Animals as Pets? Do we ever really know what they are thinking?
Do we really ever know what is going on in an animal’s mind? Some people believe that they do, but when they are wrong, disastrous consequences can result. Sometimes. Many of these same people would tell you, before the fact, that the risks are worth it.
Unidentified trainer with Killer Whale
This subject has come up a number of times recently, both in my life and in the news from across the world. Just recently, a seasoned trainer at Florida’s SeaWorld was killed by a killer whale that she had worked with for years. She was very fond of the whale; there are many photos of her hugging the whale, playing, and working with the whale. She obviously loved her job, and felt strongly about the whale conservation efforts that Seaworld claims to promote. Witnesses to the mauling have said that the whale seemed angry just before the attack, and concluded that the whale was stressed by being kept in a small tank with little to do. Essentially, they theorized that the whale “lost it.” Since then, however, I’ve heard statements made by whale trainers who theorize that the whale was simply playing; that the trainer has been in the water shortly before the incident, playing with the whale. When she got out of the water, the whale might have wanted to continue to play, and grabbed her pony tail and thrashed her about without any understanding that he was causing her death. This same whale has been involved in at least two previous deaths.
A friend on another site just posed this question.
Why is it that a recession is described as two or more successive quarters of “negative growth”, but being out of recession is just one quarter of (estimated) growth?
I felt emboldened to pen an answer as follows ….
In Britain, the definition of recession-emergence is from the same school of economics as growth predictions for next year (any year), which are always about 5 zillion% more than actually turns out to be the case.
Recession in Britain
The cunning idea is that future growth will be vast enough to cover the even vaster existing debts and commitments. And, of course, by the time we KNOW what the growth actually turned out to be, most people will have forgotten the predictions on growth from the financial and economic wizards running the country. That’s also one of the great things about a new mess or crisis; it always takes the mind off previous crises, which are likely to be ongoing but less in the media and therefore not to be bothered about too much.
This is, of course, in addition to the fact that growth in itself is incompatible with reducing global warming, but here we are getting a bit too technical.
Well, that’s how we do it in Britain anyway. How do you manage it over there?
by Chris Snuggs
A reply from a U.S. economist.
Hello there Chris!
Recession in the U.S. is also defined as two successive quarters of negative GDP growth. At least, that’s how its officially defined. And to add my answer to your friend’s question — either the economy is either in a recession — i.e., two or more consecutive quarters of negative GDP growth — or it isn’t, which means that the string of negative GDP growth rates is broken. And that only takes one quarter of positive growth.
Most of the economists I know personally tend to look at a bigger picture than the stated GDP figures, however. I focus on capital and labor utilization rates as I believe that they are more important measures of a well-functioning economy. The final GDP figures in both of our countries are national income accounting figures, and have all the weaknesses of any income statement variable. They are flow variables, which ignore the stock of economic wealth. For example, if you invest $100 this year in the stock market, and it grows in value by $20, only the $100 is counted. The increase in wealth is never captured in measures of GDP.
Another problem with current measures of GDP and GDP growth is that government spending is considered on par with private spending, which brings into question the sustainability of growth measures based on GDP, although President Obama and perhaps Prime Minister Brown are both fine with growth rates being fueled by large increases in government spending. Finally, a significant fraction of economic activity, like the value of work in the home — is not measured.
So, yes, the official measurement of GDP is all wrapped up in technicalities. But most economists I know pay little attention to it. They are more concerned with how well the economy is functioning, whether the growth is sustainable, and whether people who want to work can find work. If you are unemployed, the economy is in a recession, regardless of what the GDP figures say!
What has become very clear to me, after watching the U.S. Health Care Summit between Democrats and Republicans as objectively as possible, is that the President’s goal was not to craft a thoughtful approach to shoring up and improving the U.S. health care system.
Pres. Obama making one of many points at Healthcare Summit
No, the reason for the President and the Democratic leadership to convene the so-called summit was to grandstand; to make a show; to create a photo opportunity; and, most importantly, to try to garner enough support from the Democrats in Congress to ram through the Reconciliation option on the behemoth, disastrous 2000-plus page version of the bill, filled with incomprehensible, internally conflicting doublespeak.
