The Economics of Girls' Showers

I ran.

Therefore I stank.

But before I could return to the Captain's Cave I got a call from a female friend of mine who invited me over for dinner.

And seeing I'm an economist and I outsource all my cooking, there is nothing better than homemade food prepared by anybody else but me, and so I gladly accepted her invitation.

However, as I mentioned before, I stank.

So upon arriving at her place I asked her if I could take a shower and fortunately, I had brought an extra change of clothes along with some deodorant.

Now, as a guy there are only two things I want when I take a shower. Two SIMPLE, BASIC GOD-GIVEN THINGS!

1. Soap.

and

2. Shampoo.

However, it seems a Herculean, Indiana Jones-esque crusade to find these two items for I was not in my humble shower, but that of a girl's.

Go into any guys' shower stall and you will find only two things. JUST TWO SIMPLE THINGS!

Soap and shampoo.

In mine there is the knock off brand of Head and Shoulders (which I save a tidy $2 per bottle on over the brand name) and a half melted bar of Irish Spring.

That's it! That's all I need. That's all ANYBODY needs. Maybe a wash cloth. I'll even go so far as to permit a loova. But as for hygienic products all any human, the richest of the rich, and the poorest of the poor, all they need is

Soap and shampoo.

But go into a girl's shower and there are a billion body care lotion thingies that are anything BUT
Soap and shampoo.

You then spend the next three hours, racing the water heater before it runs out of hot water to find those two rare and coveted items;

SOAP AND SHAMPOO.

But oohhh, no! You can't find the soap or shampoo.

No, your thwarted by knock offs. Posers. Things that aren't quite

SOAP AND SHAMPOO.

So I started cataloging all the different things in this girl's shower stall that were NOT

SOAP AND SHAMPOO.

Item 1 - Moisturizing Face Wash (will not the water moisturize your face????)
Item 2 - Body Lotion (I don't want any!)
Item 3 - Body Wash (WHAT WAS THE LOTION FOR THEN???)
Item 4 - Dumb Blond Infusion (Is it wise to infuse things with running water?)
Item 5 - Lavender Bead Infused Body Wash (Why do I want beads? And what was wrong with the regular body wash???)
Item 6 - Cocoa Butter Skin Moisturizer (see item 1!)
Item 7 - "Enfuz" Treatment for Dry to Normal Hair (why are they always trying to infuse things in the shower?!?!!?)
Item 8 - Citrus Skin Treatment (What was wrong with the cocoa butter???)

Now I could go on for there were literally, LITERALLY a dozen more products. And that was the stuff just in the shower stall! You go to the bathroom counter and there is countless other products that I could never use.

I inevitably did find the shampoo (Strawberry Enhanced Shampoo no less) but could never find the soap! But my question to all of you ladies out there, especially those studying economics, COULD YOU PLEASE TELL ME WTF IS GOING ON WITH ALL THIS LOTIONY STUFF IN YOUR SHOWERS??? WHAT IS THE ECONOMIC RATIONALE FOR HAVING ALL THIS STUFF?????

I patiently await your answer! You could probably win the Nobel prize in economics if you could explain this phenomenon!

Based on GDP per Kilometer, Property May Not Be as Overvalued as You Think

Property, it is assumed, always goes up in the long run. This is based on the assumption that there is a limited amount of land, yet the population will continue to grow, therefore housing prices will forever trend upward.

However, if that was the case then countries like Ethiopia, Somalia, Sudan, etc., that have significant populations would have high property values. Alas they don't since they are constantly plagued by war, famine, plague, etc. However, they are also plagued by another disease; the lack of economic growth.

While I'm sure at some level population does correlate with higher property prices, a better determinant of property prices is the amount of wealth created from that land. The more wealth that can be produced per square mile of a particular piece of land the higher its underlying rents would be and therefore its value. Thus I crafted a new ratio;

GDP per Square Kilometer (I had to use kilometer because the CIA World Fact Book has the countries' area in kilometers)

Real GDP per sq. km. in the US has gone from just under $200,000 almost $1.3 million today. As technologies have advanced, managerial efficiencies invented and employed, we here in the US are able to squeeze out almost 7 times the amount of wealth from our land per square kilometer than we were just 50 years ago (quite identical to farming yields on a per acre basis).

It is this increase in wealth that we can extract from each square mile of our land that has truly increased our property values. However, combine the two, high levels of the production of wealth with high populations, and you get property that is most highly valued; cities.

It is no coincidence that New York, London, Hong Kong, Singapore, Tokyo etc. etc. have the highest property values in the world because not only do they have some of the largest populations, but they are also centers of commerce where disproportionate amounts of wealth are created.

However, GDP per square kilometer also provides us with a tool by which to gauge property values. In theory as more and more wealth is squeezed from a particular piece of land, the value of that land should increase proportionately. Therefore the ratio between GDP per square kilometer and the value of that land should remain constant. Introduce a new measure;

Median Housing Prices divided by GDP per Sq. Kilometer.

