Jumat, 30 Agustus 2013

Inventions in Everything: Turning Cans Into Sippy Cups

Toddler with Sippy Cup - Source: epa.gov

If you're the parent of a toddler, you know that life can get pretty messy. Especially when your toddler is attempting to drink something that isn't already in a sippy cup.

The problem is that creates somewhat of a hassle for today's busy parent, because that means you to go to the time and trouble of transferring some sort of drinkable liquid from its container into your toddler's sippy cup whenever it's empty and they're still thirsty. And if you're filling the cup with a different kind of beverage from what you previously filled it up with, that means that you'll have to fully rinse out both the cup and lid before you can even fill it with the new beverage.

That's a lot of extra steps just for getting fluids into a thirsty toddler!

That's the problem that inventor Ellyn Audrey Yacktman solved with her patented invention, the Sippy Cup Lid for a Beverage Can, as documented in U.S. Patent 8,286,827.

U.S. Patent #8,286,827: Figure 1

Yacktman's invention can convert a typical aluminum beverage can into a spillproof container. Fitting the tops of today's typical cans, Yacktman's lid would make it very easy to change out a toddler's beverage for a fresh one, with perhaps a quick rinse of just the lid when changing beverage types. Life for the busy parent gets both easier and simpler!

We can only imagine how New York City Mayor Michael Bloomberg would react if he saw lots of toddlers in Central Park drinking straight from soda cans topped with the sippy cup lids. Or better yet, one of those big energy drink cans!...

We'd leave it there, but we can't help but notice that this particular invention also overlaps the innovations in canning technology taking place in the beer industry that we've recently featured.

We think that connecting the sippy cup lid to a can of beer has some potential beyond just the toddler market. We're thinking it would also be a good novelty item aimed at the college market, where we suspect that it will always find some sales. And then, it would also make a good gift item for that beer-drinking friend of yours who somehow always manages to spill some of it all over themselves and the things around them.

At the very least, once the sippy cup lid for cans hits the market, we think that Popular Mechanics might want to add the inventions to their list of 8 easy-drinking gadgets for the beer enthusiast!

Other Stuff We Can't Believe Really Exists

Kamis, 29 Agustus 2013

The Rise of the American Fascista State

Have you ever heard of the 70-year cycle in history? Here's an excerpt from an essay by Eric A. that introduces the concept:

Many of you may be familiar with the Foundation series by Issac Asimov. In it, mathematician "Hari Seldon spent his life developing a branch of mathematics known as psychohistory. Using the laws of mass action, it can predict the future, but only on a large scale; it is error-prone on a small scale."

In practice, we can see that this would be theoretically correct: we study history precisely because human nature is relatively the same and the same events recur with the same predictable responses. If history really were chaos--a muddle of events appearing randomly and being resolved in unpredictable ways--there would be no point in studying it.

So what of 70 years? It seems that American politics goes through a roughly 70 year long cycles where it swings from one side of the political pendulum to the other. For example, if we start in 1789, which marks the real beginning of the United States as a single nation with the inauguration of George Washington as the nation's first president under the Constitution, the passage of 70 years suddenly puts us on the cusp of the U.S. Civil War in 1859 as the nation was getting set to try to tear itself apart.

From then, Random Jottings' David Weidel notes a general 70-year cycle in American politics:

The theory says that America became a Republican country starting about the year 2000. (From 1860 Republicans were dominant, and then the Dems starting about 1930.) Each cycle is about two political generations. The 70 years before 1860 don't have today's parties, but they fit otherwise, with the Revolutionary generation and then a follow-on generation stuck in old habits of thought. And then a problem that needed a new political alignment to solve.

1943 Newspaper Headline: Italy Surrenders - Source: nationalmuseum.af.mil

But what if it's not just American politics? What if it's really a cycle that's driven by opposing ideologies in conflict?

For example, in 1896, the U.S. Supreme Court made it legal to institutionalize racial segregation in the United States. Almost 70 years later, the U.S. Congress was undoing the damage in the landmark Civil Rights Act of 1964.

This is 2013. What sort of conflict was the U.S. engaged in 70 years ago?

Well, that would put us in 1943. And in 1943, the United States fought and succeeded in forcing fascist Italy to surrender and switch sides in World War 2.

The Concise Encyclopedia of Economics explains what fascism in Italy was all about, emphasis ours:

As an economic system, fascism is socialism with a capitalist veneer. The word derives from fasces, the Roman symbol of collectivism and power: a tied bundle of rods with a protruding ax. In its day (the 1920s and 1930s), fascism was seen as the happy medium between boom-and-bust-prone liberal capitalism, with its alleged class conflict, wasteful competition, and profit-oriented egoism, and revolutionary Marxism, with its violent and socially divisive persecution of the bourgeoisie. Fascism substituted the particularity of nationalism and racialism—“blood and soil”—for the internationalism of both classical liberalism and Marxism.

Where socialism sought totalitarian control of a society’s economic processes through direct state operation of the means of production, fascism sought that control indirectly, through domination of nominally private owners. Where socialism nationalized property explicitly, fascism did so implicitly, by requiring owners to use their property in the “national interest”—that is, as the autocratic authority conceived it. (Nevertheless, a few industries were operated by the state.) Where socialism abolished all market relations outright, fascism left the appearance of market relations while planning all economic activities. Where socialism abolished money and prices, fascism controlled the monetary system and set all prices and wages politically. In doing all this, fascism denatured the marketplace. Entrepreneurship was abolished. State ministries, rather than consumers, determined what was produced and under what conditions.

Now that you've read what fascism entails, consider the following excerpt from an article yesterday at The Huffington Post, noting how nearly 40% of U.S. CEOs have come to have a very large portion of their income paid for by U.S. taxpayers:

WASHINGTON -- More than one-third of the nation's highest-paid CEOs from the past two decades led companies that were subsidized by American taxpayers, according to a report released Wednesday by the Institute for Policy Studies, a liberal think tank.

"Financial bailouts offer just one example of how a significant number of America's CEO pay leaders owe much of their good fortune to America's taxpayers," reads the report. "Government contracts offer another."

