How to Survive a Recession: 12 Steps You Should Take Now to Protect Your Money

By Diane Harris – “The global economy is facing increasingly serious headwinds,” said OECD chief economist Laurence Boone. “An urgent response is required.”

It shouldn’t exactly come as a surprise then that the latest Gallup poll found about half of Americans now believe that a recession in the next year is likely—a more pessimistic reading than the survey found 12 years ago, just two months prior to the start of the Great Recession.

Even more affluent households are often cash-strapped. Among those making $85,000 or more—the top 25 percent of the income range—the typical family only has enough in liquid savings to replace 40 days of income.

If a recession hits, what would your biggest financial problem be? Taking steps to address that pain point now will make your life a lot easier if trouble comes.

“Your emotions are your best clue,” says Stephanie McCullough. “What stresses you out the most—credit card debt, the feeling that you’re spending beyond your means? Whatever the little nagging voice in your head is telling you is what you should tackle first.”

These moves address the most common contenders for many families.

  1. Pay down the plastic
  2. Earmark spending cuts
  3. Get a check-up

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Updates from Chicago Booth

The evolution of economics and Homo Economicus
By Richard H. Thaler – Early in my teaching career I managed to inadvertently get most of the students in my microeconomics class mad at me, and for once, it had nothing to do with anything I said in class. The problem was caused by a midterm exam.

I had composed an exam that was designed to distinguish among three broad groups of students: the stars who really mastered the material, the middle group who grasped the basic concepts, and the bottom group who just didn’t get it. To successfully accomplish this task, the exam had to have some questions that only the top students would get right, which meant that the exam was hard.

The exam succeeded in my goal—there was a wide dispersion of scores—but when the students got their results they were in an uproar. Their principal complaint was that the average score was only 72 points out of a possible 100.

What was odd about this reaction was that the average numerical score on the exam had absolutely no effect on the distribution of grades. The norm at the school where I was teaching was to use a grading curve in which the average grade was a B or B+, and only a tiny number of students received grades below a C. I had anticipated the possibility that a low average numerical score might cause some confusion on this front, so I had reported how the numerical scores would be translated into actual grades in the class.

Anything over 80 would get an A or A-, scores above 65 would get some kind of B, and only scores below 50 were in danger of getting a grade below C. The resulting distribution of grades was not different from normal, but this announcement had no apparent effect on the students’ mood. They still hated my exam, and they were none too happy with me either. As a young professor worried about keeping my job, I was determined to do something about this, but I did not want to make my exams any easier. What to do?

Finally, an idea occurred to me. On the next exam, I made the total number of points available 137 instead of 100. This exam turned out to be slightly harder than the first, with students getting only 70 percent of the answers right, but the average numerical score was a cheery 96 points. The students were delighted! No one’s actual grade was affected by this change, but everyone was happy. From that point on, whenever I was teaching this course, I always gave exams a point total of 137, a number I chose for two reasons.

First, it produced an average score well into the 90s, with some students even getting scores above 100, generating a reaction approaching ecstasy. more>

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Updates from Boeing

Boeing Chairman, President and CEO Dennis Muilenburg Announces Changes to Sharpen Company Focus on Product and Services Safety
New Product and Services Safety organization unifies company approach to safety. Additional actions elevate Engineering function, strengthen Boeing’s culture and will advance safety across the aerospace ecosystem.
Boeing – “Safety is at the core of who we are at Boeing, and the recent 737 MAX accidents will always weigh heavily on us. They have reminded us again of the importance of our work and have only intensified our commitment to continuously improve the safety of our products and services,” said Muilenburg.

“My team and I embrace our board’s recommendations and are taking immediate steps to implement them across the company in partnership with our people, while continuing and expanding our ongoing efforts to strengthen safety across Boeing and the broader aerospace industry. We thank our board and the committee members for their thorough work and ongoing support. Boeing is committed to always being at the forefront, proactively leading and advocating for continuous improvements in global aerospace safety.”

In addition to the previously announced permanent Aerospace Safety Committee of the Boeing Board of Directors, Muilenburg shared that Boeing is standing up a new Product and Services Safety organization that will further strengthen the company’s safety-first focus. This organization will unify safety-related responsibilities currently managed by teams across several Boeing business and operating units. more>

Updates from Adobe

The Courage to Follow a Dream
By Jenny Carless – Changing professions takes courage, hard work, and a little bit of luck, as Lisbon-based illustrator Tiago Galo knows very well: a few years ago, he took a leap of faith and turned a hobby into a successful career.

Working as an architect but still harboring a life-long dream to be an illustrator or comic book artist, Galo entered a major comic book competition in Portugal—and won.

“I took that as a sign that I should embrace my dream once and for all,” he says.

The decision seems to have been a good one, if measured by the clients he has attracted in the past four years—including Google, National Geographic Travel, GQ, Time Out, and the Financial Times. Galo also sells his work as a premium contributor on Adobe Stock.

Galo is self-taught, because when he was starting out as a young artist, few options for studying illustration existed in Portugal.

