Japan Goes Bananas

Keiko Akai is very annoyed. The attractive 21-year-old university student has been planning to do a banana diet for some time now, but she can't get started - and not for lack of trying. "I keep going to OK Store, my local supermarket every single day," she says. "In fact, I've just been there. There are no bananas on the shelves, and it's been like that for a month."

Akai has never weighed more than 100 pounds, and is so slim that her waist is swimming in Zara's smallest size XS skirt. She doesn't need to lose any weight. But Japanese girls obsessed with diets tend to jump at any trendy new ones, so, when Akai heard about a popular actress who'd lost 26 pounds through the Morning Banana Diet, she had to try it. And the dearth of bananas as her local supermarket, and many others, is testimony to the popularity of the new dieting fad.

"Large stores don't have any bananas from noon, and even Ito Yokado (a major supermarket chain) runs out of them after 3 p.m.," says Tomoyuki Horiuchi, sales representative of Tokyo Seika Boeki Co., Ltd., fruit and vegetables wholesale company. Hiromi Ohtaki of Dole Japan, a leading banana importer, sees the boom in sales as largely due to Morning Banana Diet - bananas don't normally sell well during summer, and this year's summer has been especially hot. Still, over the past 4 months, demand has driven Dole Japan to increase its banana imports by upward of 25%, and even then supplies could not keep pace with demand. "In a way this is an emergency," explains Ohtaki. "We've been importing bananas from the Philippines for the past 40 years, but this is the first time something like this happened to us, and we find it very difficult to cope." Time 10/17/08

I saw one singer do a banana diet and succeed (lose her weight) in the TV show in Japan. Many women watched it and go to the store to buy bananas and to try a banana diet.

It seems kind of crazy and definitely shows that Japan is still a peaceful country although many people are annoyed with stock market mess.

紅葉

千畳敷カール（長野県駒ケ根市、宮田村）、毎日新聞、2008.9.29.
札幌市南区、２００８年１０月１１日、Yahoo! JAPAN

雲海

午前６時２６分、京都府京丹波町下山・丹波広域基幹林道
京都新聞、１０月16日

Why Krugman Won the Nobel Prize

To be honest, I have been interested in his specialty since I read his popular writing, say, pop internationalism.

In my country Japan, his insight on the monetary policy conducted by the Bank of Japan has been more focused(because it seemed very clear and easy for general people to understand), but to me his research on international trade and geography seems more interesting.

When I read the reason for his winning the Nobel prize, I nodded and wondered what role was played in my favorite area, optimal currency area.

I try to summarize his contribution to new research area*:

From Ricardo-Heckscher-Ohlin to Krugman
The English economist David Ricardo launched the theory of comparative advantage to explain the range and composition of international trade. He focused on the differences of technology. Later the Swedish economists Heckscher and Ohlin implied that foreign trade was based on differences among countries and focused on different accesses to factors of production.

However, intra-industry trade has expanded, in particular between rich countries. Such trade implies that a country both exports and imports more or less the same goods. This would not be compatible with the theory of Ricardo-Heckscher-Ohlin.

Krugman intended to explain the occurrence of intra-industry trade and based an assumption
of economies of scale whereby mass production diminishes the cost per unit produced and an assumption that consumers appreciate diversity in their consumption on his new trade theory.

Economies of Scale and Diversity of Preference
Krugman shows that foreign trade will arise not only between different countries, but also between identical countries in terms of access to technology and factor endowments, and also shows that extensive intra-industry trade will occur.

The approach Krugman used in his foreign trade theory – the assumption of economies of scale in production and a preference for diversity in consumption – was found to be appropriate for analyzing geographical issues.

Krugman asks what would happen if foreign trade became impossible: If two countries are exactly alike, then welfare will be the same in both countries. But if the countries are alike in all respects except that one of them has a slightly larger population than the other, then the real wages of labor will be somewhat higher in the country with more inhabitants.

The firms in the more highly populated country can make better use of economies of scale, which
implies lower prices to consumers and/or greater diversity in the supply of goods. This, in turn, enhances the welfare of consumers.

As a result, labor, i.e., consumers, will tend to move to the country with more inhabitants, thereby increasing its population. Real wages and the supply of goods will then continue to increase even more in that country, thereby giving rise to further migration, and so on.

