Wednesday, July 27, 2011

Libertarians Against Raising the Debt Ceiling

Libertarian Party Chair Mark Hinkle released the following statement today:
Everything I've heard from Washington politicians about the debt limit is nonsense. I propose the simplest option: Do nothing. Don't raise the debt limit, period.

None of the deals I've heard would do anything to cut federal spending. Some reduce the rate of growth a little bit, but I'm afraid that doesn't count. And of course, some of the proposals would increase taxes, which Libertarians are totally opposed to.

The best outcome would be no deal at all. If the debt limit is not raised, then the federal government will have to cut its spending by over 40%. That would be the best outcome for the future of America, and it's certainly the preferred outcome for Libertarians.

I'm actually shocked at how resistant both the Republicans and Democrats are to making cuts. I wasn't expecting much, but their proposals are downright embarrassing.  For example, consider Speaker Boehner's plan. According to the Cato Institute, the Boehner plan doesn't cut spending. It just sets the spending increases slightly below the imaginary Congressional Budget Office (CBO) 'baseline.'

According to the CBO report released yesterday, the Boehner plan has practically no effect on the deficit in 2012, the only year that really matters. In fact, the Boehner plan actually increases Pell Grant spending by $4 billion in 2012. (So does the Reid plan in the Senate.)

Of course, the Reid plan largely takes advantage of massive errors in the CBO baseline to claim 'cuts.' (For example, the CBO predicts absurdly high levels of spending for the wars in Iraq and Afghanistan.)

As usual, Republicans and Democrats are trying to create the illusion of a high-stakes game between two vastly different visions. In fact, their visions are practically identical. I hope Americans will see through all the smoke, and consider the Libertarian option to make real reductions in the size and scope of government, across the board.
The Tea Party is starting to resemble the Libertarian Party, at least when it comes to fiscal policy...

Source: Press Release (2011, July 27), Libertarian Party.

Fiscal Policy Changes Under Two Presidents

Fiscal Policy Changes Under Two Presidents [Click to enlarge]

Source: Fallows, J (2011, July 25), The Chart That Should Accompany All Discussions of the Debt Ceiling, Atlantic.

Tuesday, July 26, 2011

Exoskeletal Software: The Analyst's View

Dr John D Cook (2011) draws an intriguing contrast between how analysts and programmers view software:
Analysts use expert software developed by programmers in order to produce business intelligence... [However,] there’s a major divide between the way scientists [including analysts] and programmers view the software they write... Scientists see their software as a kind of exoskeleton, an extension of themselves... The software may do the heavy lifting, but the scientists remain actively involved in its use. The software is a tool, not a self-contained product... [Conversely,] programmers see their software as something they will hand over to someone else, more like building a robot than an exoskeleton. Programmers believe it’s their job to encapsulate intelligence in software. If users have to depend on programmers after the software is written, the programmers didn’t finish their job.
I personally know more than a few analysts (myself included) who view their software as an exoskeletal extension of who they are and what they do. The exoskeleton metaphor speaks volumes about the motivations of analysts who abhor being separated from their preferred software applications. For these reasons, I advocate matching software tools to the analyst rather than the analyst to the software -- the implications for productivity and practice are immense.


Source: Cook, J D (2011, July 21), Software Exoskeletons, The Endeavor.

Monday, July 25, 2011

A Modest Suggestion for Pres Obama Regarding the Budget Impasse...

Pres Obama should put Congress on notice that if they do not pass a budget he can sign immediately, then he will redeploy half of all US servicemembers currently serving overseas back to the US and demobilize them under his authority as Commander in Chief -- such a move would reduce government spending dramatically -- the center of gravity for Republicans is defense spending and the military industrial complex -- a threat by Pres Obama to issue orders that would disrupt the staus quo on military spending would cause the Republicans to cave in to his demands for a balanced approach to reducing the deficit...

How to Purchase Gold

How to Purchase Silver

How to Purchase US Treasuries

Sunday, July 24, 2011

What is a Pyrrhic Victory?

