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Whenever there is an economic slowdown, there is always a cry for "stimulus spending" by government to help counteract the downturn's effect.  The idea is people who would otherwise be unemployed should be put to work for local, state or federal governments.  Not only will the people working on the project have money to spend, but all sorts of 'infrastructure' will be built.  Like most of what

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The San Onofre Nuclear Generator Station (SONGS) was a nuclear power plant located between San Diego and Los Angeles in San Clemente, California.  The plant actually sits on Camp Pendleton, and anyone driving between Los Angeles and San Diego on I-5 would drive right by the plant.  See Figure 1.  Unit 1 operated from 1968-1992.  Unit 2 and Unit 3 were placed into operation in 1

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This week's article describes how computers have been misused by economists and Wall Street.  In the three examples briefly discussed below, a completely misplaced confidence in the sagacity of computational sophistication to manage enormous amounts of leverage and peer into the economic future was the root cause behind three enormous economic debacles; all of which produced enormous and long-r

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The most important part of troubleshooting complex systems is understanding a single root cause will manifest itself in many ways.  This rule doesn't only apply to engineered systems like jet aircraft or nuclear power plants; it also applies to human organizations and even entire societies.  In fact, just such a root cause explains not only today's enormous and unprecedented concentration of po

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When reviewing all the things the Federal Reserve has gotten wrong over the years it is easy to focus on interest rates alone.  After all, it is by manipulating interest rates that the Fed attempts to direct the US economy to some desired outcome.  However, in many cases the Fed raising rates is little match for the animal spirits the Fed has already let loose.  This mechanism of rising rates f

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