In theory the average price of a home in the US should increase in sync with GDP per Sq. KM resulting in a constant ratio. However, that has not been the case;

Average (mean) housing prices were originally 28% of the wealth produced on a per square kilometer basis in the US. This has trended downward to 19% in 2001, only to recover to 21% in 2006.

In other words, the value of our land is not keeping up with the wealth that is produced by it. And although property prices did seem to recover in the latest housing bubble, they look set to trend back down towards the 19% mark (coincidentally implying a 10% over-valuation in the housing market).

Therefore there must be a macro-economic variable driving this ratio down. Without additional research and left to guess, I surmise it is the transition from manufacturing to services that is disconnecting the market value of the land from the wealth that is produced from it. Services require less land than manufacturing. Goldman Sachs has produced ever increasing wealth from it's meager .9 square kilometers of land it owns in New York by offering ever more profitable services, while GM has barely produced squat with its arguably scores of square kilometers of land that its factories and facilities sit on.

Alas I'd be curious to see if my theory would hold for China which is experiencing a manufacturing boom.

Labor Lost to Strikes

Interesting chart. Didn't know Iceland was trying to become the next Detroit.

You Go to the Penalty Box. You Feel Shame

"Long term unemployment" is defined as when you've been unemployed for a year or longer. And while people may cite different variables for it, I surmise that if the most advanced student of econometrics at the U of Chicago were to do a thorough analysis of it, it would boil down to two things;

1. How generous/stingy a country's unemployment benefits are.
2. How lazy/hard working its people and culture are.

And so The Economist has come out with the most recent long term unemployment figures.


Sadly it does not include South Korea and Mexico where the shame of being unemployed is enough to make people lie about it and the unemployment benefits are nil (and it showed on the last chart where less than 2% of both countries' unemployed were long term).

Now I understand the occasional person that has a spat of bad luck. I can even understand entire swathes of laborers unemployed for a year or more if their industry is rendered obsolete or is going through a dramatic change, but to be in Germany or Italy where over half your unemployed people have been so for a year or more is disgraceful.

Alas, maybe the European Union doesn't need labor reforms to get the economy going as much as going into the penalty box and feeling a little noble South Korean shame.

Executive Pay as a Multiple of the Average Worker

They like to blame Bush, but it was highest during the Clinton years.

Don't Forget, the French Gave Us the Statue of Liberty

Much as I ridicule the French (deservedly so), there is the occasional one or two Frenchmen that fought in the resistance, joined the French Foreign Legion or displayed some semblance of independent thought and manliness that would make you say, "you know, I would trust to have this Frenchman in my platoon if I were in Vietnam. Dien Bien Phu and all that aside, I'd still trust them."

And this guy is one such person.

Only problem is I don't speak French. But on the birth of my nation, that would not exist without the support of the French (an accursed historical fact I wish could be purged from the history books), I think we owe it to our French brothers who didn't capitulate to Vichy and were of the caliber that fought for America's freedom (or at least hated the Brits enough to do so) a little hat tip on this 4th of July.

Not that this means there will be end to the French jokes and mockery, just so you know! They shall forever be cheese-eating-surrender-monkeys.

You Think We Have a Housing Bubble? Check Out the Brits!

Though, it is an island after all. I'd be curious if Ireland and Australia are experiencing something similar.

How Video Games Explain All Religions

And so all religions are basically explained here.

The Real Slim Shady

Please stand up

So my question is do Mexicans hate this guy like most Americans hate rich people here or do they hold him up as a national champion and something to emulate?

China's Stock Markets May Not Be Overvalued

As you know when I make outlandish stock recommendations they tend to be disproportionately in China. And the reason is simple;

China produces wealth.

Come up with as many reasons and rhymes as you want for what a stock should go up, but it ultimately boils down to wealth (in the form of profit) that will drive prices up. Not how to make new B2B platforms work. Or how a search engine is going to revolutionize mapping with effectively what is only a toy. Or that you can flip it and sell it for more later.

The production of wealth ultimately drives up asset prices.

Now an investment banking colleague of mine and I were discussing it and he suggested that China was in the middle of a bubble. That millions of Chinese were borrowing to invest in the stock market and that stock market had increased in price at an unsustainable level. But allow me to share one dandy chart suggesting China may not be as overvalued as you think;



China's market capitalization as a percent of GDP is a mere 25% while Britain and the US are over 150%. It's a testament to just how much wealth is being produced in China. Additionally this does not consider the fact that China is certain to grow at rates triple that of Western economies which makes it seem even more undervalued. Add to this the fact their middle class is growing and these people will want to invest in the stock market as well, this new infusion of money will also provide upward support on prices.

So go ahead and invest in American companies, there are some good ones out there. Go ahead and invest in Apple because of the i-Phone. Just look on the back of the i-Phone and see where it was made.

Women, Children and Education

The Economist (which all aspiring and junior deputy economists should be reading) came out with an amazing article on the effects of education on divorce, women and children.

Allow me to share just two charts from the article. The first one showing divorce rates versus education.

The most obvious relationship here is that the more a woman is educated the less likely she is to be divorced (also the younger the woman, the less likely as well).

The second chart shows that the more education women have the less likely their children are going to be raised by a single parent.

