In the history of capitalism’s long expansionary cycles, it is finance capital that usually rules in the final stage, displacing the inventors and industrialists who launched the era, eclipsing the power of governments to manage the course of economic events. As capital owners and financial markets accumulate greater girth and a dominating influence, their search for higher returns becomes increasingly purified in purpose – detached from social concerns and abstracted from the practical realities of commerce. In this atmosphere, investors develop rising expectations of what their invested savings ought to earn and the rising prices in financial makrets gradually diverge from the underlying economic reality. Since returns on capital are rising faster than the productive output that must pay them, the process imposses greater and greater burdens on commerce and societies – debt obligations that cannot possibly be fulfilled by the future, and sooner or later, must be liquidated, written off or forgiven.

Amid the glow of personal accumulation, this divergence is difficult for individual investors to see. Instead, they plunge forward optimisitcially, embracing new and more speculative opportunities despite occasional evidence that something may be awry. A period of manic investing typically unfolds at this point, as masses of investors, large and small, rush this way and that in their search. Their enthusiasm is interrupted now and then by sudden disappointments that set off panics and collapsing financial prices, but the sheer energy of amassed wealth pushes forward, nonetheless. And finance becomes further inhunged from reality.

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Their predictions made in 2009.

Established in 1941 by a Harvard economist who had identified a number of cycles in the U.S. economy.

The foundation endeavours to:

• Discover the causes and conditions for already observed and cataloged cyclic and rhythmic behaviors.
• Classify discovered causes and conditions with the physical sciences.
• Incorporate these causes and conditions into the mainstream of modern scientific theory and knowledge.

PS They have a “free e-books” section which unfortunately is missing.
PSS Hmm, pretty much everything is broken at that website (except for this), looks like it hasn’t been updated in awhile.

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By Sandra Aamodt and Sam Wang

DECLINING house prices, rising job layoffs, skyrocketing oil costs and a major credit crunch have brought consumer confidence to its lowest point in five years. With a relatively long recession looking increasingly likely, many American families may be planning to tighten their belts.

Interestingly, restraining our consumer spending, in the short term, may cause us to actually loosen the belts around our waists. What’s the connection? The brain has a limited capacity for self-regulation, so exerting willpower in one area often leads to backsliding in others. The good news, however, is that practice increases willpower capacity, so that in the long run, buying less now may improve our ability to achieve future goals — like losing those 10 pounds we gained when we weren’t out shopping.

The brain’s store of willpower is depleted when people control their thoughts, feelings or impulses, or when they modify their behavior in pursuit of goals. Psychologist Roy Baumeister and others have found that people who successfully accomplish one task requiring self-control are less persistent on a second, seemingly unrelated task.

In one pioneering study, some people were asked to eat radishes while others received freshly baked chocolate chip cookies before trying to solve an impossible puzzle. The radish-eaters abandoned the puzzle in eight minutes on average, working less than half as long as people who got cookies or those who were excused from eating radishes. Similarly, people who were asked to circle every “e” on a page of text then showed less persistence in watching a video of an unchanging table and wall.

Other activities that deplete willpower include resisting food or drink, suppressing emotional responses, restraining aggressive or sexual impulses, taking exams and trying to impress someone. Task persistence is also reduced when people are stressed or tired from exertion or lack of sleep.

What limits willpower? Some have suggested that it is blood sugar, which brain cells use as their main energy source and cannot do without for even a few minutes. Most cognitive functions are unaffected by minor blood sugar fluctuations over the course of a day, but planning and self-control are sensitive to such small changes. Exerting self-control lowers blood sugar, which reduces the capacity for further self-control. People who drink a glass of lemonade between completing one task requiring self-control and beginning a second one perform equally well on both tasks, while people who drink sugarless diet lemonade make more errors on the second task than on the first. Foods that persistently elevate blood sugar, like those containing protein or complex carbohydrates, might enhance willpower for longer periods.

In the short term, you should spend your limited willpower budget wisely. For example, if you do not want to drink too much at a party, then on the way to the festivities, you should not deplete your willpower by window shopping for items you cannot afford. Taking an alternative route to avoid passing the store would be a better strategy.

On the other hand, if you need to study for a big exam, it might be smart to let the housecleaning slide to conserve your willpower for the more important job. Similarly, it can be counterproductive to work toward multiple goals at the same time if your willpower cannot cover all the efforts that are required. Concentrating your effort on one or at most a few goals at a time increases the odds of success.

