The Big Elephantine Squeeze

The obvious is sometimes so much so that nobody [wants to] pay attention. The media finally sounds the big bugle about the elephant that's been smelling up the room all this time. None of it is rocket science, just [personal] finance 101 that the "punditry" routinely chose to glaze over on the tube and [less so] in print: flat wages + high debt + high market/GDP growth = ?

And it doesn’t help that “pundits” - chatterboxes or slick-talking snake oil salespeople are just as descriptive - play musical chairs knowing that growth can grind to a halt when credit’s overstretched to breakpoint. Yet they fear crying wolf given how vested they are in folks buying into the dogma of everlasting stock market growth - while they divest - business cycles be damned.

Newsweek's "A Widening Credit Squeeze" (August 9th, 2007) aptly frames the issue:

…A credit-card squeeze carries real risks for the U.S. economy overall. “The shift from home-equity borrowing to credit cards is quite costly,” says Smith. Not only are mortgage interest rates about half that of credit-card interest rates, but the interest paid on credit cards isn’t tax-deductible. Smith believes that already-strapped households with little or no savings to rely on will be faced with increased financial obligations that will eventually lead to slower growth in consumer spending. And with consumer spending accounting for about 72 percent of gross domestic product, any slowdown could have a big impact.

Americans are so tapped out financially that they may not be able to stop using plastic no matter how high rates get, says Christian Weller, an economist and senior fellow at the Center for American Progess. “I think credit-card usage could still go up even if rates go up,” says Weller. “The credit market right now is like a balloon that’s being squeezed on the mortgage side and expanding on the credit cards side,” he says. Weller says he’s concerned that credit-card debt has risen dramatically over the past few months, even as growth in consumer spending has slowed. This, he says, is a sign that credit-card borrowing is being used to close a widening household budget gap—that cards are being used to fund housing, transportation and medical care. “I believe what we’re seeing is that consumers are borrowing out of necessity—we’re not talking about a flat-screen TV or iPods here.”

This chart shows how consumer spending has slowed even though credit card use has risen. According to some economists, this may indicate that consumers are increasingly using cards for basic living expenses, rather than luxury items.

Source: Moody's Economy.com, Inc.

For customers who need access to credit but get knocked out of the prime credit-card market due to tightening standards, the only alternative to meet their expenses may be the subprime credit- card market, says Ellen Cannon, assistant managing editor at the financial research group Bankrate.com. And that could put them even deeper into trouble, she says. “What happens with the subprimes is that they’ll give you a $200 credit limit and then they charge you $59 initiation fee and an annual fee of $45. So by signing up, you can be $150 in the hole and your interest rate is 32 percent. It’s highway robbery.”

How long will it take Americans to dig themselves out of their credit hole? Years. “Debt will increase and consumption will weaken in the next year,” says Smith. “But there will come a point when people will either have maxed out their credit or they’ll see their credit rating starting to suffer, and that’s when many of them will decide to get their household balance sheets back in order—probably by sometime in early 2009.” Smith warns, however, that reversing a borrowing trend is “a slow process.” And that’s something anyone who’s ever tried to pay down a big credit-card bill knows firsthand.

I’ve blogged for a while about the overextended American, including a month ago, “It’s the Balance of the Paycheck, Stupid”. That was a response to a posting about the “irrelevance of trade deficit figures”, a oft-popular sentiment during peaks of a financial bubble.

In fact, our growth has run too long on the inferior grade economic fuel that is debt financing, mirroring the Japanese bubble. That bubble was followed by more than a decade of spiraling deflation and economic stagnation that the Japanese are just beginning to recover from.

Now China’s finance ministry’s bold threat recently to withdraw their $1.33 trillion dollar reserves from US treasuries and debt markets if forced to devalue their yuan is doubly potent. (UK's Telegraph - August 10, 2007 - "China threatens 'nuclear option' of dollar sales")

As history tends repeating, a lame-duck administration is acting its part as a modern day Hoover, waiting for the economic fallout to widen before being forced to resort to a last-ditch effort to do something. Even then, it’d be mostly cosmetic laced with rosy sound-bite oratory – doubly impotent & intellectually hallow – as is the low expectations of these past 7 years.

And the non-stop touting of tax cuts as panacea for much of this country's financial maladies, big and small, is a rather sorry linchpin for American economic policy. It also sets a shoddy example and excuse for Americans to heed, akin to deciding to cash the always-plentiful "free-for-now" check-as-cash offers that credit card companies shovel out.

While attractive politically, tax cuts are botched economics when they dig an even bigger financial hole using 100% debt-financing as is the case when a country is in a deep red trillion-dollars+ deficit and chooses to starve itself of tax revenue by refusing to maintain tax rates as is or raise them as needed (like "no voodoo economics" Bush 41 did) and goes about writing a giant nationalized IOU check that in the fine print inevitably also echoes "free-for-now, ballooning-interest-later". All the while, benefits of this tax cut accrue mostly to the wealthy who often reinvest most of that unneeded upside overseas in emerging markets, in order to maximize returns.

And this sums up at root the flaw of the Laffer-inspired "supply-side" economics, in a nutshell*.

Which also means that, bottom line, some serious green and gravy is due Asia and the rest of the world, which they will cash in the not-too-distant future at a time of their choosing, not ours.

* Not-so-nutshell, from Wikipedia:

Estimates of the effectiveness of the Laffer curve

In 2005, the Congressional Budget Office released a paper called "Analyzing the Economic and Budgetary Effects of a 10 Percent Cut in Income Tax Rates" [2] that casts doubt on the idea that tax cuts ultimately improve the government's fiscal situation.

Unlike earlier research, the CBO paper estimates the budgetary impact of possible macroeconomic effects of tax policies, i.e., it attempts to account for how reductions in individual income tax rates might affect the overall future growth of the economy, and therefore influence future government tax revenues; and ultimately, impact deficits or surpluses. The paper's author forecasts the effects using various assumptions (e.g., people's foresight, the mobility of capital, and the ways in which the federal government might make up for a lower percentage revenue).

Even in the paper's most generous estimated growth scenario, only 28% of the projected lower tax revenue would be recouped over a 10-year period after a 10% across-the-board reduction in all individual income tax rates.

The paper points out that these projected shortfalls in revenue would have to be made up by federal borrowing: the paper estimates that the federal government would pay an extra $200 billion in interest over the decade covered by his analysis.

To support these calculations, the paper assumes that the 10% reduction in individual tax rates would only result in a 1% increase in gross national product, a figure some economists consider too low for current marginal tax rates in the United States. [3][4]

The paper appears to focus on Federal government revenue only and does not look at the total public sector revenue (i.e., it does not include increases in local and state government revenue).

The Government's Big Fish Story

Omega-3's (fish oil) are pretty important to one's health. And luckily, there's lots of good choices - from great-quality ones, to super-quality ones. Some rules of thumb that may be helpful:

1 - molecularly distilled: both have no PCBs, mercury, heavy metals
2 - well-absorbed: enteric coated is best absorbed by intestines, latter is emulsified and goes quickly to bloodstream
> taking omega-3's with food, including fats, also significantly increase absorption
3 - high levels of active ingredients DHA+EPA: 200+240mg vs. 230mg+350mg per dose/capsule, respectively
> effective dose varies, usually 1-3 grams a day of DHA+EPA (assumes ~500mg DHA+EPA total per dose = 2-6 dose a day)
4 - naturally preserved: protected with vitamin E

Thanks to MSN.com, below is a well-written, succinct article about Omega 3's:

The Government's Big Fish Story
By Sabrina Rubin Erdely and Denny Watkins, Men's Health

When Randal McCloy was rushed to West Virginia University Ruby Memorial Hospital's intensive-care unit, he was practically dead. The 27-year-old coal miner had spent 41 hours buried 2 ½ miles underground after an explosion in the Sago, West Virginia, mine where he'd been working. His 12 oxygen-starved colleagues had all perished.

