Omnivore's Dilemma - Introduction Notes

Introduction - National Eating Disorder

“Many people today seem perfectly content eating at the end of an industrial food chain, without a thought in the world; this book is probably not for them.”

In American culture, inherited cultural knowledge about eating has been replaced by confusion & anxiety.  This important activity now requires remarkable amount of expert help.  Lipophobia in 1970’s has morphed into Carbophobia in 2000’s, causing bread & pasta, a staple of dining tables, to be replaced with imperfect substitutes.  This was caused by media storm of diet books, studies, and magazine articles (including the formerly discredited Dr. Atkins).  Such a violent change in a culture’s eating habits, unseen in other countries in Europe & Asia, is the sign of a national eating disorder - other signs include dietary goals in the shape of a pyramid set by government legislation, endless stream of diet books (every January), confusion of dietary supplements for meals, obsession with fast food, and gross obesity.  Americans are dismayed at the fitness of other countries, despite what appears to be lavish consumption.  Others are amazed that Americans are so confused about what to eat.

Omnivore’s dilemma was first mentioned by Rousseau and Brillat-Savarin, addressing the boon and burden of being able to eat with greater freedom (and risk).  Some anthropologists believe our brains evolved in order to better address omnivore’s dilemma.  In addition to our senses, culture memory serves important function in distinction between good & bad foods - stores accumulated wisdom of countless human experiences.  Culture acts to avoid dilemma at the onset of every meal.  Part of American problem stems from plethora of choices available at local markets (Note - America is unique in this aspect; most cultures only have access to locally grown fruits & vegetables).  America also suffers from heterogenous culture.  Lack of steadying culture of food leaves us susceptible to some profiteers and marketers, who view omnivore’s dilemma as an opportunity.  It is in food industry’s interests to exacerbate our anxieties regarding diet, to better assuage us with new products.

Purpose of this book is to trace the origin of meals in order to discover the most fundamental relationships between species in nature, vis a vis eaters & eaten.  It focuses on three separate food chains that sustain us:  1) industrial, 2) organic, and 3) hunter-gatherer.  

Ecology also tells us that all life in on earth is a competition for energy, specifically solar energy (Note: Living Within Limits - Garrett Hardin).  Industrial revolution of food chain has changed fundamental rules of the game.  Reliance on sun has been replaced with reliance on petrol-fuels.  This has greatly increased the among of food energy available.  Abundance seems to have deepened the Dilemma, not render it obsolete.

The end result is the discovery of the Perfect Meal, not because of its taste, but because of the labor and thought-intensive process, enjoyed in the company of other foragers.  It provides the rare opportunity to eat in full consciousness of everything involved in the food we eat - it involves paying the full karmic price of a meal.  Industrial eating removes us from the relationship we have with nature’s other inhabitants - we often disregard not only the animal’s pain, but our pleasure.

The book will also illustrate the tension between nature and human industry.  Often, our prodigiousness comes into conflict with nature’s ways, particularly when we try to maximize efficiency (vast monocultures, fossil fuels, artificial animal farms, novel diets).

“But in the end this is a book about the pleasures of eating, the kinds of pleasure that are only deepened by knowing.”

Crawford & Company CRD-A/B Arbitrage

The stock market is one of the few places where two nearly identical goods are bought and sold for vastly different prices.  Consider the example of Crawford & Company, an insurance services provider based in Atlanta, GA.

Crawford has two classes of stock, Class A (CRD.A) and Class B (CRD.B).  The two classes share identical economic interests and similar liquidity profiles.  However, the Class A shares have no voting rights, while the Class B shares have votes, and thereby should command a premium.  How much of a premium?  According to currently quoted prices, B shares are currently 43% more expensive than A shares ($4.60 vs $3.20)!!

The biggest risk for potential arbitrageurs are

1. the possibility of this price discrepancy further expanding 
2. the timeliness of the convergence.

As the below graph shows, the current B-share premium of 43% is high by historical standards.  However, the premium exploded during the financial crisis - the possibility of Risk 1 clearly rises during periods of acute financial distress.  Interestingly, the spread pre-crisis ranged from 0-20%, while post-crisis, the spread has shifted upwards to a new range of 20-40%.

Only in America...

Mammon demands sacrifice I guess... no more commentary necessary

http://www.liveleak.com/view?i=696_1300116168

Problem: High Oil Prices... Solution: Print More Money!?!?!?

