Friday, December 31, 2010

Happy New Year 2011

Excel VBA and Macros

Anyone who needs to learn how to use the Visual Basic for Applications (VBA) and macro features of Excel (Microsoft) should consider the video training linked below...

Wednesday, December 29, 2010

Power Excel 2010

Anyone seeking to learn Excel 2010 (Microsoft) as quickly as possible should consider using the Power Excel 2010 video training linked below:

Searching for Growth in America

Evidence of Military-Industrial Complexity

According to the Bryan Bender of the Boston Globe:
The Globe analyzed the career paths of 750 of the highest ranking generals and admirals who retired during the last two decades and found that, for most, moving into what many in Washington call the “rent-a-general’’ business is all but irresistible.... From 2004 through 2008, 80 percent of retiring three- and four-star officers went to work as consultants or defense executives, according to the Globe analysis. That compares with less than 50 percent who followed that path a decade earlier, from 1994 to 1998.

Source: Bender, B (2010, December 26), From the Pentagon to the Private Sector, Boston Globe.

Well Said...

"There is no science without fancy and no art without fact."

~ Vladimir Nabokov

Vladimir Vladimirovich Nabokov (1899-1977)

Monday, December 27, 2010

The Good Cause...

The American Legion
Preamble to the Constitution

For God and country we associate ourselves together for the following purposes:
  • To uphold and defend the Constitution of the United States of America;
  • To maintain law and order;
  • To foster and perpetuate a one hundred percent Americanism;
  • To preserve the memories and incidents of our associations in the Great Wars;
  • To inculcate a sense of individual obligation to the community, state and nation;
  • To combat the autocracy of both the classes and the masses;
  • To make right the master of might;
  • To promote peace and goodwill on earth;
  • To safeguard and transmit to posterity the principles of justice, freedom and democracy;
  • To consecrate and sanctify our comradeship by our devotion to mutual helpfulness.
The American Legion Preamble has been the beacon light of The American Legion for more than 90 years. It has been amended only once in all that time. That amendment consisted of adding the letter "S" to the word "war." It makes the Preamble read today "Great Wars," so as to embrace all wars.

I am proud to be a member (paid up for life) of the American Legion. Follow the link below to learn more.

The American Legion

Related Posts

Restoring the American Dream

As America looks to the future in a post-recession world, the nation must begin to face the realities of economic restructuring in order to compete in the emerging global economy. I commend Dr Fareed Zakaria's special report entitled, Restoring the American Dream, as instructive for the future. Dr Zakaria's call for new investments in education, training, and innovation are particularly persuasive:

Special thanks to Dr Gary Robinson for bringing Dr Zakaria's report to my attention...

Warming Hearts...

Lola peeks from beneath her quaff...

Lola the Yorkie-Poo

Sunday, December 26, 2010

What is "Junoon"...?

I just finished reading Razi Imam's new book, Driven: A How-To Strategy for Unlocking Your Greatest Potential (2010). According to Imam (pp. 46-47):
The word, Junoon, comes from the Urdu/Arabic language... The current English language lacks a single word to describe the concept, so the best we can do is describe it in three words: Junoon is a state of obsession. It's a trasnformative, all-consuming mania: a kind of craziness, if you will, that envelops your mind and heart to achieve yoiur goal.

To live within the state of Junoon is to concentrate passionately on realizing your mission and transcending day-to-day human motivation to a degree that seems impossible to those around you. Being in this state coalesces and magnifies your ordinary strength of will and determination, and turns you into a person who rises to challenges in ways that others can't even imagine. You hold nothing back. You put your all and everything that you do, and through your investment of your entire being, you find ways to surmount the most daunting of circumstantial barriers with incredible energy.

Imagine that you're so obsessed with accomplishing something for the greater good that you feel utterly consumed with getting it done. You are inspired by a mandate from the universe, and allow nothing to stop you from achieving your objective. From morning to night, you live within your passionate concentration and desire. This is what it's like to live in, and act from, the state of Junoon.
Anyone who has ever experienced Junoon during their lifetimes will quickly recognize themselves in this book. Junoon is a fascinating term and concept, which will likely find its way into the English lanaguage and lexicon.

Source: Imam, R (2010), Driven: A How-To Strategy for Unlocking Your Greatest Potential, Hoboken, NJ: John Wiley.

The Language of Business Intelligence

Vernon Prior has released a new edition of his glossary of terms used in competitive intelligence and knowledge management. Follow the link below to download a copy:

Source: Prior, V (2010), Glossary of Terms used in Competitive Intelligence and Knowledge Management, Institute for Competitive Intelligence.

Well Said...

"Education is a progressive discovery of our own ignorance."

~ Will Durant

Dr William James Durant (1885-1981)

Friday, December 24, 2010

Merry Christmas 2010

To everyone in my life, please accept my best wishes for a wonderful Christmas day with my warm regards to you and yours during this yuletide season...

Tuesday, December 21, 2010

Well Said...

"I'd like people to remember me as someone who was good at his job and seemed to mean what he said."

~ Jimmy Stewart

Brig Gen James M Stewart, USAF (1908-1997)

Brig Gen Stewart enlisted in the US Army as a private in 1941 and rose to the rank of Colonel in the US Army Air Corps during World War II with credit for flying 20 combat missions over Europe. Following the war, Brig Gen Stewart served in the US Air Force Reserve achieving flag officer rank before his retirement in 1968.

Visit the Jimmy Stewart Museum in Indiana, Pennsylvania.

