Foreign Ownership Of US Treasuries

Prompted by this post at Thought-Mesh, I went looking for some information about foreign ownership of US Treasuries. I found this slide show, prepared for the Treasury Borrowing Advisory Committee. The facts are very interesting, and indicate that there isn't much here to worry about.

Foreigners, both governments and private entities, own a little better than half our outstanding non-intergovernmental federal government debt. As of today, the public debt is $4,920,983,368,955.71, or about $5 trillion. So foreigners own about $2.5 trillion and foreign governments approximately 60% of that, or about about $1.5 trillion. US 2005 GDP was about $12.46 trillion, so foreigners own debt equal to approximately 20% of GDP and foreign governments own debt equal to about 12% of GDP. That doesn't seem problematic to me.

A couple of other facts make it even less problematic. First, foreigners have clearly been crowding out domestic buyers of US debt. As a result, our total cost to service the debt is less than it otherwise would be and there is a currently untapped market for US Treasuries if foreigners, for some reason, decide to stop buying Treasuries. Domestic buyers actually own fewer Treasuries, absolutely, than they did ten years ago.

Second, Treasuries are a decreasing factor in the domestic securities market. Treasuries now account for less than 10% of the total amount of marketable domestic securities. This, too, indicates that the domestic market would be able to sop up any excess Treasuries if foreign governments stopped buying them.

It also seems clear that the point made at Thought-Mesh is questionable. Foreign purchase of US Treasuries can be meaningfully compared to the rates Americans receive for other investments. As noted, foreign purchase of our public debt decreases the interest rates the government has to pay. This saves the tax payers' money and decreases our deficits. Also, assuming that in the absence of foreign purchasers of our public debt the government would fill the gap by either taxation or more domestic borrowing, it is worth noting that the money freed up by foreigners lending us money can be profitably invested by individual Americans.

I Swear I'm Not Making This Up

Following a long tail from BrothersJudd, I discovered this debate on which would be the better international language: Japanese or Esperanto. As far as I can tell, both sides are dead (morto?) serious.

In The Dictionary Next To "Credulous"

While reading a quite enjoyable article about how global warming, and thus catastrophic depopulation, is already unavoidable, I was stunned to come across this paragraph:

Lovelock adopted the name Gaia, the Greek mother earth goddess, in the 1960s to apply to his then revolutionary theory that the earth functions as a single, self-sustaining organism. His theory is now widely accepted.

His theory is now widely accepted?

Self Referential? You Ain't Never Seen Self-Referential

One of the oddities of having commented so prolifically at BrothersJudd for so long is that, when I'm looking for something in the archives, I'm constantly coming across things I've written of which I have no memory. It's as if someone else wrote them. Sent to the archives by this post at Thought Mesh, I came across this comment thread. I had remembered holing OJ's nutty "broken windows" theory under the waterline, but I hadn't remembered the comment "So we just need to give the invisible hand a rock." That comment just really, really amuses me.

From The BrothersJudd Archives: THERE'S NO SUCH THING AS CAPITALISM

(originally posted June 5, 2005)

Freakonomics: Monkey Businesss (Stephen J. Dubner and Steven D. Levitt, NY Times, 6/5/05)

But these facts remain: When taught to use money, a group of capuchin monkeys responded quite rationally to simple incentives; responded irrationally to risky gambles; failed to save; stole when they could; used money for food and, on occasion, sex. In other words, they behaved a good bit like the creature that most of Chen's more traditional colleagues study: Homo sapiens.

OJ also comments on this article here.

About 12 years ago, when I was still young and foolish, I decided to give up coffee. I did pretty well for a while, but found that I missed the ritual of coffee drinking. So, for a about a week, I drank mugs of hot water. I was amazed at how much of what I thought of as the coffee drinking experience was actually the hot water drinking experience. I had neither the wit nor the nerve to add Half & Half to my hot water but, if I had, I'm sure that I would have found that at least 90% of coffee drinking is hot water and creamer drinking.