Using logic that can only be described as "asinine", one of the most influential economists in the country, and a member of the Federal Reserve, has just declared that the solution to dangerously high commodity prices is to flood the market with more paper currency...

"If [the rising price of oil] plays through to the broad economy in a way that portends a recession, I would take a position we would respond with more accommodation," Lockhart said at the conference.

Very interesting Mr. Lockhart.  So you believe that in a deflationary environment, the proper response is quantitative easing... and you also believe that in a inflationary environment, the proper response is, yet more, quantitative easing... certainly, no one can accuse of you overly-complex thinking.

It is good that educational institutions no longer teach such quaint ideas as the direct positive correlation between money supply and commodity prices.  Otherwise, the Federal Reserve would be leading us down the exact opposite of the correct path.  It is good...

Maybe after they are violently removed from office by the impoverished lynching mob of lower/middle class, the surviving members of the Federal Reserve could find second careers in carpentry.

Article - Is Wealth Gap Widening Under Obamananke? (yes!)

Article is sorta fluffy, but it conveniently sums up many of the arguments against the policies we are currently engaged in...

Consumer sentiment among families with income above $75,000 jumped to 88.2 in early February, the highest since under President Bush in 2007, according to the Reuters/University of Michigan's latest survey. 

But sentiment among lower-income households dropped to 67.7 from 72.1 in January, trapped in a range it's been stuck in since just after Obama's 2009 inauguration. 

The president helped widen this gap by compromising on the Bush tax cuts with the Republicans in Congress, agreeing at the end of last year to extend them on all incomes for two years, investors said. 

Meanwhile, Fed Chairman Ben Bernanke has set upon a large quantitative easing program that has boosted the stock market by increasing liquidity, but also raised the costs of basic goods that hit the poor the very hardest.

Poverty 1 - Middle Class 0

'Better late than never' - that's what I suspect the motto of mainstream media is.  Oh well.  Here's today's soundbite...

Are you better off than your parents? 

Probably not if you're in the middle class. 

Incomes for 90% of Americans have been stuck in neutral, and it's not just because of the Great Recession. Middle-class incomes have been stagnant for at least a generation, while the wealthiest tier has surged ahead at lighting speed. 

In 1988, the income of an average American taxpayer was $33,400, adjusted for inflation. Fast forward 20 years, and not much had changed: The average income was still just $33,000 in 2008, according to IRS data. 

Meanwhile, the richest 1% of Americans -- those making $380,000 or more -- have seen their incomes grow 33% over the last 20 years, leaving average Americans in the dust. Experts point to some of the usual suspects -- like technology and globalization -- to explain the widening gap between the haves and have-nots 

And public policy of the past few decades has only encouraged the trend. 

The 1980s was a period of anti-regulation, presided over by President Reagan, who loosened rules governing banks and thrifts. 

A major game changer came during the Clinton era, when barriers between commercial and investment banks, enacted during the post-Depression era, were removed. 

In 2000, President Bush also weakened the government's oversight of complex securities, allowing financial innovations to take off, creating unprecedented amounts of wealth both for the overall economy, and for those directly involved in the financial sector. 

Tax cuts enacted during the Bush administration and extended under Obama were also a major windfall for the nation's richest. 

And as then-Federal Reserve chairman Alan Greenspan brought interest rates down to new lows during the decade, the housing market experienced explosive growth. 

"We were all drinking the Kool-aid, Greenspan was tending bar, Bernanke and the academic establishment were supplying the liquor," Deutsche Bank managing director Ajay Kapur wrote in a research report in 2009. 

But the story didn't end well. Eventually, it all came crashing down, resulting in the worst economic slump since the Great Depression. 

With the unemployment rate still excessively high and the real estate market showing few signs of rebounding, the American middle class is still reeling from the effects of the Great Recession.
Meanwhile, as corporate profits come roaring back and the stock market charges ahead, the wealthiest people continue to eclipse their middle-class counterparts. 

"I think it's a terrible dilemma, because what we're obviously heading toward is some kind of class warfare," Johnson said.

(emphasis added)

Public Utilities - Electricity, Water, Sewage... Vampire Squids?

In recently declassified testimony (why is this crap classified anyways??) given back in November 2009, Mssr. Bernanke had this response when asked about his thoughts on new financial reform...

