If there’s really a huge excess of supply, it would restrain demand

The Federal Reserve is considering contingency plans to bolster its lending power, in case measures it has taken to rescue the troubled credit markets fail. One option being considered is to have the Treasury borrow more money than it needs to fund the government and keep the proceeds on deposit at the Federal Reserve.

Other options include issuing debt under the Federal Reserve’s name instead of the Treasury’s, and asking Congress for immediate authority for the Fed to pay interest on commercial bank reserves rather than waiting until a law enacted earlier allows it to in 2011.

If the Fed were to issue debt, it would be following the Bank of England and this could involve issuing short-dated paper in the two-to-five-year Treasuries area. Secondly, the market would not like the Fed to issue long paper which would hang for many years. Should the Treasury decide with Congressional approval to issue more bonds to fund the Fed, there should be good demand for extra paper due to the backdrop of weakening global economic growth, although this would depend on the ultimate size of the issuance.

 Equitable is unlikely to mean the same on every dimension

Women seeking a lifelong mate might do well to choose the guy a notch below them in the looks category. New research reveals couples in which the wife is better looking than her husband are more positive and supportive than other match-ups. The reason, researchers suspect, is that men place great value on beauty, whereas women are more interested in having a supportive husband.

Researchers admit that looks are subjective, but studies show there are some universal standards, including large eyes, “baby face” features, symmetric faces, so-called average faces, and specific waist-hip ratios in men versus women.

Past research has shown that individuals with comparable stunning looks are attracted to each other and once they hook up they report greater relationship satisfaction. These studies, however, are mainly based on new couples, showing that absolute beauty is important in the earliest stages of couple-hood, said lead researcher James McNulty of the University of Tennessee. Overall, wives and husbands behaved more positively when the woman was better looking. Men are very sensitive to women’s attractiveness. Women seem to be sensitive to men’s height and salary.

In couples with more attractive husbands, both partners were less supportive of one another. Men who are more attractive than their partners would theoretically have access to partners who are more attractive than their current spouses. The “grass could be greener” mentality could make these men less satisfied and less committed to maintain the marriage.

 Young people’s financial know-how has gone from bad to worse.

High school seniors, on average, answered correctly only 48.3% of questions about personal finance and economics, according to a nationwide survey released Wednesday by the Federal Reserve. That was even lower than the 52.4% in the previous survey in 2006 and marked the worst score out of the six surveys conducted so far.

Fed Chairman Ben Bernanke stressed in a speech that young people must sharpen their financial knowledge so they are in a better position to make sound investment decisions throughout their lives. College students’ financial literacy also was tested this year. They answered 62% of the questions correctly.

The larger problem is a country where knowledge—especially the kind that may be acquired through schooling—is not valued. That’s why the most popular kids in school are never the top students. That’s why the smart kids get picked on.

5,200 Cameras In One Area Is Alot!

D.C. officials are giving police access to more than 5,000 closed-circuit TV cameras citywide that monitor traffic, schools and public housing — a move that will give the District one of the largest surveillance networks in the country.

The Video Interoperability for Public Safety (VIPS) program will consolidate the more than 5,200 cameras operated by D.C. agencies — including D.C. Public Schools and the D.C. Housing Authority — into one network managed by the city’s Homeland Security and Emergency Management Agency.

Europe, Here They Come 

European MBA programs may have traditionally lacked the brand recognition of their U.S. counterparts, but that’s changing fast. The continent’s increasingly dynamic business environment, improvements to curricula, and growing corporate demand for employees with international experience are attracting top-notch candidates from all over the world. In addition, most Europe management programs are cheaper, shorter, smaller, and more diverse than their U.S. rivals, which is drawing a growing number of American students to studies in the Old World.

Applications from the U.S. to INSEAD, an elite French business school with campuses in Fontainebleau and Singapore, grew 20% in the past year and the school’s 2008 enrollment of Americans grew nearly 24% since 2007, to 73 students.

