A collision at sea...

Can ruin your entire day.  The news about two VERY lucky boats.

A Royal Navy nuclear submarine was involved in a collision with a French nuclear sub in the middle of the Atlantic, the MoD has confirmed.

HMS Vanguard and Le Triomphant were badly damaged in the crash in heavy seas earlier this month.

First Sea Lord Admiral Sir Jonathon Band said the submarines came into contact at low speed and no injuries were reported.  [More]

The article wonders why sonar didn't help them.  Unless things have changed it would be because you don't cruise around with active sonar like a game of Marco Polo. You just listen. As boats get quieter, this type of incident is mostly prevented by the sheer unlikeliness and the size of oceans.

Hmm. First satellites, then subs.  Is the moon in some strange phase right now?  These are pretty low probability events here.

Maybe corn can hit $5 after all.

You'll never read a menu...

The same way again.  How restaurants mess with your mind when you are ordering:

The first step is the design. Rapp recommends that menus be laid out in neat columns with unfussy fonts. The way prices are listed is very important. "This is the No. 1 thing that most restaurants get wrong," he explains. "If all the prices are aligned on the right, then I can look down the list and order the cheapest thing." It's better to have the digits and dollar signs discreetly tagged on at the end of each food description. That way, the customer's appetite for honey-glazed pork will be whetted before he sees its cost.

Also important is placement. On the basis of his own research and existing studies of how people read, Rapp says the most valuable real estate on a two-panel menu (one that opens like a magazine) is the upper-right-hand corner. That area, he says, should be reserved for more profitable dishes since it is the best place to catch--and retain--the reader's gaze. [More]

Whoa, they're getting closer...

It's not just big-city banks who are failing.

Corn Belt Bank and Trust Company, Pittsfield, Illinois, was closed today by the Division of Banking, Illinois Department of Financial Regulation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with The Carlinville National Bank, Carlinville, Illinois, to assume all of the deposits of Corn Belt Bank and Trust Company.

Due to the observance of Presidents' Day on Monday, Corn Belt Bank and Trust Company's two offices will reopen on Tuesday as branches of The Carlinville National Bank. Depositors of Corn Belt Bank and Trust Company will automatically become depositors of The Carlinville National Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers of both banks should continue to use their existing branches until The Carlinville National Bank can fully integrate the deposit records of Corn Belt Bank and Trust Company.

Over the weekend, depositors of Corn Belt Bank and Trust Company can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of December 31, 2008, Corn Belt Bank and Trust Company had total assets of approximately $271.8 million and total deposits of $234.4 million. The Carlinville National Bank will pay the FDIC a premium of 1.75 percent.

The Carlinville National Bank will not assume $92 million in brokered deposits held by Corn Belt Bank and Trust Company. The FDIC will pay the brokers directly for the amount of their insured funds. Customers who placed money with brokers should contact them directly for more information about the status of their deposits. [More]

The steady drip-drip of banks closing adds to the concerns of whether bigger banks are essentially insolvent. Growing calls for nationalization of such banks would present us with an entirely new financial landscape.

Nationalization is the only option that would permit us to solve the problem of toxic assets in an orderly fashion and finally allow lending to resume. Of course, the economy would still stink, but the death spiral we are in would end.

Nationalization -- call it "receivership" if that sounds more palatable -- won't be easy, but here is a set of principles for the government to go by:

First -- and this is by far the toughest step -- determine which banks are insolvent. Geithner's stress test would be helpful here. The government should start with the big banks that have outside debt, and it should determine which are solvent and which aren't in one fell swoop, to avoid panic. Otherwise, bringing down one big bank will start an immediate run on the equity and long-term debt of the others. It will be a rough ride, but the regulators must stay strong.

Second, immediately nationalize insolvent institutions. The equity holders will be wiped out, and long-term debt holders will have claims only after the depositors and other short-term creditors are paid off.

Third, once an institution is taken over, separate its assets into good ones and bad ones. The bad assets would be valued at current (albeit depressed) values. Again, as in Geithner's plan, private capital could purchase a fraction of those bad assets. As for the good assets, they would go private again, either through an IPO or a sale to a strategic buyer. 

Fourth, merge all the remaining bad assets into one enterprise. The assets could be held to maturity or eventually sold off with the gains and risks accruing to the taxpayers.

The eventual outcome would be a healthy financial system with many new banks capitalized by good assets. Insolvent, too-big-to-fail banks would be broken up into smaller pieces less likely to threaten the whole financial system. Regulatory reforms would also be instituted to reduce the chances of costly future crises.[More]

What is notable  about the calls for nationalization is who they are coming from.  Roubini (above) is hardly a wild-eyed socialist. Indeed, the political gamble taken by recovering spend-aholic Republicans could really look narrow and self-serving as the size of the crisis makes their worst nightmares the most likely solution to embrace in the near future.  Screaming "socialist" at the President becomes a little humorous if you are in the same breath advocating goverment takeovers of banks, no?

The fallout from this would be considerable.  Will un-nationalized banks look like poor investments and see their stock prices plummet?  Very likely.  And them some of them would become insolvent.  But nobody knows how far that daisy-chain will extend.

One of the obvious concerns about having the government nationalize major banks is that it will create a contagion effect, scaring private capital away from all banks, not just the obviously insolvent ones. If that happens, the result will be that instead of only having to recapitalize a few banks, the government will end up having to recapitalize most or all of them, expanding the costs to taxpayers and making it more likely that the government will end up running most of the banking system for an extended period of time. (See Tyler Cowen, Felix Salmon and me on the subject.)[More]

To date, these types of discussions seem esoteric quibbling with little impact on whether I plant more beans than corn this year. But the effect for farmers would, I believe, be significant.  Removing capital-supplying vendors - or at least hobbling them with burdensome government operating rules - could mean more economic friction in the cpaital markets and less competition for loans.  All this points to rising interest rates despite what the Fed does.

The larger the farm (loan) the more likely to be effected. Even the Farm Credit System would be involved, as lower competition for top-tier loans may allow them to stay competitive as their funding costs rise with bigger spreads on their bonds.

Interest costs, like fuel costs, are not that high on the agenda for most of us now.  Our immediate problem is demand/prices for commodities. But until people who buy commodities can get credit from working banks we may not have much success finding eager customers.

But do the seats rock?...

Ferris wheels are hot.  In fact, we seem to be in some kind of prestige war for the largest right now.

There’s an international battle going on. The prize is height, width, rotation. Its weapons are not guns, nor tanks, nor arrows. The weapons of this battle are wheels. Ferris wheels.
This year, Germany will unveil the Great Berlin Wheel. Upon its completion, the wheel will be 606 feet high — as high as two football fields are long, as high as three Niagara Falls. It will be taller than what’s currently the tallest Ferris wheel in the world, the Singapore Flyer, a soon-to-be-disappointing 541 feet high. This year, China also plans to unveil the Beijing Great Wheel. At an awesome 682 feet high, it will be taller than both the Great Berlin Wheel and the Singapore Flyer (which only debuted as the world’s tallest Ferris wheel last year).

