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The Government Bubble

Tue Dec 8, 2009 4:00 pm MST

The Government Bubble

Brian S. Wesbury and Robert Stein, 12.08.09, 12:01 AM EST

When will it pop?

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Looking back, most investors now understand that over-investment in housing was in large part caused by the Federal Reserve. The central bank under Alan Greenspan cut interest rates way too low, kept rates there way too long and--when it finally got around to lifting them--did it way too slowly.

When monetary policy is overly loose, bad things inevitably happen, usually related to mal-investment in a particular sector or across several sectors. Eventually, investment in those areas is pushed too far and will not generate enough cash flow to cover growing debt. Bust follows boom, investment (justifiably) dries up and the system goes through a painful correction.

With interest rates at essentially zero in 2009 and unlikely to move well into 2010, everyone is looking for the "next bubble." If you can find the asset class or sector that is frothy, and get in and out before it busts, you may generate abnormally high profits for the next few years.

There's no shortage of candidates. Some claim a bubble has already formed in the global stock market, with prices up 60%-plus since the bottom in early March. Others claim commodities will be next --it's hard to make it through a day without seeing a gold commercial. Still others say U.S. Treasury securities are already in a huge bubble, with interest rates way too low.

While no fundamental model is perfect, the ones we use suggest U.S. stock prices are not a bubble. With profits expected to continue rising, we think the stock market remains well below fair value. But while we expect industrial commodity prices to remain buoyant, gold, on the other hand, looks frothy. The euro and other foreign exchange rates relative to the dollar also look toppy, as do U.S. Treasury bond prices. Yields are being held artificially low.

But maybe the worst bubble has nothing to do with the private sector at all. The public sector, particularly the federal government, has benefitted enormously from absurdly low interest rates.

Think about it. The federal deficit was $1.4 trillion in the fiscal year that ended in September, or 10% of GDP, the largest peacetime deficit on record. But net interest--the cost of servicing the national debt--was only 1.3% of GDP, the lowest in about 40 years. For comparison, net interest was absorbing about 3% of GDP in the 1980s and 1990s.

In other words, loose money has created a temporary mirage in which a massive increase in government spending appears to be an easy burden to carry. In particular, the mirage of low rates colors the public's view of legislative efforts to fully nationalize the U.S. health care system, making it seem more affordable than it is in reality.

How is this any different than the housing market from a few years back? Homeowners thought they could afford a larger home as long as they assumed interest rates would stay low forever.

Just like homeowners who relied too much on short-term adjustable rate mortgages, the federal government's average debt maturity remains less than 4.5 years, which means net interest costs will soar over the next several years as the government rolls over its debt at higher interest rates. 

But here's what makes a government bubble even worse. When private sector bubbles burst, investors flee that sector. Home building went from 6.3% of GDP back in 2005 to a recent low of 2.4%. Does anyone think a government bubble is going to bring about smaller government anytime soon? Of course not. Government will try to keep its bubble alive by taxing and borrowing even more. But it can't last forever. Every bubble pops. Eventually.

Content and Articles

Wed Sep 23, 2009 2:43 pm MST
WritingThree avenues for adding content to your site are explained here. This can be a daunting area of website development and management. Creating quality content can be left to to the experts or developed on your own. How and which are explained here in.

The importance of original content for a fledgling website is vital. Without original and unique content, any site is forgotten about in the search engine results. The work required to maintain a site in the search rankings can be significant. What are you options if you are not a content writer? Some are touched on in this article.

Content sites such as Daily Content, or E-zines permit people to purchase article or articles written in the genre of a given site. The prices vary by quality, word content and intent. This is a great way for a new site to get set up. Content purchased from sites such as these often allow the purchaser to own the rights to the articles. This is helpful in that you are permitted to distribute the article at will, on any of your websites. Should you need to put something in print, it would be from here that you could reasonably purchase an article for that purpose. Often the information contained is general and varied. With this in mind, you may find a writer you enjoy and can follow through with another recommended option.

Seek out a bid site and post a content writing job for your site. This will permit you to be flexible in the budgeting, and put out a request for the entire site, just site content, or product descriptions, ectů A writer qualified in the area you are seeking information written about often looks at various bid sites for work. Here you will learn what the general turnaround time would be and potential cost. Once you budget is in place and you have selected the writer you would like to work with, they can create tailored articles and content specific to your needs and web sites target audience. With everything in mind, this will facilitate the original content needed for your website to be found by the search engines. Couple this with the experience of a writer in your area, and you have keyword rich articles that will post high in the search results.

You can always look for free content. It is not uncommon that such searches result in people not speaking the language attempting to write for you. Such will provide you with poor quality, and often-unintelligible work. Even with keyword rich work, this is not the best route to go, when trying to rank high in the search engine results. Additionally to cut costs you can write the content yourself. This option is and can be time consuming, if you are concentrating on the production of the website itself. This will enable you to create content that is specific to your design. The trade off may make this option prudent for you. It is recommended that maintaining the site content be done through one of the above methods, as managing a site, especially if it is for commerce of some kind, will be an arduous and often daunting task.

OLEDs are in and may be cheaper than Newspapers

Mon Aug 31, 2009 3:55 pm MST
OLEDs are in and may be cheaper than Newspapers
OLED

Plasma televisions are already on the outs with consumers due to their energy-sucking tendencies, meanwhile LCD screens have closed the gap on picture quality and are more energy efficient. But as many TV buffs know, organic light-emitting diode (OLED) screens are the future--if scientists can figure out how to produce them cheaply enough. Researchers at Japan's RIKEN center think they've already figured it out, and claim that they can produce OLEDs as cheaply as publishing a newspaper.

