference hosted by Wells Fargo economists. Brief comments (not quotes)
'Lizard People' Ballot Ruled An Overvote
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The infamous "Lizard People" ballot from Bemidji, Minn. was declared an overvote. The Norm Coleman campaign's challenge on the ballot was allowed, though not before some discussion among the board.
Secretary of State Mark Ritchie's original motion was to reject the challenge and allow the vote for Al Franken, whose circle was filled above the write-in vote for "Lizard People."
But in deliberation, it was brought up that there is no way to determine that there is not a legitimate person named "Lizard People" and, thus, the ballot would have to be considered as carrying two votes for the U.S. Senate race.
Hey Ponzi: What’s Your Exit Strategy, Exactly?
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I have never understood why someone would ever start a Ponzi scheme when, by definition, there’s no way to end it.
The scam works by bringing in new unwitting investors to pay off the old unwitting ones. Since there’s no actual investment involved — just a transfer of money backward, with some portion presumably pocketed by the Ponzi schemer — keeping the scheme going requires an endless supply of new investors. The schemer’s liabilities only get bigger as time goes on, and there’s no way to end the ploy. Other than jail, that is. Or death. Or perhaps faking one’s own death.
...
I recently asked a few experts what such Ponzi perpetrators might envision their “exit strategies” to be.:
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- Cut and run.
- Turn (or return) the business into something legitimate. Unlike the schemers in #1, these Ponzi architects likely started out with some hope for legitimacy. They wanted seed money to kick off some brilliant investment idea.
- No exit. These schemers, usually from relatively humble backgrounds, are deeply insecure. They have felt like impostors their whole lives, whether in the country club or on the trading floor. They expect to be exposed for something, sometime, somewhere, which allows them to rationalize fraudulent behavior. They focus on denying and delaying the inevitable for as long as they can — and living well until they get caught.
The dead mall problem
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"Our country has six times more retail space per capita than any other county," said Ellen Dunham-Jones, director of the architecture program at Georgia Institute of Technology.
"We're just cannibalizing our existing stores by building more stores even when sales aren't increasing," she said. "We were long due for a retail correction and we're going through it now."
Dunham-Jones said big-box enclosed malls have become a dying breed as more shoppers prefer going to shop at strip malls or "lifestyle" open-air malls.
Built in the 1960s as one of the four Dales, Brookdale has had a variety of problems in the past several years, including the loss of major tenants and owners that fell behind on property taxes.
But not all the problems have been self-made. Brookdale has faced increased competition from a boom in retail development in nearby Maple Grove. Demographic changes have led to a decline in per capita income in its trade area.
A new set of owners, Brooks Mall Properties, took over about three years ago and settled the tax bill. But the Coral Gables, Fla.-based company stumbled in efforts to redevelop the mall, and recently called off a project that would have filled the former Mervyn's store space with a Wal-Mart Supercenter, according to Gary Eitel, Brooklyn Center community development director.
Time to Buy a New Stove. Again.
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Planned obsolescence, a diabolical manufacturing strategy that took root with the rise of mass production in the 1920s and ’30s, has now escalated from disposable lighters to major appliances. Its evil genius is this: make the cost of repairs close to the item’s replacement price and entice us to buy new. Again. “A repair of $700 is more than the stove cost,” I whined. The repairman shrugged and counseled me that I could get the same thing for about $1,200 now.
“This one’s headed for scrap,” he said. He predicted it would end up on a fast boat to China, where apparently they can’t get enough of the stuff.
Planned obsolescence is now a global shell game; someday our atomized stove might come back at us in the form of a fireplace screen, an air-conditioner, a gas grill! I vowed to hold out as long as I could. With the flinty resolve of my favorite Beverly Hillbilly, Granny Clampett, I cooked on the remaining three burners — until the thing tried to gas us.
In Minnesota Recount, Scribbles, Mice and Other Ballot Puzzles
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At another point, Judge Kathleen Gearin expressed puzzlement over a voter whose only selection was a write-in — for Mickey Mouse.
“Why would they go in just to vote for Mickey Mouse?,” Judge Gearin asked.
Chief Justice Magnuson responded, “This is not a voter that cared a lot.”
Energy efficient home, easy to maintain — and no mortgage
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About 20 million Chinese still reside in caves and dirt-covered dwellings on the Loess Plateau that straddles the middle and upper reaches of the Yellow River in China's northwest.
Some of the caves have been passed down for generations, with hard-packed earthen walls, electrical wiring, piped-in plumbing and other modern conveniences, including cable television.
Longtime cave dwellers are often passionate about their way of life, saying they are shielded from the elements in a practical and efficient fashion, dwelling along hillsides and leaving valuable arable land in valleys for growing crops.
Researchers say economic necessity isn't the only reason so many Chinese continue to reside in caves.
"People from abroad think people who live in caves are very poor. But our research shows that is not always the case," said Wang Jun, a researcher on caves at the Xian University of Architecture and Technology.
Many simply have grown accustomed to a lifestyle that dates back more than a millennium. Caves also have a revolutionary luster. Mao Zedong, the revolutionary founder of modern China, lived in caves that still honeycomb this region after the Long March, plotting the drive to take over the country that succeeded in 1949.
Caves are easily excavated from the silty soil here, requiring only picks and other digging implements. The earth is so hard-packed that caves don't need additional support to prevent collapse. Most have a stone facade, with large lattice windows framing a door and allowing light to pour in during the day.
Generally, the caves are shaped like loaves of bread, 10-to-13 feet wide and anywhere from 20-to-25 feet deep, with arched ceilings. Several caves dug next to each other can have connecting doors, providing for a larger overall dwelling, with flues allowing for ventilation from indoor cooking fires.