Sunday, December 19, 2010

The Analytics Journey: Descriptive >> Predictive >> Prescriptive

A key management challenge of our time is to advance business analytics beyond descriptive methods, into higher order predictive and prescriptive techniques. In the video link below, Dr Jai Menon of IBM argues that while business analytics includes descriptive and predictive phases, the final phase of the journey is prescriptive.

Firms that are analytically competitive are not only practiced in descriptive and predictive methods, but are also adept at prescriptive techniques that can actuate responses to what happened (descriptive) or what might happen (predictive) in the future. Follow the link below to a related post that discusses what differentiates decriptive, predictive, and prescriptive analytics from each other.

Related Posts:

Business Analytics: Going the Distance

Record $11 Million Christmas Tree

The Emirates Palace hotel in Abu Dhabi, United Arab Emirates boasted an $11 million dollar Christmas tree this year. Apparently, the tree was decorated with ornaments made of gold, rubies, diamonds, and more. I suppose the tree was intended to be in keeping with the Christmas spirit...

Looks like the oil business is thriving. To learn more about the Emirates Palace hotel in Abu Dhabi, follow the link below:

Emirates Palace

Business Analytics: Going the Distance

Business analytics stratifies into three levels of inquiry and findings beginning with descriptive, followed by predictive, and finally prescriptive methods as follows:
Descriptive Analytics: A set of technologies and processes that use data to understand and analyze business performance.
  1. Standard reporting and dashboards: What happened? How does it compare to our plan? What is happening now?
  2. Ad-hoc reporting: How many? How often? Where?
  3. Analysis/query/drill-down: What exactly is the problem?
Predictive Analytics: The extensive use of data and mathematical techniques to uncover explanatory and predictive models of business performance representing the inherit relationship between data inputs and outputs/outcomes.
  1. Data mining: What data is correlated with other data?
  2. Pattern recognition and alerts: When should I take action to correct or adjust a process or piece of equipment?
  3. Monte-Carlo simulation: What could happen?
  4. Forecasting: What if these trends continue?
  5. Root cause analysis: Why did something happen?
  6. Predictive modeling: What will happen next if?
Prescriptive Analytics: A set of mathematical techniques that computationally determine a set of high-value alternative actions or decisions given a complex set of objectives, requirements, and constraints, with the goal of improving business performance.
  1. Optimization: How can we achieve the best outcome?
  2. Stochastic optimization: How can we achieve the best outcome and address uncertainty in the data to make better decisions?
While descriptive analytics provide a starting point for understanding problems and performance, the more significant purpose and objective of analytics is to achieve predictive and prescriptive findings via higher levels of technique. Make certain that your business analytics strategy is not short-changing decision makers by concluding with descriptive findings alone. Said another way, insist that your business analytics leaders and teams have the training and discipline to go the distance into all forms of advanced analytical methods and techniques as required. The questions posed above under each level of inquiry can provide the interrogative tools for evaluating your firm's current capabilities.

Source: Lustig, I, Dietrich, B, Johnson, C, and Dziekan, C (2010, November-December), The Analytics Journey, Analytics Magazine, 11-18.

Well Said...

"A poet must leave traces of his passage, not proof."

~ René Char

René Char (1907-1988)

Salman Khan: "World-Class Education"

Visit the Khan Academy

Michael Dell: "Enabling Human Potential"

Hans Rosling: "Human Force is the Engine"

Hanna Rosin: "The End of Men"

Thursday, December 16, 2010

Well Said...

"Fortunately we're not a public company - we're a private group of companies, and I can do what I want."

~ Sir Richard Branson

Sir Richard Charles Nicholas Branson (1950- )

Wednesday, December 15, 2010

Why College Matters...

The following chart makes a powerful economic case for earning at least a bachelor's degree in America:

Source: Thompson, D (2010, December 15), The Next Tech Boom vs the College Crisis, Atlantic.

Tuesday, December 14, 2010

Well Said...

"There is poetry as soon as we realize that we possess nothing."

~ John Cage

John Milton Cage Jr (1912-1992)

Wednesday, December 08, 2010

Gold to Oil Ratio 1948-2010

The ratio of gold to oil prices between 1946 and 2010 (as of December 7) indicates that gold has held its purchasing power vis-à-vis oil over the years. Some economists believe that the dollar to gold to oil ratios provide evidence that the dollar has lost approximately 97% of its value since 1948, and as much as 77% of its value since 2000.

Monday, December 06, 2010

Fiscal Policy or "Fantasy Football"?

I watched Dr Ben Bernanke's interview on "60 Minutes" this weekend, and I was struck my the Federal Reserve chairman's candor with regard to the possibily of deflation in today's economic environment. Yet, austerity hawks around the US are continuing their calls for fiscal policy measures that address the risks of inflation, which remains essentially non-existent today. From where I sit, calls for anti-inflationary measures are akin to playing "fantasy football" against a non-existent threat. If Dr Bernanke's views are accepted at face value, then the US is at risk of deflation and depression in the near-term, and that is the threat that our nation's fiscal policy-makers should be actively engaging...

Why Data Matters: Uncovering Insights

Effective Business Analytics

Business Intelligence: Excel 2010 PowerPivot

Business Intelligence: Excel 2010 Sparklines

Business Intelligence: Excel 2010 Slicers

Friday, December 03, 2010

US Employment to Population Ratio Continues Decline

Newly released employment data from the Bureau of Labor Statistics (BLS) shows that the US employment to population ratio declined to 58.4% in November 2010, down from 58.6% last month and 58.8% a year ago. The US employment to population ratio has been trending downwards since 2000.