Similarly, we now see that, perhaps, a surprising proportion of what we think of as human economic activity has little to do with humans. The laws of supply and demand really are laws, and are inherent in the economy. This helps us be mindful of what capitalism is, and what it isn't.

Although he didn't coin the word, modern thinking about capitalism is based largely on the work of Marx. Needing a thesis for which socialism could be the antithesis, Marx created "capitalism" just to tear it down. It is no mistake that he focused on the rights of capital, which is often resented by those without capital. But capitalism, as a theory of economic organization, doesn't exist. What exists is freedom.

The monkey experiment, along with the universal experience of mankind, shows that freedom and the protection of reasonable expectations (what we call the "rule of law") are the hot water and creamer of our economic life. If you allow people to control their own property, and they can be certain of reaping the benefits of their own decisions, then the universal rules of the market will express themselves.

The interesting question has to do with what happens when people can't control their own property, or if they must fear the arbitrary loss of the gains they have reaped. The economy becomes inefficient, and the people become miserable. But the laws of the market apply as fully as where the people are free. The "capitalist" economies used to be called market economies; with the implication that, under communism, the people weren't at the mercy of the market. But the market is everywhere. In free economies, the price mechanism works as a signal for the allocation of resources. Where people are not free, the price mechanism is not allowed to work and the market delivers misery: insufficient supply and shoddy quality bought only after standing in long queues. More to the point, freedom, it turns out, is indivisible. The freedom to invest cannot be separated from the freedom to protest. Whenever "capitalism" is attacked, it is attacked only as a proxy for freedom.

I Have Long Thought That The Boston Accent Is The Ugliest Of The American Accents

What American accent do you have? Your Result: Boston You definitely have a Boston accent, even if you think you don't. Of course, that doesn't mean you are from the Boston area, you may also be from New Hampshire or Maine.
What American accent do you have? Take More Quizzes

It's A Big Internet Out There

You wouldn't think that "DailyDuck" would be ambiguous.

Also, I mean absolutely no disrespect to our Duck when I say that we apparently have lost the DailyDuck sweepstakes.

In Which I Propose An Hypothesis For Empirical Testing

My hypothesis is that cell phone use leads to safer driving.

I base my hypothesis on two threads of thought.

First, the well-known data suggesting that automobile safety devices lead to more reckless driving. The theory here is that drivers seek a more or less constant level of perceived risk to themselves, resulting in more reckless driving as they rely upon new safety devices. The data is pretty solid for both seat belts and air bags. My hypothesis is that drivers perceive themselves to be a greater risk while using their cell phone, and thus drive less recklessly.

Second, Instapundit noted, several months ago, that automobile accident rates had fallen sharply for reasons that were a mystery to insurance companies and regulators. So, there is at least a correlation: an unexplained fall in accidents at a time of increased cell phone use.

(I suppose I should cop to a third thread: I like counterintuitive explanations, and particularly those that make the goo-goos look like idiots.)

As someone noted on the Internet in the last week or so, the most effective possible safety device that could be added to cars is an eight inch spike jutting out from the steering wheel.

MORE: I should note that the NHTSA has just published the early addition of Traffic Safety Facts 2005. The accident rate is down, as are injuries, per one hundred million miles driven. The fatality rate is up slightly, by .02 fatalities per one hundred million miles, but (if I'm reading the report correctly) fatalities among occupants of motor vehicles are down. This is somewhat at odds with my hypothesis, although not enough to falsify it.

The Wasps Are The Ones Wtih The Plaid Golf Pants

OJ gets his Jews mixed up with his Yankees.

The Caterpillar, Our Closest Relative

Genetic breakthrough that reveals the differences between humans: Scientists hail genetic discovery that will change human understanding (Steve Connor, Independent, 11/23/06)

Scientists have discovered a dramatic variation in the genetic make-up of humans that could lead to a fundamental reappraisal of what causes incurable diseases and could provide a greater understanding of mankind.

The discovery has astonished scientists studying the human genome - the genetic recipe of man. Until now it was believed the variation between people was due largely to differences in the sequences of the individual " letters" of the genome.

