A Stubborn Mule’s Perspective

One of the more peculiar stories of late in these times of turbulent financial markets is how, briefly, Volkswagen became the biggest company in the world. In the process, hedge funds around the world suffered losses estimated at over US$35 billion.

Over the last few years, Porsche has been building a stake in Volkswagen. By November 2007, the size of their stake had reached 31%, much of which was achieved by means of share options* rather than direct share purchases. Significant increases in the Volkwagen share price meant that these options delivered large profits for Porsche, prompting criticism that the company was acting more like a hedge fund than a car manufacturer.

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Apparently the sky is falling, at least that is what stock markets around the world are suggesting.

The Japanese stock market fell 9.6% today, the Korean market fell 10.6% and while the Australian market “only” fell by 2.6%, the Australian dollar is now down below US$0.65. European markets are already down 6-8%. There were dramatic Government interventions in the financial markets around the world earlier this month, which markets took as good news, but it seems they were unable to sustain the initial optimism and have given in to complete despair. The Korean market once had one of the most liquid stock index futures markets in the world, courtesy of the participation of a very large number of retail investors. Today at one point there was simply no bid on the KOSPI. The term used in financial circles when markets simply give up like this is “capitulation”.

The financial crisis, which started in the US has now well and truly spread to the rest of the world. This week the focus of attention moved to Asian and emerging markets, as Argentina announced plans to seize control of private pension funds in what is seen as a desperate attempt to stave of their second default on their sovereign debt this decade. This has driven the price on credit default swaps of insuring against default by the Argentine Government to over 30%. Even the price of insurance against default by the Australian Government has soared from around 0.02% a few years ago to 0.90% today.

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The 2008 Paralympic Games are now well underway in Beijing. Since my Olympic medal charts on Swivel proved popular, I have now created a data set for the Paralympics as well, which I will be updating regularly (source: Beijing 2008 Paralympics website). One of the topics I touched on during the Olympics was the influence of the size of a country’s population and economy on their performance at the Games. This topic did prove controversial with at least one reader and the links may be more tenuous for the Paralympics. Neverthless, I will risk revisiting the subject here.

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Last month, the Australian Government launched the GroceryChoice initiative, with the goal of helping consumers find the cheapest place to shop for their groceries. As I wrote at the time, the GroceryChoice website allows users to compare prices in a given area, but comparisons across areas are not made easy. Undeterred, I simply scraped all the data from the web-site for easier analysis. Today GroceryChoice released prices for the month of September, making it possible to start analysing prices over time as well as by region and retailer.

The website provides prices for a number of specific grocery “baskets” (Fruit & Vegetables, Meat & Seafood, etc.) as well as for a more general “Basic Staples” basket. A crude average of prices of this Basic Staples basket around the country would suggest that prices are on the rise, having increased from $75.41 for August to $75.97 for September. However, this figure should be taken with caution. Quite apart from the fact that this analysis does not take into account the differing population sizes in each region, there is also significant variation across the different retailers, as is evident in the chart below.

“Basic Staples” Prices by Retailer (A$)

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Since my last post, about Beijing 2008 Olympic rankings by population and economy size, there has been a lot of action in the medals per capita stakes. The Bahamas knocked Jamaica from the number one spot with a Bronze in the triple-jump, only to have Jamaica regain the crown as it continued to win Gold in track and field. Then, with a Silver in the Men’s 4 x 400m relay, the Bahamas got to the front again in what is now an unassailable lead.

For the blow-by-blow on MPC, visit the LA Times MPC blog. I can’t help mentioning that Australia has now pulled ahead of New Zealand!

Previously, the charts I used were static, unable to keep up with these rapid changes so, although the Games are drawing to a close now, I thought I would include Swivel charts which will update as the last results come through. This time I am showing rankings in terms of a simple total medal count per million of population (previously I used a points system, 3 points for Gold, etc).

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Now that the swimming is over, Australia is likely to see its rankings in the Olympic medal tally start to fall. To feel better about this situation, people like to start pointing out that we still look pretty good for a small country and it’s certainly true that of the countries currently in the medal tally (as at 22 August 2008), we rank only 36th in terms of population. Ever since I blogged about the data-sharing site  Swivel, I have been regularly updating a data-set with the medal tally. So, it was a simple matter to add in population as well. The chart below provides a high-level overview of the medal results by population. It shows both the total number of medals won and the gold medals. The further a country sits in this chart above a 45 degree line, the better it is doing by population.

Total Medals (blue) and Gold medals by Population

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Earlier this week I attended a training course that, once again, leaned heavily on colourful “HBDI profiles”. HBDI stands for “Herman Brain Dominance Indicator” and, much like the better-known Myers-Briggs Type Indicator (MBTI), it is a personality test with a fancy name. I am lucky enough to have been subjected to both of these tests more than once, leaving me increasingly irritated each time. This has led me to reflect on why personality tests like these are so popular in the corporate world. I suspect that it is because they have much in common with astrology.

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Earlier this week, South Australian senator Nick Xenophon raised concerns that the Government’s FuelWatch scheme would lead to higher petrol prices and that small independent petrol retailers were likely to be disadvantaged by the scheme. So it looks likely that the FuelWatch legislation will fail to pass the senate and then fade into oblivion. I can’t say I’m too upset about this as I have been critical of the scheme. Furthermore, falling oil prices have led to a fall of around 20 cents/litre in petrol prices which takes much of the sting out of the issue.

So now I am free to turn my attention to another Australian Government initiative, GroceryCHOICE. This scheme aims to “[help] consumers find the cheapest supermarket chain in their area without having to compare hundreds of prices”. Every month a survey is conducted of prices on around 500 different grocery items at over 600 supermarkets around the region. These prices are aggregated into “baskets” of goods in the following categories:
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I recently came across the OECD Factbook blog written by Jérôme Cukier, who works as a data editor for the OECD. He has an excellent post on publishing charts in blogs.

As regular readers of the Mule will know, I don’t mind posting the odd chart and in the process I have grappled with the less than ideal results that the Excel to image production-cycle can produce. Jérôme’s process discusses these challenges and illustrates the results of different techniques (although I had more luck with copying as a picture and saving to PNG format than he had, so perhaps the choice of picture editor is a factor as well). As far as possible, I try to avoid using Excel altogether for producing charts and instead use the statistical package R, which can produce charts directly to a number of image formats including JPG and PNG. Although Jérôme doesn’t mention R, it does crop up in the first of the comments on his post.

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On 1 July 2008, Starbucks announced the closure of around 600 outlets in the US. More drastically, on 29 July they then announced that 61 of the 84 Australian outlets would be closing.

Over on BeyondDigitalMedia, Chris Bishops posted an interesting examination of the challenges Starbucks has faced in the Australian market and goes on to predict that Gloria Jeans will suffer a similar fate.

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