Many economists believe that reporting the number employed as a percentage of the civilian population provides a more accurate description of the current state of employment than conjecturing the number of "unemployed" in a population. The US employment to population ratio reached a historical peak of 64.4% on an annual basis in 2000.

Source: Bureau of Labor Statistics

The Inspiration of Dynamic (and Animated) Data Analysis

Here is an inspiring video piece by Prof Hans Rosling that makes the case for dynamic data analysis and effective visual presentation by example. According to Prof Rosling, "having the data is not enough -- I have to show it in ways people both enjoy and understand." The future of dynamic data analysis never looked better:

Thursday, December 02, 2010

The "Moment of Truth" Report...

The bipartisan National Commission on Fiscal Responsibility and Reform released its "Moment of Truth" report earlier this week, and after a careful reading, I found the commission's views and recommendations persuasive. Those interested in the likely future direction of US fiscal policy will want to read and study the report for themselves, but I predict that at least some of the "Moment of Truth" recommendations will find their way into fiscal policy in the coming months and years. Click on the image below to download the full report.

[Click image to download full report]

Note that the contents of the "Moment of Truth" report focus on future directions for US fiscal policy rather than monetary policy, which remains the domain of the Federal Reserve. However, until fiscal-policy makers can formulate and pass meaningful fiscal reforms, monetary policy will likely remained hamstrung. Fiscal reform in the US is in urgent need of bipartisan support from both parties -- all eyes are on Congress...

Wednesday, December 01, 2010

On Teachers' Unions (and Public Education)

I recently posted a comment to an article entitled, Debate: Are Teachers’ Unions the Problem—or the Answer? (Adler, 2010, March 19, Newsweek Online) and I wanted share the post with readers of The Vantage Point with my invitation to join the debate:
The teachers’ unions are not really the problem (or solution) in my view. The problem is that the format of secondary education has not changed for one hundred years. At some point during the 21st century (and the sooner the better), society will need to consider the economic efficiencies afforded by alternative education. For example, society will soon witness the arrival of “3rd-grade-in-a-box” education technology that will far surpass the teaching effectiveness of traditional “bricks and mortar” schools. Imagine if every child in America could be mailed an education program developed by subject matter experts that effectively replaced sending one’s children to the school bus (which costs money), then on to their homerooms (we have already wasted an hour of each student’s time just getting to school), then on to several sessions of classes taking place in a school building throughout the day (including the costs of the building, maintenance, heating, air conditioning, security, insurance, and so forth), then back to their school buses (more student time and public money out the window), and finally to return home. At some point, this model for public education will be rejected by progressive families who will elect the “3rd-grade-in-a-box” alternative and keep their children home except to socialize and play sports with children in their neighborhood. The cost savings of moving public education from “bricks and mortar” to “boxed delivery” formats could be tens to hundreds of trillions of dollars over time. If teachers’ unions are against moving education forward with the emerging technology, then yes, they are part of the problem. However, the existence of teachers’ unions is not really the issue in my mind. Society needs to seek economic efficiencies from all public services, and secondary education is ripe for technological reform in the near future. Thank you for the opportunity to comment...
Source: Adler, J (2010, March 19), Debate: Are Teachers’ Unions the Problem—or the Answer? Newsweek Online.

Monday, November 29, 2010

Well Said...

"The chief business of the American people is business."

~ The Hon John Calvin Coolidge

Hon John Calvin Coolidge (1872-1933)

On Preventing Colon Cancer

Find below a video clip produced by my brother, Dr Ralph D McKibbin, together with Greg Gumbel of The Economic Report. I urge everyone to watch this short piece and to consider the personal screening choices that will help prevent colon cancer during our lifetimes.

Be certain to ask your physician about the simple screening procedures that can help prevent this disease. Also, please consider sharing this important message with your family and friends using the networking tools below, thanks...

Thursday, November 25, 2010

Onwards to 64-bit Excel...

Well, it's official -- I leaped from 32-bit to 64-bit Excel earlier today -- I have a client project underway that requires the spreadsheet space, so the move was mandatory -- no looking back...

Happy Thanksgiving!

Happy Thanksgiving to all my friends and colleagues around the world...

Fall foliage from my home in the Allegheny Mountains of Pennsylvania...

Sunday, November 21, 2010

Well Said...

"In times of change, learners will inherit the earth while the learned will find themselves beautifully equipped to deal with a world that no longer exists."

~ Eric Hoffer

Eric Hoffer (1902-1983)

Friday, November 19, 2010

Well Said...

"Ten thousand hours of practice is required to achieve the level of mastery associated with being a world-class expert -- in anything."

~ Prof Daniel J Levitin

Prof Daniel J Levitin (1957- )

Sunday, November 14, 2010

Well Said...

"Society acquires new arts, and loses old instincts."

~ Ralph Waldo Emerson

Ralph Waldo Emerson (1803-1882)

Saturday, November 13, 2010

How to Save the Euro? Lessons from the US

by Jacques Melitz ©

Earlier this year, the fiscal situation in Greece caused turmoil across Europe. This column examines why the financial difficulties of several state governments in the US are not having similar impacts on its economy.

