Guillermo del Toro is directing "The Hobbit" and its sequel, New Line Cinema announced Thursday. The 43-year-old filmmaker will move to New Zealand for four years to make the films back-to-back with executive producer Peter Jackson.

Guillermo del Toro to direct 'The Hobbit' and sequel

Is this the silver lining to the global food crisis?

It seems the message is finally getting through. In parts of Helmand Afghan farmers are this year sowing wheat instead of poppy - not because they have suddenly been converted to the argument that producing heroin is not in the national interest.

Market forces have been the deciding factor - with wheat prices doubling in the past year, and the street price of heroin falling, it is now more cost effective to grow wheat.

At last there are signs of progress being made amidst Afghanistan’s battle-scarred landscape.

Afghanistan swaps heroin for wheat

Consider the case of aspirin. Suppose, for the sake of argument, that Bayer aspirin and store brand aspirin are identical products, but that Bayer costs twice as much because some consumers believe (falsely, in this example) that Bayer is better. Would we expect markets to eradicate this price difference? Since the Bayer brand name is trademarked, it is not (legally) possible to go into the business of buying the store brand aspirin and repackaging it in Bayer bottles. This inability to transform the store brand into Bayer prevents one method arbitrageurs might use to drive the two prices to equality. Another possibility for arbitrageurs would be to try to sell the more expensive Bayer aspirin short today, betting that the price discrepancy will narrow once the buyers of Bayer “come to their senses.” Short selling works like this: an arbitrageur would borrow some bottles from a cooperative owner, sell the bottles today and promise the owner to replace the borrowed bottles with equivalent Bayer bottles in the future. Notice that two problems impede this strategy. First, there is no practical way to sell a consumer product short, and second, there is no way to predict when consumers will see the error in their ways. These problems create limits to the forces of arbitrage, and in most consumer goods markets, the Law may be violated quite dramatically.

The aspirin example illustrates the essential ingredients to violations of the law of one price. First, some agents have to believe falsely that there are real differences between two identical goods, and second, there have to be some impediments to prevent rational arbitrageurs from restoring the equality of prices that rationality predicts. Can these conditions hold in ? financial markets, where transactions costs are small, short selling is permitted and competition is fierce?

The Law of One Price in Financial Markets

Does being on the Colbert Show really provide a bump—a critical leap that vaults a writer, or a politician to superstardom?

The Colbert Bump is Real

Corporate prediction markets work like this: Employees, and potentially outsiders, make their wagers over the Internet using virtual currency, betting anonymously. They bet on what they think will actually happen, not what they hope will happen or what the boss wants. The payoff for the most accurate players is typically a modest prize, cash or an iPod.

The early results are encouraging. “The potential is that prediction markets may be the thing that enables a big company to act more like a small, nimble company again,” said Jeffrey Severts, a vice president who oversees prediction markets at Best Buy, the electronics retailer.

Betting to Improve the Odds

In this fast paced, modern world there is a lot to keep up with, I can help you.

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Corporations rely on specialisation, outsourcing and tacitness. Specialisation is here to manage complexity, outsourcing here to evacuate complexity and tacitness here to hide complexity. It is not perfect. Specialisation impeaches getting the big picture. Outsourcing concretely relocates knowledge out of the organisation. Tacitness prevents management as "you can't manage what you can't measure" and favours egocentric "political" games. Besides those defaults, it offers managers a simple life (and very similar to the one of a Museum keeper).

Specialisation is a natural result of complexity. In organisations, the diversity and recurrence of tasks call for dedicated people to limited actions. The bigger the organisation, the more specialised employees are.

The Museum and the Zoo

NOW added to the endangered species list in New York City, along with independent booksellers and shoe repair: the neighborhood record store.

As Problems Mount, Record Stores Find It Increasingly Hard to Stay Open

CBO finds that:

* The current economic situation is quite fragile, largely as a result of the difficulties in mortgage markets and other financial markets. Much of that fragility arises from falling house prices, which affect consumers through their housing wealth and lenders through their loss of collateral. It is exacerbated by the growing complexity of financial instruments and entities, which may make it difficult for participants to know what risks they are assuming, and by the leverage of both borrowers and financial market intermediaries, which means that it is difficult to prevent liquidity and solvency problems from spreading throughout the financial markets.
* Foreclosures are an expensive way to resolve delinquencies. A large number of foreclosures is also likely to reduce the demand for houses, as potential purchasers conclude it would be better to wait until prices stop falling. Thus, excessive foreclosures could trigger a downward spiral of house prices that could take them below what would be justified on the basis of normal relationships to income and production costs. Such a downward spiral would exacerbate the problems in the financial markets, and by reducing household wealth, could reduce consumption spending, increasing the likelihood and severity of a recession. While actions could be taken to limit the risk of such a downward spiral in housing prices, it is not feasible for policy interventions to stabilize house prices at current levels since such prices are strongly influenced by the significant inventory of unoccupied houses for sale.
* Significant impediments stand in the way of private market resolution of the difficulties in the mortgage market. In order for large numbers of mortgages to be restructured, procedures must be developed to secure the agreement of the institutions that hold second mortgages. Because most mortgages are securitized, resolution procedures also have to respect the limits of securitizing agreements. Without committing resources, the Congress could provide a standard for mortgage restructuring that might assist agreement among the first- and second-lien holders and simplify the decisions lenders have to make. Legislation could also change the treatment of mortgages in bankruptcy, which would help borrowers and might increase the pressure on lenders to voluntarily restructure loans outside of bankruptcy; such a change, however, might also lead to higher interest rates on future mortgages.
* Direct federal provision or guaranteeing of credit to mortgage markets could help avoid foreclosures and ease the downward pressure on house prices, helping the market to adjust in an orderly manner. It would also shift part of the cost of mortgage losses from current lenders and investors to taxpayers. Most of the proposals under discussion involve modest federal subsidies and would probably affect several hundred thousand homeowners.

Policy Options for the Housing and Financial Markets

The internet bellwether has reported fewer clicks on its ads. The billion-dollar question is what that means.

Will Google Earnings Save Tech?