Warren Buffett was right, trains are awesome at telling you what’s going on in the economy – BOB BRYAN JUN. 14, 2015, 12:43 PM


Warren Buffett once said that if he was stuck on a desert island and only allowed one number to know how the economy is doing, he would pick railcar traffic.

Bank of America Merrill Lynch’s Ethan Harris and Alex Lin ran the numbers and found that of six weekly indicators (railcar traffic, electricity output, steel output, lumber, chain store sales, and initial jobless claims), railcar traffic is most closely linked to changes in quarterly GDP.

Rail car traffic 06-12-15

Bank of America Merrill Lynch

Railcar traffic can account for 34% of the variance in quarterly GDP, higher than any other weekly economic measure. Jobless claims, generally the most talked about of the weekly measures, can only account for 23%. It also is significantly in sync with manufacturing output and monthly GDP changes.

Obviously, it’s not perfect.

“One of the shortcomings of the railcar data is that it captures only about 10% of shipments by weight and only about 3% by volume,” the economists noted. “By contrast, truck shipments capture more than two-thirds of both volume and value … On its own, railcar growth only explains only 12% of the monthly variation in manufacturing output growth. However, that is a lot better than the trucking data and railcars are statistically significant in all our tests.”

Similar to GDP growth, railcar traffic has confirmed the lackluster start of 2015.

“There has been softness recently, but the recent trough coincided with unusually bad weather in February and the dock strike,” wrote Lin and Harris.

Much like other recent indicators, it seems to be making a rebound with a 1% increase over last month’s average in the first week of June.


On The Line: Charlie LeDuff Discusses Inequality in America – Published on Jun 8, 2015

It wasn’t too long ago that American power and the wealth of the nation was created by cities like Baltimore, Detroit, and Newark. Now, as wealth has been concentrated among the elite, these and many American cities are in decline. Infrastructure is crumbling, the middle class is struggling, and the effects of urban poverty are becoming harder to ignore.

VICE News contributor Charlie LeDuff (https://twitter.com/charlieleduff) looks at these issues in his work for VICE News and joined On The Line to take your questions.

Read “Baltimore, Wilmington, Philly, and Newark — Inside the Forgotten Corridor” – http://bit.ly/1BIaCUR

Elon Musk’s big announcement: it’s called ‘Tesla Energy’ – MATTHEW DEBORD MAY 1, 2015, 12:16 AM

Elon Musk

REUTERS/Patrick T. Fallon Tesla Motors CEO Elon Musk reveals a Tesla Energy battery for businesses and utility companies during an event in Hawthorne, California April 30, 2015. Read more: http://www.businessinsider.com/here-comes-teslas-missing-piece-battery-announcement-2015-4#ixzz3YsvSXd5G

REUTERS/Patrick T. Fallon Tesla Motors CEO Elon Musk reveals a Tesla Energy battery for businesses and utility companies during an event in Hawthorne, California April 30, 2015.

Late Thursday night in Los Angeles, Tesla announced “Tesla Energy,” described by the company in a statement as “a suite of batteries for homes, businesses, and utilities fostering a clean energy ecosystem and helping wean the world off fossil fuels.”

The statement continued: “Tesla is not just an automotive company, it’s an energy innovation company. Tesla Energy is a critical step in this mission to enable zero emission power generation.”

Tesla CEO Elon Musk made the official announcement onstage at the company’s design studio in Hawthorne, CA, just south of LA.

“We have this handy fusion reactor in the sky, called the Sun,” he said, stressing that solar power is the best way to end the world’s addiction to fossil fuels and head off a disastrous future in which we are overwhelmed by CO2 in the atmosphere.

What’s the problem? The Sun doesn’t shine at night. So you need to store the power gathered by solar panels. But existing batteries, as Musk quipped, “suck.”

The “missing piece,” according to him, is Tesla’s suite of batteries. And they will not suck.

Article continues:


The End of Reform in China – By Youwei FROM OUR MAY/JUNE 2015 ISSUE

Authoritarian Adaptation Hits a Wall

Mad in China: a labor protest in Beijing, January 2013 (Mark Ralston / AFP / Getty Images)

Mad in China: a labor protest in Beijing, January 2013 (Mark Ralston / AFP / Getty Images)

Since the start of its post-Mao reforms in the late 1970s, the communist regime in China has repeatedly defied predictions of its impending demise. The key to its success lies in what one might call “authoritarian adaptation”—the use of policy reforms to substitute for fundamental institutional change. Under Deng Xiaoping, this meant reforming agriculture and unleashing entrepreneurship. Under Jiang Zemin, it meant officially enshrining a market economy, reforming state-owned enterprises, and joining the World Trade Organization. Under Hu Jintao and Wen Jiabao, it meant reforming social security. Many expect yet another round of sweeping reforms under Xi Jinping—but they may be disappointed.