The problems of the Eurozone this year brought to light some failures of the system. Nevertheless, the resulting drop in confidence in the system has gone further than we might have expected. Questions have even arisen about the survival of the system (see Baldwin 2010 and Blejer and Levy-Yeyati 2010 for discussions). Yet monetary systems do not tend to dissolve simply because of faulty performance. On the contrary, as a rule they endure even when they function very badly. It takes a political force majeure to bring about the break-up of a single currency area, typically without connection to monetary performance. Why, then, has the possible default of a country engaged in irresponsible fiscal policy and accounting for only 3% of the Eurozone’s GDP raised questions about ‘saving the euro’ and the survival of the Eurozone?

The issue has not received the attention it deserves. It is often simply taken for granted that the departures from the Stability and Growth Pact provide a sufficient reason for the earthquake that has shaken the whole currency area. Yet if we look around the world past and present, the mismanagement of finances by regional governments has no particular tendency to bring down entire monetary systems, far from it. In line with the usual – I think superficial – diagnosis of the ailment, proposed remedies for the Eurozone centre on strengthening the Pact, increasing joint political control over fiscal policy, and providing joint insurance against government default, or some mixture of the three. But what if a vital element of the problem is really the official doctrine that sovereign default is incompatible with the euro? What if the scale of the crisis that took place this year has resulted from financial markets’ conviction, based on this doctrine, that the future of the euro was at stake? What if assuring the long-run sustainability of the euro means convincing those markets, quite differently, that nothing as manageable as a Greek default can upset the Eurozone?

Lessons from the US

That is precisely what the US example would suggest and what I will defend. With this idea governing beliefs, the right road ahead looks quite different. It means shifting the emphasis away from avoiding government defaults toward assuring the stability and the solvency of the banking system at all times, regardless of the financial difficulties of some member governments.

In the US, default on state and municipal contractual obligations is very much a possibility whenever lower-level governments are in financial trouble; bailout cannot be taken for granted. New York City defaulted in 1975, the biggest default of all by a lower-level government unit since World War II took place in 1983 when the Washington Public Power Supply System went into bankruptcy, and Orange County defaulted in 1995. Various municipal governments have been on the verge of default at times in the last few decades, including Philadelphia and Cleveland. There is also no Stability and Growth Pact in the US. Yet financial discipline is considerably higher in the US at the state government level than in the Eurozone at the national level. All states except Vermont have balanced-budget rules; but these rules are self-imposed. It is easy to argue that this difference in fiscal discipline on the two sides of the Atlantic is related to the fact that when push comes to shove in the US and a lower-level government unit cannot or will not meet its debt obligations, the lenders can expect to take a big part of the hit.

Some rudimentary analysis is relevant. Consider any government unit unable to print money and without any prospect of a bailout. Theory tells us that credit rationing is very much a possibility. As the interest rate that such a government offers on its debt goes up, extra lending dries up completely at some point as the expected rate of return on the government debt falls. This must happen because higher nominal interest rates impair the government’s solvability and bring default nearer. Risk aversion simply lowers the interest rate at which credit rationing begins.

Suppose we compare the situation in the US and the Eurozone since the 2007-2009 financial crisis in this light. The crisis brought about dire financing problems for many lower-level government units in the US and some national governments in the Eurozone. According to the spreads on credit default swaps, California and Illinois now have a higher probability of non-performance on public debt than Portugal and Spain. This has been true for months. Consider next the difference in response in the States and Europe. Recently Illinois simply stopped paying $5 billion of bills. In June of last year California issued vouchers for wage payments. In addition, savage cuts in public services have begun and are now threatened in various states in difficulty, not only these two. Nevada has made startling reductions in spending on higher education and welfare. In the case of Portugal and Spain, nothing so drastic has happened thus far. There have been occasional spikes in interest rate spreads over German bunds of 100 to 200 percentage-points above usual levels. Both Spanish and Portuguese governments have also been forced to plan greater austerity and reduced government deficit spending. Meanwhile, they have been able and willing to keep borrowing.

Why the difference between the Eurozone and the US?

Part of the explanation may be that Portugal and Spain are more able to raise tax revenues than US states. But another part is the higher probability of a bailout in Europe. The example of Greece is to the point. Greece has been able to continue borrowing this year at interest rates typically around 200 percentage-points above Portugal and Spain on 10-year government bonds (and since May more than 500 percentage-points higher than German bunds). If you do the math, it is clear that this could never have happened without a high probability of a bailout. In fact, you do not need to do the math: there have been occasions in February/March and particularly May when some Greek issues would clearly have failed without the assurance of public lending and ECB support. If Greece can borrow on the probability of a bailout, so could Portugal and Spain.

Based on this evidence, the current Eurozone strategy of treating government default as anathema permits member governments to sink into deeper waters, weakens the forces that would otherwise exist toward self-imposed budget restraints, and thereby raises the probability of a bailout. But an actual bailout is perhaps the most likely setting for the breakdown of the Eurozone. If taxes ever need to rise all over the Eurozone in order to bail out a member government, one can easily imagine a pullout by Germany, followed by the Netherlands and Austria (if no others), in order to form a separate monetary union.[1]

What are the dangers of the opposite strategy of mimicking the US instead and moving toward heavier reliance on markets to discipline member governments and to price sovereign risk? The answer lies in the external effects of government default on the payment system and the banks, and this problem would be aggravated by contagion. But those dangers exist in the US as well. If the US federal government were to allow Illinois or California to default on state government debt in today’s circumstances of widespread financial difficulties across the states, there is a serious threat that interest premia would go up on the debt of most state governments and a wave of state defaults would follow. For this reason, the federal government might well step in. But if we look at the institutional manner in which the US deals with the problem, we find the answer to lie in country-wide prudential rules for banks and central bank powers of lender of last resort. There is no general announcement that state government default is incompatible with the dollar. Instead there is a strict separation of the issue of joint support of the financial system and joint support of financing by the sub-government units in the country. Would Europe not be wise to adopt the same strategy and to cease to conflate the two issues?