From Urban to Rural, From Rural to Urban
Later Krugman assumes that although trade is possible, it is obstructed due to transport costs. Otherwise, labor is free to move to the country or region which can offer the highest welfare, in terms of real wages and diversity of goods.

The above considerations evolved into the core-periphery model, which shows that the
relation between economies of scale and transport costs can result in either concentration
or decentralization of communities.

Under certain conditions, the forces which contribute to concentration will dominate. Under different conditions, the forces which give rise to decentralization will dominate. Krugman’s model can be used to account for the mechanisms at work in both directions.

For example, his model indicates that declining transport costs easily generate concentration and urbanization. It seems particularly noteworthy since transport costs have exhibited a declining trend throughout the twentieth century.

* Much of the above is due to here.

Krugman won the Nobel Prize!!

Krugman was one of what I first read when I was an undergraduate student. Galbraith, Krugman, and Mankiw were my best teachers and made me seek for an advanced research of economics.

However, he didn't win the Prize for his macroeconomics, but for his contributions to international economics and economics of geography.

Anyway, I was so surprised at this news and want to say to Professor Krugman, "congratulations!"

Princeton's Paul Krugman wins Nobel in economics--UPDATED 9:18 AM
by Ruth Stevens · Posted October 13, 2008; 07:38 a.m.

Paul Krugman, a professor of economics and international affairs at Princeton since 2000, has won the 2008 Nobel Prize in economics.

Krugman, the only winner this year, was recognized "for his analysis of trade patterns and location of economic activity."

In addition to teaching and conducting research at Princeton, Krugman writes a column for The New York Times.

"It's deeply gratifying," said Krugman early this morning. "There is so much shock involved that I can't really sort out. I think it will take a few days before I can assess it."

Anne-Marie Slaughter, dean of the Woodrow WIlson School of Public and International Affairs, said, "Paul Krugman has been at the cutting edge of research on the most important phenomenon of our time: policymaking in the face of rapid and seemingly inexorable globalization. At the same time, he is one of our most visible faculty members in the public sphere, actively engaging critical public policy debates. We congratulate him heartily, honoring him as the school's second Nobel laureate in economics in only six years."

デブ、病気と日本人

６月２６日に日米欧などの３０カ国が参加する経済協力開発機構（ＯＥＣＤ）から、ヘルスデータ２００８が発表されました。

これによると日本の肥満者の割合は２４・９％（０５年）と加盟国中最低で、米国の６７・３％やドイツ４９・６％、イタリア４５・１％に比べると極めて低い水準でした。

日本人は海外では細く見えるようで、日本で肥満と言われる人でも「普通」、普通体型の人は「細い」と言われることが多いです。

日 本肥満学会では、ＢＭＩ２２（身長１６０センチの場合、１．６×１．６×２２＝５６．３２キロ）を標準体重、ＢＭＩ２５（１６０センチの場合、６４キロ） 以上を肥満としています。ところが、アメリカでは、ＢＭＩ２５（１６０センチの場合、６４キロ）が標準で、ＢＭＩ３０（１６０センチの場合、７６．８キ ロ）以上が肥満とされているのです。

同じ身長で、どうしてこうも肥満の基準にずれがあるのでしょうか？同じ１６０センチでも、日本では６４キロ以上が肥満。アメリカでは７６．８キロ以上が肥満。と、あまりにも肥満の基準が違うと思いませんか？

ＢＭＩ という指数は、世界で使われる計算式になりましたが、標準体重、肥満体重の基準は、国によってばらつきがあります。標準体重は「最も健康で病気になりにく い体重」を元に決められていて、日本人の場合、その数値がＢＭＩ ２２だったのです。つまり、日本人は「太ることによって病気になりやすいので、肥満基準のＢＭＩがアメリカより低い」のです。

日本人は太ることで病気になりやすいとは驚きである。

Recession & Depression

From Mankiw's blog,

What makes a recession officially turn into a depression?

Mankiw replied that traditionally milder contractions are called recessions and more severe contractions are called depressions,....Perhaps the clearest definition is this: A recession is when your neighbor loses his job. A depression is when you lose yours.