China has, in fact, built wheels in six cities since the start of the new millennium. The Great Dubai Wheel, at 607 feet, is set to enthrall visitors to Dubailand some time in 2009. There’s the Great Orlando Wheel in Florida (400 feet), and Australia’s four-story-high Southern Star, which just opened last month. There are whispers that a Great Wheel might hit Mumbai, though no one can say when. Or how tall.
In August of 2008, Iraq officials unveiled plans for the Baghdad Eye. Its inspiration — the 440-foot London Eye, built in 1999 — was the instigator of all this recent wheel-mania. At a proposed 650 feet, the Baghdad wheel would soar above the London Eye and most of its competitors, giving locals and visitors alike a spectacular view of the city. [More]

Never liked 'em, myself.  I had a buddy in grade school who thought the height of hilarity was to rock the seat as we went around.  My experience not withstanding, I have been on the London Eye and the one at Navy Pier.  Other than a great view of the city, I seemed to miss the point others become enraptured with.

[More photos of the Singapore Flyer]


And I don't find them particularly aesthetic either.  Somehow they seem so.. Industrial-Revolutionary. Maybe if we had a more futuristic design, like the one planned for Dubai.

But the way things are going there, it may not get many visitors.

Great slide show of Ferris wheels here. 

 Is it me, or is the world tilting to the left right now?...

Food is not our answer...

In our anxiety over demand for farm commodities, I think we may be making some illogical speculation about food consumption during recessions. The basic truth is food is relatively inelastic as to price and worse yet, we may have been at a high point of consumption due to the ratio of food consumed at home to food outside the home.

These ideas popped up during this week's US Farm Report.  First, Round Table Commentator Brad Harding alluded to brisk sales at supermarkets as a good sign of an expanding market. Even if this anecdotal evidence is valid, I think it may be less encouraging to producers, albeit good news for our health.

The second moment was a report from the NCBA Convention about beef consumption which detailed a shift from steaks to hamburger.  Meat demand is problematic and the nervousness over formerly robust exports to places like China was clear.

Looking at the actual data, food expenditures have fallen off the table (so to speak).

In 2008's fourth quarter, consumer spending on food fell at an inflation-adjusted 3.7% from the third quarter, according to data from the Commerce Department's Bureau of Economic Analysis. That is the steepest decline in the 62 years the government has compiled the figure. The report is based on receipts from a sampling of food-oriented businesses across the country.

The big drop likely comes from two things, said Joseph Carson, an economist at AllianceBernstein who worked at the Commerce Department in the 1970s. First, consumers have been trading down to lower-priced items. Second, he thinks many households dug into their pantries for staples rather than going to the store, a trend that can't continue indefinitely. "You can't contract at this rate for long," he said. "It's just shocking." [More]

More importantly I think, domestic consumers are rediscovering home economics. Preparing food at home is certainly cheaper, although labor intensive.  But then more homes have some free labor as unemployment shoots upward. One perverse outcome would be to recoup some lost salary by lowering food expenditures by deploying labor to the kitchen (and I'm not specifying which gender of labor either).

In the same way, newly single-income households may discover the loss of net income could be significantly less than the whole salary as outsourced domestic work (lawn care, laundry, food prep, child care, etc.) are greatly reduced by now available labor. Indeed, if this recovery is as "jobless" as some expect, the ability to deploy unused family labor may be the key to raising a family's standard of living as opposed to adding a second income.

And looking at the list of what America is cutting back on, I wonder if we'll see a reversal of another trend:  America's growing waistline.    There is a school of thought which says that the reason Americans are getting fatter is not so much the absolute price of food as the kind of food we consume--what Seth Roberts calls "ditto foods".  These are commercially prepared foods which have high calorie density and are what some scientists call "hyperpalatable"--i.e. extremely flavorful.  They're also carefully prepared to ensure that they taste virtually the same every time.  The easy availability of these foods causes our bodies to kick up our "set point"--what our bodies naturally want us to weigh.  Our appetite regulation mechanisms do the rest

Home prepared meals are much less standardized, and not so fined tuned to hit the salty/sweet/fatty buttons over and over.  Also, much of the shopping is done for them when you aren't actually hungry, and so you're likely to pick healthier foods with lower caloric density--committing your future self to behave more virtuously than it probaby [sic] would decide to on the spur of the moment.  A leaner wallet may mean a leaner you. [More]

The hope for lagging commodity prices here rests on one large market force and some smaller ones.  We need to be feeding more people protein, not more protein to the same people, and the above states the case very well that is not likely to happen. More crucially, we need to work diligently to prevent protectionism from destroying our chance to add those people, because domestic consumption has probably seen its high water mark for my lifetime.

But the relatively unexciting outlook for domestic food consumption should make one truth crystal clear to Midwestern farmers: we are now addicted to ethanol. Good idea or bad, we have built a farm economy that cannot recover from the loss of 4 billion bushels of corn demand without the type of dislocations were are now seeing in housing and finance.

Perhaps this is what ethanol proponents pictured as success. I do not. With our eggs in one basket, we are more at risk than we have ever been for destabilizing volatility from political whim and popular sentiment.  We should have phased out the subsidies when the profits were high so the industry could adjust to real market forces.

Now we have little choice to plan our futures based on legislative decisions.

Axe Mr. Science...

One of my most loyal readers - "Anonymous" -  asked if the satellite collision I posted about would have made a sound.

Nope.

Baby break...

Took some time today for my new sweetheart:

More to the point, we visited the new first-time parents (my son and daughter-in-law) and reassured them it would it would all be over in about twenty-five years or so.

Unless by then adolescence lasts until 35-40.

I would have paid money...

To see this.

On February 10 at approximately 1656 GMT, the Iridium 33 and Cosmos 2251 communications satellites collided over northern Siberia. The impact between the Iridium Satellite LLC-owned satellite and the 16-year-old satellite launched by the Russian government occurred at a closing speed of well over 15,000 mph at approximately 490 miles above the face of the Earth. The low-earth orbit (LEO) location of the collision contains many other active satellites that could be at risk from the resulting orbital debris.[More]

An exception to the rule...

I don't pass on forwarded e-mail as a rule, but this one from my friend Jim - with whom I have sung in the choir - is worth lifting the rule.  Garrison Keillor at his best:

Garrison Keillor on Methodists

We make fun of Methodists for their blandness, their excessive calm, their fear of giving offense, their lack of speed, and also for their secret fondness for macaroni and cheese.

But nobody sings like them. If you were to ask an audience in New York City, relatively Methodist-less place, to sing along on the chorus of "Michael Row the Boat Ashore", they will look daggers at you as if you had  asked them to strip to their underwear. But if you do this among Methodists, they'd smile and row that boat ashore and up on the beach!....And then down the road!

Many Methodists are bred from childhood to sing in four-part harmony, a talent that comes from sitting on the lap of someone singing alto or tenor or bass and hearing the harmonic intervals by putting your little head against that person's rib cage.

