While not entirely topical to personal finance, an interesting infographic just as well. And does not paint a bright picture the future cost of healthcare:


China and plastic surgery

One more sign of the social changes that accompany economic growth. China is now only behind the US and Brazil in plastic surgeries per year. An industry which was almost non-existent 15 years ago now is worth $2.4 billion. 

And like so many other fledgling industries in China, lack of regulation can pose signifigant problems. As many as 70% of the operations are unlicensed. As in many other areas of the economy, the question for China now isn't whether it can be built, but rather can it be controlled. 



JP Morgan debacle as explained through poker

A number of people have asked me how JP Morgan could manage to 'lose' 2 billion..and counting..dollars. Unlike the MF Global situation of a few months ago, this was no accounting quandary. In this case we know exactly where that money went, which is to the people on the other side of the trade. The people being various hedge funds and other banks. And because JP Morgan has not closed out of the trade, the losses could continue. Unlike the stock market, where you can buy and sell stock instantaneously, the products in question are very illiquid and only traded by a handful of participants, more akin to a game of poker. 

Exactly what JP Morgan was trading (corporate bond derivatives) is a bit complex, and I don't think necessary for getting an idea of what happened. Imagine a game of Texas hold em poker (where your cards are not dealt all at once but rather throughout the course of the hand) initiated several months ago between JP Morgan, some other banks, and some hedge funds. JP Morgan was given a pair of 3's, and a few other hedge funds started with two aces. For various reasons JP Morgan believed they had the best hand so threw quite a bit of money in the pot. As the betting continued and more cards were dealt, it became clear to certain hedge funds (in this case early April) that they in fact had the best hands, and with each card were getting better, and JP Morgan in fact had next to nothing. The problem was JP Morgan still thought they had the best hand and matched every time the pot was raised. 

Eventually JP Morgan realized they had the worst hand, but instead of folding they bluffed and continued to raise the pot. The other players, knowing the truth, were happy to oblige. So now were at the point that JP Morgan knows they they were wrong, but had already thrown 2 billion dollars into the pot. And because they still own some of these products, the players at the other side of the table are raising the stakes on those products too, which means sooner or later when JP Morgan has to get rid of those products, they'll be at a much worse price. 

Moral of the story, if you start off with a bad hand, sometimes it's best to fold. 




Interesting take on world economies

An interesting take on the wealth of various countries through the prism of a Big Mac. It doesn't make particularly hungry for one, but I think it's an inventive way of viewing wealth.


More on Pension funds

Interesting piece on the activities of pension funds, and investing trends for that matter. As the US population ages, more resources will be pulled away from equities and into bonds as people look for safer returns in their retirement years. Considering from the previous post of pension funds using alternative investments more and more, it seems like some people may be have quite a bit exposure on both ends (far ends) of the risk curve. It'll be interesting to see how this all plays out in the years to come..