The Stingy News Weekly (04/04/2011)
Stepping on the Gas
"In the early 1980s, George P. Mitchell, a Houston-based independent energy producer, could see that his company was going to run out of natural gas. Almost three decades later, the results of his effort to do something about the problem are transforming America's energy prospects and the calculations of analysts around the world."
Measurements that mislead
"Mr. Sackett had assumed that these separate measurements would generate similar rankings. Those cashiers who were fastest in the short test should also be the fastest over the long term. But instead he found a surprisingly weak correlation between the rankings, leading him to distinguish between two types of personal assessment. One measures 'maximum performance': People who know they're being tested are highly motivated and focused, just like those cashiers scanning a few items while being timed. The other type measures 'typical performance'—measured over long periods of time, as when Mr. Sackett recorded the speed of cashiers who didn't know they were being watched. In this sort of test, character traits that have nothing to do with maximum performance begin to influence the outcome."
The biggest urban legend in finance
"Stocks ought to produce higher returns than bonds in order for the capital markets to “work.” Otherwise, stockholders would not be paid for the additional risk they take for being lower down the capital structure. It comes as no surprise, therefore, that stockholders have enjoyed outsized returns for their efforts for most — but not all — long time periods."
The Price of Taxing the Rich
"Nearly half of California's income taxes before the recession came from the top 1% of earners: households that took in more than $490,000 a year. High earners, it turns out, have especially volatile incomes—their earnings fell by more than twice as much as the rest of the population's during the recession. When they crashed, they took California's finances down with them."
Is ethanol to blame for global unrest
"The U.S. produces more corn than any other country. The total value of its crop in 2009 was about $50 billion, and that was before the recent price surge. It was also more than double the combined value of all the crops produced in Canada. Until a few years ago, corn was used almost entirely for animal feed, booze, processed foods for humans—such as corn flakes and high-fructose corn syrup—and backyard corn roasts. Today, 40% of the U.S. crop is devoted to ethanol, up from 33% in 2008. A decade ago, the figure was just 7%."
Ontario's search for a solar system
"In Germany, where the solar revolution began, critics are now questioning the huge size of the subsidies, estimated at $200,000 to $"68%",000 per job created."
The expansion of regulators
"From an evolutionary perspective, a research regulator is a life form with three very interesting characteristics. First, its numbers explode in response to catastrophic events regardless of how rare that event is. Second, it has few natural predators, so its expansion goes unchecked. Third, regulators multiply like bacteria: they spawn more regulations which require more regulators, so there is a rapid increase in population over time. And these three characteristics derive, I submit, from a basic human tendency to focus on emotionally-engaging events while ignoring their probability."
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