Moral Hazard & Adverse Selection

Recent trend
Recently introductory economics has had more topics related to (non-cooperative) game theory and asymmetric information (Bayesian game). It's kind of a good trend but many students might become confused about it because it is somewhat different from what is taught in price theory.

Price(Walrasian) theory and Game(Nash) theory
Needless to say, economics has two branches: price theory and game theory. We can say that game theory has recently dominated economics more than price theory. Equilibrium concept in a game theory is Nash equilibrium, whereas it is Walrasian general equilibrium in a price theory.

Although we use the same theorem of fixed point to prove mathematically the existence of the above two equilibria, these equilibria are quite different.

Some economists have said that price theory looks at the results of market clearing while game theory looks at the processes. However, I don't know the detail of this distinction at present.

Moral hazard and Adverse selection
As a remark, I let you know about the difference between "moral hazard" and "adverse selection":

These problems are very important in a real market economy and are related to asymmetric information and Bayesian game, which means kind of "market failure (or imperfect market)".

Asymmetric information is the case where sellers (the informed party) know the quality of goods and services but buyers (the uninformed party) don't know in the market economy. It leads to a serious economic problem and can be applied to many economic phenomena.

Adverse selection is the case where bad (low-quality) goods are selected as a result of the trade, whereas moral hazard is the case where bad behaviors (laziness) are selected as a result of the trade. In both situations Pareto-optimal outcomes are not realized and should be solved by some mechanisms.

The main examples are lemon model (Akerlof: 1970) , job model (Spence: 1973), and insurance model (Rothschild and Stiglitz: 1976) . These all can be read in QJE and were worth the Nobel prize in economics.

Signaling and Screening
There are two types of model(or game) : a signaling model is the game where the informed party conveys credible information, and a screening model where the uninformed party offers a menu of choices to the informed party and their choices reveal their types.

Payoffs that the players get in these games are determined by actions, messages, and types.

Let U be the uninformed party, I the informed party, and N nature. The timing of signaling is NIU, whereas the timing of screening is UNI or NUI. In a signaling model, informed party⇒uninformed party, whereas in a screening model, the other way around, uninformed party⇒informed party.

Pooling equilibrium and Separating equilibrium
There are two types of equilibrium concept (perfect Bayesian Nash equilibrium:PBNE) : in the case of signaling model, in a pooling equilibrium signaling is unsuccessful and all types choose the same message, while in a separating equilibrium signaling is successful and each type chooses a different message.

In the case of screening model, in a pooling equilibrium screening is unsuccessful and all types choose the same action, while in a separating equilibrium screening is successful and each type chooses a different action.

Principal/Agent problem & Optimal Contract
In a signaling and screening game we have asymmetric information that exists only at the time the contract is signed. The uninformed party (principal: a working mother) gets the informed party(agent: a baby sitter) to behave in a way that is in the uninformed party's interest(a mother wants a baby sitter to take good care of her baby) after signing the contract.

How should we do to get our agents to behave in a way that is in our interest? That's the problem of the Principal/Agent problem, or as known as contract theory. In this problem people make an optimal contract to induce optimal outcomes. Subject to (1) participation constraint and (2) incentive compatibility constraint people optimize their payoff.

ギクッ！！

大学生らに奨学金を貸与している日本学生支援機構は、増加する滞納に歯止めをかけるため、金融機関でつくる個人信用情報機関に年内に加盟し、滞納者情報を 通報する制度を導入する方針を固めたことが１０日、分かった。通報された対象者は銀行ローンやクレジットカードの利用が難しくなる可能性がある。

支援機構が加盟を予定している信用情報機関は銀行など約１４００の金融機関が会員。平成２２年度の新規貸与者から「長期滞納した場合は通報する」という条件で奨学金を貸与する。所在不明の滞納者情報の提供を受けることも検討している。

支援機構を所管する文部科学省などによると、奨学金は大学などを卒業後、一定期間内に返還しなければならないが、滞納は年々増加している。

１９年度の要回収額は３１７５億円だったが回収率は８割を切り、６６０億円が未返済。貸し倒れの可能性がある３カ月以上の延滞債権額も２２５３億円に上っている。【産経新聞、2008,10,10】