It's natural for Methodists to sing in harmony. We are too modest to be soloists, too worldly to sing in unison. When you're singing in the key of C and you slide into the A 7th and D 7th chords, all two hundred of you, it's an emotionally fulfilling moment. By our joining in harmony, we somehow promise that we will not forsake each other.

I do believe this:

People, these Methodists, who love to sing in four-part harmony are the sort of people you can call up when you're in deep distress.

* If you're dying, they will comfort you.

* If you are lonely, they'll talk to you.

* And if you are hungry, they'll give you tuna salad.

* Methodists believe in prayer, but would practically die if asked to pray out loud.

* Methodists like to sing, except when confronted with a new hymn or a hymn with more than four stanzas.

* Methodists believe their pastors will visit them in the hospital, even if they don't notify them that they are there.

* Methodists usually follow the official liturgy and will feel it is their way of suffering for their sins.

* Methodists believe in miracles and even expect miracles, especially during their stewardship visitation programs or when passing the plate.

* Methodists think that the Bible forbids them from crossing the aisle while passing the peace.

* Methodists drink coffee as if it were the Third Sacrament.

* Methodists feel guilty for not staying to cleanup after their own wedding reception in the Fellowship Hall.

* Methodists are willing to pay up to one dollar for a meal at the church.

* Methodists still serve Jell-O in the proper liturgical color of the season and think that peas in a tuna casserole add too much color.

* Methodists believe that it is OK to poke fun at themselves and never take themselves too seriously.



All this means that, if you are to be counted among their numbers, You will know you are a Methodist when:

*       It's 100 degrees, with 90% humidity, and you still have coffee after the service.
*       You hear something funny during the sermon and smile as loudly as you can.
*       Donuts are a line item in the church budget, just like coffee.
*       When you watch a Star Wars movie and they say, "May the Force be with you," and you respond, "and also with you."

And lastly, you'll know you've been in the presence of a Methodist, if it takes ten minutes to say good-bye!

Amen.


[Thanks, Jim]

I think I see a pony...

An assortment of not-horrible news.

• Deflation fears down 
• China chugging along 
• Economists experience the job market*
• Ships are sailing 
• Credit creeps back 

Of course, all these need to be weighed against the dismal job-creation performance of our last two recoveries.  As a lagging indicator, unemployment will not be slowing soon despite the very real possibility of improvement in other economic factors.


*I admit the cheapness of this shot, but still a good article

A week in the saddle...

Most of this week I spent covering miles in Zippy the Car, as I spoke at various gatherings.  They were not easy miles either, as the winds made my 100-lb. weakling vehicle a challenge to keep between the stripes.

I did however, finish some lectures and a book: American Lion by Jon Meacham

 

[More]

I had little recollection of Jackson's life and presidency, but found the book to be a revelation on how the power of the executive was expanded under his watch.  Like all biographies, it drug through some years, but the author presents a compelling portrait of a powerful president with highly developed oratorical and rhetorical skill, especially considering it all was done by hand and usually on the first draft.

Listening to it read, I was however, slightly put off by the affected southern accent used by the reader, John Mayer. His style also seemed overly dramatic compared to other narrators I have enjoyed.  It could also simply be a Yankee thing.

[Another review]

Much of this week was also spent celebrating.

It will be good to be home more next week. Posting should pick up.

AT LAST!!...

USFR and AgDAY are on RFD-TV!

[Well, starting in March, anyhoo]

Gross, but good, news...

After a certain age, I have noticed too many of my friends have tangled with my generation's dreaded health issue: prostate cancer.  My father developed it late in life, and it was the aggressive kind, so I dutifully go through the drill of exams and blood tests.  But I have developed a certain skepticism of aggressive treatment.

That may not bode well for me, but it looks like we're making progress for all you whipper-snappers out there under 50.

The finding comes from a powerful new science called metabolomics. Using these new techniques, scientists discovered that urine levels of an obscure amino acid derivative called sarcosine show whether a man has aggressive or benign prostate cancer.

To the scientists' surprise, sarcosine wasn't just a harmless marker.
Benign prostate cancer cells exposed to sarcosine suddenly turn nasty, becoming aggressive and invasive cancer cells. Aggressive prostate cancer cells that can't get sarcosine are tamed, becoming much less invasive.

If confirmed and validated in larger studies, the findings have huge implications for prostate cancer treatment, says study leader Arul M. Chinnaiyan, MD, PhD. Chinnaiyan is professor of pathology and urology at University of Michigan, Ann Arbor. [More]

In fact, I have growing hopes most cancer will become a minor threat for my sons' generation.

Apocryphal note:  when I spoke in Edmonton last month, the speaker right after lunch was a urologist talking about prostate cancer, and his PowerPoint presentation brought dessert forks clattering down.  [Seriously, you don't need to see an actual cancerous prostate to get religion.] Really bad scheduling. 


What exactly is a "whipper-snapper" anyway?

Watt gratitude...

I drove down to Jonesboro, AR to speak at the Arkansas State University Agribusiness Conference yesterday. The last two hours were bouts of heavy rain and mile after mile after mile of downed powerlines and utility crews working in abysmal conditions.

At the reception last night local residents were telling me entire towns were still without power from the ice storm two weeks ago, and some customers don't expect service restored until March.

The whole are looks like it has been badly mowed with a giant BushHog set about 15' high.

When you flip the light switch on this morning, say a little thank you. And if you can spare a thought and prayer for these folks, it would be appreciated.

I will be at the Louisville Farm Machinery Show tomorrow taping USFR in the afternoon.  Stop by and say hi!

One useful yardstick...

If we're not careful we could inflate the scope of unemployment or even discount it inappropriately.  To give some context, Justin Cox offers this graph, and some excellent comments.

 

[Click to enlarge]

What do we learn? So far the fall in employment is comparable to that in 1974-1975 and 1981-1982. If the comparison holds, the declines should end within the next four or five months. But we of course have no idea whether the comparison will hold. Past performance is no guarantee of future results.

Another lesson brought home by the chart is how weak the recovery from the 2001 recession was. It was a mild recession, but it took four years for employment to return to its February 2001 peak. Setting aside the worst-case scenario of a continued downward employment spiral that puts 1974-1975 and 1981-1982 to shame, a recession that combines a severity akin to that of 1974-1975 and 1981-1982 with a recovery as anemic as 2001-2002-2003-2004-2005 would be not a whole lotta fun. [More]

I echo his analysis.  The odds of a V-shaped recovery such as earlier patterns suggest could be lower than the s-l-o-w regaining of jobs more typical since 1900.

EXCEPT for the fact we're going to throw trillions of dollars and ample credit at this one.  There is no precedent for this, but...

It's just crazy enough...

Non-relational transactions...

As someone who really likes using Amazon, self-checkout lanes and pay-at-the-pump, I have to take responsibility for some of the loss of community in America.  At least, that's one way of looking at it.