"As far as we know, he survived the longest exposure to carbon monoxide poisoning," says Julian Bailes, M.D., the neurosurgeon assigned to the case. McCloy was in a coma and in deep shock, his heart barely beating, one of his lungs collapsed, his liver and both kidneys shut down. Even if he somehow managed to pull through, doctors predicted McCloy would be severely brain damaged, since the carbon monoxide had stripped the protective myelin sheath from most of his brain's neurons. "It's very difficult to come back from a brain injury," says Dr. Bailes. "There's no drug that can help that."

While McCloy was being given oxygen infusions in a hyperbaric chamber, Dr. Bailes was struck by inspiration: He ordered a daily dose of 15,000 milligrams (mg) docosahexaenoic acid (DHA) and eicosapentaenoic acid (EPA) for the miner. In layman's terms?

"Fish oil," says Dr. Bailes.

Several weeks passed. Then, unexpectedly, McCloy emerged from his coma. This in itself was amazing, but he wasn't done. In the weeks that followed, he stunned even the most optimistic experts by recovering his memory and gradually regaining his ability to walk, talk, and see, a turnaround that many in the medical field called miraculous.

Although Dr. Bailes believes the hyperbaric chamber may have worked some magic on the myelin, he thinks much of the credit belongs elsewhere. "The omega-3s helped rebuild the damaged gray and white matter of his brain," says Dr. Bailes, who now takes his own medicine, swallowing a fish-oil supplement each morning. On his orders, McCloy, still recuperating at home, continues to take fish oil daily. "I would say he should be on it for a lifetime," says Dr. Bailes. "But then, I think everybody should."

70's to Now...Omega 3 fatty acids = the building blocks of your Brain and Heart: DHA + EPA
Maybe what fish oil needed all along was a better publicist. After all, this isn't the medical community's first infatuation with omega-3s. Back in 1970, a pair of Danish researchers, Hans Olaf Bang and Jørn Dyerberg, traveled to Greenland to uncover why the Eskimo population there had a low incidence of heart disease despite subsisting on a high-fat diet. Their finding: The Eskimos' blood contained high levels of omega-3s, establishing the first link to heart health. But even though this discovery spurred additional omega-3 research throughout the '70s and '80s, the public remained more interested in other nutrients—none of which had the unfortunate words "fish" or "fatty" in their names.

There are three types of omega-3s: DHA and EPA, found in fish and marine algae (which is where the fish get them), and alpha-linolenic acid (ALA), which is found in plants, seeds, and nuts. All three have health benefits, but those attributed to DHA and EPA have sparked renewed interest in recent years. Studies show that this tag team may not only reduce a person's risk of heart disease and stroke but also possibly help prevent ailments as diverse as arthritis, Alzheimer's disease, asthma, autoimmune disorders, and attention-deficit/hyperactivity disorder—and those are just the A's. Researchers are now exploring if these multifunctional fats can, among other things, ward off cancer and even make prison inmates less violent.

It's enough to make omega-3 geeks downright giddy.

"Omega-3s are fantastic!" says Jing X. Kang, M.D., Ph.D., a Harvard University researcher who made the news by genetically engineering pigs to produce omega-3s in their meat. "Not just for your heart but also for brain function, immunity function, women's health, children's health — I'm amazed at how important they are."

In fact, some experts argue that omega-3s should be labeled essential nutrients as necessary to health as, say, vitamins A and D. "They're involved in the metabolism of each individual cell," says Artemis P. Simopoulos, M.D., a physician and the president of the Center for Genetics, Nutrition and Health in Washington, D.C. "They're part of your body's basic nutrition."

...

Early Man: From 1-lb brain to 3-lb supercomputers
"Not very glamorous, is he?" says Jane Crowther, senior director of Omega Protein's Health and Science Center. It's hard to disagree: I've come to the nation's largest fish-oil refinery, in Reedville, Virginia, and now that I'm face to fin with what a poster on the wall calls "MENHADEN...THE WONDERFISH!" I'm not exactly awestruck. Bony, oily, and without much meat, the menhaden isn't even considered edible by most people. And yet, hidden inside is a substance that some anthropologists claim was critical to our very evolution; without it, they say, we'd still have brains like chimps'.

Ask most scientists and they'll tell you that Stone Age man evolved on the African savannas, developing his big, complex brain as a result of all the animals he'd hunt and eat. But most scientists would be wrong, according to Michael Crawford, Ph.D., who, along with researchers from the USDA, conducted a 2002 study challenging the prevailing theory, which he calls "a load of rubbish."

Crawford, the director of London's Institute of Brain Chemistry and Human Nutrition, argues that many other savanna mammals also subsisted on meat, but none developed our megabrains. "And with their strong jaws and sharp teeth, they were far better equipped to eat flesh than we were," he says. Yet relative to their growing bodies, those animals' brains actually shrank, while man's brain expanded from a 1-pound processor to a 3-pound supercomputer.

What were we dining on that the rest of the Paleolithic crowd wasn't? Crawford has a three-letter answer: DHA. "The human brain is soaking in DHA," he says. "It is the only substance that supports that level of neural development and cognitive function."

And lo and behold, paleontologists have found evidence that early man lived along the coasts of southern Africa, leaving behind mounds of fossilized shells and other table scraps. Crawford points out that catching fish would have been a heck of a lot easier than snaring four-legged prey. Children and pregnant women could wade in and collect mollusks themselves, feeding young brains in the process. Studies show that DHA helps secure the connections between brain cells, especially in utero, when pregnant women can increase their babies' IQs by as many as six points.

While the savanna-versus-seashore debate will continue (Emory University researchers recently fired their own scientific salvo at Crawford's theory), no one can dispute that we're veritable meat-eating machines today. The average American ate only 16.2 pounds of fish in 2005, but consumed 195 pounds of meat. And although our livers can manufacture tiny amounts of DHA and EPA when we eat lots of ALA-rich nuts and seeds, these aren't exactly our favorite foods, either.

"6 and 3 got out of whack"
Changing agricultural techniques have worsened the situation. The natural omega-3 contents of meat, milk, and eggs have plummeted now that our livestock no longer graze on ALA-rich grass, instead consuming corn, wheat, and other grains that are loaded with another group of fatty acids, called omega-6s. In fact, the disappearance of omega-3s from our diets has coincided with an upsurge in omega-6s, mainly in the form of cereals, grains, and processed foods made with hydrogenated oils. Dr. Simopoulos estimates that in caveman days, we ate an equal amount of the two types, but that the average American now eats 16 times more omega-6s than omega-3s.

"That's what's really killing us," says Lands. "The balance of 6 and 3 got out of whack." These two types of fatty acids have a biochemical yin-and-yang relationship: While omega-3s reduce our body's inflammation response, omega-6s encourage it. Each fatty acid is crucial: For example, if your inflammatory response is too weak, you won't be able to fight infection properly. And in theory, the push and pull should create perfect balance. Instead, the excess of omega-6s in our diets may have left us in a perpetual state of inflammation.

