This Week in Bank Failures

A huddle in Europe this weekend may decide the fate of Ireland and Portugal. Ireland, in desperate financial shape after bailing out its banks, is looking for a lower interest rate on its European bailout package, though it may come away with no more than vague commitments about future action. Portugal is not in any serious financial trouble at this point, but other European countries are worried about it. More specifically, European leaders are worried about what may happen to most of the countries in Europe if bond traders succeed in putting the screws to Portugal.

In the United States, two small banks failed tonight. First National Bank of Davis, in Oklahoma, and Legacy Bank in Wisconsin had one location each. The deposits and assets were transferred to nearby banks, and the offices will remain open. With these closings, there have been 25 bank failures so far this year.

Two Discoveries in LED Lighting

Why can’t LEDs be made with the same lithographic techniques that produce microprocessors? It turns out the stumbling block isn’t the lithography, but the substrate. Microprocessors are built on silicon, a material that engineers have long since learned how to produce on a large scale. LEDs typically are made by putting gallium nitride on a base of sapphire or silicon carbide, materials are much harder to produce consistently. To work around this, LEDs are manufactured almost one at a time. But that may be changing in 2013. Bridgelux, an engineering company working on LED manufacturing technology, says it has a way to grow gallium nitride on 8-inch silicon wafers, nearly the same kind that are used to manufacture microprocessors. With this invention, it should be possible to manufacture LEDs at microprocessor factories, on the same equipment. This means LEDs can be made hundreds at a time, like microprocessors, resulting in lower manufacturing costs.

Bridgelux says the energy efficiency of its new LEDs is about the same as that of current LED room lighting, and it hopes to make incremental improvements over the nest two years to keep up with the industry as it brings its first products to market. That will be a race against time, as dozens of other companies are creating their own advances in LED manufacturing, resulting in prices that fall every year.

It is a safe bet that at least a few of the LED breakthroughs we’ve been reading about will, probably in 2012 rather than 2013, bring us LED room lighting at prices similar to those those of current compact fluorescent lighting, but with 3 times the energy efficiency and a choice of colors. When that happens, or perhaps sooner, LED will become the dominant room lighting technology, and we’ll finally be able to retire fluorescent lighting.

LED lighting may be coming sooner than that, as soon as this summer, to a supermarket or restaurant near you. Why? Besides the long-term cost savings of LED lighting, researchers have found that LED lights make food look better. Consumers even say food tastes better when they eat it under LED lights, when compared to the greenish fluorescent lighting currently used in almost all commercial buildings. In a restaurant, it’s an investment of about $15 per table at current prices to replace fluorescent table lights with LEDs. It’s an investment that pays for itself in less than 5 years with reduced electric use anyway. If it also provides customers with a better experience of the food, and a small fraction of customers spend more as a result, the improved lighting could pay for itself in a matter of a month or two, so I don’t think restaurants that can spare the cash will delay too long in making the upgrade.

Obesity, Inactivity, and Diabetes by County

New county-level data released by the Centers for Disease Control and Prevention (CDC) sheds new light on obesity in the United States. To begin with, the old notion that obesity is mainly a problem of southern cities can be laid to rest. You can see on the county-level map that a pattern of obesity in a state often bypasses major metropolitan areas.

You can also see that counties with the highest levels of obesity can be found far to the north, particularly in the foothills west of the Appalachian Mountains.

Anyone who imagines that obesity is mainly about food should compare the first map, which shows obesity rates, with the second, which shows rates of physical inactivity. In each map, the higher rates are shown in darker colors.

There is a broad similarity between the two maps; it is the same areas that have high incidences of physical inactivity and obesity. The strong association between obesity and physical inactivity offers hope to anyone trying to lose weight by becoming physically active. Food is an important aspect of obesity, but when you compare the two maps, you can see that it’s not just about the food.

Obesity has dire consequences for health, and those consequences may include diabetes. The third map shows the prevalence of diabetes by county. This is actually the main thing the CDC is studying with the county-level data, because of the enormous financial and human costs of diabetes. You can see, again, a strong similarity among the maps. The rates of diabetes are much lower than those of obesity, yet the diabetes map and the obesity map line up with surprising precision in most areas.

This does not mean that obesity is the cause of diabetes; it is not as simple as that. Causality works both ways here: obesity can cause diabetes, and diabetes can contribute to obesity. More fundamentally, though, scientists say that both obesity and diabetes are diseases of inflammation; they can mostly be avoided by avoiding the lifestyle patterns of inflammation.

This is true too with physical inactivity. Inflammation makes moving around hurt more, especially in the joints, and this can deter physical activity. But if you can get yourself started, physical activity can help reduce and eventually overcome inflammation. Physical activity may burn off some of the excess body fat — that’s what the fitness experts are always emphasizing — but the more important effect is the way exercise reduces the pattern of inflammation that causes obesity.

