In a blind taste test at festivities to celebrate the Scottish “Burn’s Night” holiday, a Taiwanese whisky, Kavalan, beat out the Scottish and English whiskies sampled. (South China Morning Post, 1/26/10)
It’s not just a global Brain Trade (of advance manufacturing and high-tech goods and services); artisan and craft products are being made around the world and judged “authentic” by connoisseurs. Make sure your alumni club has this whisky in stock!
Michael Hines
Britain’s Civil Aviation Authority is in a legal spat with a local police department that used an aerial drone. Their dispute belies the fact that the drone helped police catch a car thief last week. (BBC News, 2/16/10)
How long until American police departments seek to use unmanned aerial vehicles as part of routine police work, and what will be the public’s response on the privacy front? Nevermind, the U.S. can’t afford it…
Michael Hines
Is Hal, the infamous take-control computer in “2001: A Space Odyssey” taking over the stock exchange? It’s clear someone’s yielding control to something with unknown capabilities.
The New York Stock Exchange fined Credit Suisse $150,000 for failing to supervise one of its trading algorithms after the program halted traffic at five different trading posts on the NYSE and delayed the day’s closing at the posts for nearly half an hour. It was the first time the stock exchange has disciplined a firm for algorithm infractions. (Wall Street Journal, 1/13/10)
Algorithms are becoming more prevalent as companies attempt to understand and manipulate the tremendous amounts of available data. Wall Street firms have been leading the charge, creating algorithms in order to gain a trading advantage. These algorithms trigger automatic trading actions and reactions that can have a chaotic market impact creating instability and unforeseen consequences. While this time it was only a delayed closing, Credit Suisse’s “algorithm gone wild” is likely to be the first of many unseen risks to come from dependence on computer formulas.
Eric Zavolinsky
Is marketing a real “green shoot,” instead of the bogus ones touted last summer? Marketing departments seem to have money and plans on how to spend it.
We have seen and commented on the decline of advertising in traditional media for several years. It may be possible that the next cyclical upturn will portend a return of ad dollars to traditional media outside the U.S.
Estée Lauder unveiled plans to spend $150 to $175 million more on marketing expenses in the second half of 2010 than in the same period one year ago. This includes advertising, in-store merchandising and product sampling. The company plans to make its largest historical investment in TV ads within developing markets as well as global digital marketing. (Women’s Wear Daily, 1/29/10)
Lauder’s moves outside the U.S., when combined with Proctor & Gamble’s recent announcement that it plans on ramping up its ad spending in the second-half of 2010 and our January blog post about increased marketing spending coming from financial firms, suggests a de-thawing of advertising and marketing budgets, at least among some Fortune 500 companies.
Risa Hess
In the past two weeks, more than 100 small earthquakes have hit Yellowstone National Park, putting seismologists on alert. During January, not only was Haiti hit by a devastating earthquake with significant tremors around the region, but the Solomon Islands suffered a tsunami wave, triggered by an earthquake (7.2 on the Richter scale) in the Pacific Ocean off Papua New Guinea. Also in January, the Sichuan province of China – which is still recovering from a devastating May 2008 earthquake (8.0) – was hit by an earthquake (5.2). An earthquake (5.1) in Tajikistan left 20,000 people homeless and another quake (5.1) off the coast of Guatemala caused no major damage on the mainland but sent people scurrying from their homes. (New York Times, 1/19/10 and 2/1/10; Australia Network News, 1/31/10; New Scientist, 1/9/10; Guardian Weekly, 1/8/10)
Is there a bigger story here?
Ken Hey
Book burning has become an expression of economic, not political stress.
Some pensioners in Britain are buying cheap books at charity shops and burning them as a cheaper alternative to coal. Energy prices in Britain are up around 40 percent since January 2008 and gas consumption has increased by 30 percent over seasonal averages. (CNBC, 1/5/10)
The extremely cold winter is making things even more difficult for people struggling with an economy that contracted 4.8% in 2009 – the biggest one year decline since 1921. (Bloomberg Businessweek, 1/25/10)
Can a Kindle become kindling?
Eric Zavolinsky
Protectionist actions among countries have garnered a lot of attention over the past year, but how about protectionism between school districts within the same state?