Focusing on success is important because willpower can grow in the long term. Like a muscle, willpower seems to become stronger with use. The idea of exercising willpower is seen in military boot camp, where recruits are trained to overcome one challenge after another.

In psychological studies, even something as simple as using your non-dominant hand to brush your teeth for two weeks can increase willpower capacity. People who stick to an exercise program for two months report reducing their impulsive spending, junk food intake, alcohol use and smoking. They also study more, watch less television and do more housework. Other forms of willpower training, like money-management classes, work as well.

No one knows why willpower can grow with practice but it must reflect some biological change in the brain. Perhaps neurons in the frontal cortex, which is responsible for planning behavior, or in the anterior cingulate cortex, which is associated with cognitive control, use blood sugar more efficiently after repeated challenges. Or maybe one of the chemical messengers that neurons use to communicate with one another is produced in larger quantities after it has been used up repeatedly, thereby improving the brain’s willpower capacity.

Whatever the explanation, consistently doing any activity that requires self-control seems to increase willpower — and the ability to resist impulses and delay gratification is highly associated with success in life.

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Someone sent this to me – probably the best illustration ever to take something that can be made overly complicated and boil it down to what it really is:

US income – $2,170,000,000,000
Federal budget – $3,820,000,000,000
New debt – $1,650,000,000,000
National debt – $14,571,000,000,000
Recent budget cut – $38,500,000,000

Let’s take off 8 zeros and make this the Jones family:

Household income – $21,700
Jones’ spent last year – $38,200
Jones’ added to their credit card debt – $16,500
Total credit card debt of the Jones family – $142,710

After sitting around the kitchen table, grinding for weeks on what to cut from their spending – $385

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In 2009, almost half of all venture capital money spent in America went to four cities: New York, Palo Alto, Seattle, and Sunnyvale. So the obvious question is: Why does the Bay Area create so much economic power and not Detroit? Both have the same federal government. They work under the same laws and same rules. But San Francisco and Silicon Valley have created a culture that responds to innovation and creates business models like no other place on Earth. Cities that do this become a beacon for the most talented people in the world…

In defense of Washington, it wasn’t originally set up to be the nation’s economic engine. The U.S. government has seeded whole industries through land grant universities, defense contractors, and scientific and medical researchers to name just a few. But the government has never, will never, nor should it be expected to ignite badly needed sustainable economic booms. These economic booms originate in the souls of individuals and great cities.

Source: Gallup Management Journal

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If you’re thinking that our economic crisis was in some way the fault of homeowners who couldn’t afford their mortgages, please consider the following:

At the end of 2007, there were roughly $1.4 trillion in sub-prime mortgages in this country.

If “irresponsible sub-prime borrowers,” caused the meltdown, then $1.4 trillion would have solved the problem in its entirety, right? Because that’s all the sub-prime loans there were.

But, between the Federal Reserve, the FDIC and the Treasury over $13 trillion has been pumped into financial institutions to fix the “housing correction,” which is what Hank Paulson was still calling our economic collapse as of November of 2008.

At the end of 2008, there were $11.9 trillion worth of mortgages in this country. So, with $13 trillion, the government could have paid off every single one… and still had a little over a trillion dollars left over.

But there’s a lot more to the economic problem than that, explains Nomi Prins, my new favorite financial uber-genius and author of “It takes a Pillage.” Wall Street had been playing the leverage game… somewhat like they did in the 1920s, I suppose… but on mega-steroids. Leverage means borrowing on assets, and Wall Street banks were leveraged by 30:1, commercial banks by 10:1, not including their “off-the-balance-sheet” holdings, which could make their leverage ratio significantly higher in many cases.

So… in “Pillage,” Nomi Prins explains in terms anyone can understand that factoring in the leverage at 11:1, we’re looking at a $140 TRILLION economic problem… yes, you read that correctly… that’s trillion, with a ‘T’. Our Wall Street bankers, through the abuse of the securitization process and excessive amounts of leverage, created a potential tab of $140 TRILLION for the people of this country to pick up.

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• $$ My Current Holdings

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While other European countries endure harsh spending cuts and tax increases, Germany’s finances are so strong that politicians are considering a huge tax cut. With strong unions and stringent workplace protections, unemployment was 7% in July, compared with 9.1% in the U.S. German policymakers worry about running out of workers, not jobs.

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