Category: Economics

A California fashion designer launched his fall/winter 2010 line today. I guess the economy really does influence design:

American designer Rick Owens continued to plumb the depths of the dark side Friday, with a fall-winter 2010-2011 menswear collection of gender-bending, space age-y designs ready for the apocalypse. …

Overall, the collection, with its asymmetrical hemlines and great floppy flaps of fabric, looked like the kind of wardrobe the father and son in Cormac McCarthy’s post-apocalyptic fable “The Road” would have fashioned out of found detritus.

If I were living in California, I suppose the apocalypse would be an apt design inspiration. Might as well be ahead of the pack, right?

It’s interesting to compare and contrast things in DC to here back home. I think you can argue that the Restaurant business is a good bellwether of how people are feeling about the economy. Back here in the Philadelphia area, since the economy went into the crapper, wait lists have shortened or disappeared altogether, often even on weekends. You can still find waits at some of the econo-chains, like Outback, but most everywhere else it’s just a matter of walking in. Especially in higher end restaurants.

So you can imagine my surprise when we hit the dinner scene in DC and we’re back to one hour waits. Even past 8:00, we had to wait 45 minutes at one place in Arlington. If people are feeling uncertain about the economy and their jobs in DC, it’s certainly not showing up in people eating more at home like it is here. But why should people in DC worry about their jobs? Their major industry is growing like gangbusters, and they can always suck more money away from parts of the country that really are struggling and uncertain. No wonder people are fed up.

The CEO of Whole Foods is apparently operating under the delusion that his company’s business model involved making people healthy.  In that vein, he says his company sells “a bunch of junk.” and is vowing to help his customers eat healthier.

He went on to say that Whole Foods was going to launch a healthy eating education initiative to encourage customers and employees to reduce obesity.

But Mackey told the Wall Street Journal: “Basically, we used to think it was enough just to sell healthy food, but we know it is not enough. We sell all kinds of candy. We sell a bunch of junk.”

Mackey, dude.  I don’t know if anyone’s told you this, but at the end of the day, you sell food.  That’s your business.  If you’re encouraging people to eat less of it, unless you can turn up the margins, something that’s going to be tough in this economy, you’re screwing your shareholders.  Whole Foods has a simple business model: selling overpriced food to people who care about Mother Gaia, and who think an overworked Filipino adolescent driving a pair of oxen around a rice patty are all the farming technology the world needs.

Whole Foods provides somewhere to go to buy food so they can feel good about themselves.   That’s what you’re selling, Mack.  You’re selling a dream to hippies, and at a much higher profit margin than your typical supermarket.  If those folks come to Whole Foods, and feel good about themselves when they buy a box of organic, fair trade ho-hos, that’s a win win situation.  You win, because you just sold an overpriced box of ho-hos, and the consumer wins, because they can feel good knowing they are buying the best product subsistence farming has to offer.  It’s what capitalism is all about!

Whole Foods needs to ditch the true believer, and hire someone who’s more interested in making money for their shareholders.  I have no CEO experience, but I understand what Whole Foods sells, so I offer my services.  I would never shop at a Whole Foods store myself, but I know plenty of folks who do, and they have money to burn.  I’ll keep selling them the dream, and promise to cry for Mother Gaia all the way to the bank, and print your dividend checks on 100% recycled, organic bleach free paper.  Wouldn’t want any of our shareholders feeling bad about themselves, now would I?

Megan McArdle shows us why correlation is not necessarily causation.  I’ve dealt with this even in my professional life, because there’s a lot of lessons to be drawn from this even in the drug discovery field.

This is a pretty good pictoral reprentation of the economic downturn as far as auto manufacturers are concerned.  Lots of cars piling up that no one wants to buy, and the automakers have been churning them out because of the expense involved in shutting down and restarting production lines.

This is an excellent article from a few weeks ago that describes one of the proximate causes of the current financial crisis.

For five years, Li’s formula, known as a Gaussian copula function, looked like an unambiguously positive breakthrough, a piece of financial technology that allowed hugely complex risks to be modeled with more ease and accuracy than ever before. With his brilliant spark of mathematical legerdemain, Li made it possible for traders to sell vast quantities of new securities, expanding financial markets to unimaginable levels.

Read the whole thing.  I am by no means a mathematician, but I work for a company that does mathematical modeling of a complex system (ligands binding to proteins), so I have some experience with the benefits and deficiencies of such systems, as well as some experience with what happens when the uninitiated try to understand these models.  Let’s just say there’s a strong tendency to celebrate the benefits and fail to appreciate the limitations.

I think there’s a lot of this when it comes to global warming, too, which is another complex system that people have attempted to model.  It’s always a good idea that when anyone claims to have a mathematical model of a complex system that is simply revolutionary, without any significant limitation of caveat, drag him into the nearest bathroom and beat him senseless, before he destroys civilization as we know it.  Entire industries have been ruined by such people, who are seldom the people who actually developed the models, and understand the limitations.  Finance is not the only industry, just the latest.