Weekly Roundup 28: A Curated Linkfest For The Smartest People On The Web

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Must Read For Investors: – Wolfram AlphaWolfram|Alpha’s long-term goal is to make all systematic knowledge immediately computable and accessible to everyone. We aim to collect and curate all objective data; implement every known model, method, and algorithm; and make it possible to compute whatever can be computed about anything. Our goal is to build on the achievements of science and other systematizations of knowledge to provide a single source that can be relied on by everyone for definitive answers to factual queries.Today’s Wolfram|Alpha is the first step in an ambitious, long-term project to make all systematic knowledge immediately computable by anyone. You enter your question or calculation, and Wolfram|Alpha uses its built-in algorithms and growing collection of data to compute the answer. Based on a new kind of knowledge-based computing.

Feature: Why people fall victim to scams Via OTS Research – The research, undertaken by The University of Exeter on behalf of the OFT, provides a valuable insight into why consumers fall victim to scams, as well as the psychological techniques used by scammers to con the UK public out of an estimated £3.5 billion every year.

Feature: Nouriel Roubini On The Almighty Renminbi – Via NYT –  The 19th century was dominated by the British Empire, the 20th century by the United States. We may now be entering the Asian century, dominated by a rising China and its currency. While the dollar’s status as the major reserve currency will not vanish overnight, we can no longer take it for granted. Sooner than we think, the dollar may be challenged by other currencies, most likely the Chinese renminbi. This would have serious costs for America, as our ability to finance our budget and trade deficits cheaply would disappear.

Feature: Thriving Norway Provides an Economics Lesson – Via NY Times – When capitalism seemed on the verge of collapse last fall, Kristin Halvorsen, Norway’s Socialist finance minister and a longtime free market skeptic, did more than crow.As investors the world over sold in a panic, she bucked the tide, authorizing Norway’s $300 billion sovereign wealth fund to ramp up its stock buying program by $60 billion — or about 23 percent of Norway ’s economic output “The timing was not that bad,” Ms. Halvorsen said, smiling with satisfaction over the broad worldwide market rally that began in early March.

Feature: Empire of Carbon – Via Krugman @ NYT –  I have seen the future, and it won’t work.These should be hopeful times for environmentalists. Junk science no longer rules in Washington. President Obama has spoken forcefully about the need to take action on climate change; the people I talk to are increasingly optimistic that Congress will soon establish a cap-and-trade system that limits emissions of greenhouse gases, with the limits growing steadily tighter over time. And once America acts, we can expect much of the world to follow our lead.

Feature: Small Banks Maybe Dull But They Have Profits– Via NY Times -It’s unlikely that any group of professionals is happier to highlight the dullness of their work than small-town bankers.At a recent conference held here by the Indiana Bankers Association, attendees said it over and over: our business is plodding and boring and we would not have it any other way.“Banking should not be exciting,” said Clay W. Ewing, president of retail financial services at German American Bancorp, a community bank in Jasper. “If banking gets exciting, there is something wrong with it.”

Feature: Buying Troubled Assets Via SSRN – This paper analyzes how government intervention in the market for banks’ troubled assets is best designed, and also uses this analysis to evaluate the public-private investment program announced by the U.S. government in March 2009. I begin by presenting the case for using government funds to restart the market for troubled assets. I then discuss the advantages of providing government capital to competing privately managed funds, a strategy I have advocated in past work, and I outline the key elements that such a plan should include.

Feature: Focus and Drift: A Secret Path to Brain Power? – Via Alfin- Generate and test” is the secret to prolific creativity for both humans and nature (natural selection). Another powerful pairing may be “focus and drift”, for building mental facility — perhaps even brain matter Competence in using the “focus and drift” cycle can provide a greater potential for problem-solving and creativity, in addition to a better ability to cope with routine challenges. There are many useful approaches to meditative focus. And quite a few methods have been developed to facilitate highly productive daydreaming “drift.” Combinatorial sorting suggests an enormous range of potential “systems” for using focus and drift in a highly personal manner.

