Another week all about Central Bankers. Bernanke had a press conference on Wednesday when he said that tapering off QE was not the same thing as raising interest rates. He said although QE could end when the unemployment rate hit 6.5%, that interest rates should stay low for an extended period after that. Stocks immediately shot up to a new all-time high. On tepid volume. Greenspan had his low interest rate induced bubble, why shouldn't Bernanke get one too? Or perhaps the next bubble will be blamed on Yellen. Maybe Bernanke is smart to be getting out now.
The U.S. financial risk council on Tuesday said it has designated American International Group (AIG) and GE Capital as systemically risky, bringing them under stricter regulatory oversight. They will likely be forced to raise additional capital and receive additional scrutiny of their loan portfolio. This is supposed to make me feel better, but somehow it doesn't.
Why isn't the economy growing faster? Growth is closely tied to business investment, and since the crash there kindof hasn't been any. Business investment is well below trend line for the first time in 65+ years. This is the flip side of large companies holding $1.75 trillion in cash off-shore. They don't see any business investments that they like.
New senator Elizabeth Warren (D-MA), who many conservatives dislike but who I like, introduced a bill to restore Glass-Steagall. This bill would break up our biggest banks, separating banking from investments. I sincerely hope this passes. Over the course of my life some of our most impressive senators have been democrats - Sam Nunn, Daniel Moynihan - and it's my hope Elizabeth will follow in their footsteps.
Portugal had their finance minister resign, and the rest of their government start to debate asking for a renegotiation of terms with the EU. Portuguese interest rates immediately shot up. But don't worry, "the European crisis is over." (that just never gets old for me.)
A Korean 777 rather publicly crashed at San Francisco airport. What happened? The plane came in hot - at 2,000 feet elevation the plane was going about 38 knots faster than optimal. The pilot throttled back and hit the air brakes to slow down. By 1,400 feet altitude, the plane was still going 17 knots too fast. But by 600 feet altitude, the Asiana flight had slowed significantly to 130 knots, now 32 knots slower than optimal. The logs show that the speed kept declining all the way to 109 knots at 100 feet, far slower than normal for a landing. The pilot appeared to try to pull up to 200 feet of altitude, but that brought the airspeed all the way down to 85 knots, below rated stall speed. At this point the cockpit is screaming and flashing at him, but it was far too late. He got "behind the aircraft," reacting instead of guiding. He was so low and slow that his tail hit the sea wall and was knocked off the plane. Then he belly-flopped in to a "landing." Planes are all about energy. High and slow is ok - you can dive and pick up speed. Low and fast is ok - you can pull up any time. Low and slow is dead, you got no momentum, you got no altitude, your controls aren't working, you got nothin. The Korean pilot says he saw a flash of light at about 500 feet that momentarily blinded him which may have been a laser. In 2011 the number of laser incidents at airports increased to 3,591, up from 2,826 the year before and 1,527 in 2009. With a decent laser you can be several miles away in a house or office, you don't need to be at the airfield.
SFO has had part of their automated landing system off-line for about a month, pilots have had to land their planes themselves. On the airfield is a lighting system called the "precision approach path indicator," a visual reference that warns pilots when they are not at the correct descent angle. The glide slope device at SFO has been shut down since June because of airfield renovations and that pilots were sent a notice. This pilot apparently knew how to dial in the landing parameters to let the computers do it, but when forced to use the controls himself was not up to the task. Yoon Young- doo, Asiana Airlines' chief executive, said at a new conference Saturday that the company's Boeing 777-200ER was only 7 years old and had no known engine or mechanical problems. The NTSB blamed pilot error for a 1997 Korean Airlines crash in Guam that killed 228 people, in which the crew descended too fast and flew into a hill. Two years later, two Korean cargo jets crashed. Since 1980, more than a dozen Korean aircraft have been destroyed in crashes. Good for Boeing, bad for passengers. Remember, that 777 had two pilots. In this case the co-pilot was an instructor who explained that he thought the plane was automatically maintaining air speed so he wasn't watching it. I'm not a pilot, but even I know there are only two instrument readings that matter in a landing: altitude and air speed. There are some serious questions about the training and certification of Korean pilots. You've been warned.
In January a couple Boeing 787 Dreamliners had battery problems, resulting in the airplane being grounded for a several months while Boeing searched for a fix. In late April it started flying again. This week a parked Ethopian Airlines 787 caught on fire at London Heathrow; no one knows why yet. The plane was empty of passengers and cargo at the time, but the fire shut down Heathrow for an hour. Almost simultaneously, another 787 on a flight from England to the US had to turn around mid-atlantic due to mechanical problems. Boeing stock promptly dropped 6%. It's been a rough week for Boeing.
Washington DC passed a "living wage" law that would force large employers (read: walmart) to pay a minimum wage of $12.50 / hour. Walmart currently pays an average of $8.84. Walmart immediately canceled plans to build three walmarts in DC. Unionized stores are exempt, and existing large stores like Macy's and Target were given four years to comply. Are poor paying jobs better than no jobs? Walmart's low prices are a big boost to the lower classes' living standards, and high minimum wages effect the entire community negatively and a few workers positively. They're bad economics if you ask me. Well, in any case the Nation's Ghetto will not have any Walmarts, nor any of their jobs. The rest of us are blessed with these low wage part time jobs, which it seems is all there is these days.
