A little weekend humor...

There's a funny and poignant article over on The Onion definitely worth a few minutes of your weekend.

Nation Instinctively Forms Breadline

California unemployment in double-digits

via Reuters:

California's unemployment rate rose to 10.1 percent in January, its highest level in a quarter century, as recession tightened its grip on the most populous U.S. state.

Weakness in the housing and consumer sectors helped drive the jobless rate up from a revised 8.7 percent in December and 6.1 percent in January 2008 and to above the national average in January of 7.6 percent, state officials said on Friday.

Economist Jon Haveman of the consulting firm Beacon Economics said he expects California's jobless rate will climb to the mid-10 percent range and settle there for much of this year.

"It's headed north," Haveman said, noting his outlook reflects Friday's report that the U.S. economy in the fourth quarter shrank at a 6.2 percent annual rate, the deepest contraction since early 1982.

"Things are just simply worse out there than anticipated," Haveman said.

LINK

Buffet: Economy "In Shambles" for 2009

Warren Buffet (whose company's stock value has been cut almost in half due to stock market losses) doesn't have a very rosy view of the financial year-to-come. From Bloomberg:

While Buffett and business partner Charlie Munger can’t predict how stocks will perform in 2009, they’re certain “that the economy will be in shambles throughout 2009 - and, for that matter, probably well beyond,” he wrote.

Texas, California experience draught...

via CBS News:

Gov. Arnold Schwarzenegger declared a state of emergency Friday because of three years of below-average rain and snowfall in California, a step that urges urban water agencies to reduce water use by 20 percent.

The drought has forced farmers to fallow their fields, put thousands of agricultural workers out of work, and led to conservation measures in cities throughout the state, which is the nation's top agricultural producer.

Agriculture losses could reach $2.8 billion this year and cost 95,000 jobs, said Lester Snow, the state water director.

LINK

California draught may impact price of food

via the Christian Science Monitor:

The shortage of water for farming will have wide-ranging repercussions. As The Christian Science Monitor notes, California grows one-sixth of all the produce — those healthy fruits and vegetables — eaten in the United States. Agriculture experts say the water cutbacks announced so far will reduce farm acreage by 18 percent this year, enough have wide-ranging economic impacts.

LINK

Sharp drop in US GDP

via the Christian Science Monitor:

America’s gross domestic product, the nation’s output of goods and services, plunged at an annual rate of 6.2 percent in the final quarter of 2008, according to revised figures released by the Commerce Department Friday. That’s the sharpest drop in GDP since the first quarter of 1982.

Economists at the investment firm Goldman Sachs estimate that the decline, coupled with another slide in the current quarter, may end up as the US economy’s worst back-to-back quarters in half a century.

A cutback in consumer spending is not only dragging down US growth, but global growth as well. Japan and the European Union are now in recession, and China’s export-driven economy has downshifted sharply. Now it’s not just that Americans aren’t importing — neither is the rest of the world. A decline in exports by US corporations was one key factor behind Friday’s GDP surprise.

The suddenness of the drop has caught much of the world off guard.

LINK

Bad economy could destabilize foreign countries

via AP:

CIA Director Leon Panetta says Argentina, Ecuador and Venezuela are in dire economic straits and could be destabilized by the worldwide economic crisis.

Panetta told reporters Wednesday that the spy agency has to pay attention to the impact of the recession around the world.
In his first on-the-record meeting with the news media, Panetta said the CIA has to know how the economy is affecting the international policies of China, Russia and other countries.

The new CIA chief says that the spy agency has issued its first daily Economic Intelligence Briefing on overseas economic and political matters for the Obama administration.

LINK

A Funny Sort of Depression?

Victor Davis Hanson has an easy-breezy op-ed out in the San Francisco Chronicle where he points out some prominent negative feedback loops first brought to my attention by Charles Hugh Smith on his blog, although Hanson doesn't use that particular term to describe them. Compliments to him for distilling some dense numbers into a digestible format.

However, here again is the latest example of someone saying "things can't be so bad, because I just saw people buying things at the mall."

