What would you stimulate if your government sends you a stimulus cheque?
The economic stimulus cheque is a nifty way to put some petty cash back in the hands of people for them to spend it around and in the process stimulate the economy.
However, it appears that many Americans took stimulus rather too literally and went about stimulating whatever was easiest for them to do so.
There's some solid 'research' by AIMR Co (the Adult Internet Market Research Company … 'Adult Entertainment' is really a BIG business.) which suggests that right during the time the stimulus cheques were being sent to the American people, many 'Adult Entertainment' sites witnessed an abnormal growth of 20 to 30 percent in their paid memberships.
Don't giggle … there are some very strong economic reasons for this. If you don't believe me, look at what Dr. Marc Faber (he's a renowned investment guru) has to say on the stimulus cheques:
"The federal government is sending each of us a $600 rebate. If we spend that money at Wal-Mart, the money goes to China. If we spend it on gasoline it goes to the Arabs. If we buy a computer it will go to India. If we purchase fruit and vegetables it will go to Mexico, Honduras and Guatemala. If we purchase a good car it will go to Germany. If we purchase useless crap it will go to Taiwan and none of it will help the American economy. The only way to keep that money here at home is to spend it on prostitutes and beer, since these are the only products still produced in the US. I've been doing my part."
So, when the American economy is already being screwed, it's best to do it yourself.
I hope they will be able to screw themselves out of this mess.
Where else could you have seen this other than China? It seems that the Chinese government is reluctant to let the volatility in financial markets affect the Olympics in any way. That is why the Chinese market regulator has issued a not-so-open warning to financial analysts in China to avoid making any public statements which would increase the volatility of the markets. Which in essence means that analysts can't give a sell (or is it underweight :-) recommendation and they will have to agree with the government that everything is fine in Chinese equities.
Its good to be an analyst when you have been told the results before your analysis. You save a lot of efforts this way :)
I recently had a discussion with a colleague regarding best predictors of the stock markets. Having followed this subject both academically and as an intellectual pursuit, it is very interesting to note how the human mind is conditioned to create relationships using short term data where none exists. Detailed beautifully in "Fooled by Randomness" by Nassim Taleb, there exists a multitude of such phony correlations. "A mathematician plays the stock market" also has similar stuff.
Taleb mentions in his book an example of this. According to the research of Cal Tech professor David Leinweber, the "single best predictor of the S&P 500's performance" over the period 1983 – 1993 that he found was … hold your breath … butter production in Bangladesh. The lagged correlation is almost unity, which means that a y% rise/fall in butter prices in any year is followed by exactly a 2y% rise/fall in S&P 500 in the subsequent year.
So, if you tracked butter production in Bangladesh during that time, you could have made a killing on the stock markets and everyone would've taken you to be a genius.
Tough luck you didn't know this before hand.
That's the problem with back testing. It's what they say, "hindsight is always 20-20".
The Christie's catalogue suggested that the wine had belonged to Thomas Jefferson and that its value was "inestimable."
The most expensive bottle of wine ever sold at auction was offered at Christie's in London, on December 5, 1985. The bottle was handblown dark-green glass and capped with a nubby seal of thick
American Fattening seems to be one disaster waiting to happen. You see all these Americans are eating stuff from all around the world and accumulating them in their bodies. This makes that part of the planet so much heavier than it is designed to be. It would lead to a shift in the Center of Gravity of the planet and will someday or the other lead to a slowdown in Earth's rotation ... leading to a bigger disaster than Global Warming :-D
I came across a news article which states that Disney has recently announced its plans to close the "It's a Small World" attraction in one of its theme parks. The reason they cite is that they need to deepen the water channels because some of the heavy passengers' boats have started getting stuck.
If you think this is hilarious, just wait a bit. So, till the water channels are being deepened, the heavy passengers are being politely asked to disembark. And, they are being compensated with ... guess what an obese American would be most happy getting? ... Something for which he/she would not decide to sue Disney? … Free Food Coupons. Talk about irony.
Then there's this Iron Man Do-It-Yourself dress thing. It is nice to see people happy wearing whatever they are comfortable with. But Iron Man with a paunch! Have a look your self. The image is from Gizmodo.com
Gizmodo also has this image. Who's this guy? Can't hold my stomach laughing :)
Hyper inflation is theoretically defined as a situation where inflation exceeds 1,000 percent. We need to coin a new word for the Zimbabwean situation where inflation is close to 12.5 million percent.
Zimbabweans battle money shortages as collectors buy hundred billion dollar notes on eBay
Amid Zimbabwe's mind-boggling hyper inflation, a new 100 billion dollar bank note has more value as a novelty item on eBay than on the streets of the capital.
The note, launched this week, is worth enough to buy a loaf of bread _ if you can find one on Zimbabwe's depleted store shelves. Meanwhile on eBay, the bill was on offer for nearly US$80.
Notes in the millions of dollars are useful only as toilet paper and it's cheaper to light a fire with low denomination bills than with newspaper.