“The only possibility was to attend some workshops here and there and start your own path,” he says. “That worked well for me, as I was pursuing my own style and techniques.”

Galo’s style is simple and colorful—featuring geometric shapes and exaggerated proportions. more>

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The Unwinnable Trade War

By Weijian Shan – There are at least two reasons why Chinese exports to the United States have not fallen as much as the Trump administration hoped they would. One is that there are no good substitutes for many of the products the United States imports from China, such as iPhones and consumer drones, so U.S. buyers are forced to absorb the tariffs in the form of higher prices.

The other reason is that despite recent headlines, much of the manufacturing of U.S.-bound goods isn’t leaving China anytime soon, since many companies depend on supply chains that exist only there. (In 2012, Apple attempted to move manufacturing of its high-end Mac Pro computer from China to Texas, but the difficulty of sourcing the tiny screws that hold it together prevented the relocation.)

Some export-oriented manufacturing is leaving China, but not for the United States. According to a May survey conducted by the American Chamber of Commerce in Shanghai, fewer than six percent of U.S. businesses in China plan to return home. Sixty percent of U.S. companies said they would stay in China.

The damage to the economy on the import side is even more pronounced for the United States than it is for China. Economists at the Federal Reserve Bank of New York and elsewhere found that in 2018, the tariffs did not compel Chinese exporters to reduce their prices; instead, the full cost of the tariffs hit American consumers. As tariffs raise the prices of goods imported from China, U.S. consumers will opt to buy substitutes (when available) from other countries, which may be more expensive than the original Chinese imports but are cheaper than those same goods after the tariffs. The price difference between the pre-tariff Chinese imports and these third-country substitutes constitutes what economists call a “dead-weight loss” to the economy.

Beijing’s nimble calculations are well illustrated by the example of lobsters. China imposed a 25 percent tariff on U.S. lobsters in July 2018, precipitating a 70 percent drop in U.S. lobster exports. At the same time, Beijing cut tariffs on Canadian lobsters by three percent, and as a result, Canadian lobster exports to China doubled. Chinese consumers now pay less for lobsters imported from essentially the same waters.

The uncomfortable truth for Trump is that U.S. trade deficits don’t spring from the practices of U.S. trading partners; they come from the United States’ own spending habits.

The United States has run a persistent trade deficit since 1975, both overall and with most of its trading partners. Over the past 20 years, U.S. domestic expenditures have always exceeded GDP, resulting in negative net exports, or a trade deficit.

The shortfall has shifted over time but has remained between three and six percent of GDP. Trump wants to boost U.S. exports to trim the deficit, but trade wars inevitably invite retaliation that leads to significant reductions in exports.

Even a total Chinese capitulation in the trade war wouldn’t make a dent in the overall U.S. trade deficit. more>

Introducing Cybersecurity Insights: Director’s Corner

By Matthew Scholl – The Director’s Corner will highlight how NIST’s cybersecurity, privacy, and information security-related projects are making a difference in the field and leading the charge to make positive changes.

I believe the greatest accomplishment for the division, and what I am most proud of, is how we work globally — and the way we work in an open, transparent, and inclusive process. This is especially true in the development and standardization of cryptography. This process, coupled with NISTs technical excellence in crypto, results in NIST encryption used by commercial IT products across the world. This underlying encryption enables billions of dollars of electronic commerce to function­; such as swiping credit cards at the grocery store — to online purchases — to major financial exchanges.

As we look at 2020 and beyond, NIST will update our encryption standards and ensure that encryption will continue to enable the economy and protect our livelihood. The biggest thing coming in the future (that you will hear more and more about), is in the area of quantum resistant cryptography. NIST is building open, transparent, and inclusive encryption methods with our global partners for new sets of encryption that are needed when quantum computing becomes a reality.

Quantum computing is a completely new method and architecture of conducting computational activity (or way to generate information). When a quantum computer finally is strong enough, some of our current encryption will become vulnerable. Therefore, NIST is proactively working to create new encryption standards. more>

Updates from Ciena

Cable plays nice: Service convergence on the CIN
By Fernando Villarruel – At the start of 2019, the cable industry announced its vision for delivering 10 gigabit networks, ramping up from 1 Gbps service offerings to symmetrical speeds of 10 Gbps and beyond while enhancing the customer experience and achieving operational efficiencies. Industry bodies, cable MSOs, and vendors are working together to address industry-wide challenges associated with moving to next generation networks. Moving forward, even more interaction may be necessary if we want to maximize the potential of these new networks – particularly around convergence.

Recently, I’ve had the opportunity to meet with many MSOs in North America and other regions to talk about one of my favorite topics, the Converged Interconnect Network, otherwise known as CIN.

Some MSOs plan multi-service convergence in the CIN from the beginning, while others reserve the idea for future contemplation. For those considering service convergence “out of the gate,” it must be capable of providing (or delivering) different revenue services such as residential, mobile backhaul (small cell and macro-cell) and enterprise connections – and this is independent of delivery systems such as R-PHY, R-MACPHY, Flexible MAC Architecture (FMA), and even PON. In many cases, MSOs outside of the United States also have telco services (e.g. mobile networks – LTE, 4G, moving to 5G) and are interested in creating an environment where the last tentacles of the network – the access network – can fully participate in the convergence of services to maximize operational efficiencies. more>

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Updates from ITU

ITU Green Standards Week adopts Call to Action to accelerate transition to Smart Sustainable Cities
ITU News – ITU Green Standards Week has brought together governments, city leaders, businesses and citizens to share their experiences in driving the behavioral change required to achieve smart city objectives.