0.  Jeffery Sachs On Sustainable Developments: Rethink the Global Money Supply Via  Scientific American Magazine -The People’s Bank of China jolted the financial world in March with a proposal for a new global monetary arrangement. The proposal initially attracted attention mostly for its signal of China’s rising global economic power, but its content also has much to commend it. A century ago almost all the world’s currencies were linked to gold and most of the rest to silver. Currencies were readily interchangeable, gold anchored exchange rates and the physical supply of gold stabilized the money supply over the long term.

1. Insider Trading Probe at SEC – Via WSJ – Federal prosecutors are investigating whether two Securities and Exchange Commission enforcement lawyers violated insider-trading laws, a potential scandal at an agency normally the pursuer in such cases.A report by the SEC’s inspector general described multiple suspicious cases where the lawyers traded the stocks of companies around the time the companies were under investigation. The report concluded the lawyers had violated the agency’s internal rules, and the case was taken up by the U.S. attorney’s office in Washington, D.C., and the Federal Bureau of Investigation.

2. The Luxury City vs. the Middle Class – Via American.Com- The sustainable city of the future will rest on the revival of traditional institutions that have faded in many of today’s cities.Ellen Moncure and Joe Wong first met in school and then fell in love while living in the same dorm at the College of William and Mary. After graduation, they got married and, in 1999, moved to Washington, D.C., where they worked amid a large community of single and childless people.Like many in their late 20s, the couple began to seek something other than exciting careers and late-night outings with friends. “D.C. was terrific,” Moncure recalled over lunch near her office in lower Manhattan. It was an extension of college. But after a while, you want to get to a different ‘place.’

3. Video: Mortgage Fraud Scandal Brewing – Via Econ Video

4. Tesla Motors CEO Elon Musk: ‘Great Companies Are Built on Great Products’ Via Knowledge @ Wharton – Entrepreneur Elon Musk has three passions: the Internet, space exploration and clean energy. The first paid off handsomely for him in 2002 when he sold PayPal to eBay for $1.5 billion in stock. The second is fueled by SpaceX, a company that makes space launch vehicles. Musk’s third passion is Tesla Motors, which makes the Tesla Roadster, an electric sports car that claims to go 244 miles per charge and sells for $101,500 or more. In the first of a two-part podcast with Wharton Entrepreneurial Programs and Knowledge@Wharton, Musk speaks with management professor John Paul MacDuffie, co-director of the International Motor Vehicle Program, about electric cars, hybrids, the Tesla and the mysterious ways of Detroit. For coverage of his leadership presentation, read: Harnessing the Sun and Outer Space: Elon Musk’s Sky-high Vision.

5. Visualization:  It Pays To Lobby – Via Econ Data – Below is a chart of bailout funds received as a multiple of that $13mm spent on lobbying in the quarter.

6. Video: Umair Haque: Achieving Behavioral Innovation – Via Fora.Tv – Speaking at the BRITE ’09 Conference, Umair Haque, director of the Havas Media Lab, discusses why firms looking to innovate should start by reconceiving the costs and benefits that shape the behavior of their consumers.

7. Video: The Future of Transportation with Robin Chase Founder Of ZipCar – Janera hosts a Conversation with Robin Chase, Founder of Zipcar and C.E.O. of GoLoco, and Vijay Vaitheeswaran, award-winning correspondent for The Economist and an authority on the future of energy.The future of transportation touches on some of today’s most pressing issues: How do we balance long-term and short-term priorities? Should the environment take a backseat to the recession? What will future forms of ride-sharing, car-sharing, and public transportation look like? How can you be a Global Nomad without leaving a gigantic carbon footprint?

8. How Casinos Can Find and Target Their Favorite Customers: The Biggest Losers Via Knowledge @ Wharton – Just like its rivals for consumers’ disposable income, America’s $90-billion-a-year gaming and casino industry is significantly driven by database marketing. But gaming customers are very different in one major respect.While adult patrons of a hit movie, for example, know they will spend about $8 to $10 on a ticket, perhaps buy soda and popcorn and then head home, some casino customers lose huge sums of money while a few others might actually make a profit, especially those who are skilled at games such as blackjack.The questions inspired two Wharton faculty members and a colleague at New York University’s Stern School of Business to see if they could develop a mathematical model to identify these most lucrative customers. The three researchers — marketing professors Raghuram Iyengar and Jehoshua Eliashberg, and Sam K. Hui, a marketing professor at Stern — say that the answer is an unqualified yes. Indeed, they wonder why casinos aren’t already using these tools.