I live in southeastern Fresno County, one of the poorest regions of a now nearly bankrupt California. Many people are hurting. Yet to go to the local Wal-Mart is to see late-model cars in the parking lots and plenty of cell phones, iPods and BlackBerrys among the shoppers. Carts are stuffed with consumer goods, lots of food and Easter confections.

I don't know what all is involved in becoming a senior fellow at the Hoover Institution, but I sincerely hope it involves more than an anecdotal trip down the block to buy tube socks.

We (by which I mean America) didn't get ourselves into this jam by the virtue of our tremendous foresight and excellent personal financial management skills. Quite the opposite, in fact. Can we please consider the notion that America won't break it's longstanding addiction to consumerism-as-leisure until it absolutely, positively has to? And that just because we haven't reached that point yet doesn't preclude the idea that the problem is not somehow solving itself?

What exactly is suggesting that we've 'learned our lesson' and are now on the road back? If it's people filling carts at Wal-Mart, then I remain respectfully unconvinced.

Outlook for global economy worsening.

via Marketwatch.com

Global real gross domestic product is expected to contract 1.2% this year, a steeper decline compared to a previous forecast of a 0.5% contraction, said economists at IHS Global Insight in a research report on Thursday.

Recent economic data indicate that the U.S. economy is still in a "free fall," they said.

I don't claim to have a second sight on where all this is headed in the short-term, but I'm getting a lot of good insights on Obama's various stimuli from Paul Krugman's blog (as usual).

Unemployment claims spike.

From CNN Money:

The number of Americans filing initial claims for unemployment insurance spiked, and those living on unemployment benefits hit a record high, according to a government report released Thursday.

For the week ended Feb. 21, 667,000 Americans filed initial jobless claims, up 36,000 from a revised 631,000 the previous week. That's the highest figure since October 1982.

Economists polled by Briefing.com were expecting claims to drop to 625,000.

In a sign that more jobless Americans are having trouble finding work, 5,112,000 continued on unemployment for the week ended Feb. 14, the most recent data available. That's the highest number since the Labor Department began keeping records since 1967.

LINK

The New York Time Machine

Nice to know that not everyone is letting reality get them down. Over at the New York Times site, they've got a calculator set up to help you calculate how long it will take until it's 2006 again and everything is back to normal.

The Patient is Still Almost Dead

This is just a garden variety weekly stock update, but it had an interesting metaphor included in the quotes.

"Financing is the blood which runs through our nation's veins. It's what keeps us alive," said Lawrence Creatura, a portfolio manager at Federated Clover Investment Advisors.

He said the talk of nationalizing banks only underscores the troubles with the economy.

"Things are clearly not normal. It's not healthy. The patient was on life support, and now what we're talking about getting out the paddle with respect to nationalization," Creatura said.

We're already getting out the paddles? Holy hell, what if this gets worse? This is going to sound like an episode of House before long.

Quality human capitol is possible upside to finance bust?

Great post over on Freakonomics about the possible benefits of high quality talent flowing out of the financial sector and into other, more (possibly) worthy enterprises. Now if we could just get charities set up with multi-million dollar bonuses and golden parachutes.

Sidenote: created a new post category today, "upside." Let the rampant optimism flow!

LINK

But my arm is dry...

Paul Volcker, a top advisor to President Barack Obama, on Friday said that the global economy may be deteriorating even faster than it did during the Great Depression. [LINK], and [LINK]

Jimmy Carter, ex-president of the United States, says there is no comparison. [LINK]

This is essentially the same as saying "I think it will rain tomorrow because I have watched weather reports that say it will rain," and "I do not think it will rain tomorrow because I am sticking my arm out the window and it is not raining at this moment."

How are We Coping, or: Are We Even Paying Attention?

Great post and very lively comment thread going on over at Boing-Boing about how people are seeing and dealing with the unfolding economic downturn.