These participants have adopted a ‘Call to Action’ urging city stakeholders to accelerate the transition to Smart Sustainable Cities.

These participants have adopted a ‘Call to Action’ urging city stakeholders to accelerate the transition to Smart Sustainable Cities.

The Call to Action highlights that our cities – as powerful hubs of innovation, and a central force behind humanity’s impact on our environment – must make a defining contribution to the achievement of the United Nations Sustainable Development Goals (SDGs). more>

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Obama’s Idealists

American Power in Theory and Practice
By Peter Beinart – In different ways, each book traces a narrative arc that begins with a vow, made in young adulthood, to use the United States’ might for good and ends with a sober realization about how hard fulfilling that vow actually is. For Rice, the arc begins with her failure, as a young NSC aide, to rouse the Clinton administration to halt the 1994 Rwandan genocide, after which she pledged “to go down fighting, if ever I saw another instance where I believed U.S. military intervention could . . . make a critical difference in saving large numbers of human lives.” For Power, it starts during her time as a war correspondent in Bosnia, where the besieged residents of Sarajevo asked her to “tell Clinton” about the horrors she had seen. For Rhodes, it begins with 9/11 and the Iraq war, which left him yearning to harness the idealism he felt the Bush administration had squandered.

In each book, three moments during the Obama administration play outsize roles in chastening this youthful idealism: the decision to bomb Libya in 2011, the decision not to bomb Syria in 2013, and the 2016 election.

The problem isn’t that Rice, Power, and Rhodes shade the truth to make themselves look good. To the contrary, all three are, at various points, admirably frank about their mistakes. The problem is that by refusing to reveal what happened behind closed doors, they fail to help readers understand what lessons to draw from the Libya debacle. Is the lesson that presidents who lack the stomach for nation building shouldn’t topple regimes? Is it that the United States needs greater diplomatic capacity? Is it that brutal dictatorships are better than failed states? By not explaining Libya’s lessons, liberal internationalists like Rice, Power, and Rhodes make it easier for nativist bigots like Trump to proffer a lesson of their own: that Washington should care less about people overseas, especially if they are not Christian or white.

In each, the saga of disillusionment reaches its nadir in 2016, with Russia’s electoral interference and Trump’s election. After witnessing the limits of the United States’ ability to defend democracy and human rights abroad, Rice, Power, and Rhodes realize to their horror the limits of its ability to defend those principles at home. When Obama asks Mitch McConnell, the Republican Senate majority leader, to issue a joint statement condemning Russian interference in the election, McConnell refuses, a move that Rhodes calls “staggeringly partisan and unpatriotic.”

Although none of the authors puts it this way, it’s possible to read their books not only as tales of tempered idealism but also as chronicles of America’s declining exceptionalism. In retrospect, the belief in democracy promotion and humanitarian intervention that Rice, Power, and Rhodes embraced early in their careers rested on a faith that democracy was stable at home. With that faith now eroded—and the United States battling its own rising tribalism, authoritarianism, and brutality—it is hard to imagine a book like Power’sA Problem From Hell,” a critique of the country’s repeated failure to stop genocide, becoming the sensation it did in 2002.

As Americans have grown more preoccupied with, and more pessimistic about, their own country’s moral condition, they have turned inward. As a young woman, Power helped expose concentration camps in Bosnia. Today’s young activists are exposing them in Texas. As of September, foreign policy has barely figured in the Democratic presidential debates. more>

The EU’s rule-of-law test

By Tytti Tuppurainen – In his book The Origins of Political Order, the political scientist Francis Fukuyama argued that the rule of law is the most difficult pillar for a successful modern society to construct.

Organizing government administration and staging elections to a legislative body is relatively easy, and only a small number of failed states have no functioning public administration or legislature. But in far more countries, the absence of the rule of law is the primary source of instability and political decay.

For the EU, the rule of law is of central importance, because the EU is not simply a joint economic undertaking (although, as the economist Hernando de Soto has emphasized, the rule of law is also a prerequisite for a developed market economy). The EU’s raison d’être, like that of its predecessors, is to guarantee peace between European countries and to safeguard human rights within its member states. And the bloc is founded on common values enshrined in its treaties.

The EU’s commitment to the rule of law, set out in Article 2 of the Treaty on European Union, is straightforward. It stands for legality, legal certainty, the prohibition of arbitrary exercise of authority, the separation of powers, and an effective and independent judiciary. Respect for the rule of law affects different layers of society in very practical ways: at the level of the Union, the nation-state, companies, and citizens.

Within the EU, the rule of law is not a political statement or unattainable moral ideal, but a principle that public officials and courts are responsible for upholding. more>