A sad day for American politics. A very sad day for American citizens. We deserve better.
I’ve been asked many times over the years for advice on investing. “What is the market going to do?” “Should I be invested in stocks or bonds?” And, especially in the last few weeks, “Should I hold U.S. or foreign government bonds?”
A U.S. treasury bill
Those are some good questions! The answers are not as “good.” The factors that drive the yields on treasury bills and bonds are complex and, despite Ben Bernanke’s pronouncements to the contrary, less well understood than stock returns, and I don’t have a crystal ball, but I can at least begin to frame an answer to these questions here. I will come back to expand on this topic over time, as markets, economies, and world events evolve.
The return on both bonds and stocks is measured as the percent change between the market price today, and the cash flows received later. The cash flows of a bond, namely coupon payments and principal, are specified in a contract; if they are not paid, the issuer is in default, and the bondholder has the right to take them to court. The cash flows on stock, dividends and capital gains, are residual; they are discretionary, and are paid out only after debt payments and other obligations are paid. For this reason, bonds are considered to be less risky than stocks, and the nominal yields on bonds are generally lower than those of stocks. The risk-adjusted returns on stocks and bonds may be the same, but the nominal yields on bonds are typically lower.
There is an important distinction between the nature of the returns on bonds and stocks. With bonds, the future cash flows are known. Movements in the bond’s yield are determined simultaneously with movements in the bond’s price. Once a bond is issued, only changes in interest rates (yield, risk) drive unexpected changes in its price. Stock prices, on the other hand, fluctuate as either risk or residual cash flows change. As a result, changes in a bond’s price, hypothetically at least, are a much cleaner indicator of the market’s expectations of future market rates of interest than a stock’s price.
One problem that distorts the information about expected future interest rates that is revealed by changes in the bond’s price is that bonds are less frequently traded than stocks, so the price data on bonds is less comprehensive and complete. In addition, the reported price data that form the basis of bond yield models often diverge from actual market-clearing prices, so that bond pricing models may not describe actual market behavior. Lastly, there is such a tremendous volume of economic and policy information, some of it conflicting, that is crammed into this one variable, the bond price which, given the coupon and principal, summarizes the market’s referendum on future interest rates.
by Sherry Jarrell
Next time: Sources and types of risk in U.S. and other bond prices.
Yves’ Blog Naked Capitalism has been mentioned many times on Learning from Dogs. Indeed, she was one of the Blog authors highlighted recently in this Post.
Yves Smith
I fail to understand how she finds the hours in the day to write in such detail – but those of us interested in getting under the skin of our present economic situation are all the better for it. Here’s a great example that was published on the 23rd February. I quote the opening paragraphs and then link to the rest of her post. From here on is her piece:
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Martin Wolf, the Financial Times’ highly respected chief economics editor, weighs in with a pretty pessimistic piece tonight. This makes for a companion to Peter Boone and Simon Johnson’s Doomsday cycle post from yesterday.
Now, after the implosion, we witness the extraordinary rescue efforts. So what happens next? We can identify two alternatives: success and failure.
By “success”, I mean reignition of the credit engine in high-income deficit countries. So private sector spending surges anew, fiscal deficits shrink and the economy appears to being going back to normal, at last. By “failure” I mean that the deleveraging continues, private spending fails to pick up with any real vigour and fiscal deficits remain far bigger, for far longer, than almost anybody now dares to imagine. This would be post-bubble Japan on a far wider scale.
Yves here. Notice he associates success and failure with polar options. But how can you “reignite the credit engine” when the financial system is undercapitalized even before allowing for the need to take further writedowns? The IMF has found the converse in its study of 124 banking crises, that purging bad debt is a painful but necessary precursor to growth. So I fail to understand how Wolf envisages that “skip Go, collect $200″ of releveraging quickly comes about. And in fact, it turns out that Wolf’s “success” is a straw man:
Learning from Dogs 