In my day-to-day, I (not surprisingly) meet very few people that have the all-over rounded and informed worldview that Cory Doctorow does, and therefore I still take a lot of guff for being worried about these things, or even mentioning them in casual conversation. If I can say this without coming off as haughty, most of the people I talk with about this a) have very little actual knowledge of what is occuring, the extent to which it is, and why, b) retain a firm and entrenched belief that these issues will work themselves out in a completely satisfactory manner that requires no thought, effort or attention on their part, and c) don't really see how what's going on applies to them, or care. And I mostly interact with young, intelligent, college-educated people.

I realize full-well that many people do not have the luxury of free time allowing them to remain constantly informed on every current event, or the privilege of enough education to understand the wonkier details that (unfortunately) never get distilled down far enough to be absorbed by the mainstream populace (a topic that deserves it's own lengthy post, at least). However, I often marvel at the depth of knowledge and memorization that most Americans possess on the subject of endless sports statistics, or the minutiae of celebrities' personal lives, and wonder if all that mental effort couldn't be being put to a little bit more practical (I won't say 'better') use?

Even Chicken Little, when she thought the sky was falling, knew what both "the sky" and "falling" were. I fear our current situation will eventually find Joe America running around the proverbial barnyard yelling "Something's wrong with the thing!"

Most frustrating is the knowledge that when this thing gets worse, I will be subjected to months worth of mainstream media coverage whose basic theme will be how the majority are "shocked... shocked" that things played out the way they did, shaking their head as they spin the Wheel of Blame to see whose name will roll around this time. We can safely assume it won't be their own.

I am also frequently faced with criticism and/or hostility for discussing these issues without, shall we say, boundless optimism, even when the currency of my argument is exclusively facts. There is still more than a pinch of that old superstition in the air that says thinking about things in a negative way will result in an actual negative impact upon them, and vice versa. Granted, consumer confidence is a recognized factor in how this thing is playing out... so on a macro-scale that may well be true... to an extent. But when a positive outlook comes at the expense of actual knowledge about the situation, wishful thinking just seems like the easy way out.

And if there's anything we can all agree upon concerning the economic crisis, it's that there is no easy way out.

The Semantics of Depression

An interesting and somewhat humorous exploration hints at the idea that the terminology used by our leaders and media is as much a semantic squabble as it is hard information.

"Fortunately, the D-word itself provides an easy way out. Unlike recessions, which are precisely determined as a function of unemployment, growth and other such things by the National Bureau of Economic Research, depressions have no clear-cut contemporary definition. Depression is a historical rather than an economic term."

LINK

A World Without Water?

Some background info and a barebones interview with Dr. Peter Gleick, founder and president of the Pacific Institute concerning the possible future scarcity of water.

We need to do two things, broadly. We need first to slow the rate of climate change. The second thing is that we need to start adapting to the climate changes we can't avoid. And the best way to say it is that we need to avoid the unmanageable and manage the unavoidable. We need to avoid the kinds of climate changes that will, in the long run, be catastrophic. And we need to start managing those climate changes that we know we aren't going to be able to avoid because of the gases in the atmosphere and the inability of policy-makers to deal with the problem.

LINK

IEA Predicts 2010 Oil Supply Crunch...

The International Energy Agency said on Monday there could be an oil supply crunch from 2010 once global demand recovers and the impact of delayed investment crimps future supplies.

The agency, which advises 28 industrialized countries, is concerned that some oil producers are deferring projects to expand supply. It expects oil demand growth to resume next year after its first drop in a generation.

Oh yeah. Cause by 2010, we'll have shooed away this pesky "worldwide financial crisis and ground-up failure of market-driven capitalism" thing for sure.

Am I the only one thinking that the IEA ought to be looking a little further past the end of it's own nose, especially on this particular topic?

LINK

"The Obama Effect" is about guns now?

Not surprisingly, the somewhat-irrational fear of being seperated from one's guns by a liberal president has led to a sharp uptick in sales of weapons and ammunition in the US. Because, you know, taking your guns away is definitely something President Obama has time to worry about right now.

At the DFW Gun Range and Training Center, sales are up about 30 percent compared to the middle of last year. They attribute it to the new president.