"The reason you take ibuprofen and Celebrex and all those nonsteroidals is to prevent the manufacture of these inflammation molecules in the first place," says Joseph Hibbeln, M.D., a neuroscientist with the NIH. "The mental picture I have is of the Dutch boy with his finger in the dike, where the finger is expensive pharmacology, and the flood is omega-6s."

"Put us out of business with fish oil"
Andrew McGeehin had limped for the past half century. "Stupid football," mutters the 83-year-old resident of Allentown, Pennsylvania. He tore up his right knee in his 30s, and despite surgery and drugs, the pain gradually became enough to wake him at night. Finally, McGeehin's orthopedist, Thomas Meade, M.D., suggested that he take an omega-3 supplement. "I wasn't expecting much. But I figured I'd tried everything else," says McGeehin, who began swallowing fish oil along with his usual dose of the anti-inflammatory drug Voltaren. One week later, McGeehin was startled to realize that the stiffness in his knee was gone. He was able to walk with the easy, fluid stride of a younger man.

"Dr. Meade must be a genius!" McGeehin says today, though Dr. Meade himself explains it more modestly: "I read the literature. There's a plethora of evidence supporting the benefit of omega-3s for joint pain." He cites a 2006 University of Pittsburgh study of 125 people with neck and back pain, in which 60 percent of participants reported having less pain after taking omega-3s. And clinical studies on rheumatoid arthritis suggest that patients who take a daily dose may be able to cut back on their meds.

Indeed, in the 2 years in which Dr. Meade has been recommending omega-3s to his patients, he's seen a major shift in his orthopedic practice. "I almost never prescribe anti-inflammatories now," he says. "My staff kids me that I'll put us out of business with fish oil."

"Internal ice pack"
Omega-3s act as a sort of internal ice pack, in part because they spur our bodies to produce several inflammation-lowering substances. "Omega-3s work along the same biochemical pathway as a COX-2 inhibitor, such as Vioxx, but farther upstream," says Dr. Meade, meaning that omega-3s treat the underlying problem rather than the symptoms. And emerging research indicates that this powerful ability to ease inflammation is one of the ways omega-3s may help prevent a number of ailments, including...

Heart attack and stroke
Cardiologists now believe that chronic inflammation triggers the release of artery-blocking plaque. In the most definitive study to date, published in the Lancet, heart-attack survivors who took 900 mg fish oil daily were 30 percent less likely to die of a second heart attack, and 20 percent less likely to suffer a stroke, than those who skipped the supplement.

Omega-3s can guard your arteries in other ways, too, since they also lower triglycerides and make blood vessels more elastic. Add in their ability to improve electrical communication between cardiac cells, thereby preventing arrhythmia, and you can see why omega-3s are a standard part of cardiac care in Europe. If you have a heart attack in Italy, France, Britain, or Spain, the hospital will even send you home with a prescription for Omacor, a "medication" that's superpurified DHA and EPA.

Alzheimer's disease
Though not yet conclusive, research suggests that runaway brain inflammation may cause Alzheimer's disease. In a 2007 study published in the American Journal of Clinical Nutrition, elderly men who consumed 350 mg DHA and EPA daily experienced less cognitive decline than those who swallowed only 15 mg a day. And researchers at the Rush Institute for Healthy Aging, in Chicago, found that people who ate fish at least once a week were significantly less likely to develop Alzheimer's disease than those who ate more turf than surf.

Prostate cancer
It's estimated that chronic inflammation is the culprit in 20 percent of all cancers, and that may include many cases of prostate cancer. In a 2003 Harvard study that tracked nearly 48,000 men over 12 years, researchers discovered that the men who ate fish three times a week were 25 percent less likely to develop metastatic prostate cancer than those who dined on less. However, a recent (and hotly debated) study review in the Journal of the American Medical Association says clear proof of cancer protection is still lacking.

Depression
Could fish be the ultimate mood food? Ohio State University researchers recently analyzed blood samples from 43 older adults and found that a high omega-6 to low omega-3 ratio corresponded to elevated inflammation and more symptoms of depression. This and previous research suggest that eating more fatty fish or supplementing with omega-3s could help us beat the blues.

...

Columbia's Akabas agrees, which is why her Institute of Nutrition has come out with a bold endorsement. "We think the whole U.S. population would benefit from an upward shift in omega-3 intake, and we don't see any downside," she says. "So our recommendation is to not wait until the research becomes definitive. It's time to examine the development of a DRI."

...

Pick the Perfect Fish-Oil Supplement

Purity
When Consumerlab.com tested 41 fish-oil supplements, none was found to contain unsafe levels of mercury, PCBs, or dioxins. One explanation is that many brands are now molecularly distilled to remove any possible contaminants.

Dosage
Ignore the total milligrams (mg) of fish oil, and focus instead on the combined eicosapentaenoic acid (EPA) and docosahexaenoic acid (DHA). You want a supplement that contains at least 500 mg per dose or serving. If you're on blood tinners, talk to your doctor about the best dosage.

Form
Your choice is basically capsules or a liquid. They're equally effective at delivering omega-3s to your bloodstream, so go with the form you think you'll take on a daily
basis.

Fish Burp
Some people experience this as their stomachs dissolve the fish-oil capsule. Beat the burp by buying enteric-coated capsules or freezing regular capsules. Either strategy will cause the fish oil to be released in your intestine instead, says William Harris, Ph.D., a professor of medicine and biomedical sciences at the University of South
Dakota.

Ratio
The ratio of EPA to DHA used in research varies, but most supplements are made with a 3:2 split. This translates to 300 mg EPA and 200 mg DHA in a 500 mg supplement.

Source
Any fish oil will do, be it from mackerel or menhaden, salmon or sardines. Supplements made from algae oil contain only DHA, and those made from flaxseed oil have alpha-linolenic acid (ALA), only a little of which can be converted into EPA and DHA by your body.

Antioxidants
Once inside your body, omega-3s can quickly lose their power due to oxidation. Look for vitamin E, a.k.a. tocopherol, an antioxidant that can neutralize free radicals.

More on Omega-3 Fatty Acids on MSN Health & Fitness:
· Reality Check: Omega-3 Fatty Acids
· The Cholesterol Connection
· Check Your Oil
· Share Your Thoughts on Omega-3s
Provided by Men's Health

http://health.msn.com/general/articlepage.aspx?cp-documentid=100166680>1=102 a 12

The Tale of Two Silent Economies

Coincident to my last post, there is a story in today's NYT about Taiwan being the Silent Hands Behind the iPhone.

It's stunning that Americans are mostly silent, in this case satisfied with ourselves sans any competitiveness policy, other than promoting free-trade (important, but not sufficient in of itself) and outsourcing to the bottom of the value chain, neglecting the bread-and-butter policy work that is the formulation of a top-level national policy to consistently engender next-generation R&D sectors and the basis for the next round of new markets and technologies (and better jobs).

There's no good reason why we shouldn't be accruing the high-end value of this economic supply chain. Consider what happens when Apple eventually outsources the iPhone + iPod's design overseas - perhaps Cupertino can continue to be the bastion of avant garde sales and marketing.

...Taiwan’s evolution from computer-making giant to telecommunications Goliath has gone largely unnoticed in the United States because companies here make most of their money as made-to-order manufacturers, not sellers of their own brand products.

