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July 30, 2008

Reverse ageism?

Filed under: Politics — Tags: , , , , , — dafodo.uno @ 9:31 pm

So the McCain campaign has released an ad comparing Obama to Paris Hilton and Britney Spears, both “better known for their childish off-screen antics”. Wow. Apparently, the idea is to portray the Illinois senator and presumptive Democratic nominee for president as a young (“childish”, inexperienced celebrity who is not ready to lead).

The McCain campaign will continue to use Obama’s age (or should we say “youth”?) against him. Obama, of course, can’t call McCain a senile old man who has had every type of skin cancer. This reverse ageism will, of course, hurt Obama’s chances. Perhaps in some sort of cosmic, karmic justice, Jon Stewart and Stephen Colbert never fail to remind their audiences about how old McCain is.

I also suspect that in one of the televised debates this fall before the election, McCain will smile at Obama and say, “Son, I was serving my country holed up as a prisoner of war by the Viet Cong when you were in Hawaii smoking pot and trying to discover your true identity.”

If there’s one thing we’ve learnt about politics, it’s that things don’t have to be true for politicians to say them.

Update: Reverse racism?

The McCain campaign has accused Obama of playing the race card. The Clintons tried the same tactic and failed in the primaries. The Republicans will most likely be much more formidable foes. Does Obama have anything to gain by playing the race card? It will only alienate him from the majority (white) and would be political suicide. Jesse Jackson got 10% fewer votes than opinion polls predicted because, appraently, white people won’t admit publicly in opinion polls that they won’t vote for a black guy. People tend to support others who are “like them“. Although he has overcome the “like me” challenge with a sizeable chunk of white voters, in general talking about race is only going to be detrimental to Obama. McCain’s campaign is going to bring this issue up every chance they get.

WTO talks fail after 7 years

Filed under: Uncategorized — Tags: , , , , , , , — dafodo.uno @ 12:07 pm

I first came across this news on the IHT website. I was mildly surprised to see the article written from a U.S. perspective. Compare this with the EU perspective of the same situation. The IHT tries to blame India, China and Lamy, acknowledging that the US negotiators failed to reach an agreement. Mandelson places most of the blame on the US.

IHT writes

Pascal Lamy, director general of the World Trade Organization, could not bridge differences between a group of newly confident developing nations and established Western economic powers.

Reuters quotes EU trade chief Mandelson

…the United States helped to bring down global trade talks this week when its negotiators shunned a compromise proposal at a key juncture in the talks.

“…when WTO chief (Pascal) Lamy reconvenes the Group of Seven negotiators at midday, the Indians and the Chinese express reservations and the U.S. rejects the proposal outright, much to Lamy’s understandable frustration”.

IHT writes

He said the sticking point this time was countries like China and India, which have become more aggressive in advancing their interests. “Maybe they’re now thinking, ‘We’re big enough that we don’t even need the process,’ ” Macrae said.

Mandelson says:

a U.S. official “simply does not show up” when negotiations resume and U.S. trade chief Susan Schwab, heading into the finale of the negotiations, stopped off in the press room “to get her rebuttal in first,”

“It is bad enough to be facing defeat in the last mile of such a marathon. It’s worse to realise that some of the people across the table, instead of working for success, are in reality preparing for failure.”

You never know when the media presents you with biases cloaked in news articles. The title of the IHT story in their RSS feed was “Trade talks broke down after Chinese shift on food”.

The heart of the dispute is, of course, that the US wants developing countries to “open up” their markets. Developing countries believe they need provisions to allow them to erect temporary barriers to foreign food products in the event of import surges. With a significant amount of subsistence farmers in India and China, a large number of whom are forced to commit suicide when the going gets tough, can you blame developing countries for wanting this provision? The United States and EU countries offer vast subsidies to their farmers. To be fair, the negotiations are around the developed countries reducing their farm subsidies in exchange for better access to developing nations’ markets.

The U.S. seems to be demanding a “dollar-for-dollar” approach in this negotiation. According to Mandelson,

Washington’s demand that its farmers get new market access in return for less subsidies had hindered the Doha round, launched in 2001 to help poor countries develop, especially in agriculture.

“The dollar-for-dollar approach does not add up in any way,” Mandelson said. “Yes, there has to be balance, yes there has to be reciprocity, but in a development round a dollar-for-dollar approach is never going to stack up.”

After decades of an uneven playing field following centuries of colonial imperialism, I’ve got to agree with Mandelson. The “dollar-for-dollar” approach does not make sense.

