Mexican telephone and retail magnate Carlos Slim, in a rare defeat, will exit the U.S. consumer electronics market, shutting the last 100 CompUSA Inc. stores after sinking about $2 billion into the business.

I was just in a CompUSA recently and had no idea they were in the death throes.

Last CompUSA Stores to Close

Advertisers discover Deep Packet Inspection.

CenturyTel Inc., a Monroe, La., phone company that provides Internet access and long-distance calling services, is facing stiff competition from cellphone companies and cable operators. So to diversify, it's getting into the online-advertising business.

And not just any online advertising. The technology it's using could change the way the $16.9 billion Internet ad market works, bringing in a host of new players -- and giving consumers fresh concerns about their privacy.

CenturyTel's system allows it to observe and analyze the online activities of its Internet customers, keeping tabs on every Web site they visit. The equipment is made by a Silicon Valley start-up called NebuAd Inc. and installed right into the phone company's network. NebuAd takes the information it collects and offers advertisers the chance to place online ads targeted to individual consumers. NebuAd and CenturyTel get paid whenever a consumer clicks on an ad.

Watching What You See on the Web

In its final Afghan Opium Survey for 2007 issued today, the United Nations Office on Drugs and Crime (UNODC) shows that opium is now equivalent to more than half (53%) of the country's licit GDP. Speaking at a conference in Brussels on the future of Afghanistan, hosted by Princeton University, the Executive Director of UNODC, Antonio Maria Costa, announced that the total export value of opiates produced in and trafficked from Afghanistan in 2007 is about $4 billion, a 29 per cent increase over 2006.

Approximately one quarter of this amount ($1 billion) is earned by opium farmers. District officials take a percentage through a tax on crops (known as "ushr"). Insurgents and warlords control the business of producing and distributing the drugs. The rest is made by drug traffickers.

Opium Amounts to Half of Afghanistan's GDP in 2007

Only yesterday, it seems, teenagers stayed in touch outside of school on the telephone or at the mall. Now they log in to a growing number of social networks. Until lately, derivatives and hedge funds were marginal players in the financial marketplace. Now they shape market movements on a daily basis. These examples make a fundamental lesson clear: Embrace your edges or fall quickly behind.

Embrace the Edge—or Perish

Here is Andy Xie, an MIT-trained engineer/economist, and a former star analyst at Morgan Stanley:

“The hot money is going to come to China. Six months ago, I wrote an article that said as the U.S. comes down, a lot of people will come to China. The reason why is because I see the financial guys are running the world, so-called financial capitalists. … These people need to do something. When one bubble bursts, they go somewhere else. You can be sure of that. . . . Next year, the hot money story is going to become bigger. …

“Yes, we see a lot of problems in China. But the trade is still intact. The bubble can continue with all this hot money coming in. So the strong economy is likely to last.”

(Until recently, Xie was very pessimistic.)

China Rises

A semistructured approach can generate great ideas even in familiar settings -- and works better than unfettered brainstorming or strict quantitative analysis.

Breakthrough Thinking from Inside the Box

Dark days ahead. Stock up.

Here's Harvard's Lawrence Summers, whose assets are clearly in derivatives based on shorting the market:

Three months ago it was reasonable to expect that the subprime credit crisis would be a financially significant event but not one that would threaten the overall pattern of economic growth. This is still a possible outcome but no longer the preponderant probability.

Even if necessary changes in policy are implemented, the odds now favour a US recession that slows growth significantly on a global basis. Without stronger policy responses than have been observed to date, moreover, there is the risk that the adverse impacts will be felt for the rest of this decade and beyond.

Others have ideas, too:

HSBC Bails Out its SIVs

While the big American banks are trying to organize a collective superfund to shore up their shaky off-balance-sheet debt, Europe's biggest bank, HSBC of Britain, is simply taking its troubled children in.

The move "prevents the need for a fire sale of the assets" and makes it less likely that HSBC will join the banks' superfund.

Wake up to the dangers of a deepening crisis

“I think it will be a great program, Dr. Carlat,” he said. “Would you like to come?” I glanced at the invitation. I recognized the name of the speaker, a prominent and widely published psychiatrist flown in from another state. The restaurant was one of the finest in town.

I was tempted. The wine, the great food, the proximity to a famous researcher — why not rejoin that inner circle of the select for an evening? But then I flashed to a memory of myself five years earlier, standing at a lectern and clearing my throat at the beginning of a drug-company presentation. I vividly remembered my sensations — the careful monitoring of what I would say, the calculations of how frank I should be.

“No,” I said, as I handed the rep back the invitation. “I don’t think I can make it. But thanks anyway.”

Dr. Drug Rep

Fairness doesn’t matter much in conventional economics, which assumes that, if you and I can make a deal leaving us both better off, we’ll make it. But, in the real world, if the deal seems unfair to me I may very well reject it, even if doing so leaves me worse off.

Striking Out

Consider this an academically minded follow-up to the John Bird and John Fortune segment on sub-prime mortgages.

The stability of the financial system and the potential for systemic events to alter its functioning have long been critical issues for central bankers and researchers. Developments such as securitization and greater tradability of financial instruments, the rise in industry consolidation, growing cross-border financial activity, terrorist threats, and a higher dependence on computer technologies underscore the importance of this research area. Recent events, however, such as the terrorist attacks of September 11, 2001, and the collapse of the hedge fund Long-Term Capital Management (LTCM), suggest that older models of systemic shocks in the financial system may no longer fully capture the possible channels of propagation and feedback arising from major disturbances. Nor can existing models account entirely for the increasing complexity of the financial system, the spectrum of financial and information flows, or the endogenous behavior of different agents in the system. Fresh thinking on systemic risk is therefore required.

For the pop culture coverage, check in on James Surowiecki.

New Directions for Understanding Systemic Risk: A Report on a Conference Cosponsored by the Federal Reserve Bank of New York and the National Academy of Sciences