Ryan Brammer works as a sales associate for the store. "Glocks are a particularly good seller. We can't keep them on the shelf now. Same with assault rifles."

I am not at all against gun ownership, or even the idea that now is an especially good time to own one. I just find it hilarious that this is the logic behind the sales boost. Score one for hyperbole-prone gun sellers/organizations. They're making a killing selling this story to gun owners.

LINK

Financial crisis bigger threat than Al Qaeda, says US intelligence Czar

Retired Admiral Dennis Blair, the Obama administration's Director of National Intelligence, in his first appearance before the US Congress, stated, "The primary near-term security concern of the United States is the global economic crisis and its geopolitical implications."

Traditionally, US intelligence chiefs always preface their opening remarks with either terrorist or nuclear proliferation threats, but Blair's first sentences in his testimony before the US Senate Select Committee on Intelligence was about the economy.

Blair said, "The crisis has been going on for over a year, and economists are divided over whether and when we could hit bottom. Some even fear that the recession could further deepen and reach the level of the Great Depression."

"Of course, all of us recall the dramatic political consequences wrought by the economic turmoil of the 1920s and 1930s in Europe, the instability, and high levels of violent extremism," he said.

"Though we don't know its eventual scale, it already looms as the most serious global and economic and financial crisis in decades," he added.

LINK

Rise in Malaria Rates, Drug Resistance Tied to Climate

Again, this begs the question... are we in any meaningful way capable of forseeing all the possible results of cliamte change?

The malaria parasite is highly sensitive to changes in temperature, and even subtle warming can dramatically increase populations of the mosquitoes that transmit the disease, said ecologist Mercedes Pascual.

Some scientists have argued that climate is not involved in the increasing highland epidemics. Instead, they say, adaptations in the parasite that make it resistant to anti-malarial drugs are the key drivers.

But Pascual said that this "either-or" view is misguided and improperly lets global warming off the hook.

"I think that’s a useless discussion," she said.

LINK

Hydrophobic Sand Could Combat Desert Water Shortages

This appears to have tremendous potential for obvious reasons. Too bad it looks like they're more focused on making a buck than helping to solve a serious obstacle in tackling world hunger. Shame! Fortunately it seems other are on the same track, hopefully with more humanitarian goals.

"As DIME engineer Fahd Mohammad Saeed Hareb explains, their idea is to lay a 10-cm layer of waterproof sand beneath desert topsoil. The hydrophobic sand could serve as a water table to stop water from bleeding downward below the plants' roots. Normally, water quickly trickles down through the sand, requiring that farmers water their plants five or six times per day.

With the new layer of hydrophobic sand, farmers would only need to water their plants once per day, decreasing water use by up to 75 percent. Another benefit of the hydrophobic sand is that it prevents underground salt from passing through the plant roots, which can kill the plants...

...As the population increases and rivers run dry, water scarcity is expected to increase over the next decades in desert regions. In the Middle East and North Africa, 85 percent of the water is used for irrigation, so decreasing this requirement could help meet the urban demand and possibly prevent future humanitarian disasters."

LINK

In My Country, Underpants Trade for You

Russia has seen a small but noticable increase in larger-scale (i.e. companies and corprorations, not just individuals) bartering, due to a shortage of hard available currency.

"All this evokes a bit of déjà vu. In the mid-1990s, barter transactions in Russia accounted for an astonishing 50 percent of sales for midsize enterprises and 75 percent for large ones.

The practice kept businesses afloat for years but also allowed them to defer some fundamental changes needed to make them more competitive, like layoffs and price reductions. It also hurt tax revenues.

The comeback is on a small scale so far. The most recent statistics available, from November, showed that barter deals made up about 3 to 4 percent of total sales, according to the Russian Economic Barometer, an independent bulletin. Nevertheless, economists are taking note."

I am especially interested in the ways that the internet has widened the potential of bartering from a largely local or word-of-mouth dependent activity into a more widely accessible practice... i.e. the marriage of the oldest form of trade with the newest. I am also always curious as to how our modern concept of bartering would be forced to change if the internet were removed from the equation.