IPS has been publishing annual reports on executive compensation since 1993, tracking the 25 highest-paid CEOs each year and analyzing trends in payouts. Of the 500 total company listings, 103 were banks that received government bailouts under the Troubled Asset Relief Program, while another 62 were among the nation's most prolific government contractors.

Meanwhile, that all would be occurring as American entrepreneurs would appear to be harder and harder to find:

The US entrepreneurial spirit may be faltering. Check out these data points from The Wall Street Journal: a) In 1982, new companies made up roughly half of all US businesses, according to census data. By 2011, they accounted for just over a third; b) from 1982 through 2011, the share of the labor force working at new companies fell to 11% from more than 20%; c) Total venture capital invested in the US fell nearly 10% last year and is still below its prerecession peak, according to PricewaterhouseCoopers.

The United States would appear to be well on its way to adopting fascist Italy's political-economic system, favoring the politically-connected while starving entrepreneurs out of the economy. Although today in America, we call it "crony capitalism". And the people who practice it "progressives".

Do you think we should start calling it what it really is?

Recommended Reading

Elsewhere on the Web

Previously on Political Calculations

Rabu, 28 Agustus 2013

So, you want to teach Business English in Germany...?

Herzlich Willkommen!  You will find teaching in Business English in Germany exciting and rewarding, I'm sure.  But beware, its not all lessons in the Biergarten.  Here are ten things to help you work in Germany.

1.  German is a very hard language

There is a saying in German "Deutsche Sprache, schwere Sprache," which translates to "German language, difficult language."  Recently, football club Bayern Munich hired Pep Guardiola, the spanish legend, as their new coach.  He was hired roughly six months before he was to take on the position and was living in New York.  During that time he took German lessons to prepare for his new job.  He now gives interviews and leads press conferences in German.  In comparison, it took Franck Ribery nearly five years in the league to give his first interview in German.

Learning how to say, "We are just focusing on the next match." auf Deutsch

The commentary in the press routinely praises Pep for his amazing achievement.  His German is B2 level when he is fully prepared, A2 when answering spontaneously (my evaluation).  I have never heard criticism about Franck taking so long to adopt the language... after all it is very difficult.

In reality, it is not that difficult to learn.  To be sure, the gender pronouns cause considerable problems (der, die, das) and the problem is compounded because they affect adjectives.  Additionally, the Accusativ, Dativ, and Genetiv cases can be confusing, especially when dealing with prepositions.  In some cases, the resulting grammar makes no logical sense.  However, the German language has a set of fixed rules, which when learned, never change.  There are very few exceptions to the rules and with proper study (and some memorization) the levels become easier as you go along.

Of course, English is the exact opposite.  There is a lot grey area in English grammar.  This something that takes some getting used to.  My students are dumbfounded when I tell them, "Well, both are correct."  I often have to explain the difference between prescriptive and descriptive grammar.  Recently, the Süddeutsche Zeitung ran and article on English as Lingua Franca and said English grammar is "rudimentary". In short, Germans are often looking for rules when there are none and continually frustrated by exceptions (which abound).  They are surprised to find that we don't have a Duden, an official guide to correct German usage, upon which to evaluate correctness.

Some students will directly say that British English, in particular Oxford English, is correct.  This also includes received pronunciation.  While they have a point, focusing on this type of English may not have the most practical use.

So, in the end, I am not surprised at Pep Guardiola's achievement.  In fact, I would expect better from six months of classes (presumably one-to-one and intensive) with a crystal clear needs analysis.  German students, however, are often surprised at the difficulty of English as they improve.  It is a good idea to provide learners with 'guidelines' rather than 'rules' when necessary and use activities which teach a better feeling for the language rather than simply correct and incorrect.  When doing this, however, be prepared for resistance.

2.  Germans have two conflicting learning settings

If you start of a new class by outlining expectations for a course, you will probably be confronted with two very different methods of teaching.  The first is "learning by doing".  The students just want to talk.  They are often completely satisfied with a conversation class punctuated by some corrective and lexical feedback from the teacher.  The "bring in an article, read and discuss" lesson plan meets these expectations nicely and is even recommended by the students occassionally.

In the book "Der, die, was?  Ein Amerikaner im Sprachlabyrinth" the author David Bergmann humorously tells the story of learning German and it's idiosyncrasies.  In the book he mentions advice from Germans to "simply speak"... that is the best way to learn.  He compares this with learning a piano concerto by simply sitting down and starting to play.  Yet, many of your students will undoubtedly think that they can magically improve their language without any input or focused practice.


Along with this is the 'common knowledge' that you can only truly learn a language through immersion.  Occasionally, I counter this by presenting research which shows only mixed results for total immersion without a guide.  I also relate my own story about living in Germany for seven years without teaching.  My vocabulary was quite large but when I started lessons, I was still placed in the A1 group because I didn't understand even the most basic aspects of syntax and grammar.

As a result, one of the most important lesson to pass on to German students is 'noticing' the language around them.  Your students will certainly have a range of English exposure through news, television and signage (not to mention daily business).  Yet they rarely notice these words and I'm constantly surprised when they don't know an English word which is commonplace in German media.

The second learning method, which is less common, is the 'magic wand' learner.  These are the students who come to classes with the mistaken belief that somehow the teacher will transform them into English speakers through no effort of their own.  I believe this stems from their school experience in which English was often taught by lecture.  The teacher talks, the student listens, the student takes a written test to prove their knowledge.  This method has evolved in German schools now, but adult learners still carry this baggage.

This means that students might question (sometimes directly) the purpose of an exercise/class activity.  For example, guided discovery grammar teaching is unsuitable.  I've had students simply refuse to do the activity because they didn't see the point.  After all, the teacher's job is to teach, the pupils' job is to listen and learn.  So, sometimes it is best to clearly and directly state the pedagogical reason for a certain activity.  "This activity is designed to..."


So, you are likely to have classes in which the learning expectations are completely different.  One part of the class would prefer maximum speaking time and very little structured input.  The other part expects maximum teaching input and clearly structured practice activities.  Finding a middle can be a challenge and requires a certain bit of finesse.  Sometimes this means having clearly defined conversation and input driven lessons.  Sometimes this means teaching them about second language acquisition and methodology.  Sometimes this means changing people's minds about learning.