この対応は当然である。しかしながら、これは卒業生の経済事情を反映しているのか、それともただ（奨学金を）返したくない、という奨学生が増えている証左なのか。

いったん奨学生が奨学金を借りれば、支援機構（債権者）よりも奨学生（債務者）の交渉力が高まり、結果的にいわゆる「踏み倒し」という事態が招聘しうる。これをホールドアップ（hold-up）と呼んでいるが、これは債権者である支援機構だけの問題ではなく、これからの債務者である奨学候補生にとっても深刻な影響を及ぼす。

仮に奨学金を返したくないという奨学生が増えると、奨学金支給事業の見直し機運が高まり、本当に奨学金を借りたいと考える奨学生候補者にとって、奨学金の受給が難しくなりうる。これは、いわゆるモラルハザード（moral hazard）の問題である。

これは丁度「健康保険」の問題と同じで、健康に気を遣わない人が増えると、健康に気を遣う人にとって健康保険料が割高になり、結果的に健康に気を遣う人が保険に加入しなくなり、保険会社は健康に気を遣わない人ばかりをカバーする羽目になるだけではなく（追記：この問題を特に「アドヴァース・セレクション（adverse selection）」といい、悪いものばかりが選りすぐられるところからそう呼ばれている）、健康に気を遣う人がカバーされなくなり、健康に気を遣う人が割を食う。

今回の措置は、ホールドアップ対策のひとつとして歓迎できるのではないか。

大手百貨店の統合

大手百貨店の高島屋と阪急阪神百貨店を傘下に持つ「エイチ・ツー・オー（Ｈ２Ｏ）リテイリング」は１０日、資本・業務提携することを明らかにした。当面、１０％程度の株式を持ち合うほか、商品開発や物流面で連携、コスト削減を進める。合計売上高は１兆５０００億円規模に達し、三越伊勢丹ホールディングスに次ぐ業界２位の百貨店グループになる。将来的な経営統合についても視野に入れているとみられる。

１０日午後にも両社が共同で記者会見して発表する。

百貨店業界は三越伊勢丹のほか、大丸と松坂屋が統合して「Ｊ・フロントリテイリング」が発足するなど、再編が加速している。両社は、首都圏や近畿圏に年商１０００億円規模の大型店を持つ高島屋とブランドイメージの高いＨ２Ｏの統合により、顧客層を大幅に拡大するとともに、抜本的な効率化を進め、消費低迷下での競争力向上を図ることにした。

　高島屋は首都圏、中京圏、関西圏など全国の大都市圏にバランスよく店舗を配置している。一方で、Ｈ２０は関西圏で強固な経営基盤を持っている。少子高齢化と人口減少の中、百貨店は大都市圏でしか生き残れないとの見方もあり、３大都市圏での販売力強化で生き残りを目指すことにしたとみられる。【毎日新聞、２００８年１０月１０日】

（１）高島屋　
１９１９年設立。東京、大阪などで旗艦店を展開する百貨店の老舗。０８年２月期の売上高は１兆４２７億円、経常利益は４２０億円。

（２）エイチ・ツー・オーリテイリング　
阪急百貨店と阪神百貨店が経営統合して０７年１０月に発足した共同持ち株会社。今月１日から傘下に「阪急阪神百貨店」を設立したが、店舗は阪神、阪急百貨店の名称で運営。０８年３月期の売上高は４７１６億円、経常利益は１８０億円。

大手百貨店の動向が見逃せない。

Rice Crop(2)

At Yamagata(山形県山辺町の大蕨地区)
From Yahoo JAPAN!

Lap Dancers and Their Tip Earnings

This is nearly the season for the Nobel Prize.

Here's the economics prize:
Geoffrey Miller, Joshua Tybur and Brent Jordan of the University of New Mexico, USA, for discovering that a professional lap dancer's ovulatory cycle affects her tip earnings.

リレーションシップ・バンキング

最近よく耳にするリレーションシップ・バンキングについての文献。少し込み入っているもののよくまとまっている文献だと考えている。

German Reunification

Today is the day when Germany was reunified.

Rice Crop

When I see the above picture, I feel that the fall has come here. It shows that our Emperor is reaping rice. This is one of annual court events.　(The photo : Jijitsushin)

America's Most Stressful Cities

This kind of statistics is one that I like. When I read the following article, I felt that we Japanese and Americans had the same problem to live in a big city.