The US is no longer the nation in the world with the highest obesity rate. We just got passed up by Mexico. We're #2! We're #2! We're #2!
Obama has roughly doubled the number of Americans receiving food stamps. Food stamps currently account for nearly 14% of grocery store sales, with 48 million Americans receiving the subsidy.
Life Expectancy in the US: a new county-by-county study shows that there are large variances in longevity. For the US as a nation, female life expectancy increased from 78.0 years in 1985 to 80.9 years in 2010, and male life expectancy increased from 71.0 years in 1985 to 76.3 years in 2010. In 1985, the gap between female and male life expectancy was 7.0 years; this has narrowed progressively beginning in 2002 to only 4.6 years in 2010. Women wanted equality and the right to work; equality is settling in nicely. If you're looking to die young, try living in McDowell county, West Virginia, where your live expectancy is just under 64. If you want to live forever or die in the attempt, move across the Appalachians to Fairfax County, Virginia, where you expect to make it to nearly 82. The western slopes of the Rockies in Colorado are also good, as is Marin County in California and Provo in Utah - not only do the Mormons marry "for all time and eternity," but their clean living habits give them a little taste of that on earth. Of course in addition to living in a relatively healthy place, you need to keep your weight down, quit smoking, drink in moderation and not work in coal or asbestos mines. What does where you live have to do with anything? In this country we've been breeding a "cognitive elite" for a few generations now - the people who attend our top universities are the brightest in our country and tend to marry each other, then producing bright kids. The highest life expectancies are in zip codes where they now live - places where education is high, the average income is high, crime is low, excellent food and healthcare are easily available. Also most vegetables are locally grown, and it's been known for 40 years that places where the soils have high selenium content have much lower rates of heart disease and cancer.
Life expectancy in Beijing is 5.5 years less than in other comparable regions in China, due no doubt to the air pollution. Like LA, Beijing sits up against some mountains in an inversion zone that traps smog for days or even weeks at a time; unlike LA, China effectively has no air quality laws.
Charles Murray, the guy who coined the term "cognitive elite" in his book The Bell Curve, asks: "Why aren't Asians Republicans?" "Asians are only half as likely to identify themselves as 'conservative' or 'very conservative' as whites," writes Murray. This, of course, doesn't seem to make sense: It's not just that the income, occupations, and marital status of Asians should push them toward the right. Everyday observation of Asians around the world reveal them to be conspicuously entrepreneurial, industrious, family-oriented, and self-reliant. If you're looking for a natural Republican constituency, Asians should define "natural." So what's the problem? Murray concludes: "Republicans are seen by Asians - as they are by Latinos, blacks, and some large proportion of whites - as the party of Bible-thumping, anti-gay, anti-abortion creationists. Factually, that's ludicrously inaccurate. In the public mind, except among Republicans, that image is taken for reality." Want to help the republican party revive? The next time you hear someone spouting off about God hating gays, abortion being murder, etc, tell them to stfu.
Chicago cardiologist Vincent Bufalino says in the span of a single month, a half-dozen men who arrived at his hospital were having heart attacks, all under the age of 33. Heart disease deaths overall declined 30% between 2000 and 2010, but for 25- to 34-year-olds they actually increased 5%. Doctors say cardiovascular deaths are often related to risk factors such as obesity, hypertension, diabetes and high cholesterol, all of which are increasing among younger people under 40. "I can't help but imagine when you see the incidence of obesity in teenagers and rates of Type 2 diabetes, there's no question that this population has the potential to be a time bomb in their 40s and 50s," says Peter Eckman, a cardiologist at the University of Minnesota who specializes in heart failure and transplants. "I have to admit I do expect to see more of that." While the national obesity rate has grown more than 50% since the late '80s and '90s, to include more than a third of Americans, the rate among 12- to 19-year-olds has increased 75%. "If you get diabetes when you're 15, you're not going to live till the ripe old age of 80 - you're going to have your first heart attack in your 30s, not in your 50s," Eckman says. The American Heart Association projects that the medical costs of coronary heart disease, nearly $200 billion in 2009, will double between 2013 and 2030.
Science: Brains hold memories, right? There's a little tiny worm called a planarian. These have a very interesting property - if you cut them in half and wait a week or two, you get two planarians identical to the original. Planarians have a head with a couple eyes and a brain with about 8000 neurons. How identical? A new study shows that if you cut off their heads, not only do they grow a new brain, but they also grow back their memories. Researchers built a computerized device to train the planarian worms to wiggle through bright lit areas - which they usually fear - to reach a food source. After their heads were chopped off and regrown, they were given one more lesson on finding food in the light. These worms remembered their training to ignore the bright lights and overcame their fear of the light, knowing there was food at the other end. The ones that had never been trained and/or never been decapitated didn't catch on after only one lesson.