Happy Friday! There are more good news articles, commentaries, and analyst reports on the Web every week than anyone could read in a month. Here are the 10 most fascinating ones I read this week.
1. Making 10 times the money as others doing the same job
Princeton economist Orley Ashenfelter wrote a cool paper (here, and more here [link opens PDF file]) comparing wages of McDonald's (NYSE: MCD ) workers across 60 different countries, adjusted for purchasing-power parity. The results were staggering. "The wage rates of workers using the same skills and doing the same jobs differ by as much as 10 to 1." If you're wondering: The highest McDonald's pay is in Denmark; the lowest, in Pakistan.
2. U.K. recession now worse than the Great Depression
The last four years in the U.S. have been nothing compared to the Great Depression. Not so in the U.K. According to the Office for National Statistics (link opens PDF file), the decline in U.K.'s GDP in the most recent recession has drawn out longer and deeper than during the Great Depression:
3. Incredible growth in America's energy output
The New York Times put together a long, incredibly detailed piece on America's underappreciated energy boom. A few amazing facts:
Production from the Bakken region alone has gone from negligible quantities to 500,000 barrels of oil a day in just a few years. Production at Eagle Ford produced just 787 barrels in 2004. Last year, its production reached 30.5 million barrels, according to state regulators, and it is still growing. Natural gas production there went from nothing to 243 billion cubic feet in just three years.
Furthermore: "In the last five years, the United States and Canada combined have become the fastest-growing sources of new oil supplies around the world, overtaking producers like Russia and Saudi Arabia."
And a forecast:
If that trend continues, the growth in oil and natural gas supplies in the next decades could turn the United States into a top energy exporter, rivaling some members of the Organization of the Petroleum Exporting Countries. Natural gas could be sold to Mexico and Canada (because exploiting oil sands is so energy-intensive, Canada might have to import natural gas to produce its oil). Refined petroleum products, and even crude oil, could find customers in Europe and Latin America. Coal could be exported to China.
People skeptical of recovery often ask, "What is going to drive the economy forward?" Energy might be the answer.
4. Don't freak out about falling profit margins
One of the lead arguments for stock bears has been that profit margins are too high and bound to fall. All else equal, that could mean lower corporate profits and a falling stock market. But in a research note to clients, UBS reminds us (link opens PDF file) that all else is not equal:
As we've noted several times recently, the improvement in the global growth backdrop has been a critical support for equities. Improving labour markets -- and income growth -- while not great for corporate profitability, do support a continued recovery in consumer spending and stronger business confidence. These are critical features for a more sustainable economic backdrop that can translate to lower risk premia and higher valuation multiples and support equity returns in the face of slower growth.
Translation: Profit margins might fall because of higher labor costs, but higher labor costs mean higher wages, which drives the economy.
5. The cleanest, most detailed rundown of Apple's performance you'll see
Hundreds of articles reported on Apple's (Nasdaq: AAPL ) blowout quarterly earnings. Few did it as effectively as the website Asymco. Check it out here, including the first table, which gives detailed growth metrics by product over the last five years.
Fun fact: As analyst Eddy Elfenbein points out, Apple's stock has grown an average of 1% a week for the last nine years.
6. Who really caused the housing bubble?
Attorney and columnist Abigail Caplovitz Field writes that "we did not have a housing 'bubble', in the usual sense of the word." How so? She writes:
Houses are not like tulips, shares of stock, dolls, or any other mass-market consumer product. They just cost too much. The only people who can buy a house simply because they want to are cash buyers. No one will argue that cash buyers drove the housing bubble of 2005 onward (or whatever year you want to peg its start.) Cash buyers don't fuel a foreclosure crisis either, though banks have been known to foreclose on cash buyers anyway.
We didn't have a housing bubble in the ordinary sense because consumers don't buy houses; banks buy houses. The housing market cannot undergo a demand-driven bubble without lender collusion and complicity.
Most won't agree with this, and I can't blame them. It's an extreme view that only tells part of the story. But it still got me thinking.
7. Who buys Japan's debt?
Economist Tyler Cowan asks, and answers, a question about Japan's debt:
Why do Japanese investors keep buying their own public sector debt, which is racing to 250% of GDP by 2015, twice the level that got Greece in trouble? Part of the explanation is what we call financial repression, where the government puts pressure on domestic institutional investors, frequently through regulations. But much of the explanation is likely deflation, which creates acceptable real return to bonds, that are not taxed. The eventual [Japan government bond] crisis must await 2015 or later, when demographics drive the country into an external balance that requires foreign borrowing, something that will not be possible at current yields.
8. So much for education
If education is the key to a strong future, you won't like these two articles from The Wall Street Journal. One notes: "Twenty countries have higher high-school graduation rates than the U.S. -- including Slovenia, Finland, Japan, the U.K. and South Korea, according to the Organization for Economic Cooperation and Development. In the U.S., about one in five ninth-graders drop out before getting a diploma."
The other explains: "But U.S. Department of Education data from the 2000s show that a whopping 65% of those who start community colleges haven't earned a degree or other credential after six years."
Fool colleague Brian Stoffel has more on education here.
9. The death of facts
Rex W. Huppke wrote a true gem in the Chicago Tribune about the death of facts, which lived from 360 B.C. until its tragic passing this year. In Facts' obituary, he explained:
Through the 19th and 20th centuries, Facts reached adulthood as the world underwent a shift toward proving things true through the principles of physics and mathematical modeling. There was respect for scientists as arbiters of the truth, and Facts itself reached the peak of its power.
But those halcyon days would not last.
People unable to understand how science works began to question Facts. And at the same time there was a rise in political partisanship and a growth in the number of media outlets that would disseminate information, rarely relying on feedback from Facts.
"There was an erosion of any kind of collective sense of what's true or how you would go about verifying any truth claims," Poovey said. "Opinion has become the new truth. And many people who already have opinions see in the 'news' an affirmation of the opinion they already had, and that confirms their opinion as fact."
10. The top 5 regrets of the dying
An Australian nurse who cares for patients in their dying days compiled a list of what patients described as their life's biggest regrets. The top five include:
- I wish I'd had the courage to live a life true to myself, not the life others expected of me.
- I wish I hadn't worked so hard.
- I wish I'd had the courage to express my feelings.
- I wish I had stayed in touch with my friends.
- I wish that I had let myself be happier.
Read more here. It's fascinating stuff.