9. Why Economists Failed To Predict The Economic Crisis– via Knowledge @ Wharton -There is a long list of professions that failed to see the financial crisis brewing. Wall Street bankers and deal-makers top it, but banking regulators are on it as well, along with the Federal Reserve. Politicians and journalists have shared the blame, as have mortgage lenders and even real estate agents.But what about economists? Of all the experts, weren’t they the best equipped to see around the corners and warn of impending disaster?Indeed, a sense that they missed the call has led to soul searching among many economists. While some did warn that home prices were forming a bubble, others confess to a widespread failure to foresee the damage the bubble would cause when it burst. Some economists are harsher, arguing that a free-market bias in the profession, coupled with outmoded and simplistic analytical tools, blinded many of their colleagues to the danger.

10. Improving Access to Government Through Better Use of the Web Via Policy Pointers – Recognizing that governments throughout the World need assistance and guidance in achieving the promises of electronic government through technology and the Web, this document seeks to define and call forth, but not yet solve, the variety of issues and challenges faced by governments

11.Mensch on a Mission with Kleiner Perkins’ Komisar – Via Forbes Wolfe –  When my Lux Capital partner Peter Hebert recommended we interview our co-investor from Kleiner Perkins, Randy Komisar I jumped—not because of Kleiner’s long-standing track record of investing early in companies like Amazon, Google and Genentech, but because Randy, like our partner Larry Bock, is a rare breed of VC: “a mensch on a mission.”. When VCs invest with other VCs they’re really investing with partners at firms—not the firms themselves. VC investing is a relationship, access and entrepreneurial-mentorship business. We work for two customers who we tirelessly serve–and the day we make the decision to manage money for someone or invest it with someone is the day we start working for our investors and working for our entrepreneurs. Randy Komisar is a great embodiment of this principle. Feed you brain or miss this exclusive interview at your own intellectual peril.

12. Expertise and Problem Solving, General or Specialized? Via NeuroNarrative -One of the interesting ongoing debates in the expertise literature is whether general or specialized problem-solving strategies are more effective.  It’s an important question with implications for how skills are taught — most importantly, thinking. General problem-solving strategies are context-independent. For example, if Charley the policeman is taught the general strategy for safely disarming criminals, then he should be able to apply it to a general range of situations in which he faces armed criminals.  The general strategy, this argument goes, produces generally applicable problem-solving ability.

13. Basking in the Dopamine Glow – Via Science Blogs -Up top we have the presynaptic neuron, the bottom is the post-synaptic neuron. The blue things are receptors, and the fuschia thing is the dopamine transporter. In her normal life, Sci is more likely to focus on things like the receptors and transporters, but today I want you looking at something different. I want you looking at the clear, transparent bubble. That bubble is called a vesicle. The vesicles are the…freight trains of the synapse. They are little bits of membrane which hold dopamine, serotonin, or other neurotransmitters. When they are stimulated by an action potential coming down the neuron, they move to the membrane and fuse with it, releasing their contents at the synapse.

14. SEC Brings First Insider Trading Case Regarding CDSs – Via Harvard Law – The CDS market trades over the counter and its participants typically are sophisticated institutional players, and for those reasons, among others, it has not historically been a focus of SEC insider-trading enforcement activity, at least until now. In yesterday’s complaint, however, the SEC asserted that the CDS involved in this case qualified as security-based swap agreements under the Gramm-Leach-Bliley Act and hence are subject to the anti-fraud provisions of the federal securities laws — a proposition that has yet to be tested in court.

15. The Three R’s of Social Sector Leadership – Via Acumen Fund Blog – Imagine yourself in rural India, driving down a pothole-filled road as the sun’s 90 degree heat pounds down on you in the car – without air conditioning, of course. Sweat is dripping from every pore of your body; all you want is a cold drink and a long nap. But no. Instead, you are putting together a spreadsheet tracking each of the local dealers who are going to distribute your low-cost, low-margin product to the base of the pyramid. You have just met 5 dealers in the past six hours plus you plan to meet another 50 in the coming week and your boss (a venture backed entrepreneur) has to report the numbers to his investors by 5pm that day. And by the way, he asked you for the information this morning when he called you on your cell – which barely gets any signal.

