DVR Adoption Rises Quickly in the US

According to a survey by J.D. Power and Associates, DVR adoption in the US among paid TV subscribers rose from 38% in 2007 to 44% in 2008.

DVR Adoption in the US

The Pew Research Center for the People & the Press found that DVR ownership in the US was 3% in 2002 and rose to 35% in 2008.

Technology Adoption Rates in the US, 1996 - 2008

Auto Industry Workers by Segment

A total of 3 million workers were employed in the automotive and related fields as of September 2008.

Auto Industry Workers by Segment, as of September 2008

What a Real Bear Market Looks Like

The nominal definition of a bear market is one in which securities prices drop 20% over a period of time. In today's Wall Street Journal Arthur B. Laffer reminds us what a real bear market is:

I saw up close and personal Presidents Gerald Ford and George H.W. Bush succumb to panicked decisions to raise taxes, as well as Jimmy Carter's emergency energy plan, which included wellhead price controls, excess profits taxes on oil companies, and gasoline price controls at the pump.

The consequences of these actions were disastrous. Just look at the stock market from the post-Kennedy high in early 1966 to the pre-Reagan low in August of 1982. The average annual real return for U.S. assets compounded annually was -6% per year for 16 years. That, ladies and gentlemen, is a bear market. And it is something that you may well experience again. Yikes!

Laffer has a new book out on the subject: "The End of Prosperity: How Higher Taxes Will Doom the Economy--If We Let It Happen"

Laffer says we are making the same mistakes as previous generations of politicians, whether Republican or Democtratic, with hasty solutions cooked up under panic conditions that will set the stage for "the end of prosperity".

Credit Derivatives and the Modern Financial System

University of Chicago Economist and Nobel Laureate Gary Becker on the state of the economy:

U.S. unemployment 1931-1941: 25 percent
U.S. unemployment September 2008: 6.1 percent

The main problem with the modern financial system based on widespread use of derivatives and securitization is that while financial specialists understand how individual assets function, even they have little understanding of how the whole incredibly complex financial system operates when exposed to various types of stress.

William Engdahl on Credit Default Swaps (CDS), (June 6, 2008):

Like many exotic financial products which are extremely complex and profitable in times of easy credit, when markets reverse, as has been the case since August 2007, in addition to spreading risk, credit derivatives, in this case, also amplify risk considerably.

Now the other shoe is about to drop in the $62 trillion CDS market due to rising junk bond defaults by US corporations as the recession deepens. That market has long been a disaster in the making. An estimated $1,2 trillion could be at risk of the nominal $62 trillion in CDOs outstanding, making it far larger than the sub-prime market.

No regulation

A chain reaction of failures in the CDS market could trigger the next global financial crisis. The market is entirely unregulated, and there are no public records showing whether sellers have the assets to pay out if a bond defaults. This so-called counterparty risk is a ticking time bomb. The US Federal Reserve under the ultra-permissive chairman, Alan Greenspan and the US Government’s financial regulators allowed the CDS market to develop entirely without any supervision. Greenspan repeatedly testified to skeptical Congressmen that banks are better risk regulators than government bureaucrats.

Alan Greenspan, former Chairman of the Federal Reserve, on the use of credit derivatives (e.g., CDOs) to transfer risk outside the banking system (May 5, 2005):

Use of Credit Derivatives to Transfer Risk outside the Banking System
Perhaps the most significant development in financial markets over the past ten years has been the rapid development of credit derivatives. Although the first credit derivatives transactions occurred in the early 1990s, a liquid market did not emerge until the International Swaps and Derivatives Association succeeded in standardizing documentation of these transactions in 1999. According to the BIS, the notional value of credit derivatives outstanding increased sixfold between 2001 and 2004, reaching $4.5 trillion in June of last year. Moreover, this growth has been accompanied by significant product innovation, notably the development of synthetic collateralized debt obligations (CDOs), which allow the credit risk of a portfolio of underlying exposures to be divided or "tranched" into different segments, each with different risk and return characteristics. Recent growth of credit derivatives has been concentrated in these more-complex structured products.