3.  German employees don't do homework

Clocking in and out at work is much more than an administrative task for German employees, it is symbolic ritual which signifies their distinct separation between work and personal lives.  Only the most dedicated students will do homework.  Typically you can use homework to distinguish goals.  Those who see English as a benefit for their personal happiness will do homework.  Those who see English only as a necessary tool for their work will not.

I wrote about this topic last year and I believe my previous post is still accurate, but the effects are limited.  Even with the most elaborately planned tasks and persuasion, I can still only get about 50% completion of homework.

This limits the trainer in many ways.  First, multi-session lessons are difficult to pull off.  Starting a topic in one lesson and continuing for weeks is a challenge.  Second, the flipped classroom is largely impossible.  Imagine assigning background reading for a lesson and then having one student complete it.  Third, more elaborate skills training is questionable.  I still typically assign presentation to my classes but I rarely have more than 75% actually create and deliver the presentations.  Fourth, vocabulary practice is almost zero.  If they need to increase vocabulary, it is best to limit the aims of the face-to-face lesson and hammer the words during the lesson.

4.  Verb tenses are a bitch (yup I used that word)

Judging by the coverage of verb tenses in international course books and websites, I'm sure that Germans are not alone.  But I have seen some interesting aspects of learning verb tenses among my learners.

First, they are obsessed with them.  For many grammar = verb tenses (called 'times' in German).  I can almost guarantee that you can walk into any German classroom, ask about their needs, and verb 'times' will come up.  Add in the grey areas I mentioned above and you have room for chaos.  Add in the 'magic wand' student to the mix and you have a recipe for disaster.

Second, their school teacher confused the hell out of them.  It is a useful exercise for a teacher in Germany to do a little tutoring for a while to get an idea of how they learn English in the schools.  English is now taught starting in the fifth grade (and sometimes vocab is taught earlier).  In the sixth grade it gets serious.  In the first three years of school English, the students are ask to master the Present Simple, Present Continuous, Past Simple (called the Simple Past in Germany), the Present Perfect, the Present Perfect Continuous, the Past Continuous, and the four future forms.  In year four, they are hit will the Past Perfect, Past Perfect Continuous and the future perfect forms.

A normal school year has 37 weeks with about 2 hours of English per week.  If we throw in testing (written and verbal), we are down to about 60 hours per year of class time.  Imagine trying to teach all 12 verb tenses (plus passives) in 240 hours.  Holy cow!  No wonder they are confused.  Adding to the issue is the fact that students often believe, for example, that the Past Perfect is just as important as the Past Simple.  After all, it was taught with the same emphasis in school.  I've even had students come to class proud to show me a table they made of all twelve verb tense forms plus passive.

So, here are some of my recommendations for teachers.  First, limit the number of tenses you cover in class but make sure they understand when to use them.  Second, expect interesting sentences.  The Present Perfect is, of course, the bugbear for Germans (the same form has a different meaning in their language).  But interestingly, they will be hesitant to use the Present Continuous while at the same time overusing the Past Continuous.  Third, spend considerable time on the future forms.  The prevalence of going to, will, and the present continuous for the future warrants a look.  Germans don't normally use a modal or verb form for the future so will be uncomfortable with it.  Finally, the difference in meaning is important enough to examine in class.  I have developed special ways of teaching these verb tenses to fit my learners... I encourage you to look at your methods.

5.  They are amazed that German and English are related

I don't know why but my student never seem to see how German and English are related.  There are so many words which are the same or nearly the same in the two languages.  Be prepared for questions like, "What mean organisieren in English?" or surprised faces when you say "Bratwurst is Bratwurst in English."  I guess Bier and beer doesn't quite do it.

I have also never met a German student who was not fascinated by loan words.  In fact, you can base an entire lesson on words like Schadenfreude, Kindergarten, and Zeitgeist.  I tend to think they few this patriotic revenge for all the English words they have adopted such as 'Shitstorm', 'Handy', 'Mobbing' and 'entertainment'.  The first three fit nicely into the loan word lesson because they have different meanings or usage.

But in essence, my students routinely fail to see the parallels between German and English.  This makes translation exercises particularly useful in the classroom.  For example, Germans are often confused by the second conditional because it uses the past tense.  First of all, I have decouple the form from time (handled in the verb tenses lessons) and then I can show them how it has a close cousin in German.  German has a rarely used, but widely known, subjunctive form which corresponds closely to the German preterite form (Past Simple).  Suddenly, when they see Old German matched with English they see the connection.  By the way, most schools do have lessons on Old German.

6.  There is only one register in German

Okay, this is not quite true, but register in German hinges on three things:  filler words, pronunciation and personal pronouns.  There are certain domain specific words like darüberhinaus (moreover) which are used in a super formal register, but for the most part Germans do not change words to change register.  For a German learner it is interesting to translate everyday spoken German to see register contradictions in English.  For example, "Dude, did you obtain the confirmation for your residency visa?"  or "Listen man, the requirements are totally confirmed."

One element of German is that distinct concepts have distinct vocabulary.  The same it true of English, but they are actually used in everyday German.  My four-year-old son routinely produce sentences with vocabulary which, when directly translated, would sound like a lawyer.  "I have consistently demanded that my brother stop hitting me!"

Register in German is primarily determined by eliminating regional dialect and speaking 'high German' (Hochdeutsch).  Primarily, this means removing regional filler words like fei, gell, echt, and na.  This also means reducing the dialect pronunciation.  Where I live, for example, /p/ and /b/ are pronounced the same (soft /p/), they same is true for /t/ and /d/ (soft /t/).  When they change register, they pronounce them correctly.

For the teacher, this poses a problem.  You will have to teach the students that the deciding factor for register in English is word choice.  I typically start by saying, "Okay, in German you change the pronoun 'you' (Sie and du).  In English, we change everything else in the sentence."  But most learners equate 'informal' English with 'unprofessional' English.  In some cases this is true, but in nearly all cases, the learners simply do not have the lexis to speak unprofessionally.  For example, I've never met a student who can produce the sentence, "Dude, I'm like totally stoked about this presentation!"