Tweaking the Pact

What this would mean, of course, is adopting Eurozone-wide prudential rules on banks, providing the ECB full powers of lender of last resort, and, very significantly, dismissing the idea that the Stability and Growth Pact is the pillar on which the whole Eurozone project stands. This idea is highly perilous.[2] Markets believe it, and at times of financial precariousness, what markets believe is extremely important. According to my proposal, the Pact could still be upheld as a code of good behaviour which improves public finances in Europe and facilitates the task of the ECB. But the basic philosophy would be that if any individual member government in the Eurozone engages in irresponsible fiscal conduct, contrary to the Pact, the creditors and its taxpayers would bear the brunt of the consequences. Everything would be done to assure the stability of the financial sector in the Eurozone and the lack of repercussions on the risk premiums that the more financially responsible member governments need to pay. Banks might be bailed out but not governments. Any aid to member governments, if it came, would not concern the euro system but the IMF or if any aid did come from the EU it would be part of a programme that could as well have existed had the euro never appeared and would be clearly sealed off.

VoxEU Editors' note: This article will appear as a roundtable discussion in Miroslav Beblavy, David Cobham and Ludovit Odor, eds., The euro area and the financial crisis, Cambridge University Press, forthcoming.


Baldwin, R (2010), A re-cap of Vox columns on the Eurozone crisis”, 13 May.

Blejer, M and Levy-Yeyati, E (2010), Leaving the euro: What’s in the box,, 21 July.

Economist (2010), Can pay, won’t pay, June 19.

Poterba, J (1996), Do budget rules work? NBER Working Paper 5550, April.

Public Bonds (2010), Municipal bonds and defaults, downloaded 23 August.

Reinhart, C M and Rogoff, K (2009), This time is different: eight centuries of financial folly, Princeton: Princeton University Press.

Sinn, H-W (2010), Rescuing Europe, CESifo Forum, special issue, August.


[1] Many would say that Greece has already been bailed out. But so far no holder of Greek debt has yet suffered a credit event. Further, no one outside of Greece has yet paid any taxes to fulfil a claim on Greek debt. Thus, according to my usage, no bailout has happened. However, none of the argument hinges on this choice of words.

[2] If we really think that a government default would bring the euro under, we must conclude that the euro has no long-run future ahead – that it is doomed. A reading of Reinhart and Rogoff (2009) should convince anyone.

Republished with permission of

Monday, November 08, 2010

Well Said...

"Funeral by funeral, theory advances."

~ Prof Paul A Samuelson

Prof Paul A Samuelson (1915-2009)

Friday, November 05, 2010

US Employment to Population Ratio Unchanged

The latest employment data just released by the Bureau of Labor Statistics (BLS) shows that the US employment to population ratio stagnated at 58.6% between September and October 2010, and was down slightly from 58.8% for the same period last year. The US employment to population ratio has been trending downwards since 2000.

Many economists believe that reporting the number employed as a percentage of the civilian population provides a more accurate description of the current state of employment than conjecturing the number of "unemployed" in a population. The US employment to population ratio reached a historical peak of 64.4% on an annual basis in 2000.

Source: Bureau of Labor Statistics

Monday, November 01, 2010

Well Said...

"There is always a crying need for good people."

~ Ralph Eddowes McKibbin Jr

Ralph Eddowes McKibbin Jr (1919-2003)

Related Posts:

The Need for Good People

Saturday, October 30, 2010

The Empire Strikes Back

by Avinash Persaud ©

The role of financial institutions in the global crisis has led to a consensus that financial regulation must change. This column argues that the banking lobby, far from depleted, has struck back with a vengeance. It has managed to postpone the much needed regulation for a time when the need for it will be forgotten.

There are two remarkable aspects of the consensus around international financial regulation emerging in the run up to the November G20 meeting in Seoul. The first is that there is a consensus. International regulators are agreed that banks must set aside much more capital for risky assets; be less dependent on the whims of money markets; constrain the maturity mismatches between their assets and liabilities and set aside capital for holding complex derivatives where there may be settlement and clearing risks. They also agree that capital adequacy should move counter to the economic cycle and that banks should not be “too big to fail”. Getting an international consensus around action that is sensible – save for the emphasis on “too big to fail”- is no mean achievement.

The second is that despite appearing to be down and out, the banking lobby has struck back, successfully making the case that all of these initiatives should be postponed or phased-in between 2015 and 2019. By then the pressure for regulatory reform could be a distant memory. Financial regulation veterans will be experiencing déjà vu. In each of the last seven international financial crises, plans for a radical shake up of international regulatory or monetary arrangements made surprising progress, only to be tidied away and stuffed in the bottom drawer once the economy recovered. Many of the new initiatives being proposed today have been pulled out of that same drawer, dusted down and updated.

The argument that the banking system is too broken and the world economy too fragile, to support more onerous regulations, is seductive for politicians desperately trying to boost consumer demand. But it is suspect. It highlights that attempts to make banking regulation more counter-cyclical have not gone far enough. The point of counter-cyclicality is to loosen the constraints to lending in times of recession like today and to tighten them when growth and optimism have returned and the worse credit mistakes are being made. Counter-cyclicality needs to be at the heart of the new regulatory regime and not an optional extra. As Professor Charles Goodhart of the LSE and I have said before, crashes will not be avoided if we continue to feed the booms. The methodology of counter-cyclicality is complex and given that economic cycles are more national or regional than global, it makes for greater host country regulation and national ring-fencing of bankers’ operations. International banks do not like that. To counter they appeal to the “right”-sounding notion of level playing fields.