In the political and economic turmoil since disputed March 29 elections, prices have risen almost daily. Factories and businesses have shut down amid empty order books and chronic shortages of gasoline, power, water and spare parts for equipment repairs.
President Robert Mugabe and opposition leader Morgan Tsvangirai signed an agreement Monday to hold talks about power-sharing to end the crisis and restore economic stability. But the news failed to move the exchange rate, since little cash is available.
House prices and lottery prizes are quoted in quadrillions _ that's with 15 zeros. Zimbabweans says it's only a matter of time before big ticket items will be priced in the quintillions, which have 18 zeros.
Official inflation is quoted at 2.2 million percent but independent finance houses say it's closer to 12.5 million percent.
One major commercial bank said its automated teller machines are not configured to dispense multi-zero withdrawals and freeze in what it called a "data overflow error." Software writers are busy writing programs to try to overcome the problem.
Urgent electronic transfers in trillions also take several days as electronic accounting systems grapple with transactions in 12 zeros.
Bank transfers command a special rate. A hundred billion dollars is worth US$5 at the official rate, US$1 at the black market rate _ but just 30 U.S. cents in a transfer because by the time the funds are processed the Zimbabwe currency can be expected to be worth a lot less.
Shops have dropped six zeros from price tags, adding them again after totals are tallied at tills.
Zimbabwe has 27 denominations of bills and no coins. Lower value bills _ 10 million Zimbabwe dollars _ are all but obsolete, even in brick-sized bundles. Beggars and street urchins rarely bother to pick up such bills dropped on the street.
But one recent day in Marondera town outside Harare, traffic stopped and business came to a halt when someone _ apparently upset by the dizzying rate of inflation _ started throwing 50-billion-dollar notes from a moving car. Residents scrambled to collect the money.
The biggest bakery in Harare shut down this month and sent 1,200 workers home on forced leave because flour stocks recently ran out. For years, the bakery donated free loaves every week to a home for the handicapped and charity-run hostels.
One Internet provider has invited customers to pay their fees in gasoline coupons that hold their value.
A 58-year-old Harare financial director who asked not to be identified said his monthly salary is paid in local money which converts to US$50 at the bank rate. When available at his local sports club, a hamburger costs the equivalent of US$12. He hasn't eaten out in a year.
A cup of coffee at a government-owned five-star hotel was 130 billion Zimbabwe dollars, or US$5.30 this week. A waitress at the hotel said she earns 100 billion Zimbabwe dollars, US$4 a month.
A German company stopped shipments of bank note paper to the central bank's printers this month as the European Union looked to strengthen sanctions. The release of new money slowed as the central bank said it was looking to Indonesia and Malaysia to supply the specialized paper.
The daily grind for Zimbabweans to survive in the economic meltdown has won them a rating as the world's unhappiest people in the World Values Survey of the Michigan Institute for Social Research.
Zimbabweans were slightly unhappier than Armenians and Moldovans, also victims poverty and "the legacies of authoritarian rule," the researchers said.
Dereck Nhamo, who manages a warehouse, says he wants to join the teeming ranks of unemployed because he can't afford to work any longer.
Nhamo earns less than his bus fare to the warehouse in Harare but adds to his monthly income by selling firewood collected on weekends in outlying woodlands.
"It doesn't make sense to go to work any more," Nhamo said.
We all know about the problems that the airlines are having with rising costs and their efforts to raise prices on everything – bags, snacks, good seats, and so on. Their problems are real and I wouldn't be the one responsible for figuring out a way to cover costs at airlines today.
But I can't help but wonder if the airlines should hire a couple of behavioral economists as consultants. Here's why.
One of the major tenets of behavioral economics is that people don't view gains and losses the same way because they are averse to losses. The classic example is that people are not equally happy about finding a $20 bill on the ground as they are sad about losing a $20 bill, even though both are $20.
This brings me to the airlines. The airlines have framed all of their efforts to raise revenues as losses to the customers. You have to pay an extra fee to check a bag, get a snack or drink on the plane, get a headset, get an exit row seat, and so on.
Behavioral economics would tell you that a better approach would be to charge higher ticket prices and then provide ways for customers to gain money by engaging in the behavior that the airlines want. For example, you pay $350 to fly from Cleveland to New York, but you get $20 if you carry on your bag, $7 if you refuse the peanuts and pop; $2 if you refuse the headset, and $15 for taking the middle seat.
By giving people money for taking the actions that they want (even though the customer is only getting back his or her own money paid in the form of higher ticket prices), the airlines would frame their efforts to raise revenues as gains to customers. Almost all of the research studies show that framing the same efforts as gains instead of as losses make people respond more positively. So the airlines should get the same outcome with less negative customer reaction by taking this approach.
it seems very plausible, but my common sense suggests that it would not work. It is likely that it would do worse than the current system. In India many people use travel portals to book their tickets. When you do a search, you get multiple offers at various prices. At the time of booking, if someone sees a ticket priced at 6000 bucks v/s another at 7000 (controlling for the airline brand value), it will seem plausible for him to book his gains instantly rather than wait for flying to get cash backs.