7.  Pronunciation is not a huge problem

When we think of German speakers we often attach the convenient Arnold Schwarzenegger accent.  But I find that phoneme pronunciation is not a major problem.  Sure, some work on the /th/ sounds is needed to keep them from sinking about sings.  And at the very beginner level water can sound like vater.  'Were' is often a beginner issue at well.  But for the most part, students sort these individual sounds out quite quickly.  In fact, I am often impressed at how my students handle the quintessential problem areas like 'through' and 'enough'.  Plus, long words can be tongue twisters.  Here is a list of words which nearly always cause problems.
  • clothes
  • debt
  • negotiate
  • unfortunately
  • graduate (both noun and verb)
  • photographer (my wife is one, so we find this often in my lessons)
  • apprenticeship
But for the most part, individual word pronunciation is quite good.

The main problem is sentence level pronunciation.  This is also, sadly, the area which teachers are least prepared to handle.  While the words are said correctly, be prepared for the 'German machine gun', bang-bang-bang-rat-tat-tat-tat.  You may even find that your students look at you questioningly when you go over short forms.  Expect revolt when you bring up wanna, gonna, and gotta.



Why?  Well, read number 6.  German register is typically defined by clear pronunciation.  Teaching them short forms is equivalent to teaching them 'bad English'.  Add in a few 'Oxford English is the right way' students and I hope you can find the explanation out of the mess you created.

Also, Germans are hesitant to show emotion through intonation.  They will use intonation frequently to avoid difficult question forms (for example... You live in Munich?) but will not be prepared to pause after adverbs of commentary.  But this general lack of emotion while speaking fits with the next point.

8.  Communication skills are mediocre to poor

Yup... I said it.  I'm sorry Germany... but your overall communication ability is below average.  You write poor emails, deliver boring presentations, and write indecipherable documents.  In most cases I trace this back to the education system and the German language.  As some of you may know, Germans do not receive a 'liberal education'.  They get a very basic background in humanities up to age 16 before they move on to subject specific practical skills.

University graduates are often the exception, but less than 20% of all high school graduates attend university.  In addition, you are not likely to find them in your classes because their English is typically at least business survival level, in most cases verhandlungssicher (able to discuss = proficient).

This means that the car mechanic is totally amazing at fixing cars but horrible at talking to customers.  Taking it a step further, the engineer (through technical school) knows everything about the technology but pisses all his international colleagues off with his emails.  Of course, I am making stereotypes just as others make them about pronunciation, but there is a certain amount to truth here.  As a teacher, you may have to point to the long-term benefits of relationship building at the expense of short-term clarity.



To be honest, this is difficult line to walk as a trainer.  Most certainly there are cases in which direct words are needed.  American and British communication trainers are often confronted by the opposite, conflict and directness is avoided at all costs, resulting in unclear expectations.  But there is a middle ground here, and the trainer in Germany should seek to find it.  When it comes to leading meetings and giving presentations, there are certainly tips which constitute best practice.  Most of your students will be unfamiliar with them, both in theory and in practice.

9.  They appreciate the outsider's point of view

Germans are crazy about feedback.  This includes everything from their language to their country to their culture.  However, I have noticed that they prefer for it to be delayed until they are finished speaking.  Interruption is generally taboo, both mid-sentence and mid-story.  For linguistic mistakes and gaps, it is generally best to record and highlight later.  Most of my students prefer seeing their language written and improved rather than hitting them mid-stream.  To be honest as learner, so do I.

The second thing is about differences in opinion.  Occasionally I have lessons in which one of the student takes the discussion off on an anti-American tangent (there are ample opportunities for this).  The NSA data security issue has been the latest in string of possible 'What the hell is America thinking?' subject.  Gun control was the topic of the spring.  The presidential election was last fall.  But no matter if it is political or simply about the best way to organize a to-do list, differences of opinion will appear in your lessons.

I have found that no matter how integrated I am in Germany (in fact that helps me build extraordinary trust), I am still the outsider in the room.  They count on me to bring in viewpoints from outside their world.  In fact, a simple way to change the dynamic of the classroom from me asking them questions is to get them to ask me about America, the world, and how we see Germany.  This particularly suits the 'learning by doing' expectations of learners and as long at the teacher watches the talking time, can make for a productive lesson.

For example, most Germans are surprised to learn that "Made in Germany" actually means what they think around the world.  They are surprised by the American fascination with the Autobahn and Mittelstand.  They rarely think about punctuality until it is in the context of another culture.  Likewise, they are truly confused by the concept of patriotism and how it affects worldview.

As I've mentioned in intercultural training posts before, it would be a good idea for the trainer to understand the underlying values of German culture before trying to discuss these issues.  Perhaps I'll blog about this in the future, but the key is to stop using utilitarian reasoning and check out some rights-based ethics.  Objectivity to key and truly appreciated.  No one appreciates criticism from an outsider, but an objective evaluation is interesting.  I find that Germans are intrigued by neutral analysis and have some kind of underlying desire to be evaluated.

10.  Germany is not a nation, it is collection of similar regions

Following the previous point, it helps a teacher in Germany to understand which region he/she is in.  Each holds its own traditions and culture which are preserved with pride.  I mentioned patriotism above, which will generally be foreign to most of your learners.  For them patriotism is generally about cheering for the German national team at the World Cup.  After the two months is over it is back to those "shit Bavarians".  Likewise, Bavarians think everything northwest of Frankfurt is the Ruhr area, an industrial wasteland of welfare recipients and broken down societal systems.

There are many reasons why stereotypes and rivalries exist in Germany, some going back centuries.  It may be too much to ask for a trainer to dive into history and ethnography to try to understand them.  But the artifacts of this are clearly visible and provide ample opportunity to fruitful lessons and discussions.

First is dialect.  Picking on dialect is one of the prime sources of humor in Germany and they can talk about the differences at length.

Second is food.  In Bavaria, food translates to sausage.  In fact, I could hold entire lessons on the differences between bratwursts.  I certainly don't look down on this.  I am from Kansas City and I could describe all the minute differences in barbecue across the US and advocate clearly why KC has the best.