Here's the excerpt:

Maurna Desmond, Forbes.com, Sep 16th, 2008

Chicago's rising unemployment rate, expensive gas, high population density and relatively poor air quality create a perfect storm of stress, according to measures we used to calculate the country's anxiety hot spots.

New Yorkers can relate, though. Locals in the country's most densely packed metro have to fiercely compete for subway seats, cabs, apartments, elite preschools, dinner reservations and bartenders' attention. This constant grind compounds the area's other anxiety factors including costly housing (the country's third least affordable) and allergy-inducing pollution. Throw in Wall Street's woes, and you've got a Molotov cocktail of concern.

Detroit, Mich., Los Angeles, Calif., and San Francisco, Calif., ranked third, fourth and fifth, respectively.

Behind The Numbers

To find them and others, we examined the country's 40 largest U.S. Census-defined metropolitan statistical areas and looked at quality of life indicators. We tracked housing affordability based on the August 2008 National Association of Home Builders/Wells Fargo housing opportunity index and unemployment rates for the same month based on data provided by the Bureau of Labor and Statistics. We also worked cost of living into our ranking by factoring in the price for one gallon of gas on Sept. 4 per a daily survey conducted by insurance company AAA.

But consumers aren’t fretting about these pressures in a vacuum. A city’s environment can play a big role in how its citizens are able to cope with stress.

In order to capture the way a city’s environmental factors can impact nerves we looked at 2007 air quality using air monitoring data that states submitted to the U.S. Environmental Protection Agency (EPA) from 2003-05. Then we pulled the number of sunny days per year using 2007 data furnished by the National Environmental Satellite, Data and Information service. Finally, we looked at population density based on 2007 data furnished by the U.S. Census Bureau to find the cities most squeezed for livable space.

What's Causing Constant Worry

Though "stress" was first used by endocrinologist Hans Selye in 1936 to mean "the non-specific response of the body to any demand for change," it has since become a catch-all for anything that causes one angst. Antidotes for its toxic effects have spawn several cottage industries from high-end spas and snake-oil supplements to the brands of self-help gurus such as Australia’s own ‘Rhythm of Life’ pontificate, Matthew Kelly.

But Selye’s observation about the role of change in stimulating stress was spot on. Residents of the cities on our list acutely experience the shifts wrought by global and local economies in turmoil. In fact, it's “bedrock security issues” like housing affordability, job security and cost of living drive anxiety, says Edward Hallowell, M.D., a former professor at Harvard Medical School and founder of the Hallowell Center for Cognitive and Emotional Health in Sudbury, Mass. Nowhere is that felt more than in the Windy City. Chicago has a 7.3% unemployment rate, the eighth most polluted air in our ranking and in city where everybody drives to get around, a gallon of gas costs a nickel under $4 dollars.

Individuals living in Los Angeles experience a 7.5% unemployment rate and the second least affordable homes relative to income in the country. The metro features the worst air quality in the country; indeed, Angelinos often need to stay in doors when the smog gets really bad. Throw in the country's seventh highest gas prices and this car-dependent city has a lot stress about.

It's not much better further North. Drivers in the San Francisco metro pay the more per gallon of gas than anywhere else in the country. Tack in 359.8 housing units per square mile, the ninth highest population density of the 40 major metro areas we looked at, and you’ve got a recipe for anxiety.

Rust-belt cities Detroit and Cleveland have high rates of unemployment due to the decline of the American auto industry, and they have nasty pollution problems as a result of it. On the upside, the flight from these cities has meant a fall in home prices, which is good for prospective, if only a few, home buyers.

At No. 6, San Diego was the most unexpected city on our list. How could a laid-back beach town be stressful? Well, it's got the fifth least affordable housing of the 40 major metro areas surveyed, a 6.4% unemployment rate and car-happy residents paying $3.81 for a gallon of gas. But, they don’t let those numbers get them down. Pleasant weather and beautiful beaches contribute to a serotonin-soaked attitude that appears to take the edge off of tough times.

Sane Stress

Hallowell says that some stress, abundant in these human bee hives, can be a good thing. It can boost productivity (think Michael Phelps on a starting block), which leads to self-satisfaction and peace of mind.

