Kim Jong Il's Death; Korean Won; Structural Breaks

A picture paints a thousand words, but let me add a few other captions. Kim Jong Il died on Saturday, 17th December, 2011. On Monday, 19th December, 2011, this was the exchange rate between Singapore/S.Korea Won. I assume all other currencies to the Korean Won had the same effects. A structural break I presume, with worries about succession plans and the geo-political stability of the region.

NBA trades and agglomeration economics

The NBA lockdown finally was over, player trades sagas are coming in place, with some having seemingly season defying effects. looking at past seasons, From the Big 3 at Boston (KG, Ray, Pierce) to the Big Flukes in Miami (LeBron, Wayne, Bosh), even Shaq moving to Lakers, and subsequently the Heat, had great influences to the dynamics of the league. Early this pre-season, many are already shocked by Stern's decision to stop Chris Paul's trade to the Lakers. Indeed, restricting free labour movement within the 21st century capitalist state of the world seems just so obscene.

In thinking what motivates a player to move to another franchise, salary naturally makes the list. The "love for the franchise/city" and the franchises' "championship-winning material" definitely comes into play as well. Other influences include "their fit to franchise" and "wanting longer play time" perks. Other issues include the player's age, health, home town, and even utility functions, subjected to certain restrictive assumptions.

Let me take the pages off another Paul, Krugman that is. In his core-periphery model (first published in 1979), Krugman postulates that international trade (and in a somewhat linked fashion, industrial clustering) can occur from a combination of increasing returns to scale and 'love-for'variety' utilities. Here, I evoke a simple concept. One superstar's move to a franchise will up the franchise's "champion-material' ranking, thereby making that franchise more appealing to other like-minded championship hungry superstars. Jordan needed Pippen, Rodman, Harper and Longley. Kobe had Shaq and Gaso, Shaq had Waye, and Boston have a trio. Production towards the NBA championship (a huge winner-takes all production scenario) has a somewhat increasing returns to scale nature too!

Back to the present day NBA. Free market is sustainable because failures fails and winners remain. The Seattle Supersonics "died" (they became very OK-C), Hornets bankrupted (now owned by the NBA, which I think is why Stern had the power to do what he did), while Sacramento almost imploded at the end of last season. The idea of prevent talent clustering to make the league more competitive sounds reasonable, but it also seems to go against the ideas of agglomeration economics. I hope Stern ain't going to throw more intervention shocks this season again. Free market!!!!

Profit and Revenue

Humans have wants, but many fail to remember the costs involved in achieving them. It is worse when people envy the achievement of others without thinking about the pains they had gone through to obtain their achievements. I likened this to the idea of revenue and profits. Constantly, I see people wanting to maximise a certain form of revenue, such as obtaining that degree, the coveted job, that striking girl, without fully considering the costs involved. Totally, everyone is ignoring the idea of profit margins. Yes, we can maximise revenues, but people seem to not realise that this can be done at such a high costs that it will render the 'project' useless! 


In short, I believe to achieve a more peaceful life, people should not overly focus on their wants (revenue), but on the costs involved in achieving them (profits). In Singapore, we constantly strive to be the best in everything. My take is that some times, its not too bad to come in second, aka winner's curse!

Lifestyles: Benny Lewis, Fluent in 3 months

I recently came across this very interesting website. A guy called Benny Lewis has been travelling non-stop for 9 years and trying to learn different languages from the places that he has travelled to. Interested people can visit http://www.fluentin3months.com/about/

Lewis questions the overly materialistic world (which I agree), and is proud of how his currently nomadic lifestyle. To a certain extent, I am envious of him. I agree that consumerism rarely leads to happier lives, and that attachments to gadgets only bring as much sorrow as they can bring happiness.

Before one concludes that this dude is not into money, do understand that travelling overseas costs money. He did mentioned that he has done several odd jobs in his travels. Interestingly, his efforts to promote his services (skype language consultancy) and products (language hack guides) are but just an Internet business that allows him to travel around the world. In fact, such is a very effective promotion gimmick: to put himself constantly in new environments to prove how his language hacks works! It does help that his blogs are interesting as well. Greater readership, greater possibility of having more business.

What touches me about him is his approach to his life, not settling for a secured job, but rather, looking to explore life to its fullest. To do so, he just needed to choose the correct 'career'. Kudos, Benny Lewis!

Economic Hitman

The book, "Confessions of an Economic Hitmen", got me really intrigued by the use of econometrics, and I have never looked back. This is a cute video version a sinister approach to economic imperialism.

The Language of Econs

Japanese and Korean have strong honorific forms, while English and French have female and male forms. C++ allows us to give computers instructions for certain tasks. Mathematics is just another language with certain structures particular to itself. Economists have chosen the language of mathematics in their pursuit of scientific discovery. They claim the logical structure of mathematics have allowed economics to develop into its current scientific stage. Take for example John Nash and game theory. Nash wasn't even an economist, but game theory is currently so embedded into modern microeconomics that one wonder who the hell understands them other than (well-trained) mathematicians.

I believe certain economic situations require the use of non-mathematics languages, because we are dealing with humans, not particles. Certain issues cannot be described by mathematics without losing its meaning, just like how the poetic styles of ancient Chinese cannot be translate to other languages without losing its literature beauty. Being semi-bilingual, it is obvious to me that certain languages are better suited for certain situations. Or maybe, I am just in-adequate in either language.

Despite my deep passion for economics, I have spent my few months wondering the true meaning of economics. Should I head back to the ivory realms of academic economics, or jump to other fields that work on economic issues, but through the lens of non-mathematicians.

Citing Paul Volcker

"If there is any profession that needs help, its the economic profession. Economists have got too caught up in esoteric mathematical models, and so have financial engineers. What there economists and financial engineers have forgotten is that an economy is not a physical system. Economic life does not follow normal distribution curves, where certain things are only supposed to happen once in 100 years. Economic life is ruled by human beings, who can be very awkward. We need to remember that economics is a social science, if it's a science at all."

Paul Volcker, when he was at a 90-minute dialogue at the Lee Kuan Yew School of Public Policy at the National University of Singapore.