This story got me thinking about the demand for non-relational contracting. Ian MacNeil, my former colleague at Northwestern, was famous for claiming that most contracting is “relational” — or extends the duty to perform contracts through time and repeated transactions. But Sheen’s (possibly apocryphal) quotation has me thinking that there may be contexts in which people would pay a premium to avoid a relationship.
Some people may at times prefer A.T.M.’s to tellers in part because they don’t want to speak to tellers. Some people may prefer Merry Maids to a regular housekeeper (or may prefer to be absent when the cleaning is done). Or some people may prefer buying at Amazon.com in part because of the lack of human contact.
Indeed, what’s scariest to me as a professor is that part of the student demand for “distance learning” may come from students who don’t want to have relationships with their teachers.
A rising demand for non-relational contracting seems of a piece with Robert Putnam’s depressing Bowling Alone thesis that we are becoming increasingly disconnected from family, friends, and neighbors. I remember the day when you might have had a conversation with the person sitting next to you on an airplane. Nowadays, if you say more than a perfunctory hello when you initially sit down, you are trespassing into your seatmate’s personal space.
Of course, there are other ways to spin the demand for non-relational contracting. Restricting and regulating our contractual relationships allows us to control and concentrate our limited relationship energy on those people who matter most to us. Surely this is sometimes the case. But conserving our limited relationship energy may backfire. Our capacity to interact with others may atrophy if it goes unused.

Moreover, some of us may be healthiest and happiest when we interact with a variety of people on a variety of levels; it may not be good for us to concentrate all of our social energy on the most intense or important relationships in our lives. [More]

Much of this change in commerce carries over to the angst and anger now seething in what was once an previously placid (on the surface, at least) arena of land rental.  My latest column may not help calm the waters either, but it fairly represents my thinking.

Farmers are getting a first-hand look at what transparency means: doing business in broad daylight.  Formerly, ties of kinship and/or friendship greased the skids for land rentals, since the deal (50/50) was pretty much the same for everybody.  It was like the old Soviet Union, where the lack of market economy produced a market for influence.

As long as you were part of the group that controlled land, this was a pretty harmonious arrangment, but it was hard on outsiders or newcomers.  As labor has become less important compared to acres, the need for more acres meant dealing with more people than were inside the groups, and thus began the effort to extend "old-group" rules to people who were not part of the old group.

Many landowners - especially investors - decided to try another approach: open dealing with interested parties.  It turns out many business models embraced by farmers don't withstand close public scrutiny.

The result is a startling mix of self-righteous judgment [I could not help but note the absence of any mention of the Golden Rule in these religious opinions] and a drift toward non-relational contracting. 

What few seem to suspect is the emergence of competitors who can operate at several levels of engagement - purely financial to high-relationship transactions - as the situation warrants instead of imposing one standard on all.  This, I believe will be the mark of the next level of farm entrepreneurs.

Possible side-effects include...

An intriguing mix of speculation about how the recession will affect us other than economically is emerging (although it may be fair to say they simply spring from the financial turmoil).

For example, we may become more spiritually inclined.  Pastors have long admonished their flocks that we should attend to our duties of faith all the time, but without doubt our interest in a beneficent deity perks up as we face hard times.

The feeling of loss of control may be the key.

Uncertain times cause us to cast about more widely for explanations of our circumstances - and rational reasoning, alas, does not always come naturally when we are desperate for answers. It is ironic that science is revealing our modern, sophisticated, scientific world view to have a fragile hold on our minds (see "Natural born believers"). But there are also lessons to be learned. First, we ought to be more understanding of seemingly irrational world views. Many psychologists now see irrationality as the default state of the human mind. No wonder the idea that life arose spontaneously has such a hard time trumping creationism: overcoming that "natural" perspective takes a lot of cognitive effort. Research into irrationality may also provide insights to help guide the treatment of those suffering from obsessive-compulsive disorder and related mental illnesses.

The other lesson is more direct: be careful. In a recession, or any other time of uncertainty, you are more likely to make bad decisions. By all means play the lottery if it provides a momentary diversion from the gloom. But keep your head. However seductive and comforting the idea of a win, and however tricky your circumstances, playing the lottery is not a rational path to riches. Even if God did tell you this week's numbers. [More]

But not only our worship patterns may change. Leisure may take on a new, more laid back - and certainly less expensive - style.

First, consider entertainment. Many studies have shown that when a job is harder to find or less lucrative, people spend more time on self-improvement and relatively inexpensive amusements. During the Depression of the 1930s, that meant listening to the radio and playing parlor and board games, sometimes in lieu of a glamorous night on the town. These stay-at-home tendencies persisted through at least the 1950s.

In today’s recession, we can also expect to turn to less expensive activities — and maybe to keep those habits for years. They may take the form of greater interest in free content on the Internet and the simple pleasures of a daily walk, instead of expensive vacations and N.B.A. box seats. [More]

One less obvious change in how we operate as a society may be an increasingly favorable view of women in higher positions of power in business.  Testosterone-laced traders seemed to have made a bit of a mess, and one answer is to leaven the decision-making groups with more females.

Wall Street is one of the most male-dominated bastions in the business world; senior staff meetings resemble a urologist’s waiting room. Aside from issues of fairness, there’s evidence that the result is second-rate decision-making.
“There seems to be a strong consensus that diverse groups perform better at problem solving” than homogeneous groups, Lu Hong and Scott E. Page wrote in The Journal of Economic Theory, summarizing the research in the field.
A fascinating British study supports that conclusion with evidence from the drool of financiers. The researchers, using the saliva of male traders, tracked natural variations of testosterone in the morning and the amount of profits they earned for the firm that day.
“We found that a trader’s morning testosterone level predicts his day’s profitability,” reported the study, published last year in The Proceedings of the National Academy of Sciences. Higher testosterone meant more risk-taking and, usually, more money.

On its own, that might suggest that men have an advantage on the trading floor. Yet the same study also suggested that elevated testosterone levels could lead to greater assumption of risk; high testosterone levels “may shift risk preferences and even affect a trader’s ability to engage in rational choice.” In other words: when male traders crash ... boy, they crash. [More]

For me this idea of women in financial leadership positions rings true, as I have worked with a woman banker for years and her attitudes help offset my ruggedly manly brain malfunctions. I have also noticed mixed committees at church or Farm Bureau seem to be able to get more done with less hassle. Maybe we're about to improve productivity by simply acknowledging this capability in our midst.

Oddly this change may come about partly because we could soon have more women at work than men as this is shaping up to be a male-targeted recession.  The longer the recession goes, the more likely this outcome could be.

The proportion of women who are working has changed very little since the recession started. But a full 82 percent of the job losses have befallen men, who are heavily represented in distressed industries like manufacturing and construction. Women tend to be employed in areas like education and health care, which are less sensitive to economic ups and downs, and in jobs that allow more time for child care and other domestic work.

“Given how stark and concentrated the job losses are among men, and that women represented a high proportion of the labor force in the beginning of this recession, women are now bearing the burden — or the opportunity, one could say — of being breadwinners,” says Heather Boushey, a senior economist at the Center for American Progress.