It now appears much of the variation is explained instead by people having multiple copies of some key genes that make up the human genome.

Until now it was assumed that the human genome, or "book of life", is largely the same for everyone, save for a few spelling differences in some of the words. Instead, the findings suggest that the book contains entire sentences, paragraphs or even whole pages that are repeated any number of times.

The findings mean that instead of humanity being 99.9 per cent identical, as previously believed, we are at least 10 times more different between one another than once thought - which could explain why some people are prone to serious diseases.

The studies published today have found that instead of having just two copies of each gene - one from each parent - people can carry many copies, but just how many can vary between one person and the next.

The studies suggest variations in the number of copies of genes is normal and healthy. But the scientists also believe many diseases may be triggered by an abnormal loss or gain in the copies of some key genes.

Another implication of the finding is that we are more different to our closest living relative, the chimpanzee, than previously assumed from earlier studies. Instead of being 99 per cent similar, we are more likely to be about 96 per cent similar.

The findings, published simultaneously in three leading science journals by scientists from 13 different research centres in Britain and America, were described as ground-breaking by leading scientists.

"I believe this research will change for ever the field of human genetics," said Professor James Lupski, a world authority on medical genetics at the Baylor College of Medicine in Houston, Texas.

Professor Lupski said the findings superseded the basic principles of human genetics that have been built up since the days of Gregor Mendel, the 19th century "father" of Mendelian genetics, and of Jim Watson and Francis Crick, who discovered the DNA double helix in 1953.

"One can no longer consider human traits as resulting primarily from [simple DNA] changes... With all respect to Watson and Crick, many Mendelian and complex traits, as well as sporadic diseases, may indeed result from structural variation of the genome," Professor Lupski said.

Deciphering the three billion letters in the sequence of the human genome was once likened to landing on the Moon. Having now arrived, scientists have found the "lunar landscape" of the genome is very different from what they expected.

Matthew Hurles, one of the project's leaders at the Wellcome Trust Sanger Institute in Cambridge, said the findings show each one of us has a unique pattern of gains and losses of entire sections of our DNA.

"One of the real surprises of these results was just how much of our DNA varies in copy number. We estimate this to be at least 12 per cent of the genome - that has never been shown before," Dr Hurles said.

Scientists have detected variation in the "copy number" of genes in some individuals before but the sheer scale of the variation now being discovered is dramatic.

"The copy number variation that researchers had seen before was simply the tip of the iceberg, while the bulk lay submerged, undetected," Dr Hurles said.

"We now appreciate the immense contribution of this phenomenon to genetic differences between individuals," he said.

The studies involved a detailed and sophisticated analysis of the genomes of 270 people with Asian, African or European ancestry. It was important to include as wide a sample of the human gene pool as possible.

They found that 2,900 genes could vary in the number of copies possessed by the individuals. The genes involved multiple copies of stretches of DNA up to a million letters of the genetic code long.

"We used to think that if you had big changes like this, then they must be involved in disease. But we are showing that we can all have these changes," said Stephen Scherer of the Howard Hughes Medical Institute in Chevy Chase, Maryland.

But it is also becoming apparent that many diseases appear to be influenced by the number of copies of certain key genes, said Charles Lee, another of the project's leaders at the Brigham and Women's Hospital and Harvard Medical School in Boston, Massachusetts.

"Many examples of diseases resulting from changes in copy number are emerging. A recent review lists 17 conditions of the nervous system alone, including Parkinson's disease and Alzheimer's, that can result from such copy number changes," Professor Lee said.

"Indeed, medical research will benefit enormously from this map, which provides new ways for identifying genes involved in common diseases," he said.

Mark Walport, director of the Wellcome Trust, the medical charity that funded much of the research, said: "This important work will help to identify genetic causes of many diseases."

The key questions answered

What have scientists discovered today?

