Cafe in Chile

very interesting and attractive...I love the cafe though I don't drink coffee

Working hour flexibility

Many suggestions has been thrown out how to tracke the global warming problem: tax on gasoline, biofuel, tax through insurance on driving, etc.

I have another suggestion. I think a large portion of driving are devoted to work commute. In many cases, people do not drive as much as during the weekend. Unlike work commute, people has more flexibility in their driving decision in the weekend. If we can reduce our working day from 5 days a week to 4 days a week. Think about a typical hours of work in a typical weekday: 8-5pm from Monday to Friday. If we can squeeze it into 4 days from 7am to 6pm, the total number of hours will increase from 45 hours per week to 44 hours. We can cut lunch time for the new scheme from 1 hour to 45 minutes to make the 1 hour up.

I think many workers will like to have this new arrangement. If government worries that people may drive even more in the "long" weekend, the government can make it Wednesday break instead of Monday or Friday.

I think indeed some international institution has this practice, probably for a different resaon. IMF for example, employees there can take every other Friday off. We do not see there is any significant problem for the fund's operation. Of course we can also be more flexible in this new scheme, instead of everyone off on Wednesday, some take Wed, some take Thur, and so on. The company can continue to funcation 5 days a week.

This is probably be good for the earth and for the employees. Is that a win win situation?

Yen

Shall we buy yen? Yes

The reason, in additional to the Japanese domestic economy, is that the govt/central bank is also debating the delink between US and the rest of the world/ asia I particular. Evidence is it is possible. If we have a delink, weaken or moderating US economy will discourage money flow into the US markets. Those extra money has to go somewhere. From currency prospective, Yen is the only outlier in the developed world. From geographical prospective, the delink is beneficial to Japan as its trade with Asia is highly connected. Both encourage the capital inflow to Japan. From the rest of the world prospective, reserve accumulation is slowing down. The major buyers in the past are either diversifiying or slowing down its rate of accumulation. I don't know how the global inflation and domestic US economy will play out in the US interest rate dynamic, but the long end of the US treasury will eventually feel the pressure from external.

The only problem is the Japanese policy makers are not 100% certain that delink will be the case. At this point, they are conservative because if delink has not yet be confirmed, earlier rate hike will be harmful to the economy. It will not materialize until the day it comes. Given the current oil price is highly uncertain, It looks like the bank wants to confirm the delink hypothesis before acting (which of course the mirror image of domestic economy pick-up).

Yes. It is expensive today. It will become cheap once the delink hypothesis is confirmed.

Housing market

A while ago I mentioned that I am not as bullish as the market regarding the housing stabilization. I argued that in most market, price and quantity are both needed to adjust when there is a drop in demand. In some sense, the short run supply of house is relatively inelastic. Price adjustment will follow the sales adjustment.

Here is a bit of thought on the economy as a whole. So far, the weak housing market did not (yet) spilled over into other components of the economy. Private consumption remains high. One explanation is that housing market is quite localized. The collapse in sales in Florida will not cause much private consumption impact in the Bay Area. But when the government measures private consumption for the country, it looks at both Florida and the Bay Area. The impact of housing market collapse will not be one to one to the overall private consumption.

Now, the problem seems different. Thanks to our financial engineering technology, the securitization of mortgage loan makes every part of the country exposes to the housing market. Investors everywhere in the country are now able to expose to the risk of the local housing market through the exposure of stock market. Our private consumption is fine as long as stock markets hold up.

I would guess this is the reason why Greenspan mentioned that spill over is possible until recently.

Remittance and housing

From 2003 Jan to 2007 Jan, year over year growth between US housing starts and Mexico remittance has some unsurprising relationship:

Mexico Remittance: Only 7 out of the past 49 months are below or at 10%yoy growth. 5 out of those 7 happened since August 2006.

US housing starts: 20 out of the past 49 moths are below or at 0% yoy growth. 11 out of those 20 happened since 2006.

In terms of overlapping, 6 out of the 7months below 10% yoy remittance growth are associated with below 0% yoy growth of housing starts. The remaining 1 months was on Jan 2004 when Housing starts was also low at 3.13%yoy (Jan 2003 housing starts was 9.1%yoy, Jan 2005 housing starts was 11.8%.)

So, what will be the remittance going forward, what what will be the impact on the Mexican families live in Mexico?