The third is football.  The football team you cheer for says a lot about your personality.  Enough said.  Also, I have never met so many women season ticket holders.

Finally, we have values and beliefs.  If you are new to Germany, let me give a short beliefs overview.  The south is Catholic and conservative.  The west is Protestant and liberal.  The east is less religious (although  Protestant) and focused on whichever method can fix the problems they have (population loss, unemployment, immigration, extreme nationalism).  Certain cities have special attitudes.  Munich is the city of snobs.  Berlin is poor but sexy.  There is growing tension in the media between international gentrification and true Berliners.  Cologne (Köln in German) and Hamburg are the most open cities.  Dortmund, Duisberg and other cities in the Ruhr area are the blue collar hubs of Germany.  Stuttgart makes cars (Porsche and Mercedes) and money (large Mittelstand).  The Turks are in all the main cities, each claiming to have the largest group.  It is best to stay away from this issue as far as you can, especially as you may have second generation Turkish in your class.

One of my hangouts in Berlin during my CELTA, the Irish pub around the corner was my planning HQ.

So, for me this means that I have to balance conflicting beliefs in my classes.  The majority of my learners are Franconian (a part of Bavaria, but distinctly proud of their regional identity... dare I say nation).  About a quarter are immigrants from within Germany, mostly from the former East Germany.  And a small percentage are from other countries who have moved to Germany for opportunity.  But regional culture makes for interesting and engaging lessons.  People like talking about their identity and it provides great contexts for role plays.

So, watch out for these things I'm sure you'll have as much teaching in Germany as I do!

Bis dann...


A Broken Tool

Is President Obama planning to default on the U.S. national debt?

We had some interesting traffic on our site yesterday, as an individual in the Executive Office of the White House took an unusually strong interest in our Timeline of Major Events Driving the Risk of U.S. Default, which documents much of the last debt ceiling crisis that culminated in the summer of 2011.

Political Calculations' StatCounter - 27 August 2013 - ISP: Executive Office of the White House

We don't think they were very happy with our independent analysis of the White House's role in increasing the risk of a U.S. government default during that period of time, although they would seem to have appreciated it enough where they used a combination of terms that are unique to our analysis in a Google search to specifically track it down and to refamiliarize themselves with it.

More practically however, we had used Credit Default Swaps for U.S. Treasuries as a tool to measure the relative risk of a U.S. federal government default upon its national debt payments. Unfortunately, the same tool will be of little value in considering the current situation where the U.S. is once again approaching its debt ceiling. Reuters explains:

LONDON, July 8 (IFR) - Credit default swaps are no longer viewed as a reliable indicator of sovereign risk, traders say, as an EU ban on speculative activity has successfully eviscerated an instrument that European policymakers once blamed for exacerbating the eurozone crisis.

Portugal's political establishment was rocked by multiple ministerial resignations last week, causing the country's CDS to soar by more than 20% in a day to 506bp on Wednesday, its widest level in seven months, while the yield on its 10-year government bond almost reached 7.5%.

But in stark contrast to previous examples of sovereign stress, traders professed to be largely ignoring CDS spreads, as a huge drop off in volumes and liquidity has undermined the price discovery value of the product.

"People pricing sovereign risk now look at the bonds, so why would you look at the CDS if bonds are where the information lies? Back in the day it was the other way around, with CDS levels being the crucial signal - it's a fundamental change," said Paul McNamara, investment director at GAM.

To translate, because they were unhappy that the market had a tool that clearly communicated the risk of a sovereign government defaulting on its debt payments, the people who run the European Union chose to scapegoat the trading of credit default swaps for its problems and banned them.

It's kind of like how the people who are successful in shorting stocks are blamed for the problems of the failing companies whose stock prices are falling because of bad business decisions made by the insiders running the companies. Only here, the insiders of the failing entities have the ability to shut down that kind of trading.

The E.U. ban directly affects U.S. credit default swaps because it eliminates much of the source of liquidity and volume needed to make its price a good signal of the level of perceived risk of default.

And so, we go into the U.S. federal government's next debt ceiling crisis with a broken tool. We could perhaps use the yields of the 10-Year U.S. Treasury as a substitute, but that has been rising ever since May 1, as the market has been progressively pricing in the end of the Federal Reserve's current round of quantitative easing (QE).

10-Year U.S. Treasury Yield, 2 January 2013 through 27 August 2013

In fact, we would say that virtually all of the increase in the yield of the 10-Year U.S. Treasury since 1 May 2013 may be attributed to speculation associated with when the Fed will begin to act to end its QE programs. Although the Obama administration is targeting mid-October in its plans for when the U.S. Treasury will reach the nation's debt ceiling, the market pretty much shrugged off the news as Treasury yields fell, which indicates that they aren't placing very much stock in the administration's pronouncements.

It would seem then that President Obama will need to behave much more irresponsibly in taking actions that will boost Treasury yields if he hopes to send the market a signal that the U.S. will default on its debt at his direction.



Selasa, 27 Agustus 2013

Are U.S. Welfare Benefits Too Generous?

If the purpose of federal government-provided welfare benefits is to lift people above the poverty line, where they would have sufficient income to cover the basic costs of food, clothing and shelter, does it really make sense for the federal government to be even more generous with the taxpayer's money than that?

And yet, in 33 states and the District of Columbia, the federal government is being extremely generous with taxpayer dollars:

The data in the chart above is based upon Michael Tanner and Charles Hughes' recently-published study of the typical government-provided benefits that are available to a typical welfare recipient - a three-person household consisting of one adult and two children, which we've divided by the official federal poverty income threshold for each state.

We've provided an interactive version of the chart below, which will also let you mine down into and visualize the source data for our chart:

Amazingly, welfare benefits can take their recipients well over the 200% of poverty threshold mark in 10 states, mainly concentrated in the northeastern part of the U.S., but also including Hawaii, which tops the charts at over 275%. California falls just shy of that mark at 195%.

Since welfare benefits are not subject to tax, we wonder if this extreme generosity is creating a situation where the people who actually have to be productive to earn the equivalent incomes that welfare recipients enjoy are kicking themselves for being too stupid to exploit the system the same way as their nonproductive peers are led by their communities' organizers.