Pyrrhic victory
n
a victory in which the victor's losses are as great as those of the defeated. Also called Cadmean victory [named after Pyrrhus (319-272 BC), King of Epirus, who defeated the Romans at Asculum in 279 BC but suffered heavy losses]


Source: The Free Dictionary

Saturday, July 23, 2011

Lessons from Shays' Rebellion

One has to wonder whether the economic impasse in America today is at all similar to the circumstances that lead to Shays' Rebellion in 1786-87.

Greece Through the Rear-View Mirror

by Domingo Cavallo and Miranda Xafa © VoxEU.org

Thursday's EU summit in Brussels announced new plans for tackling the Eurozone crisis. This column says that restructuring of Greece's debt will reduce Greece's access to external financing without reducing its debt burden to sustainable levels. It suggests additional financial support contingent on larger haircuts.

European officials have struggled for weeks to reconcile the competing priorities of Germany and other surplus countries with those of Greece. Until Thursday's summit, the EU treated the debt crisis as a liquidity problem rather than a solvency problem. This contributed to the market turbulence and allowed the crisis to spread to Italy. This undermined confidence and threatened the stability of the euro itself.


Recognising that “re-profiling” of the debt by pushing maturities into the future is no longer sufficient, EU leaders reached an agreement that tries to address medium-term debt sustainability concerns while keeping the resulting losses for banks manageable.

The Deal is Probably Not Enough

The deal implies a 21% reduction in the net present value of debt owed to bondholders, which constitutes about 70% of Greece’s total public debt. This implies a reduction of 15% in total public debt, which would bring it down from 156% to 132% of GDP. With most analysts estimating the needed debt reduction closer to 50%, this deal is unlikely to ensure debt sustainability even if Greece fully implements the medium-term fiscal plan it has just voted into law.

Since it is impossible to have a fully voluntary scheme that shifts part of the financing burden to bondholders while keeping Greece’s funding costs at sustainable levels, Greece will almost certainly get a “selective default” rating. Such a rating would complicate Greece’s access to ECB financing without ensuring that Greece will emerge from default with a sustainable debt burden.

Analogies with Argentina

The situation confronting Greece today is similar to Argentina’s situation in the summer of 2001. The economy was in recession and credit spreads had widened as market participants realised that fiscal tightening was becoming less palatable economically and politically.

At the request of the Argentine government, which still wanted to avoid what would have been considered a selective default by the rating agencies, the IMF proceeded with a substantial augmentation of the financial support already committed under the existing three-year stand-by agreement. Argentina thus missed the opportunity to restructure its debt while it still had ample reserves and bank deposits remained near peak levels.

With the benefit of hindsight, the financial resources of the international community used to bail out private creditors should instead have been used to deal with the consequences of an orderly debt restructuring, including the provision of ample liquidity and capital to the banking system.

Greek Choices

Greece is facing the same choices now. With Greece’s dim prospects for market re-access in 2012-13, the EU/IMF-supported programme has been augmented with new EU resources, with more to come from the IMF, to make up for the shortfall in private financing.

But this additional financial support is likely to be wasted on what is a lost cause. The sustainability of public finances remains in doubt, as evidenced by the still-wide credit spreads (wider than in Argentina a month before it defaulted) and the large withdrawals of bank deposits, which continue even after the approval of the medium-term fiscal plan by parliament in early July. In view of the above, IMF participation in the financing of a new programme for Greece should be conditioned on a debt restructuring involving a significant haircut.

A Lasting Solution: Debt Buyback at Market Prices

A lasting solution to the Eurozone’s debt crisis would call for the European Financial Stability Facility (EFSF) to issue AAA-rated bonds in exchange for the outstanding bonds of the countries that need to restructure their debt, taking as collateral their assets under privatisation. Greece, Ireland, and Portugal could capture the discount on the debt that the markets have already reflected. The mechanism would be a massive repurchase of the old bonds at the current market price. The cost for European taxpayers will be much lower than that associated with continuation of the ongoing bailout. The most costly scenario is that of a disorderly Greek default that would have spillover effects on other countries, very similar to the contagion generated by the collapse of Lehman Brothers in the US.

The EU and the IMF should help Greece ensure that the debt restructuring will not destabilise the banking system and will not force conversion of financial assets and obligations into a new Greek currency. Otherwise a run on the banks with large holdings of Greek debt will force “de-euroisation” in Greece in the same traumatic way that it forced “de-dollarisation” in Argentina in 2002.