But Taiwan’s industrial makeover has helped its companies remain competitive in a world increasingly dominated by low-cost Chinese assemblers and by Japanese and South Korean companies with strong footholds in high-end components like flash memory chips. The strategy of repackaging — finding new uses for computer components — has paid dividends.

Companies on the island have captured 87 percent of the global market for wireless modems, 84 percent of the D.S.L. modem market and 70 percent of the market for personal digital assistants. In the competitive cellphone business, Taiwan companies made 12.4 percent of the world’s handsets last year, up from 9.8 percent in 2005, according to the Institute for Information Industry, a government-affiliated research center. That share is expected to grow as brand-name companies like Sony Ericsson outsource more of their production to companies here. In all, Taiwan companies produced $31.5 billion in communications equipment and services last year, more than 50 percent above the total the year before, according to the institute, which expects production to reach a value of $46 billion by 2010.

Less than a quarter of that was manufactured on Taiwan, with the bulk made on the Chinese mainland. “It’s been a fairly natural progression because handsets are really a mini-version of the PC, and Taiwanese are adept at adjusting,” said Gary Chia, president of the Yuanta Research Center.

The transformation did not happen by accident. As in much of Asia, the government played an active role in steering businesses into new markets by showering them with tax incentives, cheap property to build factories and research money. Companies on Taiwan have also been able to shift gears smoothly because the concentration of component producers on the island has made it easier to gather the technology and engineers to design and assemble new products....

...The iPhone is a great example of where Taiwan is still strong: reliable sourcing, leading technology and complex integration,” said Allen J. Delattre, chief of the electronics and high-technology practice at the consulting firm Accenture. “Does the average person who buys an iPhone know it’s from Taiwan? Maybe. Do they care? Probably not. But if you look at the companies in Taiwan, they are behind the scenes, and that’s a good place to be because that’s where the value is.”

...The key for Taiwan companies, Mr. Delattre and other analysts said, is to invest in next-generation products early. For example, companies here are fast becoming important players in the development of WiMax wireless and fiber optic broadband equipment. They are again getting a healthy push from the government, which is spending more than $200 million over five years to help create the world’s largest high-speed WiMax network. By next year, with 2,000 base stations spread across the island, companies will be able to start testing new applications, like the sending of video from ambulances on their way to hospitals. “We are trying to make the infrastructure more complete,” said Tsung-Tsong Wu, deputy minister of the National Science Council, which has a $1 billion annual budget. “If the highways are built, companies can go as fast as they like.”

It's the Balance of Paycheck, Stupid

This is homage to a thought-provoking post by Charles Fitzgerald's Platformnomics titled "It's the Balance of Profits, Stupid". Commenting on renowned economists Hal Varian (information) and Gregory Mankiw's (macroeconomics) exchange that bilateral trade balances (aka balance of trade, the source of our big national bogeyman, the trade deficit), both economists suggest the such deficits matter less than you think, when you consider that we Americans are soaking up a lot of the profits.

On the other hand, I suppose what would concern a *labor* (Mincer) vs. an information-(Varian) or macro-(Mankiw) economist is that more than two-thirds of our economy is driven by consumer spending, spurred on by net job gains, concomitant with wages + credit-use growth.

And while we steadily export hourly jobs to China, the same can't be said that domestic jobs are being replaced fast enough by "new economy" markets that stimulate and provide for net new jobs (be it measured by headcount or aggregate wages), as orthodox economic theory prescribes: Think new Boeing Dreamliner as a pertinent business model, which invests in R&D locally, sources internationally for its composite inputs and garners 80,000+ net new high-wage *manufacturing* jobs, or think of Toyota's hybrid investments in Japan while sourcing lower-end car manufacturing to rest of world.

As Mankiw indicated, the economic and trade balance numbers aren't "fake"; rather international trade can be very nuanced and certain views of [bilateral] trade have very little concrete economic meaning. What is troubling for me is that for a while now, many think of new information-based markets as the economic panacea, asserting that as long as corporate profits grow, little else matter.

This faction also imply that a significant portion of corporate profits accrue to workers' [wages]. Others, like myself, assert that growing profits accrue to investors and the owners of capital like Apple's Jobs, but collectively, American workers haven't benefited much, which, according to the Economic Policy Institute (below chart), seems to be disproportionately so.

Source: Economic Policy Institute, “When do workers get their share?” Economic Snapshot, May 27, 2004.
Data from the National Income and Product Accounts, Bureau of Economic Analysis, U.S. Dept. of Commerce.






And thus, unsurprisingly, most Americans have resorted to "house-of-credit-cards" financing that continues to encourage end-to-end economic exuberance, now greatly over-leveraged, to the point that currently the U.S. has a net negative 0.5-1% *dis-savings* rate.

One fundamental indicator of "dis" trend is the stagnant wage growth of the past 6+ years, and, according to the progressive Center for American Progress, the Bureau of Labor Statistics report that the biggest employment gains were:

"...largely concentrated in three industries: government employment, with 40,000 new jobs—all of them occurring at the state and local government level. In addition, health care and restaurants, two sectors that have shown remarkable job strength throughout the past few years, added 42,300 and 34,600 new jobs, respectively.

In comparison, the construction sector, which had provided a lot of labor market momentum before the residential housing boom came to an end in late 2005, added only 12,000 new jobs, almost all of which happened in nonresidential construction. Residential construction employment was essentially flat, reflecting the continued weakness in the housing sector..."

This comparatively weak job growth has also contributed to slowing wage growth:

"...Hourly wages for production, ...workers who make up about 80 percent of the workforce rose by 0.3 percent in June 2007. Hourly wages in June were 3.9 percent higher than a year earlier. This is down from a monthly growth rate of 0.4 percent in May and a year-over-year change of 4.0 percent in May.

This slower wage growth comes after inflation-adjusted hourly earnings already declined in March, April, and May. In fact, after accounting for inflation [~2.5-3% average], hourly and weekly earnings in May 2007, the last month for which data are available, were the lowest since September 2006. That is, because of weak job growth, workers do not have the bargaining power to keep wage growth at least in line with price changes.

Just because job growth is better than expected doesn’t mean that it is strong. It is certainly welcome news that the economy is seeing some unexpected employment gains, but these are happening in a labor market that has been struggling for years to find a foothold. Workers who are burdened by high prices and near-record amounts of household debt need faster job and wage growth, not lowered expectations."

Deficits in the end will matter when the ratio of wages-to-credit reach a critical mass and profit growth collapse as credit-driven expansion slow drastically, unless wages rise and we pay down our debt by saving a larger portion of our income.

Which ironically means that, meanwhile, the Chinese with their 1.33 trillion dollar reserves and other Asian net savers who have chosen to buy fewer iPods and such, at least to-date, have been fulfilling our money needs via global credit markets, yet are just financing their own demand and having Americans ultimately own the IOUs in the end.

That is, unless wage growth re-align to be more proportional to our consumer spending rate, and that is doubtful at this point. We may now be at the cusp of such a slowdown, with housing and mortgage markets steadily deflating; only time will tell.

And like nobody definitively knows many decades later what exactly the tipping point was for the Great Depression, nobody can say now what that "breaking point" wage-to-credit ratio is. But smart folks like Warren Buffet to the economic arbiters @ NBER assert that at some point, net (not bilateral) trade balances indeed have to balance, e.g. be paid back within a bounded future time horizon.

And for more then a decade, the vaunted consumer economic workhorse has largely been using inferior-grade credit-subsidized monies to drive this spectacular market boom (and help to top DJIA's 14,000+ in a record time).