Rather that see that situation grow into outright hostility, we think the real answer is to treat the recipients of government-provided welfare the same way that people who work for a living are treated by the government, but with just a bit of compassion.

Tax Forms - Source: Commerce.gov

Here's an idea: let's require that the federal, state and local government agencies responsible for dispensing welfare benefits issue 1099 tax forms to welfare recipients documenting the full value of the benefits they received and also to the IRS.

The welfare recipients would then have to report this unearned income on their federal tax returns. Any amount provided in excess of the difference between the federal poverty level that applies in their state and any regular income they may have earned should then be taxed at the same rates that apply for unearned income.

It's one thing to accommodate the basic needs of people who struggle to make ends meet in taking care of their most basic needs, but it's quite another to give welfare recipients benefits whose value far exceeds that level. By making the excess portion of their otherwise "free" income subject to tax as the unearned income it really is, they'll be treated just the same as those in the Top 1%, who also have lots of unearned income, and will share the same burden of taxes.

And just like the Top 1%, they will have the ability to choose how much unearned income they have subject to being taxed above the federal poverty threshold to minimize their tax bill.

It may not be an ideal way of dealing with having government welfare benefits be provided so far in excess of that required to boost individuals and families above the poverty line that applies in their states, but it certainly would be a lot more fair all around than today's situation.

Data Sources

Tanner, Michael and Hughes, Charles. The Work Versus Welfare Trade-Off: 2013. An Analysis of the Total Level of Welfare Benefits by State. Table 4 - Pretax Wage Equivalents Compared to Median Salaries. CATO Institute. [PDF Document]. 19 August 2013.

U.S. Department of Health and Human Services. 2012 HHS Poverty Guidelines. [Online Document]. Federal Register. 26 January 2012.

Previously on Political Calculations

Senin, 26 Agustus 2013

My Wall of Gratitude


I heard about this idea years ago. About a decade really. This is what's called a Wall of Gratitude and it's designed to help you remember and celebrate the goodness that's in your life. (Too often we focus on what we lack.) This is mine. This is 100% how I have it in my journal with corrections only for my chicken-scratch induced misspellings when I wrote these out by hand. I'd like to share them with you.

This list represents some of the people for whom I am truly grateful, but have never felt as if I have had an adequate opportunity to thank properly.  Bear with me because my list is very long. There are a lot of people who have helped me in large and small ways for which I am eternally grateful. There’s a fair chance a lot of people I’m about to list don’t even know how much they have impacted my journey through life.

Alvin and Dorothy McCray for being the best parents and support system ever.
Timothy and LaTanya McCray for being in my corner.
Pastor Thaddeus Eastland for helping me put the pieces of my life back together.
My Facebook Friends for reading my rants when I needed some therapy.
Paul Grohman, John Cruise and Steven Kaufman for teaching me about excelling in business.
Christian Smith and Leroy Nellis for teaching me that excellence comes through teamwork.
Duncan Butler for showing me there was more in me than I could see.
Tipton Ross, Bill Morrow and Eileen Kret for knocking off some of the rough edges off a country boy.
Janice Marshall for expecting a young kid from Texarkana to do something with his life.
Melissa Gray for telling me how great I was even when I knew I wasn't that great.
My daughters (Kennedy, Courtney and Mackenzie) for loving their dad even when their dad wasn't being lovable.

To all of you, THANK YOU!!!

I have more.  Many more.  I probably need to do a second volume.  In fact, I think I'll start on that right away.  More people already come to mind.

Now start your own Wall of Gratitude! Better yet, why not share here somebody for whom you're grateful!? Tag them. Let them know how much you appreciate them. Focus on good things and watch more good things come into your life!









Mark Anthony McCray helps people live on PURPOSE, achieve higher PERFORMANCE and experience true PROSPERITY. Be sure to subscribe to this blog so you don't miss a thing and forward this to a friend if you found it helpful. All material © Copyright, Mark Anthony McCray unless otherwise noted!

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Schrödinger's Cat and the S&P 500

What a boring week!

The week ending on 23 August 2013 was a week in which the Fed's officials very clearly went out of their way to not make any noise as they jetted off to Jackson Hole, Wyoming for their annual retreat. And in the absence of other noise or significant changes in the fundamental outlook for the companies that make up most of the U.S. stock market, the market pretty much ended exactly at the same level it ended in the previous week.

Really! To illustrate the point, we added just two words to our notes on our chart from last week. Actually, just the same word twice "Still":

Change in Growth Rates of Expected Future Trailing Year Dividends per Share with Daily and 20-Day Moving Average of S&P 500 Stock Prices, through 23 August 2013

The biggest market-driving news of the week was the release of the notes from the Fed's 31 July 2013 meeting on Wednesday, 21 August 2013. And because they didn't provide any greater clarity for when the Fed might begin slowing the purchases of U.S. Treasuries and mortgage-backed securities that make up its current quantitative easing scheme, the change in the growth rate of stock prices remained stuck about halfway between the future associated with an earlier slowdown (2013-Q3) and the future associated with a later slowdown (2014-Q1).

It's almost as if the whole last week never happened!

Speaking of the split in the consensus for when the Fed's current QE program will begin to draw down, we wonder if the split in the consensus of the Federal Reserve's Open Market Committee is the same as the split we observe in the expectations for these two potential futures.

There was one item in last week's news that we found noteworthy. It seems an economist from Princeton University has arrived at the same conclusion about the role of the Fed in creating the market turbulence we've seen this summer that we did just a day after the event in question, although it took them over two months to reach that same conclusion and communicate it to Fed officials.

JACKSON HOLE, Wyo.—The Federal Reserve believes that providing clear guidance about the likely future course of its policies make them more effective in boosting the economy, while helping to tamp down on market volatility and uncertainty.

That may not be so, said a paper presented here Saturday by Jean-Pierre Landau of Princeton University at the research conference hosted by the Federal Reserve Bank of Kansas City.

Over the last year, the Fed has been buying $85 billion a month of bonds in an effort to lower long-term interest rates, hoping that will spur growth and lower unemployment. Fed officials have been warning for months since May that they could start scaling back the program if the economy continues to improve as they expect.