When you are feeling anxious, Hallowell recommends reaching out to friends and family because “maintaining these strong relationships is key in our very crazy-busy disconnected society.”

The Best Cities For Singles(USA)

Another interesting article:

Atlanta tops our annual ranking of America's best places to live on your own.

For the first time ever, Atlanta tops our list of the best cities for singles. The capital of Georgia and home of Coca-Cola earns the top slot because of its hopping nightlife, relatively high number of singles and sizzling job growth.

To those who know "Hotlanta," the ranking should come as no surprise. In the eight years that we have been ranking America's largest urban areas in terms of their friendliness to the nation's 74 million single adults, only once did Atlanta place outside the top 10.

To determine which U.S. cities are most comfortable for soloists, we ranked the 40 largest urbanized areas in mainland America in seven different categories: number of singles, nightlife, culture, cost of living alone, job growth, online dating activity and coolness. To determine a city's cool factor, we partnered with Harris Interactive, who conducted a poll, asking, "Among the following U.S. Cities, which one do you think is the coolest?"

Last year's winner, San Francisco, came in second this year, scoring particularly high in coolness (third out of 40) and culture (fourth). Overall, the coolest city was New York, while Midwestern fly-over cities like Indianapolis (40th) and Columbus, Ohio, (35th) did poorly on the Harris poll.

Overall, New York ranked as only the eighth-best place for would-be lovers. In addition to its top score in coolness, the Big Apple was ranked as the city with the best nightlife and the third-best cultural resources. But young singles need to eat as well as party, and New York scored dead last in the cost-of-living category. The city also placed a mediocre 29th in terms of job growth. Economic factors have always kept New York out of the top spot on our list.

The nation's second-largest city, Los Angeles, came in 16th this year, a precipitous drop from its third-place finish in 2007. Blame the cost of living in sun-drenched SoCal and a lackadaisical online dating culture.

Jacksonville, Fla., ranked dead last this year, scoring poorly in all categories except online dating, where it ranked seventh. Providence, R.I., last year's loneliest city for singletons, fared better, tying with Memphis, Tenn., and Cincinnati, Ohio, for 33rd place. Religious Salt Lake City, a perennial at the bottom of our list, comes in 39th this year. Mormonism's hometown is penalized for its lack of available singles (39th), dismal nightlife (39th) and its square image (coolness: 38th).

Some surprises: Orlando, Fla., which had never placed in the top 10 before, came in ninth place. Minneapolis-St. Paul hadn't made the top 10 since 2002 but came in third this year. The Twin Cities scored well in culture (ninth) and online dating (sixth) and ranked surprisingly high in coolness (eighth). Perhaps some respondents thought the Harris poll was asking about the weather.

Our rankings are meant to be a guide for young, ambitious singles who, in an age of techno-mobility, can live and work wherever they want. Our methodology focuses on career-minded, "never-marrieds" under the age of 35. Older singles, divorcees, widows and widowers might find slightly different criteria more relevant to them.

Most Secure U.S. Places

This is the interesting article that I saw today in YAHOO!

Here's the excerpt:

Health, prosperity, safety and security are all desirable aspects when it comes to seeking a place to live, work or raise a family. According to our fourth annual Most Secure U.S. Places to Live rankings from Farmers Insurance Group of Companies®, the city that best meets those qualifications is Corvallis, Ore.

The rankings took into consideration crime statistics, extreme weather, risk of natural disasters, environmental hazards, terrorism threats, air quality, life expectancy and job loss numbers in 379 U.S. municipalities. The study divided the communities into three groups: large metropolitan areas, mid-size cities and small towns.

Corvallis is the fourth different city in four years to earn top honors in the Farmers study. The leading communities in the three previous studies were: the Provo-Orem, Utah, area in 2004; the Richland-Kennewick-Pasco area of southeast Washington in 2005; and St. George, Utah, in 2006.

Top-ranked Corvallis, whose population of 81,105 places it among the small towns, is nestled in the heart of Oregon's Willamette Valley and is home to Oregon State University. In 2006, Corvallis was honored as only the third U.S. city at that time to meet the EPA's challenge to become a Green Power Community. Corvallis' low crime rate and negligible threats of extreme weather, environmental hazards and terrorist threats led to its No. 1 ranking in the 2007 Farmers study.