They have found that each of us is more different genetically than we previously believed. Instead of being 99.9 per cent identical, it may turn out to be more like 99 per cent identical - enough of a difference to explain many variations in human traits. Instead of having just two copies of every gene - one from each parent - we have some genes that are multiplied several times. Furthermore these "multiple copy numbers" differ from one person to another, which could explain human physical and even mental variation.

Why does this matter?

One practical benefit is that it could lead to a new understanding of some of the most difficult, incurable diseases. Although it adds an extra layer of complexity to our understanding of the human genome, the discovery could lead eventually to new insights and medical treatments of conditions ranging from childhood disorders to senile dementia. Scientists are predicting for instance that the knowledge could lead to new diagnostic tests for such diseases as cancer.

How was this discovery made?

Scientists have developed sophisticated methods of analysing large segments of DNA over recent years. "In some ways the methods we have used are 'molecular microscopes', which have transformed the techniques used since the foundation of clinical genetics where researchers used microscopes to look for visible deletions and rearrangements in chromosomes," explained Nigel Carter of the Sanger Institute in Cambridge.

What genes are copied many times and why?

There are just under 30,000 genes in the human genome, which consists of about 3 billion "letters" of the DNA code. The scientists found that more than 10 per cent of these genes appear to be multiplied in the 270 people who took part in the study. They do not know why some genes are copied and some are not. One gene, called CCL3L1, which is copied many times in people of African descent, appears to confer resistance to HIV. Another gene involved in making a blood protein is copied many times in people from south-east Asia and seems to help against malaria. Other research has shown that variation in the number of copies of some genes is involved in Alzheimer's and Parkinson's disease.

Are there any other practical applications?

The scientists looked at people from three broad racial groups - African, Asian and European. Although there was an underlying similarity in terms of how common it was for genes to be copied, there were enough racial differences to assign every person bar one to their correct ethnic origin. This might help forensic scientists wishing to know more about the race of a suspect.

Who made the discovery and where can we read more about it?

Scientists from 13 research centres were involved, including Britain's Sanger Institute in Cambridge, which also took a lead role in deciphering the human genome. The research is published in Nature, Nature Genetics and Genome Research.

Scientists have discovered a dramatic variation in the genetic make-up of humans that could lead to a fundamental reappraisal of what causes incurable diseases and could provide a greater understanding of mankind.

The discovery has astonished scientists studying the human genome - the genetic recipe of man. Until now it was believed the variation between people was due largely to differences in the sequences of the individual " letters" of the genome.

It now appears much of the variation is explained instead by people having multiple copies of some key genes that make up the human genome.

Until now it was assumed that the human genome, or "book of life", is largely the same for everyone, save for a few spelling differences in some of the words. Instead, the findings suggest that the book contains entire sentences, paragraphs or even whole pages that are repeated any number of times.

The findings mean that instead of humanity being 99.9 per cent identical, as previously believed, we are at least 10 times more different between one another than once thought - which could explain why some people are prone to serious diseases.

It has long been the position of this blog that genetic copying errors, and particularly multiple copies of certain genetic sequences at points that, for reasons still to be discovered, are prone to duplication, play an important unacknowledged role in evolution. Natural selection, not so much.

Happy Thanksgiving

A Happy Thanksgiving to all who happen, by mistake we assume, upon this page. May you all -- even those of you who, by accident of birth, are not celebrants -- eat too much, drink too much and spend too much time in the bosoms of your families.

If you would like to do good, too, you might want to look here.

PsyOps

Israel developing anti-militant "bionic hornet" (Reuters, 11/17/06)

Israel is using nanotechnology to try to create a robot no bigger than a hornet that would be able to chase, photograph and kill its targets, an Israeli newspaper reported on Friday.

The flying robot, nicknamed the "bionic hornet", would be able to navigate its way down narrow alleyways to target otherwise unreachable enemies such as rocket launchers, the daily Yedioth Ahronoth said.

It is one of several weapons being developed by scientists to combat militants, it said. Others include super gloves that would give the user the strength of a "bionic man" and miniature sensors to detect suicide bombers....

Prototypes for the new weapons are expected within three years, he said.