As is generally acknowledged, the development of credit derivatives has contributed to the stability of the banking system by allowing banks, especially the largest, systemically important banks, to measure and manage their credit risks more effectively. In particular, the largest banks have found single-name credit default swaps a highly attractive mechanism for reducing exposure concentrations in their loan books while allowing them to meet the needs of their largest corporate customers. But some observers argue that what is good for the banking system may not be good for the financial system as a whole. They are concerned that banks' efforts to lay off risk using credit derivatives may be creating concentrations of risk outside the banking system that could prove a threat to financial stability. A particular concern has been that, as credit spreads widen appreciably at some point from the extraordinarily low levels that have prevailed in recent years, losses to nonbank risk-takers could force them to liquidate their positions in credit markets and thereby magnify and accelerate the widening of credit spreads.²

A definitive evaluation of these concerns about nonbank risk-takers would require information on the extent of credit risk transfer outside the banking system and on the identities and risk-management capabilities of the entities to which the risk has been transferred. Unfortunately, available data do not provide this information.

Credit Default Swaps (CDS) Growth 2001-2007
Notional Amount in Trillions of Dollars

Number of Ambulances in New Dehli, India

According to the government, there are 35 working public ambulances with life-saving equipment to serve the needs of a population of over 14 million in New Dehli, India. This greatly contributes to the loss of life during terrorist attacks when the "golden hour" turns into the "golden four hours".

By way of contrast, there were 1,363,893 ambulance runs in New York City in 2007 (population est. 8,274,527), over 3300 per day, with an average response time of 8 minutes and 13 seconds throughout all five boroughs.

Ambulance Runs and Incidents New York City 2007

Source: FDNY

Circumcision Rates of Newborns Drop Dramatically Worldwide, Except in the US

Circumcision rates of newborns worldwide has dropped dramatically since World War II, except in the US where the rate has dropped from 64 percent of newborn males to 57 percent of newborn males. Doctors fear this is a serious public health issue since circumcision defends against many forms of sexually transmitted diseases, including HIV/AIDS. Arguments against the procedure include fear of desensitization of the penis, which doctors claim has never been demonstrated clinically.

Rates of Newborn Circumcision Have Dropped Dramatically Since WWII, Except in the US

Source: NewScientist, "Cut!", July 19-25, 2008

Female genital circumcision (mutilation) showed a drop from 35% to 20% in Ghana at the War Memorial Hospital from 1995 to 2003.

Prevalence of FGM among mothers delivering at the WMH (1996–2003)

Ghana Med J. 2006 September; 40(3): 87–92.

The WHO says that 3 million girls a year undergo female genital mutilation (FGM) in Africa.

"Prevalence of female genital cutting in Upper Egypt: 6 years after enforcement of prohibition law."

The objective of this study was to evaluate the prevalence of female genital cutting (FGC) in Upper Egypt, after 6 years of putting prohibition law into action. A total number of 3730 girls between the ages of 10-14 years were recruited to participate in this study. They were mainly preparatory school students (three urban and three rural areas). Social workers interviewed them as to whether they had undergone circumcision within the last 6 years or not. Subsequently, a questionnaire was sent to parents of girls who were positive for circumcision as to the circumstances surrounding the procedure. The prohibition law of FGC seems not to have altered the prevalence of this procedure. The majority of girls (84.9%) had had circumcision within the last 6 years with high prevalence in rural areas (92.5%). Circumcision was done for a combination of reasons, according to parents, with high rates of non-medical personnel participation (64.15%). This study's results indicate that the practice of FGC in Upper Egypt remains high despite enforcement of law. Extensive efforts are needed both to revise public awareness and to change attitudes regarding FGC.

