Coventry League
 
Picture
Brown Capuchin Monkey
Comedians from the National Bureau of Economic Research (NBER) have hedge fund traders and financial bloggers snickering, including this must-read example at Mish's Global Economic Trend Analysis.

Some of their economic positions as committee members at NBER are highlighted in this Bloomberg article and summarized below:



  • In April 2010, issued a statement that it was too soon to conclude the end of the recession that began December 2007 (read: a recovery has yet to occur)
  • This weekend in Jackson Hole, Wyoming, stated there is between 5% and 33% chance of a double dip recession (question: doesn’t a double dip recession necessitate an end of the first recession and a subsequent recovery?)
  • Forecasts 2011 second quarter GDP growth of 1.1% (question: what is their forecast of third quarter and fourth quarter 2010 GDP growth?)
Perhaps the NBER should take note regarding the hot seats on which several financial and economic advisors sit (e.g. Treasury Secretary Geithner; current and outgoing members of the Council of Economic Advisers in the Obama Administration, Summers and Romer, respectively).

Or, better yet, just hire a few brown capuchin monkeys from Associate Professor Laurie Santos, who runs the Comparative Cognition Laboratory at Yale University. 

Just saying.

-------------------------------------------------------
Further resources:
●  "Laurie R. Santos, Yale Psychology Faculty." Yale University. July 2010. Web. http://www.yale.edu/psychology/FacInfo/Santos.html.
●  Laurie Santos: A Monkey Economy as Irrational as Ours | Video on TED.com. TED: Ideas worth Spreading. July 2010. Web. http://www.ted.com/talks/laurie_santos.html.
●  Markey, Sean. "Monkey Research: Monkeys Show Sense of Justice." National Geographic News, 17 Sept. 2003. Web. http://news.nationalgeographic.com/news/2003/09/0917_030917_monkeyfairness.html.

3 Comments
 
 
Picture
The Illusion of Diversity, Philip H. Howard
Assistant Professor Philip H. Howard of Michigan State University concludes that approximately 89% of beverage options are controlled by three corporations. 

Many people who haven’t been sleeping under the proverbial rock can name at least two of the three corporations.  

For those who cannot, the top three companies of U.S. soft drink sales are segmented as follows:

   (1.)  42.7%: Coca-Cola’s 25 brands and 139 varieties
   (2.)  30.8%: Pepsi’s 18 brands and 163 varieties
   (3.)  15.3%: Dr. Pepper Snapple Group’s 20 brands and 109 varieties

Rounding out the top ten companies by market share (circa 2008) are the following (see beverage digest):

  (4.)   4.7%: Cott Corp.
  (5.)   2.6%: National Beverage
  (6.)   0.8%: Hansen Natural
  (7.)   0.7%: Red Bull
  (8.)   0.4%: Big Red
  (9.)   0.4%: Rockstar
  (10.) 1.6%: Private label and other

The well-presented chart porn highlights the pseudovariety, or the illusion of diversity.
2 Comments
 
 
Picture
'W' Recession of Early 1980's
In the past few days, several people and organizations have questioned whether the economy is falling back into a recession (double-dip or “W”recovery). The last double-dip recession in the U.S was the early 1980's.

Our opinion is the economy never really recovered from the notable downturn beginning in late 2007, and for that matter never recovered from the 2001 recession (technology bubble burst).  It’s our lost decade – in terms of economic growth, jobs and the stock market.
Nevertheless, there are some lighthearted articles about the topic.  Here’s a snapshot from Zero Hedge: 

You know we're headed for a double-dip when:
  • What you thought was your cable bill, turns out to be your 401k statement.
  • Your mortgage shows up on eBay.
  • You buy $50 of GM stock, and are named to the board.
  • The family dog asks for a severance package.
  • Your parents move to Greece.
There’s even a new song by Merle Hazard about a potential double-dip recession.  For a more granular opinion, Yahoo! Finance lists 22 cities in danger of a double-dip recession.  Lastly, there’s the conventional approach to economic forecasting using leading indicators published by the Economic Cycle Research Institute (ECRI).  Given its perfect forecasting record of recent, what is it forecasting?  A double dip recession, as indicated at DailyFinance.

Picture

Our opinion?  Psychology plays an important role: if you think you’re beaten, then you’re beaten.

------------------------------------------------------
Note: Footnotes for the first chart may be found at the link provided above (early 1980's at Wikipedia).  To summarize, (1) blue line is percent change from preceding period in real gross domestic product (annualized; seasonally adjusted) and (2) red line is average GDP growth 1947–2009.

Update 2 Sep. 2010: Given several have ask about further feedback about the ECRI, its managing director, Lakshman Achuthan, provides an overview in this interview on Yahoo! Finance.
6 Comments