Kenneth Arrow on Greece and US debt limit

Nobel laureate Kenneth Arrow shares his views on Greece and European economy and also on US debt limit imbroglio.

As to Greece and the European soverign debt crisis, he suggest that "Greece should default", and that "the leaders in Europe allow the market to operate to some extent which gets the burden of political decision-making off the backs of the leaders. The idea of avoiding all defaults is, in his opinion", "an unsustainable ideal".

As to the possible consequences of failing to raise the debt limit or an actual US default, his opinion is that, the American and European economies may suffer somewhat and China, will probably be the net gainer in all of this due to future rise of interest rates.

Tribute to the high-speed rail

- How long is forever?
- From the day the train started to run until it crashed.
- I am confused, really...but how long is that?
- I don't know...umm, maybe four years one hundred and twenty-six days...

"Quote" of the day...

"To be and not to be, that is a miracle..."

"I believe therefore I am..."

                                                                           

                                                                          -- Great philosophers in the Chinese Railway Ministry

Some background information:

On 23 July 2011, two high-speed trains collided and derailed in the Lucheng District of Wenzhou, Zhejiang Province, China. The trains were on the Ningbo–Taizhou–Wenzhou railway line when the incident occurred. State-run Chinese media have confirmed 39 deaths, and at least 192 people were hospitalised, including 12 who were severely injured (see here and here).

When a spokesman of the Ministry of Railways was asked about the rescue of a two-year old girl from the about-to-bury wreckage, he said, "...it was a miracle...". Later when was asked why Wenzhou trains were instantly buried, he said the following, "...during the emergency rescue operations, the area was very complex, and there was a marsh below, so it was very difficult to do our best job. We also had to deal with all the other train cars, so (the earth-moving equipment operator) buried the front car below, covering it with earth, and it was mainly just a case of dealing with the emergency. This was the explanation he was offered. Whether you believe it or not, I certainly do..."

Charlie Rose talks with Chinese entrepreneurs

Jack Ma, founder of Alibaba.com - China's largest e-commerce group, and Zhang Xin, CEO of SOHO China - one of the largest Chinese real estate developers, sat down with Charlie Rose, sharing their knowledge and experience on how they started their own businesses, and what is unique about Chinese people, its economy and its culture.

Growth: A Demographic Measure

In predicting growth, demographers like to look at a country's "dependency ratio," a measure of how many old people there are, and how many young working people there are to support them. The particular ratio in the chart below measures how many old people there are in a certain country who are at least 65 years old per 100 people who aged between 15 and 64. If a country has a higher dependency ratio, then it means it has a more aging population relative to the young people.

In theory, the more young people there are, relative to old people, the better. From the chart, it is clear that emerging economies still have large room to grow.

From BusinessInsider.

China's economic facts

See here. Although China's GDP growth maintained 9.6% in the first half of 2011, the rising price levels driven by foodstuff and the unbridled property market are still two big headaches for the policy makers in Beijing.

Facebook faces problems

Facebook is surely under huge pressure right now as Google is actively testing its newly-launched social networking service Google+ among invited users. Some have revealed that Google+ offers more desirable features for users to better manage their social ties, like the circles feature, and the multiperson video chatting.

Here comes a little bit more disturbing news for Facebook. Accoring to the special report from this week's Economist, Facebook's international expansion strategy may well face some challenges in the future (see the chart below, click to enlarge). More competition? Well, that's for sure. But what is more important is whether Facebook could (or is willing to) adjust its conventional business model to fit the social norms and the culture in its new intended territories.

Take Japan as a typical example. Although in most countries, the number of Facebook users far exceeds that of the users of Twitter, 5 times more or in some cases, even 6 to 8 times. However, in Japan, this ratio is less than one-third. Some analysts believe that the unpopularity of Facebook in Japan is mainly due to its late entry into the market since earlier entrant and large incumbent like Mixi, has already grasped nearly 80% of the market share. But, still this could not explain the growth discrepancies between Facebook and Twitter. Facebook Japan was launched in May 2008, while the Japanese version of twitter was introduced only a month earlier. How could the difference be so large? Moreover, according to the latest Alexa ranking of top sites in Japan, Facebook is high on top 10, while twitter and mixi are ranked 13 and 14, respectively. How could this happen at the same time when facebook users in Japan are only one-third of the twitter users? It might be the case that the English version of facebook is far more popular in Japan than its Japanese version, and even twitter.