Under current economic conditions in most 1st world countries, bartering is just another incarnation of the second-hand economy, usually less preferable to sale of items for outright cash and sometimes seemingly an avenue of last resort to rid oneself of items that cannot be sold any other way. However, in a shortage of currency or lack of retail purchasing opportunity, I think bartering could quickly come to the forefront as a dominant force in local economies, especially when married to specialization and small-scale production/manufacturing, as a substitute for traditional retail markets.

LINK

The Revaluing of Material Goods, Part 1

Lately I've been devoting a lot of thought to the how's and why's behind the pricing structure of consumer goods, namely in the distinction between their practical and perceived worth, and how that the relation between those factors and their going price changes under various large-scale economic stresses.

Common logic would dictate that in a growing/successful economy, where many consumers are flush to the extent that their basic needs are covered with money left over, that the desire for (and sales of) non-necessary/luxury/status items would increase. This would seem to be partly due to the economic ability of the individual consumer, but also to the convenience-oriented marketplace in which the consumer resides.

The average modern city/suburban dweller is used to being able to get whatever they need, whenever they need it, with a minimum of travel/effort (provided they can afford it). The modern retail world is constantly bending over backwards to make our purchases of goods and services more convenient and desirable in an effort to compete for our business. Competition between various brands/chains/outlets, combined with the short-term rewards of a globalizing economy essentially guarantees that our basic needs as consumers can be met not only easily, but in many cases, cheaply.

Then, in most cases, once a person's needs are safely accounted for, consumer activity quickly turns to fulfilling wants instead. Now, many non-essential items have extremely useful and practical applications, or allow us to make a task that is already possible much quicker or simpler. So if a delineation must be made between the two opposing camps of consumer goods (and I say it must), I would draw it between: goods whose worth is based on their practical value, and goods whose worth is based on their perceived value (luxury, status-associaton, non-practical rarity, etc.).

In our current economic situation, many of the perceived-value goods are significantly more expensive and "desirable" than the practical goods, for obvious reasons. But this common paradigm could be forced to shift in the face of a floundering economy. If any part of the 'web of convenience' (complex and expensive supply chains, dirt-cheap prices on imported goods, ubiquitous and redundant retail outlets) were to fail, then the entire cost structure of the necessary goods sold in those stores could increase quickly. A rising cost or reduced availability of necessary goods would most likely lead to a reduction in demand (although perhaps not, sadly, cost) for perceived-value goods, due to the inelasticity of demand for the necessary ones (hey econ majors/buffs... did I get that right?). Simply put, stuff you actually need may well end up being more valuable than stuff you don't at some point in the future. Which doesn't matter now, because if you're reading this chances are you have everything you need and a whole hell of a lot more (including a bunch of crap that you probably don't even need).

If you get a spare moment soon, take a look around you in wherever it is that you live and take a quick inventory of items whose practical value is trumped by their perceived value. What percentage of your possessions fall safely within that category?

In part two, I will attempt to define a tiered system of goods as ranked by practical worth in a troubled economy.

Pace of global warming faster than previously predicted.

"The pace of global warming is likely to be much faster than recent predictions, because industrial greenhouse gas emissions have increased more quickly than expected and higher temperatures are triggering self-reinforcing feedback mechanisms in global ecosystems, scientists said Saturday.

"We are basically looking now at a future climate that's beyond anything we've considered seriously in climate model simulations," Christopher Field, founding director of the Carnegie Institution's Department of Global Ecology at Stanford University, said at the annual meeting of the American Association for the Advancement of Science."

LINK

IMF: "depression" in advanced economies.

From an article in the International Herald Tribune:

"The G-7's finance ministers and central bankers are meeting on Friday and Saturday before releasing a statement. On the agenda are how to thwart protectionism, overhaul financial oversight and end what the International Monetary Fund calls a depression in advanced economies."

This is the first time I've seen the word Depression used, in print, to directly describe the current world economic situation.

LINK