In the past, California school districts such as the one in Beverly Hills welcomed students from outside its locale, since the district accepting the students received a payment of $6,239.00 per student from the state. With recent cutbacks in state funds for education, Beverly Hills has told its roughly 400 out-of-district students to either rent an apartment in the boundaries of the district or find another place to go to school. (New York Times, 1/14/10)
A statement by one Beverly Hills parent seems relevant: “This is a community trying to take care of its own, and there is nothing wrong with that.” That thought reflects an emerging protectionist attitude being encouraged by a sense of scarcity.
Charles Hess
In a Commonwealth Fund survey of 10,000 primary-care physicians in eleven industrialized countries, U.S. doctors had the worst score of all countries for making provisions for after-hours care. Two of three U.S. primary-care physicians made no allowance for care during evenings and weekends, leaving Americans no option but to seek help in more expensive hospital emergency rooms during such hours.
In another survey finding, 97 percent of doctors in the Netherlands, New Zealand and Norway use electronic medical records, while 46 percent of American doctors do. (Governing, 1/10)
In the healthcare bill making its way through Congress, changes planned for Medicaid alone will bring 15 million more patients into the United States’ healthcare system, each one likely to look for a primary care physician. Not only are fewer medical students going into general practice, but primary-care physicians are already behind the curve in providing health care at the most basic level. The reason for such a shortage of basic doctors’ services might have come through in another part of the survey: Fifty-eight percent of patients of primary-care physicians in the U.S. have trouble paying for the care they receive; the other countries in the survey had figures ranging from five to thirty-seven percent.
Ken Hey
Five percent?? That is the number that some economists expect the U.S. GDP to grow this year. It would certainly be an impressive number when you figure that, according to The Center on Budget and Policy Priorities, state and local spending accounts for about one-eighth of GDP.
During legislative sessions in 2009, state legislatures cut $145.9 billion from their fiscal 2010 budgets. Despite these cuts, states still face a mid-year budget gap of $28.2 billion. (Stateline.org, 2/21/09)
How bad are things for the states?
Things are so bad in Illinois that as of mid-December, the Illinois State Board of Education has sent the state comptroller more than 18,000 vouchers totaling $757 million and that number is just a drop in the $4.5 billion bucket of I.O.Us the state has handed out. (Beacon News, 1/4/10)
Things are so bad in Maine that the new budget proposal submitted by its governor is based on the assumption that congress will pass another $200 billion in stimulus programs and provide direct aid for the state to fund its Medicaid program. Certainly other states must be hoping for the same as stimulus funds plugged about 30 to 40 percent of the budget gaps states were facing last year. (Stateline.org, 12/14/09; CNN,11/11/09)
Things are so bad in North Carolina that it has borrowed $1.4 billion from the federal government since February 2008 to fund unemployment insurance claims. During the last recession the state borrowed a total of $270 million. Twenty-three other states have borrowed from the treasury to fund claims and they will all have to begin repayment, with interest, in 2011. (Charlotte Observer, 12/1/09)
Things are so bad in Arizona that on November 19, the state borrowed $700 million from Bank of America, the first time since the Depression that the state needed to turn to an outside borrower. After less than two weeks, the money had all been allocated and the state had to borrow $73 million from its internal account to make a payment to the state’s schools. Arizona claims it will replenish the accounts as tax collections come in. (Arizona Republic, 12/2/09)
Tax collections are going to have to improve for the states to find their footing. The nominal and inflation adjusted figures indicate that the first three quarters of 2009 marked the largest decline in state tax collections since the Census Bureau began tracking the data in 1962. (Rockefeller Institute of Government, 1/10/10)
Together sales and income taxes make up roughly half of state and local tax revenue. With national unemployment still above 10 percent, states like Arizona are betting a lot on individuals increasing spending despite a difficult job market. Anyone betting on 5 percent GDP growth is betting that these states get healthy…quickly. Any takers?
Eric Zavolinsky
Despite cutting costs in 2009, many companies in Germany and the rest of Europe appear to be less interested in outsourcing, and some companies in Germany are even bringing manufacturing back home.
In 2009, three German companies continued to outsource work abroad for every one company that brought formerly outsourced jobs home. In 2003, six companies were sending jobs overseas for every one returning jobs home. An October survey by Cognizant found that 40 percent of European companies cut back outsourcing plans in 2009. (Newsweek, 1/11/10)
This could be evidence of slackening demand or anticipated slackening demand. Or it could be a nationalist shift in attitude about production and labor. But, either way, this is a negative for shippers.
Eric Zavolinsky