Many seasoned economists and market pros see few economic fundamentals to justify this torrid rise, other than US companies vested in rapidly-growing, savings-rich developing markets whose populations and incomes are booming thus demanding basic infrastructure and commodities, which do benefit US trade and engender spectacular returns for emerging market ETF-holders.

Still, it's important to understand that trade only account for a quarter of US economic activity/GDP, and as such, there's a real need here-and-now to reform American economic policy to be more balanced and to hone in on improving the economic health of its citizenry and government.

A concrete start would be something along lines of bread-and-butter Consumer Economics 101 kicking it off at elementary education onward, significantly more savings incentives and education, greatly expanding R&D credits and loans, to pay-as-you-go gov't spending.

But it seems Americans tend to thrive under duress, and until one exerts itself, many will probably continue to assume that Tulips=Profits.

FDR - Another Smith Tour De Force

Until Jean Edward Smith's biography of FDR came along (his other being the immaculate work on Chief Justice John Marshall), there was nothing interesting that I wanted to post about or read in a long time (last good presidential work I read was Doris Goodwin's Lincoln bio, A Team of Rivals). Then a week ago, I picked up a copy at my trusty Costco book section, after which there was nary a waking moment when I didn't find myself turning each page to see how the story would "unfold"; I just finished it. Another brilliant, insightful work, balanced introspective about the man, and the same time deftly crafts a story of the times that makes FDR so larger than life, not of decades ago, but someone who is immediate, intimate, and continues to impact contemporary events and times.

Quantasic

I’m reading what most would consider dry, but to me pretty interesting, book on the history of modern physics. It really gets my juices going not to mention that it has a very human narrative, which goes a long way to convey the sense of excitement and awe that scientists get at comprehending the most fundamental, mysterious parts of nature and the universe.

Plus it has a great title too: Quantum Generations: A History of Physics in the Twentieth Century

Fishing for a good mood

Some new research from Israel show that good mood and brain health is not just about having enough Omega-3’s (e.g. fish and its oils), it’s also about its proportion with Omega-6's (e.g. corn and soy oils, etc.).

Today most of us need to eat a lot more 3's and a lot less 6's.

Not that hard and it ain’t rocket science to do. Your local Costco carries Kirkland Signature™ Enteric Coated Extra Strength Fish Oil Concentrate for a whole 6 cents each. And it's molecularly distilled so there's no mercury, PCBs or dioxins.

A bit of rocketry if you're so inclined:

Omega-6's bring on increased cellular inflammation, the breakdown of cells through oxidation, which as loosened oxygen-based molecules, aka oxides, react and break apart cellular membranes (e.g. heart, brain, skin, basically everything between your head and toe).

Omega-3's, in addition to being the premier brain food cited below, is also a potent antioxidant, a molecular agent that absorbs those oxidative molecules and helps maintain cellular integrity. They also constitute roughly half of the essential fatty acids (aka Omega-3's) that is your brain.

A diet high in omega-3 and low in omega-6 beats the blues

By PsychologyToday.com

The evidence has been mounting for several years that the best way to ensure a bright mood—and a strong heart and working joints—is to consume plenty of cold-water fish, because they are rich in omega-3 polyunsaturated fatty acids. These fats, basic components of nerve cell membranes, facilitate all kinds of transactions in the brain, and one net effect is to keep depression at bay. It is through the fat-rich cell membrane that all nerve signals must pass—think of it as a kind of gatekeeper of the mind.

Now, from Israel, comes another piece of evidence linking omega-3s to mood states. And it confirms what many scientists have suspected all along. It isn't just that you need to consume omega-3 fats; at the same time you need to cut back on foods and fats that are loaded with omega-6 fatty acids, which are found in soy and corn oil.

The Israelis found that animals exhibiting the signs of depression have increased levels of an omega-6 fatty acid in their brains. Not only may depression result from a deficiency of omega-3 fatty acids, it may also result from an excess of omega-6s.

This so-called "phospholipids hypothesis" of depression has been supported by research showing that omega-3 fatty acid concentrations in the blood of depressed patients is lower than that in nondepressed people. The assumption is that low fatty-acid levels in the blood reflect low fatty acid levels in the brain. But most of the evidence is indirect, because it's not possible to examine the brain tissue of people directly.

The Israeli researchers, using an animal model of depression, found that the depressed animals and nondepressed animals had about the same levels of omega-3 fats in the brain. But they dramatically differed in levels of omega-6s, particularly arachidonic acid.

"The finding that in the depressive rats the omega-3 fatty acid levels were not decreased, but arachidonic acid was substantially increased as compared to controls, is somewhat unexpected," the researchers reported. "But the finding lends itself nicely to the theory that increased omega-3 fatty acid intake may shift the balance between the two fatty acid families in the brain. It has been demonstrated in animal studies that increased omega-3 fatty acid intake may result in decreased brain arachidonic acid."

Omega-6 fatty acids compete in the body with omega-3s. Consume an excess of omega-6s and they displace the omega-3s. The catch is, you need a proper balance of omega-6 and omega-3 intake for cells to function optimally.

Here is one of the central ironies of the American diet: While consuming too much fat overall and too much saturated fat, many North Americans fail to consume enough polyunsaturated omega-3s.

And they consume too many omega-6s. These are also polyunsaturated oils, and they're widely recommended as healthful for the heart. They're also widely used in cooking, frying and in prepared foods—corn, safflower and sunflower oils—have almost no omega-3s. Instead they are loaded with omega-6s.

Canola oil and walnut oil are highly recommended because of their fat make-up. Omega-3 fats also appear to have been integral parts of the diets of our prehistoric ancestors. Although the amount of omega-3s in the food supply has radically dropped in the past hundred years, eons of evolution have custom-crafted our brains and bodies to depend on them for basic biochemical maneuvers.

So adding seafood to your diet is only half the story. It's essential to cut out sources of corn oil and soy oil—almost ubiquitous in margarine, fried foods and commercial salad dressings. They contain a predominance of omega-6s.

By cutting out soy oil and corn oil, and using olive oil instead, you can, virtually double the effect of any fish that you eat, scientists believe. Plus, that brings you closer to a Mediterranean diet—more like the diet on which mankind evolved, and which our bodies are basically suited for.

Gates charity gives $500M for AIDS care

This is just terrific.

But much more is needed; G-8 governments need to step up.
- http://www.msnbc.msn.com/id/14269506/:

The Bill & Melinda Gates Foundation took its support of AIDS-related research and care to a new level Wednesday, announcing a $500 million grant to an international fund that provides AIDS assistance in poor countries.

Some musings...redux

I realized a while back that sometimes one can take their background and life experiences for granted. And once in a while, you get some time to really think and, in some cases, realize all over again that everyone's history and life experiences are truly unique.

I wrote something a couple nights back to someone that I thought would also be of value in shedding light on my background and core beliefs. In other words, get to what motivates my thoughts on religion, science, and history more deeply, delving into who I am as the political/economic creature you read and see here today.

Altogether, it's sort of a redux of my other blog musing. So here goes:

• My grandfather was a general in the Taiwanese army who marshalled the front lines, later emigrating from Communist China to Taiwan as Mao slaughtered millions. I know many stories of what our family experienced; many in our extended family were left behind and suffered Mao's reformation labor camps and torture. (Eerily, my grandfather went to the same high school as Mao). We were fortunate enough to escape. Thus, we were all instilled with a strong sense of duty, honor, self, and the recognition of the importance of knowledge, history and one's critical thinking. However uncomfortable, many Chinese know Mao's red book mesmerized countless to kill millions (estimates range between 40-80 million dead during his reign).
  
