Bear Flag Republic Radio Weblog

Economy: A Financial Pearl Harbor???. From The Connection's archives:  Robert Rubin on his new book (In an Uncertain World) and the economic well-being of the US.  Worth the time spent to listen to it.

With the deficit near $500 b this year, there is a risk of a financial melt-down in the long term (ie. due to a lack of job growth, historically high short term interest rates, etc. and exacerbated by baby boomer retirements).  However, the real problem is uncertainty in the short term. 

Risk can be projected and compensated for (if you do get burned by risk, it's your fault).  Uncertainty can't be quantified or analyzed.  It can only guarded against by not placing yourself in a position where it can't topple you easily.  We are in a position where uncertainty can put us into a crunch situation in very short order.

For example, uncertainty is an event like 9/11 and the subsequent invasion of Iraq.  This sequence of events were unanticipatable, in any reasonable way, but they have had a major impact on our financial status.  Some other uncertainties that we have on our plate include a series of major terrorist attacks on US soil that negatively impact regional economies and confidence, a failure/quagmire in Iraq that drags on for years at an escalating cost and a global loss of confidence, and full war with North Korea.  Any of these events could cause the budget deficit to surge to unsustainable levels over an extended period, cause the US to lose its safe harbor status, and turn the rest of the world against us (not willing to help us when we are in crisis). 

This is exactly how we could convert (through our lack of preparedness) the risk of long-term financial crisis into a short term crisis.  Given this, why isn't fiscal responsibility a National Security issue???  If our economy collapses due to external uncertainties becoming real events, we would be hard pressed to defend ourselves.  We wouldn't be able to afford it. [John Robb's Weblog]

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Cringely whacks offshoring.  No solutions listed though. [John Robb's Weblog]
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What is the scope of the offshoring problem?

Here an article in the McKinsey Quarterly (via Forbes):  By McKinsey estimates, in 2002 it was worth $32 billion to $35 billion--just 1% of the $3 trillion worth of business functions that could be performed remotely. Because of the significant benefits already being realized through offshoring, the market is projected to grow by 30% to 40% percent annually over the next five years. This prospect may cause consternation over job losses in the United States but it will make offshoring an industry with well over $100 billion in annual revenue by 2008. 

What is $100 b of offshored services worth in terms of jobs?  First, an offshored service costs ~50% of the service produced in the US (on average).  Since this is basically a pure salary play (infrastructure is minimal), these estimates mean that 2 m ($100k) information workers will be offshored by 2008.  Also, given these jobs usually produce upwards of ~4 additional jobs per position (community impact), this is a net loss of 10 m jobs by 2008. [John Robb's Weblog]

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High tech degrees no guarantee of a job: outsourcing dims job prospects. Outsourcing of jobs has gutted new job prospects for recent tech degree college dropouts. Keep that in mind when nearly every Democratic politician running for President says the solution to outsourcing is that we need more students studying engineering. They also like to say that we must merely move further up the "food chain" to higher value jobs. When jobs went from agriculture to manufacturing, that was considered moving up. When manufacturing left, new workers moved up to field like engineering. Now, workers with Masters degrees in engineering are toward they must "move up". Its a little bit disconcerting as to what - specifically - is meant today by a "higher value" job. But that is what all the politicians want you to do. When I have time, I hope to write a short essay on outsourcing and the economic theory behind it that says its good for everyone. In a macro sense, it is, but for the U.S. I fear it may be bad news. When I have a chance, I'll explain that in more detail. [Edward Mitchell: Common Sense Technology]
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Files 'overloaded' Mars probe. Hundreds of data files accumulating on the computer belonging to Mars rover Spirit may have crippled it. [BBC News | Technology | UK Edition] Reading between the lines, it sort of sounds like someone forgot to handle an "out of memory" error ... will be interesting to see if the full story is ever revealed. [Edward Mitchell: Common Sense Technology]
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News the TV stations won't report: When their own crews frequently electrocute themselves by raising their Electronic News Gathering (ENG) truck antenna masts directly in to power lines. Or forgetting their 12 foot vehicle clearance when the mast is down, and driving the mast straight into bridges and structures. Or worse, driving their truck while the mast is still 35 to 55 feet up in the air! Also turns out that most of the small TV news trucks are well over their vehicles gross weight rating, which greatly increases vehicle braking distances. The company that makes the majority of the TV masts replaces about five every month - after they are damaged, usually by crashing the top into something. For fun, search the Internet for ENG MAST ACCIDENT ACCIDENTS. The stories are all over the web - but I've never seen one of these on TV! [Edward Mitchell: Common Sense Technology]
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Opportunity rolls onto Martian surface. Move one day ahead of schedule, the Mars Exploration Rover Opportunity successfully rolled off its... [spacetoday.net]
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