I just want to say this as strongly as possible -- the reform will be a failure if we could not contemplate the failure of Goldman Sachs. That is, there needs to be a system by which Goldman Sachs will go bankrupt and Goldman Sachs’ creditors could lose money. If we don’t have that, then we might as well treat them as a utility, because that’s what they are.

Plebeian Inflation Report Feb 2011 - Food, Clothing, and Apartment Prices to Rise 10% to 20%

Who should we believe??  Oh yea, rent prices at Post Apartments are being raised approximately 20% for the year 2011.  But that's just one data point.  Surely, not everyone will raise their rent prices 20%... right??  If so, what will become of the summertime poolside redneck riviera festivals??

"Inflation is expected to persist below the levels that Federal Reserve policymakers have judged to be consistent... Overall inflation is still quite low and longer-term inflation expectations have remained stable" 

-Ben Bernanke 2/9/2011 

"Cotton has more than doubled in price over the past year, hitting all-time highs. The price of other synthetic fabrics has jumped roughly 50 percent as demand for alternatives and blends has risen. Clothing prices are expected to rise about 10 percent in coming months, with the biggest increases coming in the second half of the year... 

Mom-and-pop stores are most vulnerable because they have less power to negotiate better prices with suppliers than, say, Wal-Mart Stores Inc... Mary Hutchens, owner of Full of Beans, a 25-year-old children's clothing store in Chevy Chase, Md., worries that price increases could be a death blow. She said she has to discount heavily to stay in business and isn't sure she'll be able to pass along the costs."

-Associated Press 2/14/2011 

(Thanks for killing small businesses)

Edit:  I forgot to include that Kraft & General Mills (and presumably other food manufacturers) plan to raise prices... due to (drum roll) rising food prices... yay!

Detecting Asset Bubbles Before the POP

"...the Fed cannot reliably identify bubbles in asset prices"
Chairman Ben Bernanke, 2002

Some interesting commentary today from Google's CEO Eric Schmidt, which appears to reveal that there are people with 1) more clairvoyance than Mr. Bernanke or 2) more undeserved arrogance... history will tell us who is right (again, 1)

There are clear signs of a new Internet bubble in corporate valuations, Google's chief executive Eric Schmidt said in an interview with a Swiss magazine on Thursday.

Asked about the high valuations being put on companies such as social network company Facebook and game developer Zynga, Schmidt said in an interview with Bilanz: "There are clear signs of a bubble ... But valuations are what they are. People believe that these companies will achieve huge sales in the future."

The Wall Street Journal reported on Thursday that Google, Facebook and others have held low-level takeover talks with Twitter, valuing the company as high as $10 billion.

America's Myth of Social (Im)mobility

At the risk of being a jerk, this post is not for the graph-reading-challenged... (I'm too lazy to explain it)

Exhibit A - Belief of Social Mobility (America)

Exhibit B - Actual Social Mobility (America)

Price Control Part One - Commodities Market

http://finance.yahoo.com/news/Govt-moves-to-limit-apf-4112081129.html?x=0&sec=topStories&pos=3&asset=&ccode=

Unsurprisingly, as the government has flooded the market with money, the prices of many commodities (which can't be printed, but must be grown/found) are surging... naturally this surge in prices has been blamed on a faceless culprit, conveniently referred to as "funds, traders, and investors"...

As financial history tells us, these are the same parties culpable for every economic unpleasantry since the dawn of markets, though the real culprits are often the ones who pronounce such accusations through giant microphones (read: politicians)...

And, if the history of every price control ever can teach us anything, its that it never works.  We (un)eagerly anticipate the opportunity to share Price Control Part Two (aka, consumer good price control)

Inflation - Who'll ever know?

A growing number of products, from orange juice to toilet paper, are shrinking in size yet being kept at the same price, according to the latest investigation by Consumer Reports.

Happily, Americans are unlikely to notice the hidden 8% inflation (equivalent to paying the same for 59oz vs 64oz OJ), as we will be all too pleased when Angry Bird v5.0 is released.  In even better news, this apparent theft will likely be excluded from the government's CPI inflation report... which will likely continue to show that, after excluding rocketing food prices, soaring fuel prices, and corporate theft of individuals (not to mention higher education and healthcare costs), prices paid by Americans likely remained, unsurprisingly, unchanged.  Hurray!!

P.S. In real good news, corporate profits are soaring... hahahaa