  
• Growing up, I experienced poverty first-hand and saw those without, regardless of merit, who just didn't have a shot at opportunity. And as a Christian for 10 years, then full of hope for true salvation baptized and seeking redemption as a confessed sinner who believed, I witnessed how people who in Christ's name acted less than what Christ would've liked. It all only increased my resolve to find things out for myself, with science as guide - open and self-critical, and providing a consistent model to compare and contrast things as they were, not how they should or claim to be.
  

• Throughout my life, I've always respected people of faith. There are many of faith I've come to known whose deeds follow principled actions that I've always had the most sincere and utmost respect for. Charlie Rose recently interviewed notable scientist Francis Collins (38 minutes on), Director of the National Human Genome Research Institute, whose book, "The Language of God: A Scientist Presents Evidence for Belief", speaks to the meaningful coexistence of science and faith. It is an open assessment and would be a good counter to my musing; his assertion that science has no domain or relevance in things religious and vice versa is central to faith and one's religious beliefs.
  

• In recent years, I've just grown increasingly concerned about the religious extremism in this country that has fomented as an ex-ante response to Muslim fundamentalism. When we happen to be the superpower, every step we take wields enourmous influence to literally uplift or destroy millions of lives in our lifetime. The musing was essentially a reactionary piece arising from today's proponderance to treat science and critical reasoning as throw-away commodities.

• ...Science is about bearing repeatable, testable experiments to expand and apply our body of knowlege for the betterment of mankind, and making predictions that verifiably withstands serious, repeated and transparent peer review and scrutiny.
  

• I strongly stand by the scientific method and its processes, which however seemingly mundane, has afforded humanity in a relatively short time of less then a hundred years to control the wanderings of the smallest electrons and photons. Or comprehending the nuances for preventing the spread of malaria which kills thousands of African children nightly. Or allowing mothers of sick newborns to bear hope that one day we'll bear witness to humanity stopping AIDS and its various mutations in its tracks, and in such a way that everyone will be able to afford a vaccine treatment.
  

• Bill and Melinda Gates deserve superlative kudos for their efforts, both in deeds and in principles. Not many people (Warren Buffet excepted) in their position have stepped up like they. Perhaps as a economics afficiendo, like Jeffrey Sachs and Bono, those numbers are more real to me than most - many are lives that could be saved for a quarter a day. And if someone gave up a quarter of their food a day, they could save more than 50 souls. It troubles me that that isn't the case, despite our best stated intentions and promises as a nation and people.
  

• I've come to believe that society suffers a lot more than is obvious when religion and science mix, especially when one claims to be the other and vice versa, using each as pawns in a larger political battle to undermine each other.

• ...Very particularly when a growing number of extremists absolve or ignore suffering and violence as part of a necessary God-given, Calvinistic, order, e.g. the numerous end-times prophesies that see a holy war between Christendom and Islamists as an inevitability versus heeding Christ's words of "loving one's neighbors" or "let those without sin judge..." or that "noone will know the hour or the day" of Christ's return.

• ...This includes not seriously moving the mideast peace efforts forward today in a real attempt to stop the bloodletting of innocents, thus implicitly acknowledging such war as a natural order of things to come, etc.
  

• At the end of the day (no pun intended), this slippery slope mutes if not deadens a society's will and aspirations, as JFK put it, "to lift all boats" irrespective of religious creed, race, color, sex or geography (or as Warrent Buffet deadpans "womb-based economics"), and subverts the positive forces and developments accrued thus far this past hundred years, parlaying it instead into increasing cynicism and despair.
  

• Since when I was a deeply religious Christian to present-day, I've always passionately believed in a liberal democracy and deliberation between its body politic and sciences, e.g. stem cell research is not the next a-bomb but should be carefully regulated to avoid human cloning. And liberal in the political science sense of minorities having an equal of a voice as the majority.
  

• I believe that we disregard extremism's slippery slope at our own peril; accepting such cases as [inevitable] reality is catostrophic for humanity. Just in the last ten years: in Yugloslavia where a democracy let its majority vote for and carry out genocide on its religious minority slaughtering hundreds of thousands or over a million and a half people dead in Rhwanda or the 5,600 civillians who were killed in Iraq for May/June alone or 9/11's 3,000 dead.

• ...They're all based on distorted belief systems and stories that do little else but perpetuate hate that infects subsequent generations, where the horridly wrong acts of killing and slaughtering become a righteous one with rewards to be had in the afterlife - an unbeatable promise and operational war doctrine.
  

• We dare not stand by and do nothing. And here at home, secular science and critical reasoning and all the benefit that it affords is losing ground to all our detriment because society's grown complacent and come to take its fruits for granted as the British, French, Spanish and many before have, with similar belief that God was on all their side(s) as well.

In conclusion, society's at its best when religious expression thrives in coexistence with a secular society that firmly respects it, and vice versa. An imbalance is in no one's interest. Christianity as it stands today is very different then where it stood when I attended a Billy Graham crusade in Anaheim, California more then a decade ago and was deeply touched by his message. I still prefer Billy Graham but his is a waning voice seldomly heard today.

Some history lesson

While the following just wasn't one of the smartest pieces of mail I've received; nonetheless this was in my Hotmail today (followed by my response):

Sent: Monday, July 24, 2006 2:11 PM
Subject: FW: History Lesson...

Evolve not involve.

In the early years, humans existed as members of small bands of nomadic hunter/gatherers. They lived on deer in the mountains during the summer & would go to the coast and live on fish and lobster in winter.

The two most important events in all of history were the invention of beer and the invention of the wheel. The wheel was invented to get man to the beer. These were the foundations of modern civilization and together were the catalyst for the splitting of humanity into two distinct subgroups: L&C Liberals and Conservatives.

Once beer was discovered it required grain and that was the beginning of agriculture. Neither the glass bottle nor aluminum can were invented yet, so while our early human ancestors were sitting around waiting for them to be invented, they just stayed close to the brewery. That's how villages were formed.

Some men spent their days tracking and killing animals to B-B-Q at night while they were drinking beer. This was the beginning of what is known as "the Conservative movement."

Other men who were weaker and less skilled at hunting learned to live off the conservatives by showing up for the nightly B-B-Q's and doing the sewing, fetching and hair dressing. This was the beginning of the Liberal movement. Some of these liberal men eventually evolved into women. The rest became known as 'girliemen.'

Some noteworthy liberal achievements include the domestication of cats, the invention of group therapy and group hugs, and the concept of Democratic voting to decide how to divide the meat and beer that conservatives provided.

Over the years conservative came to be symbolized by the largest, most powerful land animal on earth, the elephant. Liberals are symbolized by the jackass. Modern liberals like imported beer (with lime added), but most prefer white wine or imported bottled water. They eat raw fish but like their beef well done. Sushi, tofu, and French food are standard liberal fare.

Another interesting evolutionary side note: most of their women have higher testosterone levels than their men. Most social workers, personal injury attorneys, journalists, dreamers in Hollywood and group therapists are liberals. Liberals invented the designated hitter rule because it wasn't "fair" to make the pitcher also bat.

