Sovereign debt credit ratings

April 28, 2010Jon Brooks Comments Off

The Greek and European debt crisis has thrown a spotlight on the credit ratings of entire nations. From the blog Credit Writedowns, here’s a list of all S&P sovereign credit ratings, from AAA to junk.

These ratings will in large part determine the rate of interest countries pay to investors who loan them money via purchase of bonds. The lower the rating, the higher the risk the rating agency has determined the country is, and the higher the interest rate that nation will have to pay to attract investors to buy its bonds.

On the other hand, considering the role that the ratings agencies played in the sub-prime real estate implosion, someone may want to rate the raters…

Some selected countries and their ratings. What is striking is the number of “negative” outlooks…

Country

 

Debt Rating

Outlook
United States

 

AAA

Stable
Canada

 

AAA

Stable
United Kingdom

 

AAA

Negative
Spain

 

AA+

Negative
Ireland

 

AA

Negative
Japan

 

AA

Negative
China

 

A+

Stable
Israel

 

A

Stable
South Africa

 

BBB+

Negative
Russia

 

BBB

Stable
Brazil

 

BBB-

Stable
Iceland

 

BBB-

Negative
India

 

BBB-

Stable
India

 

BBB-

Stable
Greece

 

BB+

Negative
Vietnam

 

BB

Negative
Philippines

 

BB-

Stable
Venezuela

 

BB-

Stable
Dominican Republic

 

B

Stable
Pakistan

 

B-

Stable
Iceland

 

BBB-

Negative
Ecuador

 

CCC+

Stable


Pew News IQ quiz

April 28, 2010Jon Brooks Comments Off

The Pew Research Center has an online news IQ quiz consisting of 12 questions. I got one wrong, and another one right only because I just read it today.


A real crisis

April 28, 2010Jon Brooks Comments Off

MIT economist Simon Johnson writes on the blog The Baseline Scenario that the European debt downgrades of the last two days constitute a genuine crisis:

Wake the President

Most days we can coast along, confident that tomorrow will be much like yesterday. On a very few days we need to look hard at the news headlines, click through to read the whole story, and then completely change a large chunk of how we thought the world worked. Today is such a day.

Everything you knew or thought you believed about the European economy – and the eurozone, which lies at its heart – was just ripped up by financial markets and thrown out of the proverbial window.

While you slept, there was a fundamental repricing of risk in financial markets around Europe – we’ll see shortly about the rest of the world. You may see this called a “panic” and the term conveys the emotions involved, but do not be misled – this is not a flash in a pan; financial markets have taken a long hard view at the fiscal and banking realities in Europe. They have also looked long and hard into the eyes – and, they think, the souls – of politicians and policymakers, including in Washington this weekend.

The conclusion: large parts of Europe are no longer “investment grade” – they are more like “emerging markets”, meaning higher yield, more risky, and in the descriptive if overly evocative term: “junk”.

This is not now about Greece (with 2 year yields reported around 20 percent today) or Portugal (up 7 basis points) or even Spain (2 year yields up 27 basis points; wake up please) or even Italy (up 6 basis points). This is no longer about an IMF package for Greece or even ring fencing other weaker eurozone economies.

This is about the fundamental structure of the eurozone, about the ability and willingness of the international community to restructure government debt in an orderly manner, about the need for currency depreciation within (or across) the eurozone. It is presumably also about shared fiscal authority within the eurozone – i.e., who will support whom and on what basis?

It is also, crucially, about stabilizing the macroeconomic situation without resorting to more unconditional bailouts. Bankers are pounding tables all across Europe, demanding that governments buy out their position – or bring in the IMF to do the same. We again find ourselves approaching the point when the financial sector will scream: rescue us all or face global economic collapse.

The White House did not see this coming – and the Treasury’s attention was elsewhere. The idea that we can leave this to the Europeans to sort out is an idea of yesterday. Today is very different and much more scary.

President Obama is wide awake and working hard. Someone please tell him what is really going on.


Top-post countdown No. 5: Bush tax cuts vs. Obama health care

April 28, 2010Jon Brooks Comments Off

Original post:

From a recent post titled “What Are These Three Numbers” on the economics blog Econbrowser comes this chart:

bushtaxcutsobamahealth

“The first bar is the impact on the unified budget balance of the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001. (Ed. note: That’s the first Bush tax cut.) The second is the impact on the budget balance of the Jobs and Growth Tax Relief Reconciliation Act (JGTRRA) of 2003 (the second Bush tax cut). The third bar is the CBO estimated impact on the deficit of the Patient Protection and Affordable Care Act (aka the health care bill) proposed in the Senate on November 19, for 2010-2019.”