PMID: 18348787 [PubMed - indexed for MEDLINE]

Employer Health Care Insurance Costs Trend - up 5% in 2008

Employer health care insurance cost trends continued their upward march in 2008, rising an average of 5% from 2007. This is a far cry from the 13% to 14% increases of five years ago, but it still makes employer paid health care one of the greatest benefits to employees in the US. The costs for family coverage in 1999 were an average of $5,900. In 2008 family health care insurance coverage averaged $13,000, an increase of 54% in nine years. But employers and employees are paying more for less, because today's insurance packages come with much higher deductibles, in some cases as much as $1,000 or more per year.

Estimated Average Annual Premiums of Employer Sponsored Health Benefits

Source: WSJ

Bank Failures - Then and Now

Over 3000 banks failed during the savings and loan crises, and the run up to it, in the '80s and '90s. By comparison, bank failures post the S&L crisis of the '80s have been minuscule by comparison. But the ones of late have been gigantic in size.

Bank Failures during the S&L Crises of the '80s and Now

Source: WSJ

A Brief History of Investment Banking Firms in the US

Goldman Sachs and Morgan Stanley - End of the Line


Source: WSJ

Mortgage Foreclosures in the US, April 2007 - August 2008

Total home foreclosures in the US have grown 105.7 percent from April 2007 to August 2008, growing to 303,879 from 147,708.

Mortgage Foreclosures in the US, April 2007 - August 2008

Source: Thomson Financial; RealtyTrac

3D Coming to a Theater Near You

Major movie theater chains and independent movie houses are trying to make the jump to 3D pictures to entice couch potatoes out of their 50-inch screen, THX powered homes. The leader in this technology area is RealD Corp., of Beverly Hills, California. In order to run 3D pictures a theater first has to upgrade to digital projection, then add the RealD 3D system to it.

Major theater chains such as Regal Entertainment Group and Cinemark USA Inc. have signed deals to outfit 1500 screens with RealD 3D projection technology. The Cinema Buying Group LLC, which represents 643 small theater owners in the US and Canada, has said it plans to add 3D equipment to 1,000 of the 8,000 screens it represents.

Digital 3D Theater Factoids

Cost to upgrade reel-based projector to digital projector: $50,000 - $70,000 per screen
Cost to license RealD 3D technology: $20,000 per screen over 10 years
Theaters with RealD screens in North America: 1200
Theaters with RealD screens in North America by the end of 2008: 3200

Premium charged for 3D ticket: $2 - $5

Movie tickets sold in US in 2002: 1.6 billion
Movie tickets sold in US in 2007: 1.4 billion

Source: Motion Picture Association of America

Unit sales of Video Games in Japan

Nintendo Wii:
Launch date: November 2006
Units sold in Japan: 6.7 million

Sony Playstation 3:
Launch date: December 2006
Units sold in Japan: 2.3 million

Microsoft Xbox 360
Launch Date: December 2006
Units sold in Japan: 700,000

Size of Japanese Video Game Market: $6.6 billion

Source: Enterbrain

Japanese video game players tend to like less-violent role playing games.

Piracy Threatens Oil Transit through Gulf of Aden

Bab el-Mandab, the strait connecting the Red Sea with the Gulf of Aden and the Indian Ocean, has come under the attack of pirate vessels. Ships have been captured and their crews held for ransom. This threatens some 3.3 million barrels of crude, or 3.9% of daily world supply, that moves through the strait headed east for the Suez Canal.

Oil Transit Points Through Middle East Straits and
Percent of Daily Oil Demand Carried

Source: Energy Information Administration

Daily percent of oil carried:
Straits of Hormuz (Persian Gulf): 19.4% of daily demand
Bab el-Mandab (Gulf of Aden): 3.9% of daily demand
Suez Canal (Red Sea): 5.3% of daily demand

Links:
Somali Pirates Grab Ukranian Ship Loaded with 30 Tanks

Pirates from the failed African state of Somalia have attacked at least 61 ships in and around the Gulf of Aden this year (2008), 17 of them in the first two weeks of September (2008) alone, according to the International Maritime Bureau's piracy reporting center in Malaysia. That compares with 13 attacks in the area for all of 2007.