Conservatives drink domestic beer. They eat red meat and still provide for their women. Conservatives are big-game hunters, rodeo cowboys, lumberjacks, construction workers, firemen, medical doctors, police officers, corporate executives, athletes, Marines, and generally anyone who works productively. Conservatives who own companies hire other conservatives who want to work for a living.

Liberals produce little or nothing. They like to "govern" the producers and decide what to do with the production. Liberals believe Europeans are more enlightened than Americans. That is why most of the liberals remained in Europe when conservatives were coming to America.

They crept in after the Wild West was tamed and created a business of trying to get MORE for nothing. Here ends today's lesson in world history:

It should be noted that a Liberal may have a momentary urge to angrily respond to the above before forwarding it. A Conservative will simply laugh and be so convinced of the absolute truth of this history that it will be forwarded immediately to other "true believers".


My raw two cents follow. If you don’t like raw, delete the mail. If you dig raw (sashimi variety), read on. Thought it only fair I should respond in kind. I wanted to title mine drunk v. sober but then that’s not as fresh as evolve not involve, whatever that’s suppose to mean.

Anyways.

The schoolyard tales that get passed around so proudly as super deep conservative thought these days. It’s overdone, too self-stroking and ample congratulations for all its brethrens to revel in. Get a room already.

If conservatives can swivel away from Fox News for a few and consider by their lonesome selves that the British too had their share of proud surefooted apologists who thumped their chests, full of bravado, of apparent might and righteousness right before their empire crashed and burned around them.

Romans, French, Spanish empires…the list goes on. To imagine that conservative dogma today is in any way original v. just rehash of dogma spewed and regurgitated many a times over in history is typical kool-aid overdose and delusional egomania, of the ideological and groupthink variety.

The below tries to denigrate a whole class of people, roughly half of Americans who happen to live in richer, more colored “blue” states, who also happen to account for the majority of this country’s GDP.

Which is plain odd since the wealthiest men in the world are hardy Democrats (Gates, Buffet et al). Hmm, let’s crack that wider. Name the 100 wealthiest Americans. Tell me how many actual Republicans there are. Go by % of 100 or just total wealth of top 100.

My god, I mean talk about something measurable and comparable already, just this once - so we can at least try to keep score. Go ahead, amuse me. Amuse yourself.

And yah, liberals are nuanced creatures. Guess physicists are liberals. But then what would we do without the electron, eh?

And liberals like to govern. Someone’s got to do it. By George if W is and he seems to like it.

Others like abstracted long-term thinking. That no doubt includes nerdy do-goody-Gates to those damn physicists working on the nonsense that is string theory, just ruining our country.

Other libs like to invent. And damn those liberal Japanese inventing hybrids beating down our lame big-2 ½ (again), perpetuating the liberal meltdown of environment propaganda, nm Greenland ice caps melting or record worldwide temps or first-time ever 102 degrees in Seattle.

With liberals, it just takes a rainbow. Omg, end of days are surely upon us.

Conservatives have to wait until it hits them in the face (Katrina pun intended), otherwise who cares….if $’s can’t measure it, it doesn’t exist – as if economics is a perfect science, and coming from me that’s saying a lot.

Conservatives abhor nuance and prefer simpler worldviews, e.g. we hard working, liberals lazy bums (thump, thump). To believe that one’s superior based on a mockery tale mimicking a history lesson is what’s that word besides liberal-wannabe’ - oh right, ludicrous, a big nice juicy liberal word that’s just so right on.

It also belies a major weakness of the conservative movement today – the obsession with simple tales & short stories that’s made into “horse-sense”, which scary enough takes a life of its own becoming hard rules of thumb and conservatives’ worldview of reality.

Sadly, actual reality show that horse-sense to be all wrong and brimful of excuses, a la why invade Iraq with its two-dozen before and after versions of excuses, budget-deficit BS that’s just repressed shame for all conservatives, to whatever top issues are choice news this week.

If you can’t find any, email & I’ll happily oblige.

More damning is W and Co’s inability to address measurable evidence and facts, particularly contrary ones without resorting to continued blaming of that not in charge party (lame), rehashing Fox News’ sound-bites, conspiracy theories, immeasurable and incomparable “facts…of faith”, take 3 for giggles:

• fight them over there so we can help arouse a whole new Arab extremist army all so we don’t fight them over here,
• tax cuts through debt-spending somehow equal more money for government coffers and increase net growth,
• spending a trillion dollars without being a hair-closer to bin Laden is cheap and on the money in return for a hoped for middle east freedom that a big multi-generational war will surely bring – nm Halliburton to (fill in the blank).

Mash those and a few more up and you get bastardized neocon “horse-sense”, which today then gets bantered about as core conservative “principles.”

It’s not what Buckley had in mind. But then, like Goldwater and Nixon, he’s probably considered a lame liberal by now, so who cares.

Sure, liberals by nature were born to consider both or more sides to an issue, and spend too much time squandering and bickering among themselves and over think…. “Over” in the sense that it has not helped us win or kick-ass in the school-yard bully fights and one-line frat-boy bagging now aka the elections.

So congrats, reality-TV politics finally comes to age in the states.

But when one considers the current Republican fracas over just 3 things - stem cell research, gay marriage and fiscal imprudence, it’s obvious deep thinking is not their forte. Still, brilliant crafting of one-liners like “flip-flop” and "girliemen" – bravo, well-done, genius.

I’m sure that’s what the founding fathers had in mind.

And true believers, boy haven’t they caused enough trouble (and wars and genocides). Right-wing conservatives are proudly “true believers” of one certain absolute truth, perceived or otherwise – an honor that happens to be proudly shared by fascists.

Liberals do this critical thinking deal that can actually lead to flip-flopping (gasp) based on what peer-reviewed evidence suggests. Liberals actually deal with, dare I say, different and multiple points of view and, gasp again, science (the stem-cell, not creationist, kind).

After all, someone’s got to cure a disease if prayer, however steadfast, fails.

Sure they’re also the ones that go on to lose 'em well-argued and debated American elections yet win those snobby, liberal-drenched, self-absorbed Nobel Prizes in the sciences and those really snobby ones in literature. Go figure.

Yah, ignorance may be bliss, and if things weren’t so fucked up, I’d be laughing my head off right now too, like hilariously and loud even.

But as the world has become fucked up beyond recognition in way too many cases, I just feel sorry for the writer (and readers who feel such pride, if not outright titillation) of this misguided, caricatured homily - evangelical self-righteousness intact - that is today’s bastardized, intellectually-starved neoconservative.

Of fish and evolution

Just for kicks, I was following up on a statement I heard on Discovery Channel - and considering the recent news of the missing land-sea species link makes this even more pertinent perhaps - so was doing some well-rounded reading and came upon these gems.

To preface, I’m pretty passionate about this because it has really changed my life for the better. Something simple that when consistently and sufficiently done greatly influences one’s well-being, mental acuity, and physiological health.

An angle that probably doesn’t get a lot of airplay and thus not a lot of people know about is that Omega 3 fatty acids (e.g. fish oils) were/are crucial to human evolution, particularly for the significant growth of the frontal lobe of the hominid brain.

Regardless of how fish has been bastardized these days by modern marketing thus so negatively perceived as something for health nuts, over fished, or tainted by our man-caused mercury contamination - though smaller, cold-water fish like salmon is still clean so far - good ol’ common sense should apply today, however unsexy it may be (or you can get ultra-pure molecularly distilled fish oil capsules at Costco, which at 6 cents a softgel is a bargain insurance policy of sorts).