The other problem of kicking regulatory initiatives into the long grass is that as long as the prospect of new profit-squeezing regulation is out there, uncertainty will limit the one thing everyone is agreed the banking system needs more of – capital from investors. It is one of those delicious fallacies of composition that what banks want individually is often not in their collective interests. I recall writing in October 2002, what the FT headline writers presciently captured as “Banks put themselves at risk in Basel.”

Competitive finance is critical to the development of a robust and dynamic economy – locally and globally. But the lesson currently being repeated is that regulatory capture – subtle, sophisticated, and seductive – has the power to stop us from developing a financial industry that serves the economy rather than the other way around.

Tackling regulatory capture head on is the better argument for limiting bank size. The notion that smaller institutions will make the financial system safer ignores history. The UK Secondary Banking Crisis of 1973-75, for example, had a bigger impact on property prices and the stock market than the current one. The principal avenue of financial contagion is the panic-stricken search for institutions that look similar to the one that has just failed. Moreover, a large number of small institutions doing the same dangerous thing is just as toxic, if not more so, than a small number of large institutions engaged in the same activity. But smaller institutions invest less in political lobbying. A politically less powerful financial system has a better chance of being reassuringly boring.

The way to make the financial system safer is to break up institutions not by the porous boundaries of “narrow” and “wholesale” banking, but by the more fundamental boundaries of risk capacity. To create systemic resilience we need a systemic approach to capital adequacy requirements across the entire financial system, one that pushes different financial risks to wherever across the entire financial there is greater capacity for those different risks.

This is simpler than it sounds. There are three major types of risk: credit risk, market risk, and liquidity risk. Their differences can be found by the different ways in which these risks can be hedged or absorbed. The capacity to absorb liquidity risk comes from having time to sell an asset because liabilities, like promises to pay a pension in twenty years, are long-term. The capacity to absorb credit risk comes from having access to a wide range of uncorrelated credit risks to pool together, like a loan to an international oil company and another to a local wind farm. A financial system in which liquidity risks were held by young pension funds because of the capital required to set aside maturity mismatches, and credit risks by large consumer banks, because of the capital required to set aside for concentrated credit risks, would be far safer than one with twice the amount of capital but where the banks fund illiquid private equity investments and pension funds hold credit derivatives because regulators and accountants treated risk as if all that mattered was price volatility not risk capacity. Limiting risk taking to risk capacity would limit the size of banking institutions. It would create opportunities for new players with different risk capacities.

But the odds of a systemic approach to systemic risk appear slim. It’s politics, stupid!

Republished with permission of

Thursday, October 28, 2010

Well Said...

"Philosophy recovers itself when it ceases to be a device for dealing with the problems of philosophers and becomes a method, cultivated by philosophers, for dealing with the problems of men."

~ Prof John Dewey

Prof John Frederick Dewey (1859-1952)

10 Ways A Grammar/Spelling Checker Can Help

by Tomer Harel © 2010 Takanomi Ltd Company

Software that will find corrections for your spelling and grammar has many benefits. Some of these reasons are not so obvious, while others are quite apparent. Although social networking and texting has caused many people to stop using good spelling and grammar, professional people, employers and teachers still expect it. In fact, more emphasis is being placed on this in recent years due to the decline in good writing skills. Here are some of the advantages in using a program that will find and correct grammar and spelling errors.

1. Learning problems such as dyslexia or attention deficit disorder cause people to struggle in both spelling and grammar. A program that can do a grammar and spelling check on written work will help people find the mistakes that they tend to make. Those with learning disabilities sometimes have trouble focusing and/or catching their errors. A software program that will catch these mistakes will make it easier to communicate with others and help them avoid making embarrassing mistakes.

2. Another great advantage of having a grammar and spelling checker is the error-free work that will be produced. With a program helping them find their spelling and grammar errors, people no longer have to be anxious about their work. With a spelling and grammar checker, they can rest assured that their work will be correct.

3. Spelling and grammar really matters on the job. People don't usually spend enough time proofreading their work, which often backfires on them. Oftentimes, they may not know the damage that comes about by using poor grammar and spelling. However, the bottom line is that others will have negative feelings about them and their company if their words are not used correctly. People will be more likely to succeed at their jobs if they use good spelling and grammar skills. This can make it more likely for them to receive promotions and a raise from their employers.

4. Spelling and grammar checkers are especially helpful for those who are very busy. It takes time, but everyone should proofread their work. These programs can help save time by finding errors and making suggestions for correction.

5. Many people hate to write because they know they don't do a good job at communicating or they don't have good writing skills. A top-notch spelling and grammar checker can help to take away some of that stress. They can write papers for school, comment on a social networking site or send an email with the confidence that they are avoiding major mistakes in spelling and grammar.

6. People who don't have good spelling and grammar skills will often find other people to proofread their work for them. While this is helpful, they still must depend on others. Others must now take the time to do this work for them and they have to wait on others, trusting that they will do a good job. If they can find a checker program to do this for them, they will be able to become more independent and get their work done when they want to get it done.