The latest IMF staff report on Greece shows that public and external debt sustainability “hinges critically on full and timely implementation of fiscal, privatisation, and structural reforms... and the restoration of market access at reasonable terms in the post-programme period.” In cases where restoration of market access within the programme period is judged to be unrealistic, IMF rules encourage “comprehensive debt restructuring, to provide for an adequately financed programme and a viable medium-term payments profile.” It’s an idea whose time has come.

Republished with Permission of VoxEU.org

Spending Less versus Taxing More

Note that the debate about "spending less" versus "taxing more" is really an argument about how to implement "austerity" -- that this debate has ended in an impasse (in the US, Europe, and even California) highlights why austerity fails, which is the chronic lack of a public mandate -- austerity proposals are failing in the US and all over the world, which leaves only two other macroeconomic ways forward: default or monetary expansion -- we will see whether the US falls into default or monetary expansion in the coming months...

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Thursday, July 21, 2011

What Derailed the Recovery?

An interesting question was posed in the Wall Street Journal (2011) this morning under the title, What Derailed the Economic Recovery? Three Possible Explanations. I provided my own short explantion as a posted comment in response:
The economic recovery was "derailed" by the myopic response of the Federal Reserve and Congress -- when the crisis began, the US embarked on efforts to save Federalism as the first priority, which meant bailing out or protecting "too big to fail" banks, automobile manufacturing, the defense industry, and government salaries -- unfortunately, those efforts ignored the problems on Main Street, including comsumption -- reality to date is that consumption has not been restored, probably because consumers have no money -- any money that was dispersed went to Federal and state workers, defense, and the automobile industry -- but nothing whatsoever has been done to put money directly into the hands of consumers -- at this point, Federalism is consuming all the nation's resources and then some -- anything left is being consumed by state workers and programs -- nothing is left for the consumer-at-large in America -- the US has become a safe-haven for the largest "too big to fail banks," government workers, unionized manufacturing, and the defense establishment -- public employees are a protected class, while small businesses and consumers have been "written off" in a misguided effort to save Federalism from itself...
Source: What Derailed the Economic Recovery? Three Possible Explanations (2011, July 21), Wall Street Journal.

Wednesday, July 20, 2011

Integrated Business Intelligence

Jeffrey Tobin: The Ginomai Principle

An instructive and inspiring talk about value creation by my good friend, Mr Jeffrey Tobin.



Follow the link below to learn more about Jeff's many activities, including speaking engagements.

Jeffrey Tobin: Business Coach & Speaker

Images of Private Practice in Minnesota

Employers Providing Unlimited Vacation

What is Private Practice?

private practice - the practice of a profession independently and not as an employee; "he teaches at the medical school but his fortune came from private practice"; "lawyers in private practice are in business and must make a profit to survive"

practice - the exercise of a profession; "the practice of the law"; "I took over his practice when he retired"


Click the image above to learn more about the ABC television series, "Private Practice."

Source: The Free Dictionary

Monday, July 18, 2011

Silver Hits New Highs

Silver is currently trading at above $40 per ounce -- the global debt crisis appears to be on the minds of at least some investors...

The Stand-Up Economist

The latest from Dr Yoram Bauman (aka "The Stand-Up Economist")...



Bravo! Follow the link below to learn more about Dr Bauman's work and activities.

The Standup Economist

Sunday, July 17, 2011

Whipple Dam State Park

Whipple Dam State Park is one of Pennsylvania's best kept secrets -- I climbed the hill above the dam earlier today -- I always feel rejuvinated following my visits to this park and recreation area...

Whipple Dam State Park, Petersburg, PA

The good life comes in moments...

Visit the Whipple Dam Store

Business Intelligence (BI) System Methodologies


Source: Adapted from Vercellis, C (2009), Business Intelligence: Data Mining and Optimization for Decision Making, West Sussex, UK: John Wiley & Sons Ltd, p. 17.

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Saturday, July 16, 2011

Screen Monitors and Online Learning

Recently, I had the opportunity to view a learner's computer screen using the screen sharing features of a popular virtual video-conferencing service. What happened was that I received a telephone call form a learner regarding a spreadsheet assignment. Several moments into the call (and the learner's verbal description of their work thus far), I suggested that we open a video-conference so that I could see the learner's computer screen as we discussed the homework in more detail.