July 23, 2008

Is consumer debt like tango?

Filed under: Uncategorized — Tags: , , , — dafodo.uno @ 2:40 pm

The New York Times is making a big splash today about their multimedia feature on consumer debt. The article blames the financial industry of usury:

Ms. McLeod, who is 47, readily admits her money problems are largely of her own making. But as surely as it takes two to tango, she had partners in her financial demise.

Consumer debt is not like tango. There is a free market where consumers have several choices – the most important one being not living beyond their means. To be fair, some people are indeed the victims of misfortune. Medical emergencies are the single biggest cause for bankruptcies in America. But that is no excuse for this mountain of debt that the American people have piled upon themselves. Spending more than what you earn using credit cards, buying more house than you need, more car than you really need. Shoes and handbags? Come on. The situation in Britain is probably no better. And emerging markets are also beginning to ride the wave of easy credit.

Don’t try to blame the credit card companies and their exorbitant fees and interest rates. And don’t try to fix these problems with regulation.

But with so many borrowers in trouble, some bankruptcy experts and regulators are beginning to focus on the responsibilities of lenders, like requiring them to make loans only if they are suitable to the borrowers applying for them.

Why should the government step in with regulation? The government is stepping in to bail out the people and the institutions that, under a free market, would have to deal with the consequences of their actions.

July 18, 2008

Fannie, Freddie and Karachi

Filed under: Uncategorized — Tags: , , , , , — dafodo.uno @ 4:16 pm

Once again Bill Bonner delights with some interesting tidbits of news and insight. Correlating the news that Fannie Mae and Freddie Mac paid millions to Washington lobbyists with the cheap credit they get because of US government backing, Bonner writes:

What a glorious scam! The two pretended to be important parts of private enterprise…partaking in the grand scheme of risk/reward along with all other capitalist businesses…but they had the world’s biggest government standing behind them all the time; it was all reward and no risk, right from the beginning. Fannie and Freddie could funnel millions in profits from homeowners to politicians…and then, when they got into trouble, lay the losses onto shareholders and taxpayers.

In other news, stocks in Karachi are down. Traders in Mumbai have had a lot more experience with stock market crashes (arguably more than the high flyers in New York), but the Pakitanis apparently don’t realize that stock prices fall.

“We demand that all stock prices be frozen at current levels,” said a representative of the Small Investors Association, perhaps speaking for small investors all over the world. He was not, of course, speaking for short investors – who couldn’t be happier.

July 17, 2008

Fannie, Freddie and the US taxpayer

Filed under: Uncategorized — dafodo.uno @ 1:35 pm

The Economist criticizes the American financial system, highlighting the absurdity of government bailouts to reckless lenders. From the article:

The absurdity of this situation was highlighted by the way the discount window works. The Fed does not just accept any old assets as collateral; it wants assets that are “safe”. As well as Treasury bonds, it is willing to accept paper issued by “government-sponsored enterprises” (GSEs). But the two most prominent GSEs are Fannie Mae and Freddie Mac. In theory, therefore, the two companies could issue their own debt and exchange it for loans from the government—the equivalent of having access to the printing press.

July 15, 2008

Creatures of habit – Homo sapiens no different

Filed under: Marketing,Research Studies,Social Experiments — Tags: , — dafodo.uno @ 10:52 pm

The NY Times has this wonderful piece on habits, cues and marketing. Interesting snippets:

Habits are formed when the memory associates specific actions with specific places or moods,” said Dr. Wood, a professor of psychology and neuroscience at Duke. “If you regularly eat chips while sitting on the couch, after a while, seeing the couch will automatically prompt you to reach for the Doritos. These associations are sometimes so strong that you have to replace the couch with a wooden chair for a diet to succeed.

Here’s another one about Febreze:

Procter & Gamble introduced Febreze in 1996 as a way to remove odors from smelly clothes. [...] ads focused on smelly pets, sweaty teenagers and stinky minivan interiors. But Febreze flopped. [...] One of the biggest problems, P.& G.’s researchers discovered, was that bad smells simply didn’t happen often enough in consumers’ lives.  [...] consumers liked Febreze when they used it, but many customers simply forgot that it was in the house. [...] Because bad smells occurred too infrequently for a Febreze habit to form, marketers started looking for more regular cues on which they could capitalize.