I assume that the Israelis let this information out just to increase their enemy's paranoia.

Follow Up

The local paper follows up on its PS3 story:

Heather Lord of Amherst said the act of reselling the machines for $2,000, $3,000 or more on eBay demonstrates a class divide between those who have thousands of dollars to purchase an item that costs much less and those who don't.

'The industry is manipulating the consumers,' said Lord, who also wasn't early enough to walk away with a console.

The campers at the front of the line saw it differently.

'Finally, the poor are taking advantage of the rich,' said Chris Brodeur, a UMass student who had been waiting in line since Wednesday morning with plans on selling his console.

Those who are paying thousands of dollars over retail may, indeed, be being taken advantage of, said Dan Hsu, editor in chief of Electronic Gaming Monthly magazine, by phone....

Buying a brand-new system at launch can also be frustrating for consumers due to the lack of strong titles available right away, with only one game title, 'Resistance: Fall of Man' being a standout.

'Do you want to pay $600 to play one game?' Hsu asked.

Anyone want to take another shot at why Sony left tens or even hundreds of millions of dollars on the table?

In Which I Am Forced To Notice Darwinism

I've been keeping the blog clear of Darwin, mostly because I just don't care. But this really is the stupidest thing I've seen yet on the subject:

Darwin got it right - it's survival of the fastest (Lewis Smith, timesonline.co.uk, 11/17/06)

THERE’S nothing like the threat of being eaten to make an animal evolve in double-quick time, a study of lizards has shown.

Twice within a year the brown arole lizard has evolved changes in its body and behaviour to outwit a predator — confirming Charles Darwin’s theory on natural selection.

Changes in limb length were observed by biologists after they introduced a predator, the northern curly-tailed lizard, to islands off the Bahamas where the brown arole is found.

In the first six months the brown arole, Anolis sagrie, developed longer legs so that it could outrun its predator, Leiocephalus carinatus.

Over the second six-month period the arole changed its behaviour so that it spent far less time on the ground and longer on branches and plant stems.

After a year the surviving aroles had much shorter, stumpier legs that were more suited to clinging on to thin branches. "We showed that selection dramatically changed direction over a short time, within a single generation," the researchers reported in the journal Science.

In Which I Propose A New Metaphor

I like metaphors and am always on the look-out for new ones. In that spirit, I'd like to propose a new metaphor for the unemployment dislocation caused by creative destruction, globalization and technological advances. My metaphor is the car cigarette lighter.

There were a couple years there when the future of the car cigarette lighter looked bleak. Changing fashion (and that pesky link to cancer) were quickly reducing the number of smokers in the US. Cars were recognized as particularly bad places to smoke: there were other passengers to consider; those other passengers are often children; and people suddenly realized that maybe holding burning leaves while driving wasn't the best idea anyone had ever had, particularly as your hands had to be free to eat lunch. It seems obvious that the familiar cigarette lighter was doomed.

And then along came the cell phone, the iPod, the navigation system, the DVD player, the car fax, the car air pump, the hand held video game and, of course, the hot cold personal car fridge. Suddenly, the problem is too few cigarette lighters.

What If The World Changed?

Glenn Reynolds points us to the following, which is either a cold fusion level con or world changing:

Israel to produce synthetic oil from low quality shale at $17 a barrel (Leah Krauss, UPI, 11/7/06)

The Israeli process for producing energy from oil shale will cut its oil imports by one-third, and will serve as a guide for other countries with oil shale deposits, according to one company....

Oil shale is limestone rock that contains hydrocarbons, or fossil fuels -- about 20 percent of the amount of energy found in coal. Using the rock as a raw material and coating it with bitumen, a residue of the crude oil refining process, the company can produce natural gas, fuel, electricity, or a combination of the three.

I have to suspect that there's something shady about it -- news like this should be on the front pages in Second Coming type (hey, maybe this is how the media would cover the Messiah coming) -- but we'll know in a few short years.