These numbers, represented in billions of 2010 dollars, were taken from the non-partisan Congressional Budget Office.

As you can see, the two tax cuts increased the deficit about $1.8 trillion dollars, while the proposed health care bill will actually modestly decrease the deficit. As one of the main anti-health care bill criticisms is its cost, this is a potentially effective talking point. (Plus, both of the tax cut bills passed via the reconciliation process, the proposed path to passage for the health care bill and the subject of a major to-do between the two political parties.)

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Top-post countdown No. 6: Worst tippers redux

April 28, 2010Jon Brooks Comments Off
    6. Who are the worst tippers? – another round of waiters commenting on which groups of people they think are the most penurious when it comes to tipping (Dec 8, 2009)

Original post:

waitressThe recession has fewer people eating out, which means less in tips for waiters and waitresses. This can only accentuate the hard feeling felt by restaurant staff at poor tippers.

A recent posting on the blog Waiter Rant asked waiters and waitresses which people they considered to be the worst at doling out an adequate gratuity. The post has thus far elicited 260 responses and the answers are bound to offend anyone and everyone. Except for maybe gay men, whom multiple people designated as the best tippers.

Some random answers to “Who are the worst tippers?”

Canadians

Canadians! In New Orleans, many restaurants add gratuity to foreigners. Usually, this is only to foreigners that don’t speak English well. We can’t grat Brits, Aussies, Kiwis or Canadians. Western European countries have come a long way in the past 20 years, but not the Canadians. Occasionally, I’ll get a good tip, but usually it’s 10%.

Middle-aged blue-collar guys

Well I’d have to say the worst tippers on the whole in my experience were middle aged guys who looked like they were in their 40s or 50s and probably blue collar workers. For whatever reason I always seemed to be lucky to get 15% from them, while ladies around the same age tended to leave me 18%-20% on average.

Scandinavians

Scandinavians. Used to wait on a group of SAS pilots every Sunday in Minneapolis, and I think they gave me 5% or so on average. Maybe three out of my five best tips have come from black people, and I’ve had ladies who lunch leave me 100% before. But the Scandinavians have always screwed me.

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The crowd bets

April 27, 2010Jon Brooks Comments Off

Ever check out Intrade? It’s an online futures market, currently made up of 102,000 members, where you can bet on the outcome of a particular occurrence, giving or taking the odds that the market itself has set. People who subscribe to the “wisdom of crowds” theory often check the site to see what the “market” believes will be the outcome of something in the news.

For example, is Sarah Palin going to be the Republican nominee in 2012? Here are the odds over time that the members of Intrade have set by virtue of their betting. The chart shows the market makes Palin’s odds at about 25%.


Will the U.S. economy enter another recession in 2010? The market speaks:


As you can see, the market has deemed the chances of recession this year to be about 11%, a considerable decrease from the beginning of 2009, when the odds were pegged at about 45%.

What about the odds of a severe stock market crash? The market puts the chances of the Dow closing at under 6500 by the end of the year at just 10%.


Other events you can bet on:

And what are the odds that you’ll lose your shirt betting on stuff like this?

Higher than 50%, I’d say…


EconomyBeat Podcast #14: Shifting Gears

April 27, 2010roman Comments Off

shiftinggearsThe blog ends, but the podcast continues! For a short while, anyway. Thanks Jon, for doing such an awesome job.

I love this (most likely, apocryphal) story: So, Henry Ford one day was taking Walter Reuther, the United Auto Workers president, on a tour of a newly automated Ford plant that had replaced many of the workers with mechanical robots.  And as he’s showing off, Ford says to Reuther, “Well Walter, how are you going to collect union dues from these robots?”  And Reuther laughs and says, “Well Henry, how are you going to get these robots to buy Fords?”

When it comes to the U.S. auto industry, I don’t think robots even rate in the top 10 concerns of either the manufacturers or workers. There have been so many problems and ground shaking changes over the years that it’s almost impossible for any one radio piece or producer to take it all on, so PRX, WDET in Detroit  and a whole consortium of editorial partners at stations around the country collaborated on two remarkable one-hour specials that try to break it all down for us. Shifting Gears lead producers are Kate Hinds from WNYC, and Ron Jones and primary host Craig Fahle, who are both from WDET in Detroit. This is hour #2 of the special—Shifting Gears: The Retooling of the U.S. Auto Industry. You can (and should!) listen to hour #1 at PRX.