The perfect cue [...] was the act of cleaning a room, something studies showed their target audience did almost daily. P.& G. produced commercials showing women spraying Febreze on a perfectly made bed and spritzing freshly laundered clothing. The product’s imagery was revamped to incorporate open windows and gusts of fresh wind — an airing that is part of the physical and emotional cleaning ritual.

“We learned from consumer interviews that there was an opportunity to cue the clean smell of Febreze to a clean room,” Dr. Berning said. “We positioned it as the finishing touch to a mundane chore. It’s the icing that shows you did a good job.”

In a sense, a product originally intended for use on piles of smelly, dirty clothes was eclipsed by its exact opposite — a product used when women confronted a clean and tidy living room. And the more women sprayed, the more automatic the behavior became.

Here’s one about beer:

Beer commercials, once filled with busty women in ill-fitting tops, are now more likely to feature groups of buddies, because research shows that groups of friends are one of the strongest habit cues.

And finally, the main story about increasing soap usage in Ghana after people use the restroom:

The commercials, which began running in 2003, didn’t really sell soap use. Rather, they sold disgust. Soap was almost an afterthought — in one 55-second television commercial, actual soapy hand washing was shown only for 4 seconds. But the message was clear: The toilet cues worries of contamination, and that disgust, in turn, cues soap.

I like such stories.

Shrinking nest eggs

Filed under: Economics — Tags: , , , — dafodo.uno @ 10:32 pm

The Daily Reckoning reports that CNN reports that since fall of 2007,

U.S. pension plans have lost about $280 billion.

“Since the credit crunch hit last fall, pension plans funded by S&P 1500 companies have lost about $280 billion in assets, according to an actuary at Mercer, a human resources consulting firm.

“On paper, the losses from last October tally $160 billion. However, according to Mercer actuary Adrian Hartshorn, the asset losses are closer to $280 billion when pension plan assets and liabilities are considered together. The assets, which totaled roughly $1.7 trillion at the end of October 2007, fell by 17%, leaving about $1.4 trillion in assets at the end of June.

“Companies should be concerned, he said, because – assuming no change in the market – a typical U.S. company can expect their pension expenses to increase between 20% and 30% in 2009. That’s due to the higher cost of servicing the pension plan’s debt and the smaller return from the plan’s assets.”

So the “magic of compounding” isn’t working any more. In any case, the pension fund managers get their 1-2% of the pie every year regardless of how much the fund loses.

July 11, 2008

Restriction of freedom of expression

Filed under: Politics,Society — Tags: , , , — dafodo.uno @ 6:31 pm

I don’t know how but I missed this story when this happened. Apparently a low-level Indian politican filed a complaint against an Orkut user for “posting derogatory messages”. Pune police actually flew to Gurgaon and arrested the man.

Vaid was charged under section 292 of Indian Penal Code and section 67 of the Information Technology Act because he created a profile and then posted content in vulgar language about Sonia Gandhi in the community.

For what it’s worth, I think Sonia Gandhi is incredibly smart. The move to give up Prime Ministership and install Manmohan Singh as PM was sheer genius.

July 7, 2008

What do you get when you exclude inflation?

Filed under: Economics — Tags: , , — dafodo.uno @ 3:33 pm

Spiegel International has this article by Gabor Steingart (translated from the German by Christopher Sultan) about how the US Federal Reserve is losing its “influence”. Dafodity from the article.

If the inflation introduced in the United States is excluded, a small miracle is revealed, namely something approaching price stability. Adjusted for inflation, prices are in fact rising by only 2.3 percent.

If you exclude inflation and still get a price rise, what the hell is going on?

July 5, 2008

Large organizations tend to dumb down – even Google

Filed under: Economics,Society — Tags: , , , , — dafodo.uno @ 1:50 am

The New York Times is running this story about Google’s day care program.

Parents who had been paying $1,425 a month for infant care would see their costs rise to nearly $2,500 — well above the market rate.

So an employee who has the misfortune of being a parent has to spend $30,000 on day care? That’s $40,000 considering income tax.

  • Why should a company whose mission is to organize the world’s information spend internal resources on day care?
  • If you have two kids, wouldn’t you just as well be a stay-at-home parent?
  • Why does Google need to have the lowest student:teacher ratios and the latest toys for kids?
  • How does a garage landlord become a vice president of a multi gazillion dollar company?
  • What does “small children’s ability to chart their own learning paths” even mean? From Wikipedia, “Parents are a vital component to the Reggio Emilia philosophy. Parents are viewed as partners, collaborators and advocates for their children. Teachers respect parents as each child’s first teacher and involve parents in every aspect of the curriculum.”
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