The need for further reforms still exists, due to widespread corruption, rising inequality, slowing growth, and environmental problems. But the era of authoritarian adaptation is reaching its end, because there is not much potential for further evolution within China’s current authoritarian framework. A self-strengthening equilibrium of stagnation is being formed, which will be hard to break without some major economic, social, or international shock.


One reason for the loss of steam is that most easy reforms have already been launched. Revamping agriculture, encouraging entrepreneurship, promoting trade, tweaking social security—all these have created new benefits and beneficiaries while imposing few costs on established interests. What is left are the harder changes, such as removing state monop­olies in critical sectors of the economy, privatizing land, giving the National People’s Congress power over fiscal issues, and establishing an independent court system. Moving forward with these could begin to threaten the hold of the Chinese Communist Party on power, something that the regime is unwilling to tolerate.

Article continues:


Paul Tudor Jones II: Why we need to rethink capitalism TED2015 · 9:51 · Filmed Mar 2015

Paul Tudor Jones II loves capitalism. It’s a system that has done him very well over the last few decades. Nonetheless, the hedge fund manager and philanthropist is concerned that a laser focus on profits is, as he puts it, “threatening the very underpinnings of society.” In this thoughtful, passionate talk, he outlines his planned counter-offensive, which centers on the concept of “justness.”

China just revealed a terrifying new cyberweapon – EDITORIAL BOARD, THE WASHINGTON POST APR. 12, 2015, 4:07 PM

China Chinese Soliders Army PLA People's Liberation

REUTERS/China DailyPeople’s Liberation Army (PLA) soldiers shout as they practise with knives during a training session on snow-covered ground at a military base in Heihe, Heilongjiang province March 18, 2015.

China’s determination to censor information inside the country is exemplified by the world’s largest digital cordon, known as the Great Firewall.

People who try to gain access to Facebook in China, or search for terms considered a threat by the Communist Party, get screens saying their request or search has been “reset” or get nothing at all. All this is powered by a massive computer system.

The Great Firewall reflects the fear of China’s rulers that information could undermine their monopoly on power. It also has isolated hundreds of millions of Chinese people from the world beyond.

Although limited, there are holes in the firewall. Technology makes it possible to penetrate the cordon and reach overseas Web sites.

One nonprofit group outside of China, Greatfire.org, has attempted to publicize methods for circumvention of censorship and make some blocked Web sites accessible in China.

On March 17, the servers used by Greatfire.org were deluged with an enormous volume of Internet traffic. The cascade was a crude but effective technique known as a “dedicated denial of service” attack.

The goal is to overwhelm a server so that it breaks down. The Greatfire.orgservers, leased in the cloud in the United States, were hit with 2.6 billion requests per hour, or 2,500 times normal.

Now, a group of Internet researchers have pinpointed why: China struck back. The researchers at the Citizen Lab of the Munk School of Global Affairs at the University of Toronto have issued an unsettling report that suggests China activated an offensive cyberweapon against Greatfire.org.

Article continues:


Don’t Raise Gas Tax to Fix Supposed Infrastructure Crisis – By Randal O’Toole March 24, 2015 | 12:01 a.m. EDT

Everyone from the American Society of Civil Engineers to the AFL-CIO tells us that we face an infrastructure crisis and we must raise federal gas taxes to save our highways, bridges and other infrastructure. However, as comedian John Oliver reminds us, asking civil engineers how much we should spend on infrastructure is like asking golden retrievers how many tennis balls we should throw.

Wrong way?

The truth is that, while some of our infrastructure is in poor condition, other infrastructure is in pretty good shape. Understanding the difference will help explain why increasing federal gas taxes is the worst possible solution.

Everyone remembers the Minnesota bridge that collapsed in 2007 and the Washington state one that collapsed in 2013. But neither of these bridges failed due to lack of maintenance. The National Transportation Safety Board found that the Minnesota bridge had a construction defect that maintenance could not have detected or corrected.

The Washington bridge fell when the driver of an oversized truck ignored the warnings and tried to cross it. The bridge was more than 50 years old, but it would have fallen if that truck had tried to cross it the day it opened.

Spending advocates point to the 61,000 bridges that are rated “structurally deficient” (meaning they require more than routine maintenance). Yet they never mention that this number has steadily declined from nearly 138,000 in 1990 even as the number of highway bridges has grown. This continuing decline hardly signals a crisis.

