Consumerism

What our global economy is predicated upon...

BACTERIA: Operates like the Economy

Colonies of bacteria balance growth against risk, just like financial investors, ecologists have found.

Using lab-based synthetic biology, experiments in bacterial evolution, and mathematical modeling the study finds links between organisms and markets.

Bacterial investment crashes and boom-bust cycles are described in a paper in the journal Ecology Letters.

The study is the clearest experimental test of a 50-year-old theory relating trade-offs to competitive success.  Continue reading the main story

"The study is a classic demonstration of Darwinian economics and survival of the fittest.”  Dr Ivana Gudelj (left) University of Exeter

The evolutionary successes of bacteria are plain to see as they are found across the globe, but bacteria may also have something to say about investment success more generally.

A research group from the UK and Australia used strains of the bacteriumE. coli that were constrained in the amount of resource that they had for growth, but that were also subjected to varying degrees of biological stress.

Different strains of E. coli developed covering a range of ability to cope with stress and invest in growth.

Externally imposed "market conditions", represented by changing salt and acid contents of their environment, influenced the outcome of the "investment decisions" made by each bacterium, with success rewarded by survival, and failure leading to extinction.

The consequences of the trade-offs between development of stress-resistance, which involves the acquisition of costly proteins, or increasing consumption to grow were recorded in the evolution of the genetic codes of the successful bacterial strains.

The observations were used to test and validate mathematical models of bacterial investment booms and crashes.

Dr Ivana Gudelj from the University of Exeter was one of the authors of the study, and said: 

"We have shown that very different investment opportunities can require different investment strategies.  These strategies are constrained by the subtleties in trade-offs that are usually invisible or ignored in real markets. The study is a classic demonstration of Darwinian economics and survival of the fittest."  Read more:  

New Chairman Perhaps?

Thirty-two economists said they expect Fed Vice Chairwoman Janet Yellen to succeed Chairman Ben Bernanke next year. Four predicted Obama will nominate Larry Summers, his former economic adviser and President Clinton's Treasury secretary.

The survey was done last week amid a flurry of media reports suggesting that the field was narrowing to a choice between Yellen and Summers or that Summers was the front-runner. 

The White House has said only that a decision will be made in the fall. In an interview with The New York Times published over the weekend, Obama said he has narrowed his choice to "some extraordinary candidates." Treasury Secretary Jack Lew declined to express a preference in an interview on ABC's This Week on Sunday.

Yellen is "extremely well-qualified and she's been there through the (financial) crisis," says Diane Swonk, chief economist of Mesirow Financial. "We need continuity."

Vincent Reinhart, chief U.S. economist of Morgan Stanley and former head of monetary affairs at the Fed, thinks Obama will pick Summers. 

"The president really has tended to reward loyalty," Reinhart says, "and Summers has that history with the president that Yellen doesn't." 

The presumptive horse race between Yellen and Summers to be the nation's top economist has transfixed Washington in a uneventful political summer even though the White House says a nominee won't be announced until fall.

After reports last week that Summers may be emerging as the favorite, Senate Democrats began a petition in support of Yellen and House Democratic leader Nancy Pelosi endorsed her in a Bloomberg Television interview. "It would be great to have a woman," Pelosi said.

Bernanke hasn't said whether he plans to step down when his second four-year term ends in January, but his departure is widely expected.

The Fed chairman is the most influential voice on a policymaking committee that can speed up or slow down U.S. economic growth by lowering or raising interest rates, among other moves that ripple across the global economy.

Obama likely would relish the opportunity to nominate the first female Fed chief, says Nariman Behravesh, chief economist of IHS.  Read more: 

US Loses Big Time

Attacks on businesses and consumers are a blight on the economy, with criminals foreign and domestic using the Internet to steal identities, intellectual property, trade secrets and just about anything else they can get their hands on. 

A new economic model (above) developed at a prominent D.C. think tank puts the cost to the U.S. economy as high as $100 billion annually, with a corresponding loss of as many as half a million jobs. 