The problem for the Fed is that as its policy makers have tried to prepare markets for this shift, they've generated considerable market volatility, in part driving up bond yields and boosting borrowing costs.

But the best part is when the Princeton economist discovers the role of what we've long described as "noise events" in affecting markets:

Mr. Landau lays a lot of the blame for the bond-market turbulence on the Fed itself. The paper notes that current Fed guidance on the policy outlook eliminates the cost of leverage, and creates "strong incentives" to increase and even overextend investment exposures.

In turn, "this makes financial intermediaries very sensitive to 'news,'" whatever that may be, he wrote. In this case, the catalyst for the market tumult is the Fed's statements about possibly scaling back the bond program this year. Once that view was conveyed to markets, it drove a big shift in market positions, to a degree that was very surprising to many observers.

But perhaps not so surprising if you know what expectations for things like stock prices are associated with different points of time in the future. And as we're emphasizing today, for the current "market tumult", it's really just a matter of determining how split investors are between the outlooks that apply for each of those alternative futures.

We'll see how long it takes Princeton's economics department to catch up to that realization. Our guess though is that Princeton's physics department may beat them to it, since this is, after all, the financial equivalent of the many-worlds variant of Schrödinger's Cat experiment....

Previously on Political Calculations

We had looked forward to a boring summer. Instead, we've found ourselves providing the following observations and near real-time analysis of the economic story of the summer, to which the economics department at Princeton University would appear to only just be beginning to catch on....

  • The World Investors and the Fed Live In Now - Our snapshot of the market right before the event, in which we note that investor concern about the future of QE was growing and remark that there will be a market reaction in response to the outcome of the Fed's two-day meeting later that week.

  • The Bernanke Noise Event - as the Summer of 2013 shall ever be known to investors....

  • Now Is It Time to Sell? - according to statistics, a quaint branch of mathematics that only works to describe how stock prices vary with respect to their trend when order is present in the market. The problem with it is that the market goes in and out of order, so it's periodically pretty useless....

  • The Fed's Real QE Mistake: Timing - We explain how Bernanke really screwed up.

  • Now What Will You Do? - the statistical line is crossed! We look at everything that we see screaming "sell", without actually saying it's time to sell.

  • The Fed Attempts to Walk It Back - we anticipate how the Fed will respond to Bernanke's error, and we determine if it will work.

  • The GDP Multiplier for QE - Not about investing, at all! Instead, we explain why sustaining QE at current levels is so important to the U.S. economy at present.

  • "Never Bet Against the Fed" - we visually illustrate that the Fed's response to repairing the damage from Chairman Bernanke's blunder is working and recap why fears of stock market doom, despite signals to the contrary, were really overblown.

  • Bernanke Closes the Gap - we mark the end of the Bernanke Noise Event.

  • The Noise of Summers - we note the beginning of a new negative noise event....

  • The S&P 500 Hits 1700 A Month Late - Finally, after all that noise!

  • The Fed's Minions Shoot Themselves in the Foot - we discuss the role of new data and comments by Fed officials in forcing stock prices off the pace the Fed had previously preferred.

  • How the Timing of the Tapering Is Driving Stock Prices - we apply the kind of analysis that we invented to explain why the market would appear to be split between two very different futures.

The Kind of Analysis That We Invented



Jumat, 23 Agustus 2013

Summer 2013: Who Really Owns the U.S. National Debt?

It's time again to check in on who really owns the U.S. national debt. This edition of our occasional series is different however, because the official size of the U.S. national debt hasn't meaningfully changed over the last three months.

That's because of the deal struck between President Obama and the U.S. Congress, which allowed the national debt to increase while both the House of Representatives and the Senate passed budget proposals, which was a real accomplishment for the U.S. Senate, since that body hadn't fulfilled its Constitutional responsibilities for passing any budget proposal for years.

But after that, the window for further debt increases closed, with the total public debt outstanding for the U.S. since then frozen within a few billion of $16.738 trillion.

If you would, please take a moment to think about how casually we're describing those very, very big numbers....

That $16.738 trillion is approximately the current level of the debt ceiling for the U.S. federal government. Since reaching that level in May 2013, the U.S. Treasury has been employing "extraordinary" measures to ensure that the official national debt of the U.S. does not exceed that level, which include such steps as delaying borrowing money to fund the pensions of federal government bureaucrats.

Meanwhile, the Federal Reserve has maintained its quantitative easing programs, where it has been acquiring an average of $85 billion per month in U.S. Treasuries (UST) and Mortgage-Backed Securities (MBS).

Both these factors account for the big changes that we observe have taken place since the end of the U.S. federal government's 2012 fiscal year on 30 September 2012.

Summer 2013: To Whom Does the United States Government Really Owe Money?

Since that time, the Federal Reserve's share of the total public debt outstanding of the United States has increased from 10.8% to 12.0%, as the share held in the U.S. Civil Service Retirement Trust Fund has declined from 5.6% to 4.4%.

With the Federal Reserve sustaining its QE bond-buying program, we also observe that the relative share of the national debt by foreign entities has declined. This is a result of the Fed's QE policy "crowding out" these other lenders from the market for U.S. government-issued debt securities.

Data Sources

Federal Reserve Statistical Release. H.4.1. Factors Affecting Reserve Balances. Release Date: 5 July 2013. [Online Document]. Accessed 20 August 2013.

U.S. Treasury. Major Foreign Holders of Treasury Securities. Accessed 20 August 2013.

U.S. Treasury. Monthly Treasury Statement of Receipts and Outlays of the United States Government for Fiscal Year 2013 Through June 30, 2013. [PDF Document].

Kamis, 22 Agustus 2013

The Relative Productivity of Private vs Public Sector Employees

"How does the compensation of federal civilian employees compare with that of employees in the private sector?" is a question that the Congressional Budget Office once asked and answered, finding that the combined cash income and benefits that Uncle Sam's employees are paid is a lot more generous than what their peers in the private sector earn, even after controlling for factors like education, years of experience and job descriptions.