The scientists used what they call smooth, electrospray-deposited polymer films to build the cheap OLEDs. In the past, OLED screens have been built with spin-coated films. The new polymer films, however, minimize wastage of the polymer solution used to create images on the screen. The end result: cheap, efficient OLEDs.

OLEDs have a number of advantages over LED screens--they don't require a backlight, which means that they use much less power and operate longer on battery charges. The lack of backlight also means that OLED displays can be thinner than LCDs. And since OLED pixels directly emit light, they can display a greater array of color, brightness, viewing angle, and contrast than LCD screens. All of which makes the RIKEN discovery a big deal for the future of television, cell phones, computers and pretty much every other application that requires a screen--including the future of newspapers.

Happiness

Wed Aug 5, 2009 1:34 pm MST

A few years ago, on a morning like any other, I had a sudden realization: I was in danger of wasting my life.

As I stared out the rain-spattered window of a New York City bus, I saw that the years were slipping by.

"What do I want from life?" I asked myself. "Well...I want to be happy."

I had many reasons to be happy: My husband was the tall, dark, handsome love of my life; we had two delightful girls; I was a writer, living in my favorite city.

I had friends; I had my health; I didn't have to color my hair. But too often I sniped at my husband or the drugstore clerk.

I felt dejected after even a minor professional setback. I lost my temper easily. Is that how a happy person would act? al Simple: How to make positive changes in your life

I decided on the spot to begin a systematic study of happiness. (A little intense, I know. But that's the kind of thing that appeals to me.)

In the end, I spent a year test-driving the wisdom of the ages, current scientific studies, and tips from popular culture. 

 If I followed all the advice, I wanted to know, would it work?

Well, the year is over, and I can say: It did. I made myself happier. And along the way I learned a lot about how to be happier. Here are those lessons.

1. Don't start with profundities. When I began my Happiness Project, I realized pretty quickly that, rather than jumping in with lengthy daily meditation or answering deep questions of self-identity, I should start with the basics, like going to sleep at a decent hour and not letting myself get too hungry.

Science backs this up; these two factors have a big impact on happiness. Real Simple: 34 low-cost, make-you-smile ideas

2. Do let the sun go down on anger. I had always scrupulously aired every irritation as soon as possible, to make sure I vented all bad feelings before bedtime.

Studies show, however, that the notion of anger catharsis is poppycock.

Expressing anger related to minor, fleeting annoyances just amplifies bad feelings, while not expressing anger often allows it to dissipate.

3. Fake it till you feel it. Feelings follow actions. If I'm feeling low, I deliberately act cheery, and I find myself actually feeling happier. If I'm feeling angry at someone, I do something thoughtful for her and my feelings toward her soften. This strategy is uncannily effective. Real Simple: Small, helpful gestures with big impact

4. Realize that anything worth doing is worth doing badly. Challenge and novelty are key elements of happiness.

The brain is stimulated by surprise, and successfully dealing with an unexpected situation gives a powerful sense of satisfaction.

People who do new things -- learn a game, travel to unfamiliar places -- are happier than people who stick to familiar activities that they already do well.

I often remind myself to "Enjoy the fun of failure" and tackle some daunting goal.

5. Don't treat the blues with a "treat." Often the things I choose as "treats" aren't good for me. The pleasure lasts a minute, but then feelings of guilt and loss of control and other negative consequences deepen the lousiness of the day.

While it's easy to think, I'll feel good after I have a few glasses of wine...a pint of ice cream...a cigarette...a new pair of jeans, it's worth pausing to ask whether this will truly make things better.

6. Buy some happiness. Our basic psychological needs include feeling loved, secure, and good at what we do.

You also want to have a sense of control. Money doesn't automatically fill these requirements, but it sure can help.

I've learned to look for ways to spend money to stay in closer contact with my family and friends; to promote my health; to work more efficiently; to eliminate sources of irritation and marital conflict; to support important causes; and to have enlarging experiences.

For example, when my sister got married, I splurged on a better digital camera. It was expensive, but it gave me a lot of happiness.

7. Don't insist on the best. There are two types of decision makers. Satisficers (yes, satisficers) make a decision once their criteria are met.

When they find the hotel or the pasta sauce that has the qualities they want, they're satisfied. Maximizers want to make the best possible decision.

Even if they see a bicycle or a backpack that meets their requirements, they can't make a decision until they've examined every option.

Satisficers tend to be happier than maximizers. Maximizers expend more time and energy reaching decisions, and they're often anxious about their choices. Sometimes good enough is good enough.

8. Exercise to boost energy. I knew, intellectually, that this worked, but how often have I told myself, "I'm just too tired to go to the gym"?

Exercise is one of the most dependable mood-boosters. Even a 10-minute walk can brighten my outlook.

9. Stop nagging. I knew my nagging wasn't working particularly well, but I figured that if I stopped, my husband would never do a thing around the house.

Wrong.

If anything, more work got done.

Plus, I got a surprisingly big happiness boost from quitting nagging.

I hadn't realized how shrewish and angry I had felt as a result of speaking like that. I replaced nagging with the following persuasive tools: wordless hints (for example, leaving a new light bulb on the counter); using just one word (saying "Milk!" instead of talking on and on); not insisting that something be done on my schedule; and, most effective of all, doing a task myself.

Why did I get to set the assignments?

10. Take action. Some people assume happiness is mostly a matter of inborn temperament: You're born an Eeyore or a Tigger, and that's that.

Although it's true that genetics play a big role, about 40 percent of your happiness level is within your control.

Taking time to reflect, and making conscious steps to make your life happier, really does work. So use these tips to start your own Happiness Project. I promise it won't take you a whole year.

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