Santa Claus government
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he U.S. Conference of Mayors sent its list of wishes to the political equivalent of Santa Claus: Congress. The mayors apparently figure with all the talk from President-elect Obama about infrastructure repair and job creation, they might as well try to pile onto Santa's lap, too.
The mayors claim the economy will be stimulated if their wishes are granted. What do they want? The National Taxpayers Union (NTU) has analyzed the 72-page list. Here are some of the lowlights.
- $1.102 billion in projects involving sidewalks; — $1 million for annual sewer rehabilitation in Casper, Wyo. (emphasis mine);
- $6.1 million for corporate hangars, parking lots, and a business apron at the Fayetteville, Ark., airport.
- 15 projects with the term "stadium" in them, including a $150 million Metromover extension to the Florida Marlins' baseball stadium; and
- 81 projects mentioning "landscaping" and/or beautification efforts.
- $1,500,000 for an initiative in Dayton, Ohio for the "Reduce Prostitution-Off the Streets Program." The proposed spending would "connect individuals involved in prostitution with resources to leave a life of prostitution." I guess Ronald Reagan was right when he observed, "It has been said that politics is the second-oldest profession. I have learned that it bears a striking resemblance to the first."
- "$6,000,000: Ventura, Calif., Water Surfers Point Improvements." "This project is to protect the beach with natural buried cobble stone, create sand dunes over the buried cobble, relocate, and rebuild the State Owned Omer Rains beach front bike path, and construct parking lot and drainage."
Kristina Rasmussen, NTU's director of government affairs, offers more analysis of the mayors' report on NTU's blog: "Total cost of the wish list is $73,163,299,303. They claim this will create an estimated 847,641 jobs in 2009 and 2010. Divide that out, and you get a cost to taxpayers of $86,314 per job. Not exactly a great deal."
Detroit papers drop home delivery to 3 days a week
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Fighting to stay in business, Detroit's two daily newspapers will radically change their relationship with readers by slashing home delivery to three days a week, printing small editions on other days and encouraging people to get information online.
Are Nut Bans Promoting Hysteria?
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In the column, Dr. Christakis points out that about 3.3 million Americans are allergic to nuts, and even more — 6.9 million — are allergic to seafood. But of 30 million hospitalizations each year, just 2,000 are due to food allergies, and about 150 people die annually from serious allergic food reactions. That’s the same number of people killed by bee stings and lightning strikes combined. About 10,000 children are hospitalized annually with traumatic brain injuries from sports, 2,000 children drown each year, and about 1,300 die in gun accidents, he writes.
Dr. Christakis notes that there is no scientific evidence that nut bans are particularly effective at protecting children. But more important, he argues, is that limiting widespread exposure to nuts can make things worse. The “policy of avoidance” means that fewer children are being exposed to nuts, likely increasing their risk for developing an allergy. A 2008 study in The Journal of Allergy and Clinical Immunology of 10,000 British children found that early exposure to peanuts lowers risk of allergy, rather than increasing it.
At this time of year many municipal elementary schools in the United States, including the one attended by my children, raise money by selling wrapping paper and candy. This year parents in our school were told that they could no longer pick up their purchases from their children’s classrooms. Instead they had to pick up their orders from a loading dock at specified times, to avoid a danger to the children. The danger? Some of the orders contained sealed tins of festive nuts.
Out of an overabundance of caution the school decided not to allow any of the items on the premises. This decision came on the heels of another recent event: a peanut was spotted on the floor of a school bus, whereupon the bus was evacuated and cleaned (I am tempted to say decontaminated), even though it was full of 10 year olds who, unlike 2 year olds, could actually be told not to eat food off the floor.
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As a US Government report into the motor industry has stated: “The shift in consumer preferences towards smaller, more fuel-efficient passenger cars appears to be permanent.”
(The report said this in 1980, a year after giving Chrysler $1 billion of bail-out money to arrest its spiral towards the plughole. Truly, there is nothing new under the sun.)
Iraqis Pick Up Their Shoes: Reaction From Around the Country
Comment: Reactions to yesterday's shoe throwing incident from around Iraq. No excerpts. Worth a read.
Mitch McConnell's Finest Hour
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... Led by Tennessee Senator Bob Corker, they asked the auto workers to show they were serious about making Detroit competitive again. In exchange for a lifeline from Washington, Mr. Corker wanted the union to set a "date certain" in 2009 for lowering the Detroit Three's hourly labor costs to the average of foreign-owned auto makers in the U.S. He also wanted creditors to bring down Detroit's total debt by two-thirds through an equity swap, making sure debtholders share the cost of restructuring.
The union's counteroffer was that it would bring down labor costs in 2011, when its current contracts run out. Maybe we missed something, but we thought GM and Chrysler were facing bankruptcy now, not in three years. As Minority Leader Mitch McConnell said on the Senate floor, that sounds like "taxpayer money today for reforms that may or may not come tomorrow."
Thursday's showdown marked an important political moment for the Republican Party. By refusing to write a blank check to Detroit, Senate Republicans have started to reclaim some credibility on fiscal policy and the role of government in the economy. They did so standing up to a Republican President who doesn't want any more bad headlines, as well as to Democrats who will blame the GOP if the auto makers collapse.
They also stood up for the right reasons. No bailout will ever restore the car companies to profitability without a restructuring. Yet an explicit UAW goal is to use the bailout to avoid any such thing. The union and their Democratic protectors want to avoid the discipline that a bankruptcy could impose under Chapter 11. A government-directed salvation would also give environmentalists huge leverage over the cars Detroit builds, a power they and Democrats have wanted for decades.