The San Jose-Sunnyvale-Santa Clara area in northern California's Silicon Valley tops all large metropolitan areas (population of 500,000 or greater), scoring particularly well in the extreme weather and terrorist threats categories. The area is considered one of the leading research and development centers of the world; in 2005, San Jose and Sunnyvale ranked first and second in the number of utility patents filed in the U.S.

Olympia, Wash., is the most secure mid-size city (population between 150,000 and 500,000). The state capital has become a hub for artists and musicians. The extremely clean air and the long life expectancy of Olympia's residents aided its lofty ranking.

Large Metro Areas (500,000 or more residents)

1. San Jose-Sunnyvale-Santa Clara, Calif.

2. Boise City-Nampa, Idaho

3. Bethesda-Gaithersburg-Frederick, Md.

4. San Francisco-San Mateo-Redwood City, Calif.

5. Oxnard-Thousand Oaks-¬Ventura, Calif.

6. Bridgeport-Stamford-Norwalk, Conn.

7. Nassau County-Suffolk County, N.Y.

8. New Haven-Milford, Conn.

9. Lake County, Ill./Kenosha County, Wis.

10. Honolulu, Hawaii

11. Portland-South Portland-Biddeford, Maine

12. Cambridge-Newton-Framingham, Mass.

13. Edison, N.J.

14. Portland-Beaverton, Ore./Vancouver, Wash.

15. Santa Ana-Anaheim, Calif.

16. Madison, Wis.

17. Seattle-Bellevue-Everett, Wash.

18. Rochester, N.Y.

19. Syracuse, N.Y.

20. Essex County, Mass.

Mid-Size Cities (150,000 - 500,000 residents)

1. Olympia, Wash.

2. Rockingham County-Strafford County, N.H.

3. San Luis Obispo-Paso Robles, Calif.

4. Sioux Falls, S.D.

5. Bellingham, Wash.

6. Fargo, N.D.

7. Naples-Marco Island, Fla.

8. Las Cruces, N.M.

9. Lancaster, Pa.

10. Bremerton-Silverdale, Wash.

11. Binghamton, N.Y.

12. Lynchburg, Va.

13. Burlington-South Burlington, Vt.

14. Rochester, Minn.

15. Santa Barbara-Santa Maria, Calif.

16. Charlottesville, Va.

17. Santa Rosa-Petaluma, Calif.

18. Salinas, Calif.

19. St. Cloud, Minn.

20. Medford, Ore.

Small Towns (Fewer than 150,000 residents)

1. Corvallis, Ore.

2. Harrisonburg, Va.

3. Ithaca, N.Y.

4. State College, Pa.

5. Logan, Utah

6. Lewiston, Idaho

7. Bismarck, N.D.

8. St. George, Utah

9. Napa, Calif.

10. Bend, Ore.

11. Wenatchee, Wash.

12. Mount Vernon-Anacortes, Wash.

13. Ames, Iowa

14. Morgantown, W. Va.

15. Wausau, Wis.

16. Iowa City, Iowa

17. Winchester, Va.

18. Coeur d’Alene, Idaho

19. Glens Falls, N.Y.

20. Grand Forks, N.D.

American Financial Crisis (4)

From Freakonomics

FAQ

1) What has happened that is so remarkable?

This episode started when the Treasury nationalized Fannie Mae and Freddie Mac on September 8. Their combined assets are over $5 trillion. These firms help guarantee most of the mortgages in the United States. The Treasury only got authority from Congress to take this action in July, and in seeking the authority had insisted that no intervention would be needed.

The Treasury has replaced the management of both companies and will presumably oversee their operation. This decision marked an acknowledgment by the government that the mortgage market and the institutions to make it operate in the U.S. are broken.

On Monday, the largest bankruptcy filing in U.S. history was made by Lehman Brothers. Lehman had over $600 billion in assets and 25,000 employees. (The largest previous filing was WorldCom, whose assets just prior to bankruptcy were just over $100 billion.)

