Memorial Day in Oakland Cemetery

The scraggly oak trees intertwine their branches in a tall ceiling that shades the entire drive. Here, the appropriate view of the eternal isn’t blue and bright, but sheltered and close to the ground.  The rows of marble and granite dazzled by bright flowers have their own quiet redemption as the slow speed limit and a gentle wave from each passerby gives the setting grace.

This is Oakland Cemetery, Saint Paul’s municipal cemetery, founded in 1853.

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Devouring the Dreams (and Cash)

Big incentives lure a big employer into town. It’s the dream many rural regions coping with high unemployment and a “brain drain” of their best and brightest long for and have often put up big subsidies to make it happen. Sadly, however, the dream doesn’t last long and many small cities which put their futures on the line saw the big employer move on. We’ve seen this happen for decades, and usually call it “corporate welfare”.

Today is no different, except for one thing – business is moving much faster and the net time from groundbreaking to heartbreaking is only a few years. That was the experience in Dubuque Iowa and Columbia Missouri who spent a total of $84M luring IBM to expand in their towns. Six years on, a struggling IBM has let go of half of their staff in those places.

How effective are these subsidies? And why does this keep happening?

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Suspending Disbelief

Everyone has the experience at some time.  You’ve read a book or seen a movie that you absolutely loved, and you want to tell the world about your new obsession.  You might even know someone that you’d love to share this new world with.  So you start telling them about the intricate details of the plot and characters and after rambling on and on … and then you see their eyes slowly glaze over. What went wrong?  Often it’s that you had suspended your disbelief in something that sounds too absurd to tell easily.  It makes sense to you, but the retelling leaves you sounding a bit crazy.

This doesn’t just happen with fiction.  A  disconnected world requires a lot of suspension of disbelief.

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Betting on Low Interest

When will the Fed raise interest rates? If you ask investors, the answer is “Not this year”. Bets have been placed on bond futures which imply that the Fed Funds Rate will be no higher than a quarter of a percent at the end of the year – hardly any rise at all.

But if you ask the Fed, it’s going to come soon. Why doesn’t anyone believe them?

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Productivity Panic!

Last week the Bureau of Labor Statistics (BLS) announced labor productivity declined for the second straight quarter. It’s a worrisome figure for many reasons, the most important being that this is usually the signal of an upcoming recession. Headlines in the financial world were quick to fret that this is the first back-to-back decline since 2006, a strong signal in advance of the big recession in 2007.

Should we be worried? This is never a good sign, but the situation is very different. There are very good reasons why there is a decline in productivity and they all have the potential for signaling a recession ahead. But it also may be the last gasp of the bizarro economy where good news comes to us in the form of bad news, at least at first.

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Winds of Change Blow Both Ways

The election in the UK produced a surprising result – one not even remotely called by all the polls taken right up to polling day, 7 May. How could they miss it? It’s always possible that the polls were simply wrong, but it’s more likely that something changed deep in the guts of the electorate as they went in to vote. Is Britain really that conservative? No, people probably don’t like PM Cameron any more now than they did before. Can we learn something from this?

Perhaps we can. But we might be able to learn more from the provincial election in Alberta that produced a surprising win for the very left-wing New Democratic Party (NDP) in a conservative stronghold. This huge shift came on like an Alberta Clipper off the North Pole, but it was caught by pollsters just before the election. And both of these recent election may apply because, as we noted before, the developed world is suffering from the same chill everywhere – buffeted by change, voters are demanding stability and strong new leadership.

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Online Ad Bust

“Half the money I spend on advertising is wasted, the trouble is I don’t know which half.”
– John Wanamaker, Philadelphia retail giant, circa 1893

During the internet boom that defined the previous bull market, before 2000, one thing was clear. Advertising as we knew it was dead. Any maven or guru of the ‘net pointed to the ability to target audiences with pinpoint precision and collect real-time data on how effective the spending was. It was a feature that broadcast, direct mail, and print media would never be able to achieve.

Fifteen years on, we can see just how this has worked out. The short answer is that advertising is just as wasteful and untargeted as ever, even online. Worse, advertisers have not substantially moved away from broadcast ads, with teevee still the largest category of spending.

Is internet advertising a flop, or was the hype just ahead of the promise?

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