So I present to you, the reader, an academic paper outlining DHA’s role in evolving the hominid brain (DHA is a primary form of Omega 3’s) as well as the importance of Homo Sapien's close proximity to land-water masses. A pretty nice, readable bedtime piece or you can just skim the abstract :) ...

Evidence for the Unique Function of Docosahexaenoic Acid (DHA) During the Evolution of the Modern Hominid Brain

ABSTRACT
The African savanna ecosystem of the large mammals and primates was associated with a dramatic decline in relative brain capacity. This reduction happened to be associated with a decline in docosahexaenoic acid (DHA) from the food chain. DHA is required for brain structures and growth. The biochemistry implies that the expansion of the human brain required a plentiful source of preformed DHA.

The richest source of DHA is the marine food chain while the savannah environment offers very little of it. Consequently H.sapiens could not have evolved on the savannahs. Recent fossil evidence indicates that the lacustrine and marine food chain was being extensively exploited at the time cerebral expansion took place and suggests the alternative that the transition from the archaic to modern humans took place at the land/water interface. Contemporary data on tropical lake shore dwellers reaffirms the above view.

Lacustrine habitats provide nutritional support for the vascular system, the development of which would have been a prerequisite for cerebral expansion. Both arachidonic acid (AA) and DHA would have been freely available from such habitats providing the double stimulus of preformed acyl components for the developing blood vessels and brain.
...
We suggest that the evolution of the large human brain depended on a rich source of DHA from the land/water interface. We review a number of proposals for the possible influence of DHA on physical properties of the brain that are essential for its function.

Money in the bank

By exporting & lending to the US cheaply (and the American consumer willingly), China has amassed nearly 1 trillion in dollar reserves.

From The Economist (March 2006):

China surpassed Japan as the world's biggest holder of foreign reserves. The news came amid more politicking over China's currency policy, which American politicians regard as a cause of their trade deficit. Charles Schumer, a senator who has been shrill in his attacks on Beijing, dropped plans, for the moment at least, to slap a 27.5% tariff on Chinese goods, partly in response to signals from China that it would allow its currency to float more freely.

Tides Turning

A new book, Tides Turning, predicts that climate change is likely to be abrupt and cataclysmic—and that these sudden shifts could cripple national economies.

Newsweek has an interesting interview with the book's author here.

Implicit in this article, and mainstream economists are the first to admit, is the idea that there’s tremendous uncertainty and an unknown territory when it comes to modeling and estimating the costs of pollution, climate change, and natural disasters.

Yet sometimes in the assumed belief that free markets address most issues big and small, we fail to realize that in reality there are significant limitations and staleness with the economics discipline and free markets, particularly when dealing with uncertainty in complex, open systems with unknown transaction costs.

This is despite Nobel economist Ronald Coase’s work decades ago on transaction and social costs, that is, when property rights are fixed and defined, it was possible to “internalize externalities” like pollution. While it was a good starting point it was only for closed systems (two parties) with known transaction costs.

Unfortunately, meanwhile many have come to assume that mother nature is a trash collector that works for free, when it’s that we just don’t know how to accurately measure such externalities so it’s as if such costs don’t exist, even when it does and is often quite visible for show like Katrina.

To get a good sense of the limitations with Coase’s theorem as it applies to externalities like pollution, see A Critique of the Chicago School of Economics: Ronald Coase and the Coase Theorem

V for Wow

My wife and I saw V For Vendetta last night and it was absolutely magnificient. Highly recommended.

Finally a podcast I like

Podcast interviews of the world’s leading economists. Awesome.

Some musings & book recommendations: Religion, science, and history

Happy New Years! It's been a while again since my last entry and thought I should squeeze one in as I end my extended holiday vacation. And well, perhaps right now you’re looking for some new books to put on your reading list. If so, some out of box suggestions / musings:

As far as religions go, I’m an agnostic. Given my utmost respect for what I understand of [the history of] the scientific method and physics, I find Buddhism to be the most open-minded, interesting and compatible of the bunch. Speaking as an ex-practitioner, Christianity is to me at best a set of haphazard myths and inconsistent tales that have long outlived its usefulness as humankind’s shining light on the future, unless one now considers the end of days to be the future to look forward to shortly. Surely then, the vast majority of the world will be damned to hell except a small fraction of [mostly American] people who qualify to be saved. And the absolute clash of logic irreconcilable between that of an unquestioned being’s omnipotence that wills glorification & worship by mere mortals, who in return goes on to afford countless children and other subjects a dismal right to live and suffer in abject poverty, squalor, destitution. Any logical person should at the very least seriously ask [a Christian apologist], “Is that the best an omnipotent being can do?”

With that said wrt Buddhism, I was compelled to pick up and read the Dalai Lama’s The Universe in a Single Atom: The Convergence of Science and Spirituality. It is one of most elegantly written religious perspectives that succinctly delineates spirituality and science with all its fine lines and wrinkles intact. It clearly puts together a rich and engaging storyboard distilling complex ideas and concepts that cleanly synthesizes both concrete-physics and meta-physics, using everyday language. Something similar I read some time ago in high school was an early edition of The Tao of Physics. That felt forced and was a bit confusing as it tried to force a 1:1 mapping between the parallels of physicists’ attempts at a “grand unified theory” to the foundations of eastern mysticism. It is more comprehensive, though somewhat repetitive.

So it is hard for me to pick up a religious tome unless it’s grounded on a scientific foundation with its knack for consistency and rigor. I recently read The End of Faith, somewhat an exception to the rule since it also relies quite a bit on a set of tougher to follow metaphysical arguments. It presents a strong case against today's rather fervent religious movements (radical veins of Islam and Christianity in particular) that since time immemorial have resulted in some of mankind's most awful atrocities, acted out by followers of its various factions, always bearing a similar set of exclusionary and unwavering beliefs from which comes the notion, "it's my way to heaven or hell’s on your way", thus arising the Inquisition, the Crusades, Islamic jihad, religious genocides like Rwanda and Bosnia, and so forth. They seem to eventually trap its “true” believers in an un-repudiatable straitjacket of [blind, unprovable tautology that is] religious faith, when mixed with growing extremism, death merely becomes a doorstop to heaven provided enough earthly blood is shed to get someone a one-way ticket there.

I also got to spend some treasured vacation time reading a bit of early American history. A particularly compelling narrative - a bit stylized but provides for a unique portrait of a great man - was put together by a Pulitzer Prize writer whose earlier LBJ biography accorded the award. Now, her Team of Rivals tells a rich and layered story of Lincoln’s life, perseverance, and leadership during the Civil War as he guides a very fractured yet indispensable cabinet that's constantly in turmoil throughout the entire war. Also began David McCullough’s 1776.

Managed to revisit string theory a bit as well, prompted by an excellent primer by one of the top physicists of our time. Ed Whitten of Princeton obtained a PhD @ 25 after a brief stint with history and happens to hold a professorship founded by former Microsoftie Charles Simonyi. And if you’re interested in the very latest that advanced physics and vibrating strings have in store, physicist-extraordinaire Greene’s magnificent and fun to read best-seller, The Elegant Universe: Superstrings, Hidden Dimensions, and the Quest for the Ultimate Theory would be highly recommended. It is accessible to anyone who knows some introductory-level college physics sans the math. String theory is even more fantastic and mysterious than standard [atomic] theory and quantum mechanics, particularly for those who are instinctively curious about the worlds around them.