16. Is The Crisis Over Yet? The CBO Weighs In – Via Baseline Scenario -Confidence is returning to most credit markets, consumer spending is likely to rebound for some items (autos and housing repair are leading contenders), and firms in the US are starting to sound more optimistic.  On NYT.com’s Economix yesterday, Peter Boone and I suggested that we are out of the panic phase of the crisis – in large part because the US fiscal stimulus has reassured people worldwide, but also because President Obama has had a broader calming effect.Today, the Congressional Budget Office is pointing out that it would be premature to congratulate ourselves too much (disclosure: I’ve joined the CBO’s Panel of Economic Advisers, but none of the information here comes from them).  As you likely know, the administration is proposing to lend $100bn to the IMF, as part of that organization’s increase in resources following the G20 summit.  Peter Orszag, head of OMB, argued that there was zero probability of this money being lost, so $100bn should be “scored” for budget purposes as $0bn – which is how this kind of transaction has been handled in the past.  As the IMF likes to say, it is “the lender of last resort, but the first to be repaid.”

17. Brother, Can You Spare a Loan? – Via NYT Magazine -Debt, credit, lending — these are financial matters, to be evaluated empirically and mathematically. But that’s not all they are, especially lately. Value judgments about both personal and corporate borrowing and lending abound in this time of tight credit: who deserves to borrow and on what terms, who abused the idea of debt and why.

19. Talking about Epidemics, Panic and the Revenge of the Germs with Philip Alcabes – Via NeuroNarrative – It’s a huge understatement to say that panic is part of human nature. We’re all wired to anticipate threats and experience nervous system overdrive when they arrive – our species wouldn’t have made it this far if we didn’t. But what happens when the anticipation itself is enough to trigger heart pounding panic? And stranger still, why do threats as rare as they are vague cause more panic than threats that surround us every day?

20.Bankruptcy: Sink and Swim Via The Atlantic – America is the most bankrupt nation on Earth. Our government is for the nonce relatively solvent, its AAA rating intact. But our citizens declare bankruptcy at a rate that astonishes the rest of the world. In 2007, two years after we tweaked our bankruptcy law to make it tougher on debtors, the number of personal bankruptcies had dropped by more than half, but we were still well ahead of Great Britain, our nearest competitor in the Insolvency Olympics: roughly one in 500 Britons declared personal bankruptcy that year, against about one in 300 Americans. Since then, of course, the subprime crisis has increased our lead. We are the Michael Phelps of debt liquidation.You’d think that title would be one we’d gladly relinquish. But in fact, America leads the developed world in bankruptcies because for more than a century, we’ve worked hard to build the best—and, not coincidentally, the most generous—bankruptcy code in existence. We didn’t do it by design, but in fits and starts; the hodgepodge of innovations that have helped systematically ensure that debtors get a fresh beginning were as much the brainchildren of grasping creditors as of beleaguered debtors. Nonetheless, our system works so well that other nations are trying to move away from their harshly punitive treatment of insolvent debtors, and closer to our free-and-easy, all-is-forgiven model.

21. Chesapeake Energy: Case Study in Bad Corporate Governance – Via Manual Of Ideas – A truly amazing letter by the Chesapeake Energy (CHK) general counsel (“GC”) is making the rounds among investors concerned with public companies’ corporate governance practices. While we have not followed CHK’s corporate actions to date, the above-linked letter caught our attention.In the letter, CHK’s GC attempts to justify paying a $75 million bonus to CEO Aubrey McClendon in 2008, a year in which Chesapeake’s stock price declined by 5.9%. Actually, we stand corrected: the price dropped by an order of magnitude more — it finished 2008 down an impressive 59%. Mr. McClendon’s total compensation during such a notable year? 100 million sixty-nine thousand two hundred and one U.S. dollar (see it for yourself in CHK’s proxy statement).

About Miguel Barbosa

I run this site.

17. May 2003 by Miguel Barbosa
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