Economists have predicted before that women would one day dominate the labor force as more ventured outside the home. The number of women entering the work force slowed and even dipped during the boom years earlier this decade, though, prompting a debate about whether women truly wanted to be both breadwinners and caregivers.

Should the male-dominated layoffs of the current recession continue — and Friday’s jobs report for January may offer more insight — the debate will be moot. A deep and prolonged recession, therefore, may change not only household budgets and habits; it may also challenge longstanding gender roles. [More]

All things considered, I think we will not be the same society as we were when all this is over. Of course, that is a "well, duh" statement, but something about this experience seems to suggest widespread and fundamental changes lasting for decades.

I think agriculture will not escape this transition either.

No wonder they sleep so much...

A baby's day at the office.



OK, I'm a grandpa.  And I loved it.

[via infonation]

More than you want to know...

About vultures.

Some visitors even stone the poor vultures, according to a zoo curator. Unjust though this is, it's understandable that we find the carrion-eating birds gruesome. Most of us would rather not think of ourselves as meat, and the details of vulture dining are hard to get comfortable with. Vultures, whose name comes from vellere, Latin for to tear, begin their eating at vulnerable spots on the carcass—the anus and eyes.

...

As they ride the wind, vultures seek dead things, not dying things, using a sense of smell far more highly developed than any other bird's. They can detect a dead mouse under leaves from 200 feet up. They are discriminating, preferring corpses between two and four days dead. (The turkey vulture entry in the definitive Birds of North America Online does note, "Takes live prey occasionally in unnatural situations.")

Another misconception, and one that has caused farmers to shoot them, is that turkey vultures spread disease. In fact the opposite is true. Something in the vulture gut allows them to digest and destroy the agents of diseases such as cholera and anthrax. If another carrion-eater—rat or coyote or hyena or dog—disposed of the infected carcass, contamination would be spread.

To those who prefer not to have vultures pooping on their building ledges or roofs or decks, Lynch says, "Their waste is as clean as any waste can be." But there is some threat to human beings from the other end of the vulture digestive system. If adults are threatened when nesting, they throw up on the intruder or play dead. (The latter seems a poor strategic choice, given their companions.)

[More - and you'll be too grossed out to stop reading]

I sometimes think we may be "unnaturally selecting" wildlife for their adaptability to human encroachment. For example, deer that can avoid cars or live in suburbs.  In the same way, maybe we are selecting from faster take-off vultures with our bountiful roadkill.

OK, it's just a theory.

Another reason to back off...

I have long been troubled by the aggressive public posture of biotech proponents.  To be sure, the scale-up response theory of public debate was popular in other PR campaigns as well.  But if it ever had a valid moment to be used, I think it's over.

Biotech will win over the public in several ways.

1. The lack of bad news.  Its been nearly two decades since GM crops were introduced and there aren't any photos of cows staggering or mothers weeping at gravesides.  And it's not for lack of effort by opponents.
2. Generational change.  Older, more conservative and scientifically disinterested folks are being replaced with cohorts more at ease with science barely 20 years old.  It's not revolutionary if it's always been around when you were.
3. Wider benefits. The long slog to find high-impact uses for biotech in medicine is gathering payoff momentum.  Which is preamble to this story:

The US Food and Drug Administration yesterday approved GTC Biotherapeutics Inc.'s ATryn, an anticlotting drug made using genetically modified goats that live on a farm in Charlton. GTC engineered the herd to secrete a special therapeutic protein in their milk.
"It's really a milestone event," said Eric Overstrom, chairman of biology and biotechnology at Worcester Polytechnic Institute, who collaborated with GTC on some of its early research using goats. "This adds to the toolbox for the pharmaceutical industry."
Though ATryn is likely to have limited marketing potential because it would serve a relatively small pool of patients, the drug's approval could clear the way to produce many more drugs with genetically modified animals, an approach nicknamed "pharming."
European regulators approved the drug - and the novel production technique - in 2006.

In addition to goats, Overstrom said, drug companies could potentially use other animals, such as cows or rabbits, to produce drugs in their milk, blood, or even urine. Overstrom said animals could be particularly helpful in cultivating enzymes and other large molecules that are more difficult to produce using bacteria or individual cells. [More]

While this particular effort will not be a big money-maker, what it will do is start the process of making genetically engineered livestock more acceptable by the usual route - a slew of goat-milk jokes, serious 5-minute talking head debates on news shows; financial analysis of biotech firms in business media, etc.

Just like getting rich, maybe our scheduling for full biotech acceptance could stand some revision.  Instead of being driven by next quarter's earnings reports, we could accept a pace that allows the above factors to work and folks around us to embrace without loss of face or unease.

To push the social validation of biotech even suggests we don't believe our own claims and data. If our science is well done it will endure, and advance past false charges. In the meantime, we can save ourselves considerable conflict by simply moving ahead past the detractors to the future.

Remember, we're winning.

Ideology as policy...

Many folks who haven't lost their jobs or retirement fund yet are interpreting economic data through ideological filters that may arise from devotion to a political philosophy or even religious conviction (am I the only one getting the apocalyptic e-mails?).  For instance, in the most recent newsletter Pro Farmer Editor Chip Flory announces the Right Answer.

"Economic stimulus comes from spending...but NOT government directed spending.  It comes from consumer and private sector business spending." [His emphasis] [Sorry, subscription only]

This seems extreme, especially looking at data from the Great Depression.

Many economists and most citizens (even on the right) think wartime spending revived the economy, in direct contradiction to Chip's pronouncement. While I have heard stimulus skeptics cite WWII as proof New Deal policies really didn't help end the Great Depression, some voices now say government spending gearing up for war did not affect the emergence to growth either.   

OK, then you are left with three choices: it was WWII, New Deal stimuli, or we just climbed out on our own despite both of the above.  I think the latter as a real long shot, and the answer to be mostly attributed to wartime spending.  The point is both the former causes were "government directed" spending.

We may argue (boy, are we!) about the relative multiplier value of various forms of stimulus, but the multiplier for government spending is clearly not zero. Most of all, while theoretically possible, a zero multiplier is really hard to get.

In order to get a zero multiplier (see the Barro article and Barro’s textbook, “Macroeconomics: A Modern Approach” published by Thomson South-Western), one must argue that economic units will anticipate the increased real economic costs, real future taxes, or inflation that results from the way in which the stimulus package is financed. Then, they must re-arrange their economic and financial activities in order to be able to cover the future government levies. A zero multiplier means that for every $1.00 the government puts into the stimulus plan, economic units will remove $1.00 from the spending stream. Thus, the $825 billion stimulus plan would increase real Gross Domestic Product by…ZERO DOLLARS! [More]

 Let me offer countering arguments and actual explanations. Here are some opinions I found useful:

One excellent post by Prof. Chinn has direct relevance to governmental policy initiatives to deal with the economic problems. Her post is based on work by Mark Zandi of Economy.com. The question is: given that the economy needs to be stimulated, what method of stimulation yields the largest economic benefit. The benefit here is expressed as the stimulus multiplier, which is the amount of increase in GDP per unit of stimulus. For example, if we simply gave every person in the country $1, each could go out and buy a McDonald's value menu item. But the benefit doesn't stop there because with the increased consumption, McDonald's has to hire more workers, who in turn consume more; purchase more supplies from its suppliers, who in turn hire more workers, etc. So in principle, a $1 stimulus package can have more than $1 benefit to overall production.