Young people are recognizing the value of an MBA but don’t want to spend two years earning one—the length of most U.S. programs. Others credit the U.S. recession. The average tuition at the top 10 European schools is less than $73,000, vs. $86,600 at Harvard Business School, and about $95,000 at Wharton. Furthermore, MBA students are increasingly looking to pursue social justice through business, and many European schools have responded with a wealth of new courses on corporate social responsibility, social entrepreneurship, and doing business in developing countries.

A potential threat to the growth of European MBA programs is 46 European countries have pledged to adopt an Anglo-American system of higher education by 2010 and to recognize each other’s degrees more than in the past. Rather than spending as many as six years at one school to earn one degree, students will complete a bachelor’s degree in three to four years and have the option to do a master’s elsewhere.

To build on their growing reputations, many European institutions are now opening satellite campuses in other parts of the world, particularly the Middle East and Asia. While the repercussions for Europe’s MBA programs remain to be seen, the current outlook is bright: Applications are up, admissions are increasingly selective, and ever more companies are demanding multilingual recruits with global polish.

Robots could fill the jobs of 3.5 million people in graying Japan by 2025.

Japan faces a 16% slide in the size of its workforce by 2030 while the number of elderly will mushroom, the government estimates, raising worries about who will do the work in a country unused to, and unwilling to contemplate, large-scale immigration. The current fertility rate is 1.3 babies per woman, far below the level needed to maintain the population, while the government estimates that 40% of the population will be over 65 by 2055, raising concerns about who will look after the graying population.

Japan could save 2.1 trillion yen ($21 billion) of elderly insurance payments in 2025 by using robots that monitor the health of older people, so they don’t have to rely on human nursing care. Caregivers would save more than an hour a day if robots helped look after children, older people and did some housework, it added. Robotic duties could include reading books out loud or helping bathe the elderly. Mommy, I want Yuki 2.0 to wipe my @**.

The New Economics of Outsourcing

Companies that traditionally rely on India for offshore IT services have been looking for that something beyond India for years, citing such reasons as high employee turnover and unreliable communications. But the search has taken on added urgency recently, especially for U.S. companies, as a weakening dollar has boosted the cost of IT services priced in India’s rupee. Over the past five years the dollar has declined about 16% against the rupee. High real estate costs and expectations for tax increases also have diminished India’s allure.

As outsourcing to India becomes more expensive, North American companies are more inclined to “nearsource,” keeping work in the Western Hemisphere, where they can operate in a closer time zone. In years past a company could save 40% to 50% by hiring Indian firms to handle IT and other services. Should the U.S. dollar continue its descent, that differential would shrink to 10% to 20%.

How much longer the world’s companies will have financial incentive to outsource to India is a matter of lively debate. India’s “advantage as an offshore location is fast eroding—its attractiveness takes a hit with each passing day,” analysts at Forrester Research wrote in a January, 2008, report. Forrester catalogued some of the well-known challenges, such as increasing staffing costs, turnover and strained infrastructure.

The benefit of doing business, from a labor-cost point of view, in such locales as Bangalore, India, will disappear for some companies in three to four years. Indeed, while costs are increasing in India, the country is generally less expensive than Latin America and most other locations, especially for companies that don’t require high-end software developers. The average annual salary for an IT worker in the U.S. is about $75,000. In India it’s about $7,779 and in Argentina, it’s slightly higher at $9,478. In Brazil, the annual wage jumps to $13,163, and in Mexico it climbs to $17,899.

Increasingly, companies want a provider that can nimbly shift tasks and labor among its own global network of work centers. The dollar’s decline aside, even Brazilian firms are benefiting as companies spread their outsourcing around. The real question, if you’re going to sign onto somebody for five to seven years, is do they have a vision for how they’re going to move work around the network.

Programs provide chefs, home repair and other services to help suburban seniors age in place.

Many community planners believe that aging-in-place programs could help many elderly homeowners avoid institutional care. More than 100 programs exist in places as diverse as Boston’s Beacon Hill, New Canaan, Conn., Madison, Wis., and the Indianapolis suburbs. Often, it’s the small, inexpensive service (a ride to a doctor’s appointment or home-delivered groceries) that can make all the difference.