The report, released by the Center for Strategic and International Studies (CSIS) and written by James Lewis and Stewart Baker, two old hands in the Washington cybersecurity policy discussion, offers a quantitative approach based on data from the Commerce Department and analogous losses from activities such as car crashes, piracy and other losses and crimes. 

The authors explain: "One way to think about the costs of malicious cyber activity is that people bear the cost of car crashes as a tradeoff for the convenience of automobiles; similarly they may bear the cost of cybercrime and espionage as a tradeoff for the benefits to business of information technology." 

The report, sponsored by security software vendor McAfee, eschews survey data, which the authors say is flawed because respondents "self-select," and businesses often either conceal or do not realize the full extent of the losses from a cyber attack. 

"We believe the CSIS report is the first to use actual economic modeling to build out the figures for the losses attributable to malicious cyber activity," Mike Fey, executive vice president and CTO at McAfee, said in a statement. 

"As policymakers, business leaders and others struggle to get their arms around why cybersecurity matters, they need solid information on which to base their actions." 

Cybersecurity is the subject of a long-running policy debate in Congress, with lawmakers divided over what role the government should play in setting and enforcing security standards for critical infrastructure operators in the private sector.   Read more:

If You Want to Dance, You Have to Pay the Band

Yahoo is eyeing the one social network it can afford that would make it feel young again.

The company is considering buying Tumblr, according to two separate reports on AllThingsD and Adweek. UPDATE: The deal was made official on Monday.

AllThingsD reports that Yahoo would consider an investment or corporate alliance in addition to outright buying all the Tumblogs; Adweek is more confident, stating that "Yahoo is in serious talks" to buy Tumblr. Both cite a valuation of $1 billion. The site, known for cat GIFs and amateur porn, expects to turn its first profit this year.

And so another social network that hasn't proven profitable might earning a 10-figure buy. It seems it's become an annual tradition. If you'll recall, Facebook scooped up Instagram in 2012 in a deal that at the time was worth $1 billion, although ultimately worked out to $736.5 million, after the company's stock dropped.

What's up?

It's the need for the young.

Tumblr may be Yahoo's best shot at gaining an audience of young people.

The aging tech company, which Marissa Mayer took over as CEO to much fanfare last year, is struggling to attract web users in their teens and 20s while it holds onto an older audience tethered to the company with 90s and early-aughts-era email accounts. Though Yahoo itself doesn't offer solid numbers, the app Hunch estimated in 2011 that 42 percent of Yahoo email users are between 35 and 64. Only 27 percent of Gmail users are in that age bracket.

Yahoo is missing the the sweet-spot demographic of 24- to 35-year-olds that advertisers climb over each other to get. And it certainly is missing teens, the young adults of the future that brands also spend lots of money to impress.

NEW GALLUP POLL BLAMES BUSH FOR ECONOMY 68%!

I would be in the two-thirds too.

About two-thirds of Americans believe Republican former President George W. Bush is responsible for the nation's struggling economy, with a smaller percentage blaming Democratic President Barack Obama, a Gallup poll showed on Thursday.

About 68 percent of the more than 1,000 adults surveyed nationwide said Bush, who left office in January 2009, deserves a "moderate amount" or a "great deal" of the blame for the U.S. economic woes compared to 52 percent who pointed to his successor Obama, the poll found.

OCCUPY WALL STREET

Right now there are a great many dollars in the global economy that are no longer worth the same as any other dollar. Consider the trillions of dollars worth of essentially worthless real estate loans on the balance sheets of banks around the world. Governments allow banks to treat these as assets, but unless governments agree to take them, they can’t be exchanged for anything else, because nobody in his right mind would buy them for more than a tiny fraction of their theoretical value. Those dollars have the same sort of weird half-existence that horror fiction assigns to zombies and vampires; they’re undead money, lurking in the shadowy crypts of the world’s large banks like so many brides of Dracula, because the broad daylight of the market would kill them at once.

~John Michael Greer in The Wealth of Nature: Economics as if Survival Mattered

Should We Be Worried?

In an article (2-4-12) entitled, Major Economic Problems Facing the United States, Thomas Heffner, wrote “Most people are unaware of the easily observable signs of this crisis, where it came from and how to stop it. While we persist in our superpower mentality, we have quietly become a second-class country in many respects.”  