So which economic stimuli had the greatest benefit? The top three were:

• Temporarily Increase Food-stamps (multiplier 1.73)
• Extend Unemployment Insurance Benefits (multiplier 1.64)
• Increase Infrastructure Spending (multiplier 1.59)

The first two items have the obvious benefits of keeping people on their feet, but also provide an extra 64-73% advantage beyond the direct stimulus. Of course these benefits can only be temporary. On the other hand, the third item has the advantage of improving neglected infrastructure -- a long term "capital gain" -- while at the same time providing an extra 60% bang for our buck.

Now for the worst stimulus concepts:

• Make Bush Tax Cuts Permanent (multiplier 0.29)
• Cut Corporate Tax Rate (multiplier 0.30)
• Make Dividend Tax Cuts Permanent (multiplier 0.37)

Since these multipliers are less than unity, it means that for every dollar of tax break, the country's production actually goes down. Of course some small segment of the population may benefit from such tax cuts, but in hard economic times, it's not clear why they would deserve a benefit when the broad population and the overall economy do not. To be fair, a few of the tax cut concepts do a little bit better, most most are break-even at best. [More]

Of course, the actual values are debatable - and that's what is tying us in knots, but to simply see the problem as Good/Bad is a gross oversimplification and freighted with social and political dogmatism. Moreover, we now have evidence the Bush stimulus - a form Chip would approve - was less than a howling success.

Harvard's Martin Feldstein, head of the National Bureau of Economic Research, was one of many economists last winter calling for federal action to avert a recession. "What's really needed is a fiscal stimulus, enacted now and triggered to take effect if the economy deteriorates substantially in 2008," he wrote. He liked the idea of tax rebates, which is what Congress and the president eventually agreed on. How did that turn out? According to Feldstein, it's a failure.

In fact, the news seems to even get worse for economic ideologues.

Yet when the scores are totted up in a few years’ time, the prize for deepest recession may go, not to Britain, but to Germany. Europe’s industrial powerhouse is in freefall. Figures released today showed that German industrial production fell by 4.6% in December, following big declines in earlier months. For a long time Germany’s capital-goods producers thrived on sales to cash-rich oil exporters and fast-growing Asia. No longer. Orders for German manufactures are down by quarter from a year ago. Forecasters think figures released on February 13th will show that German GDP fell at an annualised rate of 8% in the fourth quarter, twice as steep as the drop in America, and worse than in Britain.

Is there no justice? During the good times for the global economy, Germany avoided a housing boom, cut its budget deficit, kept its real wages low and ran a current-account surplus. Its consumers resisted the lure of cheap credit. Yet the German economy seems to be doing far worse than its imprudent peers in America and Britain are. (Japan, another country that avoided the housing and credit booms, is suffering badly too.) Macroeconomics, it seems, is not a simple morality tale, where “bad” borrowers are punished and “good” savers are rewarded. On the contrary: rich economies that depend on foreign demand are more vulnerable than those that rely on foreign capital. [More]

The recession has unleashed a tidal wave of fear which too often manifests itself as unwillingness to move from preset beliefs even when facts suggest otherwise. It is also why the tenor of argument rises to stridency.  We feel we can't afford to be apathetic.

Now throw in the desire to be proven right because we chose the path of virtue and thrift, only to see our investments wither and even our employment threatened. The desire for philosophic retribution is often stronger than our commitment to rational thinking.

But just like we observed when mixing social conservatism with economic policy (Damn the deficit if it advances gets Supreme Court appointments!) the result when mixing rigid and often misunderstood economic ideology with government policy will be just as wasteful and unpleasant.

And this time the consequences could be very painful indeed for most Americans.

Over-stimulated...

It's been hard to post about the stimulus package as the target has been moving, but a few thoughts have popped up.

1. It may just be my perception, but the folks who are not crazy about stimulus spending compared to tax cuts have a large overlap with folks who say Americans need to save more.  Isn't this counterproductive or mildly hypocritical?  The only thing worse than poorly spent stimulus money is unspent stimulus money. A tax cut right now would, like the last stimulus effort, likely be mostly tucked away in anxious consumer savings or paying down debt, I think.  In essence, tax-cutters are counting on consumers' ignoring their own counsel.  In fact, ask yourself what you would do with an extra $1000.
   
2. Looking at results from previous recessions is perfectly valid, but isn't is also possible the consumer response to a tax cut will be different due to the much deeper current of fear around the world right now? With an entire globe nervous and countries - not just companies - failing, I know I am more concerned about this recession than previous downturns in my experience.
3. Calling everything except tax cuts "pork" isn't helpful.  And even pork isn't pork if it's your pork. A significant portion of the stimulus is transfer payments to mitigate the effects of unemployment: extended unemployment benefits, food stamps, etc.  Even economists who think government spending to revive consumption a bad idea don't oppose these payments.
4. Suddenly a mystery of how Pres. Hoover so badly mismanaged his response when he was superbly qualified for the job is partially explained. The basic instinct right now to hoard and avoid debt is the same today as then.
5. Although job losses are not necessarily accelerating, the social effects could as ripples of family-friend connections fan out across almost every sector. Encouraging consumption is not going to get easier, I'll bet.
6. I believe the urgency of stimulus to be the lesser of two evils compared to the possibility of wasteful spending.  Besides, I've always wondered if any spending - government or personal - is ever 100% efficient.
7. Many who claim we are destroying the future with stimulus deficit spending could have been more useful had they spoken up meaningfully say, 8 years ago.  Imagine if we still had a surplus budget instead of a six-year war to contend with.
   

The wide range of strongly held positions on stimulus ideas testifies, I believe, to the anxiety pandemic in our citizens. Debate under these circumstances is very difficult, and frankly, I'm amazed it's proceeding as well as it is.

It shows how negative I can get...

I dunno why, but this graph actually cheered me up.

 

[Click to enlarge]

[More]


Of course, it's not like these guys have had great track records recently.

Why I blog - reason #27...

A brilliant observation by Ray Pelecchia at Exchanges:

Perhaps the biggest irony of the Bernard Madoff case is that Harry Markopolos, the investor-turned-investigator who for years warned other investors and the Securities and Exchange Commission that Mr. Madoff was running a Ponzi scheme, today is haunted by regrets that he was not more effective in getting others to heed his whistle blowing, according to today's Wall Street Journal.
Mr. Markopolos shouldn't fault himself; rather, he deserves immense credit and appreciation. He did more than anyone else to sound the alarm. According to the article, he did manage to warn off some prospective Madoff investors. The SEC inspector general is investigating how the agency missed the alleged fraud, but surely Mr. Markopolos bears no blame. He sent the SEC and investors a detailed 19-page analysis, listing 25 red flags about Mr. Madoff's supposed investment results.
Certainly, any failure to convince others was not due to lack of effort. Perhaps Mr. Markopolos lacked only an effective medium to communicate his warning. Here's a thought experiment: What would have happened if Mr. Markopolos had blogged his analysis? That is, what if he had posted the entire piece on a blog, under his name or a pseudonym?
We'll never know the answer, but here's what I think might have followed:

• The post would have quickly spread far and wide among traders and investors. It's a small Street, as the saying goes, and an analysis raising questions about the investment results of a prominent name such as Madoff would have sent e-mails flying.

