Month: November 2008

Costco was packed today. There is nothing like a good depression to boost sales at a wholesale store. While enjoying my $1.50 hotdog and soda, I shared a table with a college girl. “My student loan company went bankrupt,” she noted, “so I’m looking for other funding.” What about a semester job? “I’m working at a Dunkin Donuts near school,” she replied, “but business is slow. We’ll probably have to close if things continue like this.”

Just a few months ago it would have been tough to imagine that the economy could slump enough to keep people away from their Boston Cream Donuts. Perhaps finally Americans will slim down.

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A month ago the Dow was at 9500. I asked a friend who is in the money business “How much lower can it go?” He said “7500. People who need cash, for whatever reason, have no way to get it except by selling public equities.”

Yesterday the Dow sank to 7500, so I called my friend asking for his next prediction.

“6000. Still a liquidity crisis.”

The aggregate market capitalization of the S&P 500 was about $10 trillion in years past. Presumably it is falling towards $5 trillion. We may be getting to the point that the people from whom we’ve bought stuff lately, e.g., the Chinese, the Japanese, the oil-exporting countries, may be able to come over here and buy a 100 percent interest in the 500 largest U.S. companies. Why would they want them if the U.S. economy continues to suck wind? (And it probably will if you believe that my economic recovery plan is necessary and compare it to what politicians are actually doing.) Most of those companies are multi-national and do a lot of business outside of the U.S.

Meantime, we can take heart that similar economic challenges were tackled back in 1945: important historical video.

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Here are a couple of photos from a recent Saturday flight over El Paso, Texas. Note the empty parking lot in the conventional shopping mall and the full parking lot at Walmart.

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Folks: I’ve drafted an economic recovery plan for the U.S. and would appreciate comments/corrections.

Thanks.

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I would appreciate comments and suggestions on a new Web site: hanscomcharter.com. I won’t say too much about this except that it is for people who want to charter private jets out of Hanscom Field in Bedford, Massachusetts.

[p.s. Yes, I know that this is a pretty ill-time business venture. We ordered the jets a year ago when the world looked very different.]

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My apartment in Harvard Square had a 300-gallon aquarium filled with African Cichlids. With the new house in the suburbs the challenge is keeping Nature out of the house, not bringing it in. The fish have been given away and the tank sits in a moving company’s warehouse. Now the question is whether anyone knows of a school or charity in the Boston area that wants a 300-gallon tank, which includes a nice stand with maple doors. The tank is complete with filters, lights, cover, etc. I will pay for delivery, including a crane if necessary, to the school. The tank is about 8′ long by 2’x2′.

[Update: I also put this on Craig’s List and ended up with a flood of inquiries ranging from the local zoo to a bunch of schools. Sometimes the Internet really is useful…]

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In February 2006, I published “Women in Science”, a response to the theory that America’s smartest women were too dumb to spend years getting PhDs in science when the prize at the end was a $40,000 per year job. A loosely related New York Times Article appeared this weekend: “What Has Driven Women Out of Computer Science”. It is an interesting read, but possibly could be summarized in one sentence: “It is better to be an MD or cardiac nurse collecting Medicare reimbursement checks than one of the 6000 laid-off engineers from Sun Microsystems.”

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This Wall Street Journal article, “Just Say No to Detroit”, by David Yermack, a finance professor at NYU, has some interesting calculations. The author claims that Roger Smith was prescient for realizing that GM should diversify rather than putting more money into making cars. The figures in the article are impressive, with about $465 billion invested by Ford and GM since 1998, enough to have purchased Honda, Toyota, Nissan, and VW. Presumably he couldn’t scratch up the figures for Chrysler because they are now private.

Favorite quote: “If the government diverts our national savings into businesses that have long track records of destroying investment capital, eventually we’ll end up with an economy like France’s — or Zimbabwe’s.”

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This New York Times piece talks about a Web site that teaches math to American kids using a curriculum from India. “Math homework in India consists of math problems that students work through, as opposed to the United States, where homework is heavy on reading about math topics in a textbook.”

This echoes some of my recommendations to computer science teachers in Africa.

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“I find myself in a lonely position. While many states and local governments are lining up for a bailout from Congress, I went to Washington recently to oppose such bailouts. I may be the only governor to do so.” — Mark Sanford, Governor of South Carolina

The complete Wall Street Journal piece has some interesting points, including “There’s something very strange about issuing debt to solve a problem caused by too much debt.” and “Those [states] that have been fiscally responsible will pay for or lose out to the big spenders. California increased spending 95% over the past 10 years (federal spending went up 71% over the same period). To bail out California now seems unfair to fiscally prudent states.”

Some similar points are made in “Why Spending Stimulus Plans Fail.” The author points out that “Every dollar [Congress] injects into the economy must first be taxed or borrowed out of the economy.”

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