Now the article is amazing and important in that it shows the importance of education. Not just for earnings sake, but for healthy relationships' sakes and the sake of the children. it also shows smart women know that we men are cool dudes and not worth getting divorced from for we provide a heaven that is known as eternal bliss.

Alas, I would like to see the same figures for men.

How the Minneapolis Public Schools Piss Away Money

Friend of mine sent this to me.

I don't want to hear from the Minneapolis public schools or any of these leftist "we-need-more-money-for-education" cheerleaders telling me they need more money.

COSMETOLOGIST????? OJIBWE?????

WHY ARE WE PAYING HARD EARNED TAX DOLLARS TO TEACH COSMETOLOGY AND A DEAD LANGUAGE????

I can understand cosmetology in that it teaches a trade, but jeez, talk about low expectations! What, just because they go to the inner city schools they'll never become doctors or engineers? So let's set them up to become salonists???

And Ojibwe???? I'm sure it's interesting, but how is teaching a dead language going to help a student find a job???

The motto for the Minneapolis Public Schools is;

"Minneapolis Public Schools; Expect Great Things."

It aught to read;

"Minneapolis Public Schools; Setting Your Kids Up for Failure"

Corporate America Might Just Save the Baby Boomers

They pioneered rallying against "the man" and may have made "Corporate America" a four-letter word, but the Baby Boomers may yet come to appreciate Corporate America just yet in that it may just save their asses when it comes to retirement.

During the Dotcom Mania days and the successive crash, I was somewhat concerned that with 401k's, IRA's and the bevy of other retirement programs out there that these programs would incentive people (namely the Baby Boomer generation) to flood the stock market with retirement dollars, artificially driving up prices only to crash when the Baby Boomers retire and start pulling their money from the stock market. I noted this as the S&P 500's P/E ratio has never been below it's historical average since 1928 of 15 ever since the Baby Boomers entered their prime earning years in the late 80's. The S&P 500 P/E ratio didn't even drop below its average after the stock market crash suggesting there was a lot of excess cash floating around.


However, what amazes me is that even with this excess cash in the market AND the recent bull market, I would have sworn when I updated my charts that the S&P 500 P/E ratio would have skyrocketed again as America went back to mindlessly flooding the stock market with their retirement dollars. But no such thing has happened. Actually, the S&P 500's P/E ratio suggests the markets are accurately valued, borderline sane with the P/E ratio hovering around 16, just a smidge over the historical average.

With a bull market driving prices sky high, mathematically the only culprit that could be keeping the P/E ratio down is profits, and sure enough that's what it is.

Corporate profits in America have reached an all time high as a percent of GDP of just over 10%. This not only provides merit to the recent bull market, giving it some underlying value, but also suggests that a "Baby Boomer Crash" may not ensue as the Baby Boomers start to retire and switch their investments from equities to bonds. Corporate America, evil and vile as it may be, might just be able to keep the profits up making the stock market a viable and wise long term investment and making sure millions have the money in their retirement accounts.

Of course, I'd be curious to see what would happen to corporate profits when we enter a recession triggered by a housing bubble. But that certain isn't a possibility now is it?

Taxi Cab Economics

I found this interesting about Thailand's taxis. If you're looking for a lighter "fare" read. (Ha! get it??? "Fare?" I'm so witty!)

Loser!

Hee hee.

Socialists always lose in the end.

Simply because they do not live in the real world.

Only in a socialist economy could the world's 4th largest oil producer have to ration oil.

Yes, Still On Vacation

HI All,

Got a couple e-mails and I'm out in the wilderness so this is the first time in about 4 days I've had e-mail access, but anyway, yes, I'm still on vacation. A well-deserved one I might add.

But as a teaser for what is to come next, the first CHARITABLE post on Cappy Cap will be made upon my return. Amazing what you'll run into out in the middle of nowhere.

I Predict Unemployment Will Go Up to 4.9%

My economic spidey senses were tingling. And although not based in research, data and statistics, those spidey senses have rarely been wrong. They were triggered when I noticed a good third of my friends have either been laid off or quit their jobs. Anecdotal, I admit. Could be completely wrong? I admit. That being said, I think we're in for an unpleasant surprise here pretty soon. I predict unemployment is going to jump. I'd say to 4.9-5% or so.

But that is just my economic spidey senses.

The Other Captain Capitalism

So they have wifi at my hotel and I've been checking out the "other" Captain Capitalism.

This is hilarious (it's a cartoon so it's not like you have to "read" or anything lame like that)

Kate and her readers will love it.

Shiller Should Be Award the Nobel Prize

Couldn't resist, but I stopped in at the local library (which actually has internet access!) and saw these charts sent to me by Dav e.

This is the expected decrease in prices for major cities by the Case/Shiller model (though I respectfully disagree and think prices should drop more);


This is historical price changes in some sample cities (the link above has them all)

The Captain Goes on Vacation

Adios alles! (I'm getting multi-cultural here)

Off for another exciting episode of fossil hunting and hiking. And mayhaps the occasional red-headed fair maiden economist that frequently dot my path through life.

Will be back on Friday-ish.