• Those who had money invested with Mr. Madoff -- or who were thinking of investing -- would have done the same math that Mr. Markopolos had done, undoubtedly reaching the same conclusion. The resulting rush to pull money out and the avoidance of adding new money would have meant a faster end to the alleged Ponzi scheme. [More worth reading]

It is the speed and connectivity of blogs that allows them to more closely match the information flows of today. I agree with the above speculation because I have been alerted to many incoming (heh) troubles by following a link or two or googling the blogs and news.

Blogs have arguably moved transparency at least two quantum levels higher because it allows whistleblowers and and cranks alike to throw out opinions rapidly for the world to sort out, instead of the judgment of a few editors with biases and blind spots of their own.  The capacity of the blog-reading public to determine useful sources is similarly taking huge forward strides as better minds and tools come into the arena.

Arguably, the current stimulus conversation is much deeper and richer because so many top economists can blog and debate practically in real-time, allowing winning arguments to be easily expropriated (along with buttressing data) by policymakers.  All this occurs without conferences, papers and even compensation. Congress has essentially added an enormous staff who will sort through the details and logic simply for the delight in finding the howling error and crying "First!"

Also, the power of bloggers and search engines to referee/score commerce is becoming a factor in consumer economics:

THOSE of you who watched the Superbowl may have seen an advertisement for Cash4Gold (whose ads are omnipresent on the airwaves, at least in my area). The company's business model is this—they send envelopes to folks who request them. Those folks send back any old gold they have lying around, and Cash4Gold sends them money. How could this business model work? Well, obviously, Cash4Gold is paying less than the market price of gold to their "customers".

About two-thirds less, according Rob Cockerham, who wrote as much on his website, in a post that was subsequently linked all around the internet. The linkage meant that his post became one of the top Google returns for the search "Cash4Gold", which apparently was bad for Cash4Gold's business. How do we know? Well, they sent Mr Cockerham a letter: [I don't want to spoil the ending of this post, so please follow to read]

If this isn't proof of making more efficient markets, I don't know what is. We may not need so much more government regulation as we do affordable broadband access for our citizens.

Free wisdom [although you have to sort for it yourself] is proving to be a blessing of increasing magnitude for our globe.  In addition, since the value of output is decided by readers, not the media, the threshold for participation is very low.

Even I can try to advance the collective understanding from my corner.  And so can you.

Computerized hand-written notes...

Clearly an oxymoron for our times. Has your handwriting deteriorated to a semi-legible signature on credit card stations?  For that matter, are they still teaching penmanship at all?

I'm always embarrassed by my thank-you notes (and it gives me too easy an excuse not to do them). 

Well, this could be the answer: create your own handwriting font.

[Full instructions and website]

You'll need access to a scanner.  And it's free!

I'll let you know how mine works out.


[via mefi]

In case of stimulus...

Somebody wake me up.  I have been wrestling with my rational and emotional reactions to the various parts and predictions on the stimulus effort in Washington.  Because it is so very big and very broad, I think several minds have simply given up and retreated to ideological redoubts to lob criticism from. The bill(s) as presented certainly offer plenty of targets.

For me the lingering question is the the relative efficiency of government spending compared to tax cuts. Historically, I think the data show tax cuts to give a larger multiplier and hence more GDP per dollar of stimulus.  But will those numbers apply this time?  Megan McArdle comes closest to my thoughts:

I'm agnostic on the question of tax cuts vs. spending, which makes me an oddity among most econopundits.  The complaint that spending is spent while tax cuts are often saved leaves me cold, because I think this focuses too much on that measured GDP figure, and not enough on welfare enhancements.  Right now, most households that save $500 by putting it in the bank or paying down debt will gain a big boost in welfare, because they'll worry that much less about credit card payments, or potential emergencies. 

On the other hand, given that the banks have really cut back on the credit they're willing to extend, it is worth worrying that that stimulus will stop dead with the consumer--it won't provide income to any other consumers who can then breathe a little easier.  But that raises two further concerns:  will we stay in a liquidity trap (I'm not sure we will), and if we do, will the people the government buys from spend their earnings, or save them?  If the latter, the multiplier isn't too high.

What I'm not agnostic about--and neither should any serious proponent of stimulus be--is the difference between stimulus now, and stimulus two years from now.  Spending may have a higher multiplier, but if you want an output shock, the immediacy of a tax cut far outweighs any possible benefit of a high speed rail project that's going to be built just as soon as we can design it, and get the EIS, and clear the public hearings . . .


So.  It's time to admit what we already know:  proponents of the stimulus are in favor of this package in large part because they favor a fairly large transfer of resources to the public sector, and the stimulus is a good way to achieve that.  There is, in fact, nothing wrong with this belief, for all that I disagree with it.  And most of the opponents of this package are opposed just as reflexively. [More]

I tracked down some information that touches on this question. Basically, I think the dispute in my mind concerns the MPC - the marginal propensity to consume.

Investopedia explains Marginal Propensity To Consume - MPC
Let's illustrate this with an example. Suppose you receive a bonus with your paycheck, and it's $500 on top of your normal annual earnings. You suddenly have $500 more in income than you did before. If you decide to spend $400 of this marginal increase in income on a new business suit, your marginal propensity to consume will be 0.8 ($400 divided by $500). 

 The feeling I have is the current of fear among our citizens is much stronger than experienced in previous downturns - and worse still, it is growing with ever layoff announcement. Tax cuts will likely be squirreled into bank accounts, where they could stop circulating as Megan notes above.

Part of the question deals with the temporary-or-permanent argument for a tax cut. Temporary cuts are saved, broadly put, and permanent cuts are more likely to be spent and raise consumption according to conventional thinking.  This depends of course how forward-thinking consumers are, and my hunch is "not very" at this moment.

Consequently, I can see the case for both spending and tax cuts, especially a payroll tax cut. At least, I can't definitively rule either approach out as ineffective. That said, we may be about to over-politicize the issue, and some scenarios are not inspiring.

