The Stingy News Weekly (06/10/2012)
Failure and rescue
"But there continue to be huge differences between hospitals in the outcomes of their care. Some places still have far higher death rates than others. And an interesting line of research has opened up asking why. Researchers at the University of Michigan discovered the answer recently, and it has a twist I didn't expect. I thought that the best places simply did a better job at controlling and minimizing risks - that they did a better job of preventing things from going wrong. But, to my surprise, they didn't. Their complication rates after surgery were almost the same as others. Instead, what they proved to be really great at was rescuing people when they had a complication, preventing failures from becoming a catastrophe."
Exhausting the Earth's resources?
"But firms that make their money mining this planet say the Earth is one big, practically inexhaustible mine, with just as many unexplored corners as outer space. 'We think there are 10,000 more years of minerals left for civilization,' said Andrew McKenzie, a geologist and BHP Billiton PLC's chief executive for nonferrous metals. 'Civilization will change, of course, and there will be different minerals involved, but 10,000 more years.'"
Housing market jitters keep lid on Genworth
"Mortgage insurer Genworth MI Canada Inc has a perception problem and its bargain-basement valuation tells the tale."
Turning slumdogs into millionaires
"The idea behind Dakshana was to find some of India's most brilliant and poorest kids and prepare them for the rigorous entrance examination for the Indian Institutes of Technology. The IITs are a group of the nation's most prestigious engineering and technology universities. Its graduates are virtually guaranteed employment and success."
Euro breakup precedent
"It was a currency union of 15 states in 1992. Two years later, as budget deficits spiraled out of control, hyperinflation reigned and economies shriveled, just two members of the Soviet Union's ruble zone were left. As Greek politicians threaten to break terms of the country's bailout with international lenders, Spain calls for financial help, and northern European nations balk at funding the south, historians are asking whether the euro region is about to face a similar exodus. They take a longer view of the European Union's crisis than economists, and it's much bleaker."
Q ratios and stock market crashes
"At current valuations - and if this 110-year relationship continues - there is an expected (median) drawdown of 20%, and a 20% chance of a larger than 40% correction in the S&P500 within the next few years these probabilities continually reset as valuations remain elevated, making an eventual deep drawdown from current levels highly likely."
Equity Q ratio
"Tobin's Q ratio is the ratio between the market value of the stock market and against the aggregate net worth of the constituent stocks measured at replacement cost. It can be defined to include or exclude debt. We exclude debt for ease of calculation, and refer to it in this form as 'Equity Q'."
The austrians and the swan
"Over the past century-plus there have clearly been sizeable annual losses (of let's say 20% or more) in the aggregate U.S. stock market, and they have occurred with exceedingly low frequency (in fact only a couple of times). So, by definition, we should be able to call such extreme stock market losses 'tail events.' But can we say this, just because of their visible depiction in an unconditional historical return distribution?"
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