Costs that can not be recovered after they are spent. Most ‘expenses’ are sunk costs. Disregard them during future decision-making. [...]
Opportunity Cost
The cost of passing up the next best choice when making a decision is one many disciplines misapply. [...]
Repricing Risk and our Economy
Morgan Stanley's Richard Berner, July, 2007: In our view, housing activity is clearly at risk, and we see no real recovery until 2009. We believe that the economic costs of subprime loan defaults largely will be borne by lenders rather than borrowers because such borrowers have scant equity in their home. Thus, the spillover risk to the economy depends on whether lenders tighten lending standards significantly further. [...]
Globalization or Isolation
Let's say you live in Chicago. And I tell you that you can not buy anything from anyone who didn't go to your high school. What kind of life do you think you'd have, compared to the one you have now? What about if you could just buy things from Chicagoans, or better yet, people who live in Illinois? What kind of life would you have now? But wouldn't you prefer to be able to buy things from all over the world? [...]