Everyone Agrees They Should Charge More

WalMart has issued the following press release:

Former Senator John Edwards Turns to Wal-Mart for PlayStation3

Just like the millions of Americans who turn to their neighborhood Wal-Mart (NYSE: WMT) for their holiday shopping needs, Wal-Mart announced today that former Sen. John Edwards is seeking to be one of the first to get a Sony PlayStation3, one of the most coveted holiday gift items this Christmas season.

Yesterday, a staff person for former Sen. Edwards contacted a Wal-Mart electronics manager in Raleigh, North Carolina to obtain a Sony PlayStation3 on behalf of the Senator's family. Later that night, Sen. Edwards reportedly re-told a homespun story to participants of a United Food and Commercial Workers (UFCW) union-sponsored call about how his son had chided a fellow student for purchasing shoes at Wal-Mart.

Wal-Mart welcomes Sen. Edwards to visit his local Wal-Mart store and explore the extensive line of home electronics as well as the Metro7 line shoes for men and boys.

The Company noted the PlayStation3 is an extremely popular item this Christmas season, and while the rest of America's working families are waiting patiently in line, Senator Edwards wants to cut to the front. While, we cannot guarantee that Sen. Edwards will be among one of the first to obtain a PlayStation3, we are certain Sen. Edwards will be able to find great gifts for everyone on his Christmas list - many at Wal-Mart's "roll-back prices."

Best of the Web notes that Senator Edwards blames this on a overeager young volunteer who apparently didn't know of the Senator's strict policy against doing business with the anti-Christ.

Blame Brit

Skipping

Lileks writes about skipping today. I don't skip very often; actually, I haven't skipped in a while. (I think I'll try it when I go walk the dog today. I'm sure it will freak him out.) Whenever I do skip, I'm always amazed at the ground I cover for what seems like a surprisingly small energy output. Skipping is all about inertia. Why isn't skipping a socially acceptable way of getting around?

Anyway, my gift to you all today is the mental picture of an fat 44 year old skipping while walking his dog.

One Of Life's Enduring Mysteries

With the coming of the new PS3, the local paper runs a staple of "Ha, ha, look at the funny people" journalism:

But for the UMass students who have begun camping out on the sidewalk in front of Best Buy at the Hampshire Mall in Hadley, the highly touted next-generation game machine that also plays high-definition movies isn't primarily about movies or games.

It's an investment.

For $600 plus tax and two days of waiting, the enterprising young men and women waiting in front of the store plan to reap at least $1,400 in profit when they resell the machines between now and the holidays.

As of Wednesday afternoon, on eBay, PS3s were being sold for as much as $3,000, two days before they hit store shelves.

In fact, this is one of life's little enduring mysteries.

Sony, like Microsoft and Nintendo, underprices the first run of its new gaming system by thousands of dollars. They leave hundreds of millions, if not billions, of dollars on the table. Nor is this unexpected. It is as predictable as the tide.

While it is easy to come up with possible explanations, it is difficult to come up with an explanation that can explain walking away from massive revenues that would fall directly to the bottom line. To put this in context, Sony's 2006 net income was a little better than $1 billion. Estimates of how many games systems Sony will sell this year vary widely, but 500,000 seems to be a good conservative estimate. If Sony could realize just an additional $500 per system sold this year, that would be an extra $250 million in profit.

So why is Sony walking away from an amount equal to nearly a quarter of its profit for the whole of last year? What ever the reason is, it's got to be better than having at least $250 million in Sony's pocket now.

So what are the possible explanations? Sony doesn't want to appear greedy. Is there anyone over 12 to whom this explanation applies? If this is really a worry, lead with the PS3 Premiere Addition. Throw in accessories that cost you $50 to make and include a gold-plated case. Sony is still ahead of the game.

The want to get the system into the hands of persuasive early adopters. This makes no sense at all. Identify the 1000 most persuasive players and give them systems. Sony would still be ahead of the game; it would hardly even notice that cost. Also, note that the current arrangement doesn't work that way. The systems are being snapped up by arbitrageurs, not by players.