On Tuesday, the Federal Reserve made a bridge loan to A.I.G., the largest insurance company in the world; perhaps best known to most of the world as the shirt sponsor of Manchester United soccer club, A.I.G. has assets of over $1 trillion and over 100,000 employees worldwide. The Fed has the option to purchase up to 80 percent of the shares of A.I.G., is replacing A.I.G.’s management, and is nearly wiping out A.I.G.’s existing shareholders. A.I.G. is to be wound down by selling its assets over the next two years. (Don’t worry, Man U will be fine.) The Fed has never asserted its authority to intervene on this scale, in this form, or in a firm so far removed from its own supervisory authority.

2) Why did these things happen?
....

American Financial Crisis (3)

No More Creampuffs

The Government Is Willing to Let Wall Street Firms Fail. That's Good.

By Kenneth Rogoff (Tue. Sep. 16, 2008, Washington Post)

This past weekend, the U.S. Treasury and the Federal Reserve finally made it abundantly clear that they won't bail out every significant financial firm in America. Certainly this came as a rude shock to many financiers. In allowing the nation's fourth-largest investment bank, Lehman Brothers, to file for bankruptcy, and by forcefully indicating that they are prepared to see even more bankruptcies, our financial regulators showed Wall Street that they are not such creampuffs after all.

The question now: What's next? Assuming the financial sector continues to melt down over the next couple of months, at what point, if any, should the government get back into the game? It would be a mistake to do so before a great deal more consolidation takes place. During the epic boom of the past 20 years, the financial services sector became badly bloated. At its peak, it accounted for over one-third of corporate profits in the United States, not to mention the staggering billions of dollars in bonuses that Goldman Sachs ($12.1 billion in 2007) and others paid their employees. Now, in the wake of the subprime mortgage debacle, investment banks are seeing some of their most profitable lines of business evaporate. Profits from complex mortgage products are not coming back anytime soon; nor are profits in many other areas that rely on huge borrowing.

Instead, "deleveraging" is the buzzword throughout the financial system, as firms prune their borrowing and their positions. As profits come down to more earthly levels, the U.S. financial system is going to shrink. In all likelihood, at least 15 percent of financial employees -- including at the high end -- are going to lose their jobs. In principle, this shrinkage could take place through all firms and banks trimming their operations proportionately. But that is not how a capitalist economy operates. Whether it is the auto, airline or tech industries, the strong devour the weak. That is why it was inevitable that some banks would either fail or submit to distress mergers, including even some of the largest. That is why it has been quite clear for some months that the trauma to the U.S. financial system was not over.

Letting a big investment bank go, as the Fed and Treasury did this weekend, was a calculated risk in a difficult situation. And the risks are very real. With the immense interconnectivity of the financial system, there really is no telling where the unprecedented failure of a big investment bank might lead. On the other hand, ponying up tens of billions in tax money, as the Federal Reserve did in March when another investment bank, Bear Stearns, collapsed, is no answer, either. With the housing market still weakening, with U.S. exports likely to suffer as the global economy falters and with unemployment rising, it is clear that simply bailing out Lehman Brothers would not stop the rot in the financial system.

In March, the Federal Reserve took on $29 billion in risky Bear Stearns assets. Bailing out Lehman probably would have involved at least as large a commitment. If such a maneuver could have put an end to the crisis, it might have been justified, but that is hardly the case with many other giants teetering. This is not to mention the trillions of dollars in liabilities the Treasury took on 10 days ago in bailing out the mortgage giants Fannie Mae and Freddie Mac. These alone will probably end up costing taxpayers $100 billion to $200 billion, assuming inflation-adjusted housing prices fall another 10 to 12 percent.

Will taxpayers now escape without further damage? Probably not. More likely, the stress will continue for some time, radiating out into corporate debt, hitting big automakers, many debt-strapped cities and others. At some point, the federal government will blink again, and taxpayers will probably end up paying at least another couple hundred billion dollars before this extraordinary mess ends. But by placing some of the burden on the shareholders and bondholders of the big financial institutions, financial regulators have at least forced some discipline onto the system, making bankers and investors think twice before they once again head off to the races. By allowing firms that took excessive risks to fail, regulators also reduce the political pressure to overregulate the system in the aftermath of the crisis. Let's hope they hang tough for at least a little while longer.