Do you have a piece you think should be considered for the EconomyBeat Podcast? Put it on PRX, and add the tag ‘ebpodcast’.


Top-post countdown No. 7: The H&M incident

April 27, 2010Jon Brooks Comments Off
  • 7. The H&M incident – After a student notices that retailer H&M is dumping unsold garments, a p.r. nightmare for the company unfolds on the web. (Jan 8, 2010)

Original post:

“The phone no longer just rings off the hook at the corporate public relations office. Now the Internet lights up too with thousands of posts and instant messages. Talk about pressure to behave responsibly.”

handmlogoYou may have heard about the big to-do going on over H&M (as well as Wal-Mart) dumping unsold clothes. A few days ago a City University of New York grad student noticed hundreds of the stores’ discarded garments and called the New York Times, which wrote up a story.

What happened next has become a familiar story in the annals of bad corporate p.r. H&M took too long to respond, and the Web went wild. A day later, H&M issued a statement. From Wallet Pop:

After spending a day in the number two “trending” spot in Twitter, H&M called the New York Times. “It will not happen again,”said spokeswoman Nicole Christie. “We are committed 100% to make sure this practice is not happening anywhere else, as it is not our standard practice.” Interestingly, on H & M’s website, the answer to the FAQ “What do you do with surplus clothes?” is this: “We donate clothes that do not meet H&M’s quality requirements to charity organisations like Oxfam, Caritas, the Red Cross and Terre des Hommes. Each store is itself responsible for clothes that are returned to it. Often there is an agreement that the clothes will be passed on to a suitable local charity organisation.”

But that has not stopped the negative posts on Twitter, Facebook, and blogs. Some examples…

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Top-post countdown No. 8: Pretend Office

April 27, 2010Jon Brooks Comments Off

  • Pretend Office – Freelancers write pretend email messages about pretend office matters. (Apr 12, 2010)

Original post:

If you’ve been unemployed a long time, perhaps you miss the kind of electronic back-and-forth that goes on in an office. If so, check out Pretend Office. Here’s a description:

A few times over the past couple of years I’ve discussed with freelancing friends how we miss out on some of the aspects of working in a proper company: the Christmas lunch, the after-work drinks, the fire alarm tests. All that bonding. A couple of us thought that maybe we should start an email list to compensate in some way, although we weren’t quite sure what it would be for. Maybe we’d just send round stupid videos and fail to organise a get-together in December, but it might be fun. So I set up the Pretend Office mailing list with no expectations.

And a weird thing happened.

With no planning, we all started acting as if we were people in a real office. Almost immediately we began to adopt characters and send officious announcements. Soon we were referring to characters in the office who didn’t exist in real life. Meeting rooms were booked, couriers arrived, servers went down, timesheets were requested, and embarrassing emails were accidentally sent to everyone in the company.

Here are all the email messages about pretend matters, sorted by pretend thread, pretend subject, pretend author, and pretend date.

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Top-post countdown No. 9: Best of Craigslist

April 27, 2010Jon Brooks Comments Off
  • 9. Best of Craigslist: Economy version – Craigslist-user nominations of posts that are particularly interesting and humorous also serve as indicators of the rotten economy. (Oct 7, 2009)

Our original post:

Ever check out the Best of Craigslist? These are posts that the site’s users have nominated as particularly interesting and/or humorous. They also can be telling indicators of the horrendous economy.

Dear Future Hipster Neighbor (Portland)

Dear Future late 20/early 30 Hipster Neighbor from the Mid-west/South/Idaho:

I know you are the coolest kid in Iowa/Ohio/Idaho/Texas/Florida/etc but…

While scanning CL for a cool vintage apartment near Hawthorne or Alberta, a sweet barista job and a new fixie to ride around on once you arrive, please reconsider your decision, and please do not move here.

There aren’t any jobs for the people who already live here….

Regards,

Your previous future neighbor

Small space for right roommate (SF Bay Area)

We have a limited time offer for a “nook” in our living room. The nook is currently home to my bike and is 6′ x 3′. It is perfect for someone who needs a little respite between apartments and has a comfy sleeping bag. The nook has wall to wall carpeting and has a window to private patio. Though it’s located in the main living room, you will be assured privacy by the entertainment center and nearby couch. We have limited space in our closet for your things, mostly it’s a room for the water heater, our suitcases, and a baby doll on a stick…

The rent: Negotiable per above standards
Availability: Now through mutually determined date

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ForSale2
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