7. Although many don't like to admit it, having good grammar and spelling skills is important. People often look down on those who don't write correctly, even belittling them. If an employee continues to make grammatical and spelling errors at work, their employee has the right to fire them, as this is a reflection on the image of the company. Using a quality spelling and grammar correction program will not only help workers to have more confidence in themselves, but they will gain the confidence of their customers, peers, teachers and employers as well.

8. Because so many people take good writing skills lightly, people can really gain the upper hand at school, on the job and elsewhere by using correct words, both in spelling and grammar. Teachers are very impressed with students who take the time to correct their errors and turn in papers with great grammar and spelling. A worker who will take the time to correct written errors is appreciated by his or her employee. It's a great feeling to know that more doors are open to a brighter career future by investing in a grammar and spelling checker.

9. Investing in a grammar and spelling checker will enable others to communicate effectively on social networking sites, emails, and letters. This can affect their personal lives because the greater their skill with words, the greater their ability to communicate with others. Friends and colleagues will be impressed at the ability of those who can write with meaning and depth.

10. For those just learning to speak English, a spelling and grammar checker is a great way to improve their skills while communicating with others. As they learn, they will be able to use their spelling and grammar program to find and suggest the right words. This can help them learn also, both in grammar and spelling. They will then be able to write things correctly, through the spelling and grammar correction that follows, and thus, improve their skills and communicate with others in English.

Republished with permission of

Sunday, October 24, 2010

Well Said...

"Maybe the preoccupation with technological progress has overshadowed our concern with human progress."

~ Wynton Marsalis

"Dr" Wynton Marsalis

Monday, October 18, 2010

How Wall Street Consumes Main Street

Here's a short video from the Huffington Post that discusses how banks on Wall Street are essentially "gutting" value from homeowners on Main Street. It would seem to me that Wall Street might find better ways to make money other than consuming the equity of struggling homeowners across the US.

Saturday, October 16, 2010

Financial Economics Intelligence

I am constantly posting and reposting the links below for my students (and sometimes colleagues) who are seeking source data for basic research in financial economics. Here are several of the most important intelligence resources used by economists around the world:

Federal Reserve System Online

Bureau of Labor Statistics

Bureau of Economic Analysis

Internal Revenue Service

If you are conducting basic research in financial economics, you will find an enormous amount of information and data in the links above. Moreover, most of the material available on these websites is free to access and download…

Friday, October 08, 2010

US Employment to Population Ratio in 10-Year Decline

The latest employment data just released by the Bureau of Labor Statistics (BLS) shows that the US employment to population ratio suffered another decline in September 2010 to 58.6%, down from 58.9% for the same period last year, and from 58.8% for the previous month in August. The US employment to population ratio has been trending downwards since 2000.

Many economists believe that reporting the number employed as a percentage of the civilian population provides a more accurate description of the current state of employment than conjecturing the number of "unemployed" in a population. The US employment to population ratio reached a historical peak of 64.4% on an annual basis in 2000.

Source: Bureau of Labor Statistics

Thursday, October 07, 2010

The History of Economic Thought

Here is a link to a useful website for those interested in financial economics, entitled The History of Economic Thought. The website is provides a comprehensive overview of the major schools of economic thought, including the pre-classical, classical, Ango-American, continental, heterodox, Keynesian, and thematic approaches to economics:

The website is sponsored and maintained by The New School in NYC.

Wednesday, October 06, 2010

Public Dental Clinics: The 1930's is Today

The Main Street Depression that continues to ravage America invites comparisons between today's economy, and that during the Great Depression of the 1930's. Consider the photographs that follow. The first depicts a public dental clinic that treated school children by the busload in Rochester, NY during the Great Depression. The second is a photograph of a typical public dental clinic operating in America today.

Public Dental Clinic in America during the 1930's...

Public Dental Clinic in America Today...

Of course, the quality of dental care has improved dramatically since the 1930's. However, the delivery of clinical dental care to those in need seems to have changed little, or so it appears...

Friday, September 24, 2010

Well Said...

"Through want of enterprise and faith men are where they are, buying and selling, and spending their lives like serfs."

~ Henry David Thoreau

Henry David Thoreau (1817-1862)

Sunday, September 05, 2010

Business Intelligence = Data + Analytics

We might all find inspiration from IBM's recent advertising regarding the future of business intelligence, data, and analytics.

For more information, visit:

A Smarter Planet

Related Posts:

The Art and Science of Data Enjoined

Nature by Numbers

The Fourth Paradigm: Data-Intensive Scientific Discovery

Education of a Computer Programmer

I came across a photogragh of my first personal computer purchased back in 1983 -- the Apple //e -- and suddenly found myself reminiscing about how I became a computer user. The Apple //e was powered by the venerable MOS Technology 6502 8-bit microprocessor running at 1.023 MHz, and boasted 128 kilobytes of RAM. I recall taking a $2,500 personal loan to make the purchase, which included the hardware shown below along with an Apple Imagewriter dot-matrix printer.

I spent many hours programming and otherwise "playing" on my Apple //e during the mid-1980's. What I did not know at the the time was how important computer technology would become for me and my career. I essentially taught myself to program on the Apple //e at home, and would later build upon what I had learned as I migrated onto more powerful machines in subsequent years. However, my education about personal computers definitely started on the Apple //e computer, and my life has not been the same since.

My how computer technology has evolved.

Well Said...

"I am not an Athenian or a Greek, but a citizen of the world."

~ Diogenes of Sinope (412-323 BC)

Diogenes Searching for an Honest Man by Jacob Jordaens (1593-1678)

Saturday, September 04, 2010

US Employment to Population Ratio Gender Convergence

I ran some projections for the US employment to population ratio by gender, and the findings suggest that a convergence in labor participation by genders could occur by 2015. Gender participation in the US workforce has been steadily converging since 1948.

