Latest Stories

• Readings: Oil, Lawyers, Math, Niall Ferguson, Big Lebowski, etc.
• Stephen Roach vs Paul Krugman: I'm an Economist! I'm an Umpire!
• Readings: China, Ireland, Water, Traffic, CDOs, etc.
• Readings: Eating, End-times, Media, China, etc.
• Peak Oil Demand? Ha!

 

Energy Echelons: Global Average Energy Use/Capita

I had someone cite data to me today about global per capita energy use. For my part I responded that such averages are meaningless: We live in a world of energy use echelons, as the following figure shows.

 

Ed Thorp Speaks

A rare radio interview with blackjack guru and original quant Ed Thorp:

In 1962, Ed Thorp became every gambler's favorite mathematician when he published the first mathematically proven method for beating the dealer at blackjack.

Thorp's work revolutionized the game. But he went further: In 1967, Thorp devised a system that uses math and computers to predict the future of the stock market. His hedge funds and his personal portfolio have been profitable ever since.

Check it here.

Related books:

• Beat the Dealer, by Ed Thorp
• The Quants, by Scott Patterson

 

Readings: Greece, Coal, Solar, Cows, and China

• El-Erian on Greece Sovereign Debt (Source)
• Coal and Treasuries (Source)
• Taking a shine to the Owens Valley's sun (Source)
• U.S. Cattle Herd Falls to 1958 Low as Losses Climb, Survey Says (Source)
• Economic Survey of China 2010 (Source)
• 20 Ways to Build a Cleaner, Healthier, Smarter World  (Source)

 

The U.S. Currency Problem and the Return of the Wooden Nickel

The U.S. has a  currency problem. No, not just the dollar, or even the staggering debt and deficit, but another one: It loses money making pennies and nickels. Here is some musing on the problem from the new White House budget docs:

The Mint's primary cost driver is the price of metal, a factor over which it has no control. Daily spot prices of copper and zinc, the Mint's two main metallic materials, have fluctuated in excess of 100 percent, and the price of nickel by 500 percent in recent years. This contributes to volatile and negative margins on both the penny and nickel: in recent years the penny has cost approximately 1.8 cents and the nickel approximately 9 cents to produce. Costs have exceeded the value of these two coins by over $100 million in prior years.

Well, the White House and the Mint have a cost-saving solution:

The 2011 Budget would bring the costs of coins more in-line with their face values and create a more sustainable, cost-effective 21st Century use of materials in the minting process. The Budget enables the Department of the Treasury to explore, analyze, and approve new, less expensive materials for all circulating coins ...

Paper? Plastic? The return of the wooden nickel?
 

Weekend Reading: China, Connections, Volcker, Energy, Ramen, Poker, etc.

A few links from my weekly Weekend Reading column at TheStreet:

• China Is Leading the Race to Make Renewable Energy (Source)
• A special report on social networking: A world of connections (Source)
• In tough economic times, shoppers take haggling to new heights (Source)
• A new wave of Sinomania taking hold worldwide (Source)
• Volcker: How to Reform Our Financial System (Source)
• Goldman Trader Shares Three Big Ideas With Lloyd (Source)
• Exploring Tokyo Through Its Ramen Shops (Source)
• Universal statistical properties of poker tournaments (Source)
• Henry Paulson's new book offers a glimpse inside the economic crisis (Source)
• China: hard to extinguish speculators’ animal spirits (Source)

 

Readings: EMH, Oil, Complexity, Davos, etc.

• OECD oil demand has peaked (Source)
• The next industrial revolution: Stuff vs bits (Source)
• Efficient markets disproved at Davos (Source)
• The Roubini/Raghuram panel from Davos (Source)
• Best Davos "whoops" moment ever (Source)
• Interdisciplinarity in Socio-economics, mathematical analysis and predictability of complex systems (Source)

 

Davos, So You Don’t Have To

A tag cloud of the words from all 227 sessions at this year’s World Economic Forum going on in Davos this week. I had to wipe out a bunch of only-at-Davos stop words, including “global”, “redesigning”, “reinventing”, “rebuilding”, etc., or the results would have been more skewed.

[via Wordle.net]

 

Elizabeth Warren Does The Daily Show Again

 

Readings: StockTwits, Tablet, Jobs, Davos, Hotels, etc.

• The ring of fire in sovereign credit: U.S. is out; Norway is in (PIMCO)
• Lawmakers down on the whole budget freeze thing (TheHill)
• Michael Lewis's Davos column in 2007 woefully ill-timed skepticism about credit troubles (Bloomberg)
• The 6 most statistically full of shit professions (Crunched)
• Me on StockTwits TV talking Bernanke, China, IPOs, etc. (Source)
• Jobs of the future -- from where? (BurningPlatform)
• Apple Tablet launch daze live (GDGT)
• Latest hotel numbers from Q$ (STR)

 

Taleb vs Asberger’s Syndrome Sorts

Nassim Taleb has added an update to his recent Black Swan-centric comment about Asperger’s Syndrome and risk:

Note that the very same people who attack me, on grounds of political correctness, for discussing Asperger as a condition not compatible with risk-bearing, and its dangers to society, would be opposed to using a person with highly impaired eyesight as the driver of a school bus. All I am saying is that just as I read Milton, Homer, Taha Husain, and Borges (who were blind) but would prefer to not have them drive me on the A-4 motorway, I elect to use tools made by engineers but prefer to have society's risks managed by someone who is not affected with risk-blindness.

Hell hath no fury like a health lobby group whose syndrome of choice has been appropriated for metaphorical purposes.

 

Debate on Financial Innovations

Didn't realize until today that video was online of the Economist debate between Myron Scholes, Jeremy Grantham and Rick Bookstaber about the merits, or lack thereof, of financial innovation.

 

Deleverage This, My Friend

McKinsey has out a new report with some useful figures showing the rise of leverage worldwide, where it must fall, and the corresponding GDP consequences.

 

The Trouble with History

Good quote from Taleb:

It is particularly shocking that people do what is called “stress tests” by taking the worst possible past deviation as an anchor event to project the worst possible future deviation, not thinking that they would have failed to account for such deviation had they used the same method on the day before that past  anchor event.  [Emphasis mine]

 

The Dutch Disease Gets a Brazilian

The Dutch disease – the economic hollowing-out and corruption effects of domestic resource exploitation – has an interesting twist when it happens in Brazil:

Oil windfalls and living standards: New evidence from Brazil
Francesco Caselli, Guy Michaels, 20 January 2010

Does the “resource curse” exist? This column presents new evidence from Brazil. Municipalities that receive oil windfalls report significant increases in spending on infrastructure, education, health, and transfers to households. However, the windfalls do not trickle down and much of the money goes missing. Indeed, oil revenues increase the size of municipal workers’ houses but not the size of other residents’ houses. [Emphasis mine]

 

Moore's Law, Then and Then and Now-ish

Good hundred-years-of-Moore's-Law graphic:

[via Steve Jurvetson]