Aging-in-place programs got their start in 1986 in Penn South, a ten-building apartment complex in Manhattan. Residents and local social-service agencies created the program after an 84-year-old woman with dementia wandered onto a roof and died of exposure. “This event spoke personally to residents about their vulnerability,” says Fredda Vladeck, director of the Aging in Place Initiative at the United Hospital Fund.

ElderSource created Elder-Friendly Communities, which covers an area of mostly two-story, three-bedroom homes built 40 to 50 years ago. “Our program works in the suburbs because we literally went door-to-door to introduce ourselves,” says Claudette Einhorn, chairperson for ElderSource. Elder-Friendly Communities’ vendors, such as drivers and gardeners, offer discounts from 5% to 50%. The program charges an annual membership fee of $120. Beyond the support services, the program provides social and educational activities. In some communities, the residents themselves are creating aging-in-place programs.

 The Labor Department on Friday said nonfarm employment fell by 80,000 jobs in March, more than expected and the biggest drop in five years. Financial markets saw this as reinforcing the need for further Federal Reserve interest rate cuts.

Adding to the bleak picture, the Labor Department said a total of 152,000 jobs were lost in January and February, sharply above the prior estimate of 85,000, and the jobless rate jumped to 5.1% from 4.8%, the highest since September 2005. Construction employment fell 51,000, the ninth consecutive month of job losses.

Factory employment fell by 48,000, the biggest decline since July 2003, exacerbated by a 24,000 fall in auto manufacturing jobs that the department said likely reflected the impact of a strike at an auto parts maker. Most economists, having seen a third monthly decline, were now convinced that the economy is in recession.

The numbers drew calls from Democratic presidential hopefuls Hillary Clinton and Barack Obama for aid to families facing foreclosure on their homes, while Republican candidate Senator John McCain said tax cuts and streamlining burdensome regulations were needed to foster growth.

A New York Times/CBS News poll released on Friday showed the economy’s deepening woes were weighing heavily on the minds of Americans. Of those polled, 81% said they believed things were “pretty seriously” on the wrong track, up from 69% a year ago and 35% in early 2002.

This billboard and press campaign is now running in Mexico, is a colorful map depicting what the Americas might look like in an “Absolut” — i.e., perfect — world. The U.S.-Mexico border lies where it was before the Mexican-American war of 1848 when California, as we now know it, was Mexican territory and known as Alta California.

The campaign taps into the national pride of Mexicans, according to Favio Ucedo, creative director of leading Latino advertising agency Grupo Gallegos in the U.S. Ucedo, who is from Argentina, said: “Mexicans talk about how the Americans stole their land, so this is their way of reclaiming it. It’s very relevant and the Mexicans will love the idea.”

The U.S. is the largest importer of Absolut in the world, so I’m perplexed that it concluded there could be a net gain by this ad campaign. Absolut really blew it by uncorking this one. Perhaps it has consumed too much of its own product. They’ll have plenty of surplus stock to drown in though. But don’t worry, folks. This is in no way a threat to our national sovereignty.

Criminals Have It Too Good In America

Lawmakers from California to Kentucky are trying to save money with a drastic and potentially dangerous budget-cutting proposal: releasing tens of thousands of convicts from prison, including drug addicts, thieves and even violent criminals. Officials acknowledge that the idea carries risks, but they say they have no choice because of huge budget gaps brought on by the slumping economy.

At least eight states are considering freeing inmates or sending some convicts to rehabilitation programs instead of prison.   If adopted, the early release programs could save an estimated $450 million in California and Kentucky alone. A Rhode Island proposal would allow inmates to deduct up to 12 days from their sentence for every month they follow rules and work in prison. Even some violent offenders would be eligible but not those serving life sentences.

In California, where lawmakers have taken steps to cut a $16 billion budget deficit in half by summer, Gov. Arnold Schwarzenegger proposed saving $400 million by releasing more than 22,000 inmates who had less than 20 months remaining on their sentences. Violent and sex offenders would not be eligible.