The vast majority of structurally deficient bridges are locally owned. Some 15 percent of local bridges are deficient, compared with less than 4 percent of freeway bridges, which are mostly state owned.

[SEE: Editorial Cartoons on Gas Prices]

A similar situation exists for highway pavement. The average roughness of pavement has steadily improved, but the smoothest pavements are state owned while local streets tend to have the most potholes.

While highway conditions are improving, America’s rail transit systems are falling apart. A 2010 Federal Transit Administration report said these systems suffered from a $59 billion maintenance backlog, and it is growing because transit agencies aren’t spending enough on maintenance to keep the rail lines from deteriorating further.

Article continues:

If you want to raise graduation rates, study the successes of NCAA student-athletes. – By Andrew J. Rotherham March 17, 2015 | 3:54 p.m. EDT

Lessons Learned

They get help; give some to disadvantaged students as well.

They get help; give some to disadvantaged students as well.

As you can tell from the brackets circulating around your office or email inbox, it’s NCAA basketball tournament time. The actual odds of you picking a perfect bracket from the 68 eligible college teams? Experts say 1 in 9.2 quintillion is a conservative estimate. So here’s a better and somewhat counterintuitive bet: College athletes are more likely to graduate from college than students overall.

Yes, that sounds crazy given the stereotypes and the barrage of college sports scandals, most recently the revelations about University of North Carolina professors running no-show classes for athletes. And yes, there is too much bad behavior in the “amateur” world of big time college sports. Still, here’s the more pedestrian reality for most student-athletes: They experience college differently than most students and enjoy a variety of powerful social and academic supports along the way. These helping hands range from help with personal finance management and how to navigate a grocery store (shop on the outside where the fresh food is, stay out of the middle where the processed stuff is) to tutoring, special study labs, and academic coaching.

The Associated Press

Athletes can get an academic advantage.

Individually none of those supports might be determinative for a student. Collectively, though, it adds up to a lot of help – especially valuable help for first-in-family college-goers or low-income students navigating college without all the social capital affluent students enjoy.
And it works. Colleges are exceptionally good at keeping athletes academically eligible to play sports for the years they are able to. That shows up in graduation rates. According to federal data the overall six-year graduation rate for college students at Division I schools is 65 percent. It’s 66 percent for student-athletes at those schools. But the real story isn’t a percentage point, it’s what’s inside that data. For instance, black male athletes graduate at a rate 11 points higher than the rate for black men overall. The differential for black women is 13 points relative to their non-athlete peers. Some of those outcomes certainly owe to the tenacious characteristics of elite competitive athletes. A lot of it, however, is the simple reality that when you give college students support, they do better.

Article continues:


CIA director Brennan orders major overhaul – BBC News 6 March 2015 Last updated at 15:56 ET

CIA director John Brennan has ordered one of the largest reorganisations of the spy agency in its history.

U.S. Assistant to the President for Homeland Security and Counterterrorism John Brennan, nominated by U.S. President Barack Obama to be the next Director of the Central Intelligence Agency, testifies before the Senate Intelligence Committee 7 February 2013

Mr Brennan wants greater accountability at the CIA

CIA director John Brennan has ordered one of the largest reorganisations of the spy agency in its history.

In a memo to staff, the director said that the changes were driven by a wider range of threats and the impact of technological advancements.

The reforms aim to impose greater accountability on managers and to improve cyber capabilities.

The biggest change is the breakdown of the division between operators and analysts.

Historically, those who run operations and those who interpret the intelligence they gather have been kept separate in different divisions and offices.

Under the new plans they would brought together in 10 “Mission Centres”, each run by an assistant director.

There are a handful of such facilities at the moment, including the Counter Terrorism Centre, where analysts and operators have worked side by side for the past decade.

Digital revolution

In his memo to staff, the spy chief highlighted the dangers presented by cyber terrorism, but also the opportunities that technological advancement offered the agency.

He called on the CIA to “embrace and leverage the digital revolution” and announced the creation of the Directorate of Digital Innovation.

Mr Brennan told reporters that the cell-like nature of the agency often meant that there was no one person he could hold accountable for a spying mission.

“There are a lot of areas that I would like to have better insight to, better information about, better access to,” Mr Brennan said.

Correspondents say the changes are a result of increasing concerns that the CIA’s focus on terrorism following the September 11th attacks has blunted its abilities to deal with other threats.

The move to greater accountability comes after Mr Brennan admitted that some officers had acted beyond their authority following a 2014 Senate report that criticised the agency’s use of enhanced interrogation methods.

Responding to the report, the director admitted that some of the methods were “abhorrent” but defended the CIA’s record.