Heffner points out 2 critical issues:

• We no longer produce what we need to sustain ourselves
• We are failing even to acknowledge predatory foreign trade practices

And, offers 3 possible solutions:

• we should take direct action to reverse our out-of-control trade deficits.
• we must carefully manage access to our markets.
• We must take a new direction.

Thomas Heffner

Thomas Heffner, publisher and founder of the website Economy in Crisis, also believes “that the wealth achieved in the United States in the 20th century has been increasingly eroded within the last 30 years due to sustained trade deficits that have eroded competitive domestic industry.” 

Robert Reich

Robert Reich of the University of California at Berkeley agrees with Heffner and argues, “The economy won’t really bounce back until America’s surge toward inequality is reversed . . .  without a nascent middle class able to spend without going into debt, the economy will not be able to stabilize.”

We must take a new direction à 
is a very interesting observation and comment to make because it obviously closes the door on the past while offering no solutions for the future.  So, if we are simply stating the obvious then one might easily suspect that no one is really sure what this new direction should be.  Actually, all Heffner’s suggestions lacks specific details; and, it is a very complicated problem.

MC Escher print

For instance:

America’s core values have eroded

America’s middle class is shrinking

America’s youth are falling behind the rest of the world in education

Unemployment has been at a sustained all time high for years

Gas prices continue to fluctuate at ever-increasingly higher amounts

The Euro Zone is unstable financially and impact US imports

Trade deficits continue to increase

The National Debt continues to increase

Cyber crime is cost US companies billions of dollars annually

India/China has growing middle class demanding increased goods and services

Foreign wars continue to drain US resources

Retired Americans will substantially drain financial and healthcare resources

These points are just for starters and bear in mind that they come from a non-economic expert and more of a wanabee economic expert who attempts to extrapolate ideas from the ideas of the experts.

One issue is for sure and that is the economy of America is in trouble and no one seems to know what to do and all the ideas that the experts are currently suggesting do not seem to work. 

So, Heffner is right, a new direction is needed and one that is creative and out-of-the-box.

Do you have any ideas?

If you do, let us know.

ANOTHER BANK BAILOUT

For the actual people of Greece there is only one solution - default and leaving the Eurozone. The attempts at "bailout" are designed to bail out the big banks and give Germany an economic occupation of Greece. The austerity being forced on the Greeks only guarantees that the country will officially slip into depression followed by civil war and the debts will never be re-payed. Make no mistake - this is war. Unlike WWII it's economic rather than military. But the goal is the same - German domination.
This is not meant to be an excuse for the Greek economic irresponsibilty, this is what happens when you spend money but don't collect taxes, but it's not the Greek people who should suffer.

By Alex Hutchins

It is conservatively estimated that the global revenue from the distribution and sale of illegal drugs is $600-800 billion with $180 billion in the US alone.  more

It is conservatively estimated that the global revenue from the distribution and sale of pornography is $90 billion with $13 billion in the US alone.  more

It is conservatively estimated by the DOD that sales of arms outside of the US will reach $103 billion or greater this year.  more

It is conservatively estimated that the sale of firearms and ammunition inside the US will reach $4 billion or more this year.  more



Chinese symbol
 for
LISTEN



Hard to believe that selling drugs to Americans generates more revenue than selling firearms to other countries.

Hard to believe that selling pornography to Americans generates more money than selling firearms to Americans.

What I want to know is who is buying the porn and who is buying the drugs?  I hope it is not all the unemployed workers . . .  of course not;  it is all the survivors who are trying to escape from all the extra work that they are being asked to do - that's the real answer.

BUT, who is listening?

Who, wants to listen?

A full moon is rising over America and while it is offering us plenty of light to see, it appears to me that no one wants to see.  No one wants to admit that we have a drug problem.  No one wants to admit that we have a porn problem.  No one wants to look at our 50% divorce rate problem because we need to watch the Super Bowl or report on an impotent Congress or fuss over the contributions made to Super PACS.

We have all made a conscious decision to ignore so that we can make sure we have our boarding pass for America's Ghost Ship.