Somali Pirates Demand $20 Million to Release Ship

Navy Boats Monitor Hijacked Ship

Update: Developed Nations Push Back on Piracy

Somalia

Source: LonelyPlanet.com

Cost of Shipping a Standard Container from China to the U.S.

Cost of shipping a standard 40-foot container of goods from China to the US:

2000 -- $3,000
2008 -- ~$8,000

Increase: 266% over eight years, caused largely by the increase in the price of oil from around $20/barrel to triple digits today. The result has been a dimming of appeal among manufacturers to outsource manufacturing to China and other Asian countries. The price of oil is making the world round, again.

Trends in Alzheimer's Disease

Nearly 30 million people worldwide suffer from Alzheimer's disease today. By 2050 that is expected to grow over 3 fold to top 100 million people.

Worldwide Prevalence of Alzheimer's Disease
2008 - 2050

Update: The percentage of Americans over the age 85 with Alzheimer's is 42%, an astoundingly large figure.

Age of Onset of Alzheimer's in the US

TiVo Market Share

TiVo is one of my favorite pieces of home electronics gear. If not for it, I would probably not be watching television any more. Despite having invented the category about a decade ago, Tivo has only a 6.54% market share, 1.7 million units out of a total of 26 million. The rest belongs to cable company DVRs whose equipment is provided for free and whose monthly charge is lower than TiVo's. Here is another example of good enough is. Although TiVo is much more sophisticated, has many more recording options, allows downloads from Amazon Unbox, and has a much better user interface, the Cable Co's DVRs have won the field with their "good-enough" feature set and low cost.

TiVo has a 6.54% Market Share for DVRs, 1.7 million units out of a total of 26 million

Source: Magna Global/Interpublic Group

Price of Nickel Down 30% January - August 2008

The price of nickel continues to fall, down 30% so far in 2008. Falling prices together with rising costs are making many nickel operations unprofitable. Russia's Industrial Metallurgical Holding has shut down 30% to 40% of its production capacity because falling nickel prices made its operations unprofitable.

Despite the lower prices, demand from the stainless-steel industry, the main consumer of the anticorrosive metal, hasn't picked up. Instead, buyers appear to be hoping for even lower prices.

Nickel producers are being squeezed by energy prices and the rising costs of sulfuric acid, a key component to extract nickel laterite ores. Sulfur prices have rocketed from an average of just more than $100 a ton last year to more than $800 a ton.

The Price of Nickel is Down 30% January - August 2008

40% of all Seaborne-Traded Crude Oil Moves Through the Straits of Hormuz Daily

17 million barrels of oil move through the Straits of Hormuz daily, 40% of all seaborne-traded crude oil. (This is about 25% of the world's total crude supply.) Closure of the Straits, even for a short time, as threatened by Iran if its nuclear facilities are attacked, would raise the price of crude to $300 per barrel, according to George Friedman, founder of StratFor, the Austin Texas-based global intelligence company.

(Source: Barrons, August 4, 2008, "In Sight, an Amicable Endgame in Iran")

Straits of Hormuz


Straits of Hormuz

See: Tehran Program Gains Influence in Israel's Election

Number of Animals Euthanized in US Annually

The number of animals euthanized in shelters in the U.S. for lack of homes is 4 million annually. 25% of these are estimated to be pure breeds. Source: Parade Magazine, Aug. 3, 2008, P. 14

Dog Euthanasia in Silicon Valley (Santa Clara County) and Environs

Why did dog euthanasia increase in the Silicon Valley area as its economy was turning around after the dot com bubble burst in March 2000?

The Price of Platinum, January - July 2008

Source: Wall Street Journal