However, once the learner's computer screen became visible, I was surprised to see a relatively small window (probably a laptop screen) that the learner was relying upon to "see" the spreadsheet problem at hand. In fact, the learner was struggling to pan through the spreadsheet, which required significantly more columns and rows than the learner could possibly display.

The point of my story is to highlight the need to "see" what you are doing while writing or working with complex data, and to suggest that all online learners consider investing in a high-resolution monitor at least as large as that shown below:

Samsung SyncMaster T240HD (24" LCD; 1920 x 1200 pixels)

The above is a photograph of the high-resolution monitor here on my desk. Notice that the monitor displays two full pages of text (top to bottom and left to right). Also, spreadsheets are much more assessible (and understandable) in the larger screen display. I cannot imagine reading ebooks, documents, or complex spreadsheets (for hours) on anything smaller than that above.

So, if you are one of the millions of learners pursuing online education and you are relying upon a relatively small laptop monitor, then consider investing in a high-resolution computer monitor. Your eyes will thank you and your learning experience (and grades) will no doubt prove more rewarding.

PS: The above advice applies as well to online instructors struggling to read learner assignments on their laptop displays -- if I am describing your situation, consider ordering a high-resolution monitor now...

Thursday, July 14, 2011

Gold Hits Record High

Gold hit a record high of $1,589.30 a troy ounce at today's close.


With gold prices higher than ever, I suppose that we can likewise presume that the global economic risks are worse than ever...

A Framework for Management Research

Republished from Department of Veterans Affairs Website

The past 20 years have seen intensive development of new models for organization and management in industry and health care. Many observers believe, however, that popular trends and fads have guided this development more than research on organizations and management practices. Often managers rely on consultants for assistance in making and implementing important strategic decisions, but they do not rigorously challenge the information upon which such recommendations are based.

At the same time, however, there has been a significant shift in the way that health care professionals use evidence from scientific research in clinical practice, and the concept of evidenced-based health care has become part of the language of clinicians, managers, policymakers and researchers. But the leaders and managers of health care organizations, while often strongly encouraging clinicians to adopt evidenced-based practices, have been slow to apply the ideas to their own management.

The Nature of Managerial Decision Making

Managers make fewer but larger decisions than clinicians—and the timeframe for those decisions is usually longer. Major managerial decisions may take weeks, months or even years to be made and implemented, and it can be difficult to discern or describe the decision-making process or to pin down when a decision is actually made. Managerial decisions are also more heterogeneous than clinical decisions, in the sense that they do not usually involve the application of the same body of knowledge to a series of similar but different circumstances, so guidelines of decision support aids are seldom used in managerial decision making. Therefore intuition often plays a part in decisions that would defy any rule-based, procedural analysis.

In addition, decision-making for managers, even within a hierarchical structure and chain of command, is often a team or group activity, whether formal committees or informal groups. Securing the support of others is often a key part of the process. Managerial decisions are also often significantly constrained by organizational or wider system requirements, such as resource availability, pressure in the marketplace, policies and procedures and stakeholders' views and interests.

These factors may act as limitations or may even directly conflict with research findings. Because of the constrained, contested and political nature of many managerial decisions, it may be difficult for managers to apply research evidence even when it is available.

Managerial Culture

There are a number of significant reasons that managers may not consider research when making policy decisions. In the past, nonprofit organizations have lacked accountability for the costs of growing or discontinuing lines of service, and therefore have had little incentive to investigate best practices. Rather, health systems have focused on operating margins and past budgets. Research is often viewed as producing little or no return on investment. More money tends to be spent on consultants’ strategic recommendations, which may not be backed up by research.

In reality, most healthcare organizations are not large enough to carry out management research. But, in larger systems, management has not used the advantage of system size to gather evidence on best practices. The evidence that does exist is often not shared even within the same system. Again, in fairness to managers, it must be noted that there is little evidence available related to best management practices.

There are some practical problems that suggest that conditions typical of health care organizations may be counterproductive to fostering support for management research. These factors include working conditions that involve a heavy workload and tight deadlines. Without a system in place to cope with heavy workloads, the pressure to meet deadlines restricts the time managers have to consider their decision-making process or to examine research. Attitudes that focus on making speedy decisions can interfere with managers’ acceptance of research. In addition, a belief system reinforced by years of experience that management is an intuitive process will restrict support for management research.