The CDC suggests that physical activity may also prevent diabetes. Physical inactivity is not really the cause of diabetes, but there are enough stories to suggest that people who have diabetes can hope to cure themselves by maintaining normal body fat levels and activity levels.

Obesity is lower in areas of higher elevation, and here, it appears that is not the elevation itself that protects against obesity, but the hills. Walking up and down hills is somehow a strong deterrent to obesity. This may be just because it builds strength in the leg muscles, which are the largest muscle groups in the body. I have speculated that skiing may be a factor in preventing obesity. Downhill skiing, of course, also depends on the presence of hills and builds impressive leg and core muscles. Of course, you can develop muscles anywhere with the right exercises; you don’t have to look around for hills if there are none immediately around you.

Looking at these county-level maps is an exercise in epidemiology, a field of science that looks at the connections between health conditions and places. The skeptics who doubt the power of epidemiology to pinpoint health information that matters would do well to look at this set of three maps.

Don’t Fear the Budget

Austerity budgets are coming to the United States this year. The government funding situation is certain to be a mess however it comes out, with millions of jobs lost if fiscal propriety is fully restored to the federal and state budgets, the risk of state or national bankruptcy if fiscal problems are ignored. There will be millions of job losses in the most optimistic scenarios, potentially 25 million if an impasse shuts the federal government down for an extended period. The biggest job cuts will be the corporate workers laid off when businesses get skittish about the economy, either because of the weaker economy after government cutbacks, or because of uncertainty created by government gridlock.

As scary as this sounds to a lot of politicians and observers, the budget is so controversial precisely because most of the budget decisions this year are no-win propositions. Given the state of the economy, there is no right answer. That also means that the various alternative on the table, including shutdowns like the one the governor of Wisconsin is talking about, won’t be a calamity either. It isn’t going to topple the economy if budgets are off by a few billion dollars here or there, or if whole agencies and departments stop operating for a few months or a year. If there are large layoffs at some of the big corporations, it’s just a case of the old guard stepping aside to make way for the businesses that will make up the new economy.

I don’t want to dismiss the pain caused by the cuts in government services, but I don’t want to exaggerate those either. It’s easy to bemoan teacher layoffs and hospital closings, but we mustn’t pretend we’re pulling the plug on a fully functional educational system or a highly successful health care system. If half a million students are forced to get their high school education from books and the Internet, some won’t learn much — but many students remember next to nothing of what they learn in high school as it is. It is a similar story with other government services that we consider essential. The businesses that provide our essential infrastructure are not much better.

Against this highly conflicted economic backdrop, I defy anyone to say with confidence what’s really best when it comes to a government budget. Even a government shutdown might very well be the right course of action depending on the political situation. No one should fear the broad economic consequences of the austerity budget that may come out of Washington over the summer, or of the shutdown that may occur there if politicians cannot agree.

If there is anything to fear, it is the state of the economy. The drama in Washington and the state capitals merely speaks to the government’s inability to do much of anything about it. Perhaps the government hasn’t been trying very hard to fix the problems in the economy, and its measures so far, such as the Wall Street bailout, may have done more harm than good. But the federal government has been virtually broke since 2005. There isn’t much it can do to help the economy, no matter how hard it tries. Some people say the government should just shut down and let the economy fix itself, but the truth is, that wouldn’t accomplish anything either.

It’s asking too much at this point for a government budget to fix the economy. That’s not what’s at stake. When budget questions come up, we have to just take our best guess — then return our attention to the things that actually have the potential to fix something.

Like It’s 2007 Again

A curious question came over the cable on CNBC this morning: “Are you spending like it’s 2007 again?”

The question reflects a hope that consumer spending will lead an economic recovery in the United States. And it lends itself to two main answers: “What?! Are you kidding?” and “Um, well, now that you mention it, maybe so.”

The suggestion of spending at 2007 levels is preposterous, of course, in households where the last four years have brought a new sense of fiscal sobriety along with a reduction in income from work. That is probably a little more than half of U.S. households. For those of us in this category, even though our income may someday return to 2007 levels, it will never be 2007 again.

In other households, income has kept up with inflation, or nearly so, and there hasn’t been such a scare as to change people’s attitudes about money and spending. But even here, the social context of spending has changed. Far from the prior peer pressure to borrow and spend beyond one’s means, there is now social pressure to master money and ditch the credit cards. And so, if people are spending like it’s 2007 again, they recognize this as a mistake that they would like to correct if they can manage it.

Of course, there are also households that have much higher incomes now than four years ago, mainly as people successfully made the transition from students to working professionals. It is to be expected that these households would be spending more than before; but all other households, in aggregate, are spending less.

Consumer spending edged up in January, but only because of higher fuel prices. With prices for oil, gasoline, natural gas, and electricity expected to increase over the next six months, and food prices increasing as a consequence, this will show up as an increase in consumer spending, but the increase will likely mask a decrease in spending on consumer goods other than food and energy.