But we wondered how does the productivity of federal civilian employees compare with that of employees in the private sector? After all, if a civilian employee of the U.S. federal government is more productive than their similarly educated and experienced peer doing the same or similar job in the private sector, that difference could well justify their more generous compensation. If everything else is equal, it makes sense that a person who is more economically productive in doing a job would be compensated more than a less productive person doing the same work.

Thanks to a natural experiment, we're about to find out just how productive federal bureaucrats really are with respect to their direct peers in the private sector!

This summer, as part of the cost-cutting measures related to the budget sequester required by the Budget Control Act of 2011, President Obama acted to discontinue the operations of the Department of Labor's International Labor Comparisons (ILC) program, which converts the economic statistics produced by other nations' governments to adhere to U.S. standards and definitions, which allows for direct apples-to-apples comparisons to be made between the nations' economic data. Here's the announcement of the program's elimination that appeared in the Federal Register on 25 June 2013:

The International Labor Comparisons (ILC) program adjusted foreign data to a common framework of concepts, definitions, and classifications to facilitate data comparisons between the United States and other countries. ILC data were used to assess United States economic performance relative to other countries, as well as to evaluate the competitive position of the United States in international markets.

On March 1, 2013, President Obama ordered into effect the across-the-board spending cuts (commonly referred to as sequestration) required by the Balanced Budget and Emergency Deficit Control Act, as amended. In order to achieve these budget cuts and protect core programs, The Bureau of Labor Statistics is eliminating the International Labor Comparisons program. Subject to BLS policies and procedures, the underlying data and the methodology used to produce the data will be available upon request.

Shutting down the ILC program had been one of the President's budget objectives for some time. The Washington Post described the ILC's operations and President Obama's desire to cut the program back on 3 March 2010:

President Obama's budget would eliminate the International Labor Comparisons office and transfer its 16 economists to expand the bureau's work tracking inflation and occupational trends. The White House says the cut, estimated to save $2 million, is one of many difficult decisions the president was forced to make to control spending.

On 27 June 2013, the non-profit Conference Board announced that it would take over reporting the international labor comparisons. (The Conference Board is the same outfit that conducts the Consumer Confidence Survey and that reports the Index of Leading Economic Indicators, both of which are frequently cited in the media.)

The Conference Board announced today that it will continue a statistical program on international labor statistics that is to be eliminated by the federal government due to across-the-board spending cuts. The Bureau of Labor Statistics, a unit of the United States Department of Labor, has announced that it will shut down the International Labor Comparison (ILC) program on July 1.

The program provides businesses, government agencies, academics, and the public with high-quality data on manufacturing productivity, unit labor costs, consumer price, wage rates, and employment and unemployment for up to 34 countries. It adjusts data to a common framework of concepts, definitions, and classifications to facilitate data comparisons across countries. ILC data are used to assess United States economic performance relative to other countries, as well as to evaluate the competitive position of the United States in international markets. The Conference Board will continue the program on its current basis and make the data available to the public at no cost. The Conference Board will implement the transition of the program over the summer.

"Every large company needs access to this data, and it can only be gathered effectively by leveraging non-commercial relationships between various government and statistical agencies around the world," said Jon Spector, President and CEO of The Conference Board. "If a government agency cannot continue to maintain this information, it requires an independent institution to take over the task."

Clearly, the Conference Board believes that there is value in sustaining the output of the International Labor Comparisons program. But the question we wanted to answer is "how many people will they seek to hire to do the work?"

Since the private sector Conference Board wasn't doing the work previously, to take on the new work, it would very likely have to both retask its current employees to add to their current job responsibilities while also creating new jobs specifically to do the additional work.

The number of dedicated new hires would be especially revealing because that would provide a direct indication of the relative productivity of people doing the exact same jobs in both the public and private sector. If the number of new hires in the private sector required to do the work turns out to be greater than the number of dedicated federal employees who were previously doing it, that would be a clear indication that the federal bureaucrats are more productive than their private sector peers, and thus are deserving of a higher level of compensation.

AHRQ.gov Bureaucrat Definition

As best as we can tell from its job postings since its announcement, the private sector Conference Board will hire at least two and possibly three people to do the work that would appear to have required 16 dedicated bureaucrats when the same work was done by the U.S. federal government. Here are the job descriptions for the positions that the Conference Board is seeking to fill related to this work:

The last Research Assistant position doesn't reference the International Labor Comparisons program, which means that it isn't the primary purpose of the position, but it's clear from the job description that the person hired to fill the opening could very well be tasked with work related to the ILC program. We should also recognize that it is possible that the job posting for the Research Analyst position that does specifically reference the ILC work may represent more than one opening with the same job description, but there is no indication that is the case in the description for the position, so we tend to think that is not the case.

Those things noted, these job postings suggest that the private sector Conference Board believes it will take the addition of no more than 3 people to do the same work that 16 bureaucrats were dedicated to doing as employees of the U.S. federal government. That would mean that the federal government employees who were previously doing the work would appear to be less than one-fifth as productive as their private sector peers in working to produce the same output.

We therefore find that the higher level of compensation for civilian federal government employees is not justifiable on the basis of their relative productivity with respect to similarly skilled and experienced workers in the private sector.

In fact, the lower apparent productivity of federal bureaucrats would also be a big reason why cuts to government spending reduces the nation's GDP by considerably less than the actual amount of the spending reduction.

Federal Worker American Idle

Speaking of those 16 displaced federal government employees, since it appears that they have been reassigned to other areas within the Bureau of Labor Statistics, whose remaining workload is unchanged following the elimination of the International Labor Comparisons program, that means that the collective productivity of the federal government's employees at the BLS has decreased.

Of course, that is exactly what we should expect to happen when more people become involved in generating an unchanged level of output. But at least, in doing less work per person than before, but for the same pay, that means that their total compensation per person has become just ever so much greater than their private sector peers.

It's all just another perk of working for Uncle Sam!

References

Conference Board. The Conference Board Takes Over International Labor Statistics Program from the U.S. Government. [Online Article]. 27 June 2013.

Labor Statistics Bureau. International Labor Comparisons. [Online Article]. Federal Register. 25 June 2013.

MacGillis, Alec. Obama Administration Plans to Close International Labor Comparisons Office. [Online Article]. Washington Post. 3 March 2010.