Others argue the unpopularity of Facebook in Japan is because of the real name policy. But how big is this issue? Are there any other factors that may better explain the facebook problem in Japan? Is it due to any further risks of using facebook in Japan, or is it because of a deep culture clash? Here is a post which offers a somewhat more in-depth look.

Selective blog entries...and short comments

1. The educational value of creative disobedience ( ..which may turn into a spiral of creative destruction);
2. Immigrant moms typically have lower infant mortality rates than U.S.-born mothers, and the single biggest factor, by far, to reduce infant deaths is the mom's years of education (alright then, it seems we need a universal coverage of college education for women);
3. 18 attributes of highly effective liars (oops, I might only have 12, six to go!!)
4. Does debt boost young people's morale? (c'mon, only young people? Give us an inverted-U for everyone pls...)
5. Nudged and stuck: a response to Thaler (who said nudge one time would be enough?)
6. The bribery of Chinese characteristics (when there is a will, there is a better way...)

Books and movies on Wall Street and the Financial Sector

1. Reading list from Goldman Sachs (pdf);
2. Reading list for quants;
3. Movies, documentaries on Wall Street, financial markets, corporate scandals and financial crisis.

Sector-specific performance measures

Revenue, profits and many more generic financial returns and earnings measures (e.g., ROE, ROA, EBITDA, EPS etc.) are used pervasively in practice as well as in business research. This article however suggests, in some business sectors, practioners often create simple yet more specific measures of performance or growth which could better capture the essence and subtlety of the sectors' operational traits than the ordinary measures.

For example, railroad operators use "intermodal volume" and "number of containers shipped" to measure their shipping volumes; steelmakers use "operating profit per ton" to show whether the companies' productivity has improved while energy, labor and raw-materials have been properly managed; and the key performance measure in hotel chains is the so-called "revenue per available room", which reflects average room rates and daily occupancy.

Jokes about Goldman Sachs

I was reading the piece on BusinessInsider about Coca Cola's accuse of Goldman on its restrictions of aluminum release (also here), but a quick link diverted my attention, which was a collection of best of worst jokes about Goldman Sachs during the financial crisis (somewhat outdated, but still funny indeed):

• "By the way, all of the jokes here tonight are brought to you by our friends at Goldman Sachs. So you don't have to worry, they make money whether you laugh or not . . ." (President Obama)
• "Why are government employees filing a civil suit against Goldman Sachs? That's just going to be embarrassing in a few years when they all go back to work at Goldman Sachs." (Stephen Colbert)
• Goldman Sachs Top Ten Excuses (from David Letterman)
• "$8.7 billion of our money has gone missing in Iraq! I didn't even know they had a Goldman Sachs over there." (Jay Leno)
• "While testifying before Congress yesterday, BP CEO Tony Hayward called the oil spill a 'complex accident caused by an unprecedented combination of failures.' Then he realized he was reading notes left on the stand by a Goldman Sachs executive." (Jimmy Fallon)
• Upon hearing that Goldman Sachs was handing out $16 billion in bonuses, after the $5.4 billion in bonuses from January, "That was January... It's only April... Was this their daylight savings time bonus? Groundhog didn't see its shadow bonus. Do you give that bonus to the bonus in January so the other bonuses don't get lonely?" (Jon Stewart)
• After the SEC announced the Goldman investigation, the popular joke, "A man is only as faithful as his options" (Chris Rock)

Here for more.

Joking aside, if I had only one takeaway from the whole financial meltdown, it is that large investment banks, like Goldman, will not only survive, but also thrive in years to come, not because it is "too big" per se, but more importantly because its clients are no less greedy than its operators.

How much do you know about the internet, really?

Like me, if you really don't have a definitive answer to this, here is a cooler and state-of-the-art version of The Internet for Dummies.

The Economist Launches Quarterly Business Books Review

See the first episode here. Six books are briefly discussed, including My Years with General Motors (1964) by Henry Ford, William Whyte’s The Organisation Man (1956), the classic text Management: Tasks, Responsibilities, Practices (1973) by Peter Drucker, bestseller In Search of Excellence (1982) by Tom Peters and Robert Waterman, Clayton Christensen’s The Innovator’s Dilemma (1997) which introduced the notion of disruptive innovation and C.K. Prahalad’s The Fortune at the Bottom of the Pyramid (2004).