Research evidence is more likely to be used in organizations that have a culture that values and encourages innovation, experimentation, data collection and analysis and the development of critical appraisal skills among managers. Organizations must cultivate what has been called a culture of learning through research.

Source: A Framework for Management Research, Department of Veterans Affairs.

Evidence-Based Management Imperatives

Evidence-based management (EBM) is the conscientious, explicit, and judicious use of current best evidence in making management decisions (Pfeffer & Sutton, 2006). EBM creates two imperatives for managers:
  1. Demand Evidence. Whenever someone makes a seemingly compelling claim, ask for supporting data and check the data for currency and accuracy.
  2. Examine Logic. Parse the logic behind evidence presented to you pragmatically for currency, as well as faulty cause-and-effect reasoning.

Source: Pfeffer, J & Sutton, R I (2006, January), Evidence-Based Management, Harvard Business Review.

Tuesday, July 12, 2011

What is Currency?

currency
n.
A formal system for shaping, enabling, and measuring currents (or flows)


Friday, July 08, 2011

US Employment to Population Ratio Indicates Stagnation

The latest employment data from the Bureau of Labor Statistics (BLS) shows that the US employment to population ratio* stood at 58.5% for June 2011, which was unchanged from the previous month, but down from 58.9% 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.

*The BLS defines employment and population (civilian noninstitutional) as follows:
Employment consists of all persons who, during the reference week (the calendar week including the twelfth day of the month), (a) did any work at all (at least 1 hour) as paid employees, worked in their own business or profession or on their own farm, or worked 15 hours or more as unpaid workers in an enterprise operated by a member of the family, or (b) were not working but had jobs or businesses from which they were temporarily absent because of vacation, illness, bad weather, childcare problems, maternity or paternity leave, labor-management dispute, job training, or other family or personal reasons, whether or not they were paid for the time off or were seeking other jobs.... The civilian noninstitutional population consists of persons 16 years of age and older residing in the 50 States and the District of Columbia who are not inmates of institutions (for example, penal and mental facilities and homes for the aged) and who are not on active duty in the Armed Forces.
Source: Bureau of Labor Statistics

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Monday, July 04, 2011

ModelRisk 4.1 Upgrade Now Available

ModelRisk 4.1 upgrade is now available -- follow the link below to download and install this newest version -- note that ModelRisk 4.1 Standard is free software!


ModelRisk 4.1 is the best in class risk modeling and analysis software add-in for Excel (Microsoft). Every serious Excel user will want to have ModelRisk 4.1 Standard installed on their business computer. Join the thousands of other users from around the world who have adopted ModelRisk 4.1 as their primary risk analysis platform. Follow the link below to download your free copy now...

ModelRisk 4.1

PS: Please help me to get the word out about this free software release by reposting or forwarding this article to your friends and colleagues who use Excel, thanks!

Ron Paul: What If...?



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Sunday, July 03, 2011

Amadeus: The Place for Ribs

Who would have thought that perhaps the best ribs in the world are served in the historic city of Ghent located in the Flemish region of Belgium:
Restaurant Amadeus in Ghent is located in the centre of the historic Patershol. The restaurant was established in 1987, and we have remained true to our original concept ever since. The house speciality is "spare ribs à volonté." This dish is served with a side-salad and a jacket potato, with our own special herb butter whose flavour really is second to none. The "à volonté" means "as much as you like," and we really mean this: extra spare ribs, potatoes, salad and accompanying sauces really can be ordered without any limit, for a very reasonable fixed price.
I am not sure what the "secret ingredient" is at Amadeus, but I believe I was tasting a caramelized molasses in the rib sauce that was absolutely mouthwatering. The departure from the traditional tomato-based rib sauce was a surprising delight!

Spareribs À Volonté at Amadeus

I had the pleasure of being introduced to Amadeus this past week by special friends who live in Ghent. The entire evening was wonderful (as was the beer). I will be eating again at Amadeus during my next visit for sure. Follow the link below to learn more about this fine European restaurant.

Amadeus: The Place for Ribs