America’s debt crisis - a good thing?

By Alex Hutchins

Since I do not hold a doctoral degree in Economics, my perspectives will be derived from what others have said, from my understanding of my reading on the subject, and from my observations during my 40 years in the marketplace working.  My thoughts are my own and do not represent the thoughts or opinions of others associated with this blog.

In Adam Smith’s Wealth of Nations masterpiece about the free market enterprise system, an invisible hand regulates the market place; which means that companies rise and fall based upon how they are managed and how quickly they change to meet the changing needs of the customer. Economics is defined as the study of the allocation of scarce resources that have multiple uses; and, a first year Economics student understand that price is used to regulate the allocation and distribution of these scarce resources.

Throughout America’s recent history, let’s say since 1975, the American government has used taxpayers dollars to support and/or bailout a variety of American Industries, such as the farming industry (with price supports), the savings and loan industry, the automotive industry, the real estate industry, and the banking industry just to name a few.  Top 6 US government bailouts.

While some may argue that America grew too quickly between 1950 and 1980 and that this growth set off a series of cascading events that eventually led to our current situation, I propose a much simpler but more radical approach and that is that the government should have never bailed out any company of any industry; and, therein lies the foundations and the systemic roots of our current situation.  We violated the invisible hand concept about which Adam Smith described in his book and did so with obviously the best of intentions.

There has been a massive shift of wealth from America to other parts of the world since 1950;   for instance, importing more than is exported, buying Japanese automobiles and electronics, purchasing petroleum crude oil from OPEC, and most recently borrowing money from China.

America’s high wages, high benefits packages, low productivity measures, and need to own extremely highly levels of debt have worsened this imbalanced situation.  Yes, there is greed in this country but this greed does not just lie on the shoulders of our politicians and businesses, but on the shoulders of all Americans who eat too much, smoke too much, drink too much, consume too much, and expect someone else to always take care of them.

As America fails and as her companies fail, some other foreign business enterprise, person, or government will step up to the plate and purchase our leftovers and while ownership will be held outside America, it will give Americans jobs; however, those jobs will be at a greatly reduced level of income as well as benefits; and, Americans will learn like the rest of the world, that economic growth is better if it is slow, consistent, and has continuity.  And yes, there will still be a place for people like Bill Gates and Steve Jobs, and America will still have Hollywood and professional sports and professional musicians like the rest of the world, they will just be paid less.  America’s economic crisis will bring everyone together again and that is a good thing.

How does the rest of the world see Americans? 

Concerned that:

4% of the population (US) uses 25% of the world’s oil

America watched Hitler for 4 years before they did something

America sees itself as saving the rest of the world from WWI

Christians in America are those only concerned with gays and abortion and not incarnation and redemption

Americans are mixing politics and religion with wars in Middle East

Americans only help the rest of the world if it is militarily strategic or results in oil

Americans have created adverse cultural changes around the world – celebrity status

Miss America Pageants have ignorant contestants representing US

America’s health care for its citizens is ranked 37^Th in the world

America’s corporations have too much political power

Aside from our War with Great Britain for Independence, our Civil War, the Alamo, and 9/11, Americans do not know what it is like to have a foreign country invade your homeland and destroy your cities, schools, businesses, and farms.  Most Americans do not know what it is like to grow up in poverty or through the Great Depression like my parents experienced.  Americans take for granted their way of life which is really what those 10 Perception points above address.

America is great and can be greater if we would just learn to look through other people’s eyes.  America needs to stop consuming the world’s resources because they are finite not infinite.  Americans only come together when there is a natural disaster or when something happens like 9/11 but then after a few months it is business as usual, life as normal, and we act like it never happened.  On the whole, only cancer patients or terminally ill patients fully grasp what it means to be alive for another day and how precious life is, not just for an American but for all citizens of the world.

We should really care what others think of us.  We should really care what the rest of the world thinks about us.  If America is the greatest nation in the world, and I believe that we are; then, we should set the example and help the rest of the world to follow, not just sit on top of our “lifestyle” mountain looking down on the rest of the world, making condescending comments.

Americans have an opportunity to change and that is a good thing!