[click to enlarge]

US Employment to Population Ratio in 10-Year Decline

A reader asked that I add a trend line to the chart posted at US Employment to Population Ratio Declining. Gladly. Find below the original chart for August 2010 with the addition of a 5th order polynominal trend line (see equation on chart). Note that the US employment to population ratio has been trending downwards since 2000.

[click to enlarge]

I will include a trend line in future updates as well.

Friday, September 03, 2010

Well Said...

"Fall on your face, really -- it's the only way you’re going to learn. God help you if you never fail, because you'll never grow."

~ Bradley Cooper, Georgetown '97

Actor Bradley Cooper at Georgetown University (September 2, 2010)

US Employment to Population Ratio Declining

The latest employment data just released by the Bureau of Labor Statistics (BLS) shows that the US employment to population ratio suffered another decline in August 2010 to 58.8%, down from 59.3% for the same period last year, and from 58.9% for the previous month in July.

Many economists believe that reporting the number employed as a percentage of the civilian population provides a more accurate description of the current state of employment than conjecturing the number of "unemployed" in a population. The US employment to population ratio reached a historical peak of 64.4% on an annual basis in 2000.

Source: Bureau of Labor Statistics

Related Posts:

US Employment to Population Ratio Dismal

US Jobs Recovery to Take Years

Percentage Employed in US Continues Slide

Unemployed Should Consider Emigration

Depressions Past and Present

Main Street USA in Economic Depression

Well Said....

"A confusion of the real with the ideal never goes unpunished."

~ Geothe

Johann Wolfgang von Goethe (1749-1832)

Thursday, September 02, 2010

Main Street Money

Given the extent of the Main Street Depression now raging across America, and given that monetary and fiscal policies have left America with insufficient legal tender to conduct local and regional commerce, should municipalities, counties, and even states consider issuing their own "scrip" as a means to expand the available money supply?

National Park Bank of New York Clearing House Certificate for $500 (1873)

During past depressions in the US, the appearance of local currencies in the form of "depression scrip" became commonplace (see examples). California has recently experimented with issuing warrants to its citizens in lieu of tax returns (see last example). The use of local and regional currencies is not without precedent in the US.

Five Dollar Certificate issued by the San Francisco Clearing House (1907)

Town, cities, counties, and states across the US are being strangled by deficits, and the supply of legal tender for commerce is simply inadequate to sustain current spending levels and public services. Should these same entities consider issuing their own currencies as a way to supplement the local money supply and maintain current levels of public employment and services? So far, a Main Street economic recovery appears elusive, especially given that our nation's fiscal and monetary policy-makers view local prosperity as a by-product of national prosperity. I would not be surprised to see local, regional, and even state currencies sometime in the near future.

Five Dollar Certificate issued by the Chicago Clearing House (1933)

Public entities that create their own currencies could use these "dollars" to pay public employees, contractors, suppliers, and pensioners. Additionally, public healthcare programs funded by states could be paid for using local currencies as services are rendered. Finally, local currencies could be used to pay public taxes due from taxpayers and business entities within those jurisdictions. Of course, this would mean that what America knows to be a "dollar" would become somewhat confusing. However, the creation of local and regional currencies could very well be a useful way for states to manage their budget deficits, or at least until the US money supply becomes more robust on a local and regional basis.

Warrant issued by California (2009)

The shortage of money in various localities and regions across the US has created a crisis, especially given that the nation's largest banks and corporations are continuing to hoard cash for whatever reasons. Perhaps expanding the Main Street money supply can be accomplished without the consent of the US Federal Reserve after all.

Wednesday, September 01, 2010

Well Said...

"The challenge we face is how to improve intergovernmental transparency and intergovernmental response capabilities to address the new realities of our world."

~ John C Reppert (January 3, 2008)

Dr John C Reppert, USA (Ret)

Back to School

Along with my colleagues, I am back to school fully engaged in facilitating and encouraging active learning, thinking, and scholarship. Of course, with each new year comes changes in the nature of the college experience for both learners and educators. I suppose that higher education is incrementally "reinvented" in very subtle ways as each year passes.

This year, students and faculty alike are returning to the halls of higher education in an environment of economic uncertainty, both for the economy and for capitalism. Clearly, the world has changed since last year as unemployment and human suffering have reached levels not seen since the peak of the Great Depression in 1933. For these reasons, researchers and students have become increasingly anxious to consider and understand what is happening economically, including implications for the future.

Prof Walter Russell Mead, Bard College

I came across a very interesting article by Prof Walter Russell Mead entitled, Back to School, which includes some useful guidance for everyone engaged in higher education. Here's a taste of Prof Mead's advice for college students, today:
Choosing the right college is over-rated. Just about every college in the United States has more talented and interesting students than you will have time to get to know in four years. At every college in America you will not be able to take all the great courses from great faculty, read every worthwhile book in the library, or participate in all the rewarding extracurricular activities.... Choosing the right courses, on the other hand, is under-rated. In the old days you could take a lot of silly courses and guts and get away with it. But your generation is going to have to scramble and you need every edge you can get.
You can read Prof Mead's entire article by following the link below:

Source: Mead, W R (2010, August 31), Back to School, The American Interest Online.

Well Said...

"The secret of being a bore is to say everything."

~ Voltaire

François-Marie Arouet "Voltaire" (1694-1778)