So where exactly are the savings extracted from? Laying off prison guards and making it more difficult to send parole violators back to state prison would account for part of the savings. To curb spending, lawmakers have offered a bill to make about 7,000 drug offenders in prison eligible for parole. A second proposal would allow the parole board to release inmates convicted of selling marijuana and prescription drugs after serving just a quarter of their sentences. Currently, they must serve 85% of their terms before release.

Law enforcement officials and Republican lawmakers immediately criticized Schwarzenegger’s proposal, which would apply to car thieves, forgers, drunken drivers and some drug dealers. Some would never serve prison time because the standard sentence for those crimes is 20 months or less.

Gov. Steve Beshear has said Kentucky must review its policies after the state’s inmate population jumped 12% last year — the largest increase in the nation. Kentucky spends more than $18,600 to house one inmate for a year, or roughly $51 a day. In California, each inmate costs an average of $46,104 to incarcerate. I now favor death sentence for the extreme crimes. These are cheaper.

To some, Larry Ellison’s $200 million reproduction 16th-century Japanese emperor’s estate in the hills above Silicon Valley sums up everything wrong with America’s out-of-control real estate market. Imagine how upset Ellison’s critics became this week when they found out that the the world’s 14th-wealthiest person had negotiated a 60% tax break on his property. As a result, his local assessor’s office is sending the 63-year old $3 million.

Ellison won the tax break by essentially arguing that he had squandered money on Larryland, and would never be able to get his investment back. Ellison said that the property had suffered from “significant functional obsolescence” and was therefore worth $64.7 million, not the $166.3 million on record (substantially less than the $200 million it cost to build).

Larry’s 23-acre Japanese emperor estate property ended up featuring a 2.3-acre man-made lake filled with drinkable water, 2,000 tons of imported Chinese granite, a waterfall with a built-in fog machine and an on/off switch, several miles of underground tunnels for domestic staff, a 30-ton boulder in the master bedroom shower, and a replica 16th-century bridge that was built by craftsmen in China.

The Pressure Is On For Rice Farmers

Asian governments have long focused on developing high-growth sectors, such as manufacturing, and meeting the infrastructure requirements of increasingly urban populations. But that has been coupled with a neglect for farming that is now hurting as a larger and more affluent population demands more food, thereby also contributing to surging world prices for staples such as rice and soyabeans. Such neglect is particularly worrying because nearly two-thirds, or 641m, of the world’s poor live in the Asia-Pacific region, with rural poor accounting for some 70% of those.

Asian governments have shown chronic complacency towards agriculture since reaping the benefits of the green revolution three decades ago. Then, US research led by Norman Borlaug allowed India and other Asian nations to switch to higher-yielding farming techniques and rapidly gain self-sufficiency in crops such as wheat. A clear example is the demise of extension services in many Asian countries. While officials from agricultural ministries used to visit rural areas to train farmers and introduce new technologies, “this provision of public service has now almost collapsed”.

Thailand is ahead of Asian peers on productivity. But it is not immune to the distribution problems and even criminal activities undermining the region’s farming. A surge in crop prices is believed to have been accompanied by increasing theft. According to local reports, some Thai farmers have been waking up to find outsiders have harvested their entire crop overnight.

China and India, meanwhile, have both made substantial pledges to farmers in their latest budgets, with India waiving some $15bn in loans to small farmers. The challenge for China, where a wealthier population has more than doubled its meat consumption over two decades, is the limited availability of arable land rather than poor production. China is a leader in the use of fertilisers, at levels about three times the world average per hectare, and most of the easy productivity gains have already been achieved.  Hail to rice farmers!

Rice climbed to a record and corn traded near its highest ever on speculation a 3% annual increase in global demand for cereals will outstrip supply as governments curb exports to prevent protests. Rice, the staple food for about 3 billion people, rose 2.4% in Chicago trading today after doubling in the past year. Soybeans advanced for the third day and wheat gained as investors bought agricultural commodities on concern dry weather in the Great Plains and heavy rain in the eastern Midwest may curtail U.S. production and push down global inventories.

The World Bank estimates “that 33 countries around the world face potential social unrest because of the acute hike in food and energy prices,” Robert Zoellick, the bank’s president, said on the organization’s Web site. For these countries “there is no margin for survival,” he said.