But Democrats are ready to assume the worst and play ball with Republicans according to a story in today’s New York Times, despite the fact that the GOP is pretty adament that only major changes, including more tax cuts and reduced spending, could earn their support. All of which points to a scenario eerily similar to that in the House — Democrats water down the stimulus with sops to the GOP, only to find themselves with little to no Republican support when it comes time to vote.
Nobody wants to play chicken with the fate of the economy hanging in the balance, but it may be time to call the opposition’s bluff. An actual defeat for the stimulus would cause havoc on Wall Street that would make the market’s plunge in the wake of the bail-out’s initial defeat look pleasant. A scare like that might shatter GOP solidarity once and for all. The alternative, in any case, is an empowered GOP minority, that will kill or maim legislation for the rest of the Congressional term. [More]

It is even possible that inaction is better than a stimulus bill, but I could find few experts who make this case. And it would take more political courage than seems to exist to stand pat while unemployment soars. What you can find, however, are strong cases that serve established political positions. Which suggests to me that even our leadership has little conviction on the correct course of action, and hence is sticking with what they know.

At the very least some bipartisan compromise might steady our confidence in government as capable to do something. But I'm afraid Republicans are worried that any uptick in the American mood will redound to Obama.  I think many in the House are genuinely torn between being re-elected and improving the economy, since it will be hard for them to get any share of the credit.

The fact that we have hardened congressional districts into "safe" enclaves of large conservative or liberal majorities only entrenches this thinking, as the folks back home do not reflect the country as a whole. Senators usually rise above this influence, so if compromise is possible, it will have to occur there.

Meanwhile Democrats have not come close to satisfying their hunger for political revenge, which has to be part and parcel of the obviously bloated spending portions of the bill. Indeed, it appears some Democrats are trying to use the stimulus bill the way Republicans used the votes on Iraq funding. The fear  - and resultant anger - that surges through America distorts thinking on Capitol Hill as well as Main Street.

I think Matt is right. Another two weeks of bad economic news will pressurize the atmosphere to an extreme, and the political and economic factors at play could be a combustive mixture.

This sounds like really good news to me...

There seems to be a connection between Alzheimer's and diabetes. While startling to me, I guess this has been a line of thinking for several researchers for some time.

The discovery that insulin may slow or prevent Alzheimer's-related memory loss fuels existing theories that the disease may be caused by a third type of diabetes.
Persons who have type 2 diabetes do not produce enough insulin, or the body does not use insulin properly. Newer research has suggested that a "type 3" diabetes may also exist. Evidence has shown that brain cells need insulin to survive and that a drop in brain insulin levels leads to brain cell damage. Memory loss can occur if the cells that die are located in the hippocampus.
"Recognizing that Alzheimer's disease is a type of brain diabetes points the way to novel discoveries that may finally result in disease-modifying treatments for this devastating disease," Sergio T. Ferreira, a member of the research team and a professor of biochemistry in Rio de Janeiro, Brazil, says in a news release. [More]

As more of our lives are touched by Alzheimer's, and our longevity increases the odds of it being a factor in our own later years, any advance that even slightly demystifies this ghastly affliction is welcome. Tying it to a familiar, albeit potent, medical foe is a start.

Blogging note...

If you check my schedule, you'll note these are busy weeks traveling for me.  More to the point, I'm finding harder to get reoriented in various hotel rooms and post much.  I'll try to get 4-5 per week, but the stuff I'm learning actually being with live people is extremely interesting right now.

For example:  the guys in Edmonton were talking about the buzz there that a Canadian company (or companies) could be a bidder for some of the Verasun facilities.

One way or another, we're going to find out something about business model for ethanol next month. 

Meanwhile, IL Corn Growers can't back the stimulus plan because it doesn't spend enough on their pet projects.

If this isn't whining about about a slow bartender on the Titanic, I don't know what is. Agriculture is doing better than about 90% of folks and we still can't shift our focus from locks and dams to unemployment and lack of health care.

We will soon, I think.  If this economy picks up speed to the downside, our demand destruction will leave any new locks standing idle.  I'm not sure grain farmers, who are arriving late to this catastrophe will appreciate the nature of this recession until job losses touch their immediate circle.

Interestingly, this position puts the ICGA alongside Republicans who want to strip exactly that kind of pork barrel spending out in favor of tax cuts.  I'll bet those are interesting Capitol Hill visits.

Tobacco's back...

For all those who think farm programs are needed to provide a secure supply of farm output, another stark refutation now emerges from our fields: tobacco.

In 2004 the government got out of the tobacco business, and since then everything has changed. Gone are the price supports that kept the cost of American tobacco artificially high. And with the quota system gone, farmers can raise as much as they’d like wherever they’d like. To many, tobacco has become the poster child of how free global markets are supposed to work.

“We’re seeing that an agricultural sector can prosper and function well without those government mechanisms,” said David Orden, an economics professor at Virginia Tech and a researcher on agricultural policy.

Orden said the theory was that taking away the quota system would allow more production to take place at lower prices, and that would stimulate demand.

Which is exactly what has happened. Tobacco acreage has increased 20 percent in the last two years. Instead of bringing ruin, the government’s exit has brought rebirth for many growers like Keugel. [More]

Of course, our opinions on tobacco are quite different than radishes, but the market principles are the same. Well, except you can't get addicted to radishes (as far as I know). Still, Big Tobacco is doing some amazing stuff to counter the overwhelming outcry against smoking.

Consumers—heck, let's just call them what they are, addicts—seem to be going with the transition. According to Helliker:

[M]ore Americans are continuing to give up smoking, helping to push cigarette consumption down about 3% each year. ... Morgan Stanley estimates that U.S. consumers spent $4.77 billion on smokeless tobacco in 2007 versus $78 billion on cigarettes. Smokeless-tobacco sales have been increasing about 5% or more a year. ... "There are probably in excess of 400,000 adults switching to smokeless each year," says Seth Moskowitz, a spokesman for Reynolds American.

Two months ago, I called smokeless tobacco "carcinogenic, addictive, and gross." But guess what? It's becoming less gross:

For many people, smokeless tobacco conjures up an image of a wad of chewing tobacco bulging from the cheeks of users who spit brown juice. Instead, recent products consist of dissolvable pellets or tiny pouches of tobacco that reside invisibly in the mouth and induce no spitting.

And it's becoming less carcinogenic:

One recent study showed that some newer brands, with names like Ariva, Camel Snus and Marlboro Snus, have sharply lower levels of a dangerous carcinogen than do older varieties of smokeless tobacco, such as Copenhagen and Skoal. Britain's Royal College of Physicians, which sets health standards in the United Kingdom, has said smokeless tobacco is between one-tenth and one-one thousandth as hazardous as smoking, depending on the specific product.

So now we're down to addictiveness. And that, too, is adjustable:

The December study also found that Marlboro Snus contained a very low level of nicotine. By contrast, Camel Snus offers a jolt of nicotine that "has the potential to satisfy those smokers who are looking for a substitute to smoking, and to keep them addicted to this product," the authors said.

 [More of a three part post on the advances (?) in the tobacco industry]

I don't smoke and I don't find smokeless tobacco appealing, but it is clear many in farming do. And when Martin (first story) told me about growing tobacco in Illinois, I was stunned. It's easier to simply label it as evil and not bother with the science, I think, than to ask what exactly is our problem.

But of course, what if we did that for marijuana?