Month: October 2014

Don’t be fooled, Loggers.

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Kal Draws is a video series put on by The Economist. Each of these cartoons takes a basic economic concept and attempts to illustrate it in a minute or two. Here is their cartoon on trade, take a look for yourself. Not everyone needs to master economics to have a meaningful opinion about economics. So when a popular economic news source tries to pass off extremely biased and uninformative media as accurate information on basic econ terminology, it’s embarrassing. There is some good information here. It’s true, trade does benefit countries. Theory and practice tells us that by specializing in the production of Continue reading Don’t be fooled, Loggers.→

Theaters, Asymmetrical Information, and Star Wars 7 (Part II)            

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Last week I talked about how movie studios make their money, why the constant price of theater tickets is a very bizarre phenomenon and then I told everyone I’d explain why, a year before its currently scheduled release, JJ Abrams has been ‘leaking’ information to the media about the upcoming release of Star Wars 7. I promise this is all related somewhere down the line. Theaters charge the same price for a ticket, regardless of movie, and movies can vary both in quality and cost to produce. Let’s imagine for a minute that you show up to the movie theater, Continue reading Theaters, Asymmetrical Information, and Star Wars 7 (Part II)            →

New T.V. Deal = More $

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The NBA just signed a new T.V. deal with ESPN and TNT over the next 9 years for over $24 Billion… What this means, besides more money for everyone, is that the salary cap is expected to rise again. This will cause all sorts of excitement as new free agents will start to look for larger contracts, and teams will have the cap space to provide these contracts. The next few free agency periods are set up to be extremely exiting, with a lot of player movement, and outrageously large contracts. What I find really interesting are the contracts that Continue reading New T.V. Deal = More $→

Ebola: Why is it so bad? (Part 3)

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This post continues the discussion from my last post, which raised the question: why has the Ebola crisis become so severe? Another contributing factor: the “dismal” response of the World Health Organization (WHO), a United Nations auxiliary organization. As an international public health crisis, this crisis falls squarely in the sphere of the WHO. To be clear, response to Ebola is not the sole responsibility of the WHO. In the words of the director general of WHO, “And we are not the first responder. You know, the government has first priority to take care of their people and provide health care. W.H.O. is a Continue reading Ebola: Why is it so bad? (Part 3)→

Increase in Cyber Attacks will Disrupt Global Economy

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As people, businesses, and governments approach a more digitally dependent way of life, the risk of breached technological security becomes much larger of an issue. Cyber attacks are rapidly increasing in frequency, targeting celebrities, large businesses, and financial institutions. In mid June of this year, hackers gained access to JPMorgan’s internet servers that contained user information of current and former customers who accessed the bank’s websites. The bank didn’t discover the attack until about two months later, but they promptly found and closed all access paths to the vulnerable servers. A few days ago, JP Morgan stated that contact information for 76 million households and 7 million Continue reading Increase in Cyber Attacks will Disrupt Global Economy→

Fitness Apartheid? A moral look at price discrimination

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Fitness Apartheid. That’s right, apartheid. That’s one way the housing market in New York City has been described recently by a tenant. An inflammatory word? Absolutely. Comparing exclusive fitness centers to an entire history of racially based and politically enforced segregation is entirely inappropriate and I don’t support it in the least. However, the housing market in New York is a battle ground and the actions that landlords are taking have become downright offensive. This episode of Freakonomics explores the idea of price discrimination through first class airplane seats, “the poor door”, and yes, an exclusive fitness center. To listen to the episode, Continue reading Fitness Apartheid? A moral look at price discrimination→

Theaters, Asymmetrical Information, and Star Wars 7 (Part I)

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These days, Star Wars rumors are plastered all over the Internet. It’s hard to go far without running into a new rumor about the plot of the upcoming trilogy, or JJ Abrams standing in front of a puppet-alien, claiming that he’ll use no CGI in order to bring Star Wars back to its roots. The question is: why does JJ Abrams bother with all of these strange ‘leaks’? It could be that entertainment news sites have nothing else to talk about, but that theory seems discredited by the astonishing proliferation of celebrities-eating-a-cupcake articles. However, this phenomenon is different, and that Continue reading Theaters, Asymmetrical Information, and Star Wars 7 (Part I)→

How an interest rate can become negative

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This post will summarize a unique historical situation when an interest rate on an asset became negative. The repo market is a market for short term, low rate, collateralized loans, often done between between large entities. The collateral on these loans are government securities, such as treasury notes, so someone will loan someone money, and in return, they will receive a t-note as collateral until the loan is repaid. Here is a quick visual representation of how the repo market works. To get to the story, in the summer of 2003, there was a rising interest rate on intermediate t-notes leading Continue reading How an interest rate can become negative→