In the News: Cellphones Are Eating the Family Budget

....And to think I just bought an iPad. At least I'm just using free wi-fi for now.

by Anton Troianovski | The Wall Street Journal – Wed, Sep 26, 2012

Heidi Steffen and her husband used to treat themselves most weeks to steak at Sodak Shores, a restaurant overlooking a lake near their hometown of Milbank, S.D. Then they each got an iPhone, and the rib-eyes started making fewer appearances.

"Every weekend, we'd do something," said Ms. Steffen, a registered nurse whose husband works at a tire shop. "Now maybe once every month or two, we get out."

More than half of all U.S. cellphone owners carry a device like the iPhone, a shift that has unsettled household budgets across the country. Government data show people have spent more on phone bills over the past four years, even as they have dialed back on dining out, clothes and entertainment—cutbacks that have been keenly felt in the restaurant, apparel and film industries.

The tug of war is only going to get more intense. Wireless carriers are betting they can pull bills even higher by offering faster speeds on expensive new networks and new usage-based data plans. The effort will test the limits of consumer spending as the draw of new technology competes with cellphone owners' more rudimentary needs and desires.

So far, telecom is winning. Labor Department data released Tuesday show spending on phone services rose more than 4% last year, the fastest rate since 2005. During and after the recession, consumers cut back broadly on their spending.

 

The combined cost of the components for the iPhone 5 is estimated at $197, or only $9 more than for the iPhone 4S, Arik Hesseldahl reports on digits. Photo: Getty Images.

But as more people paid up for $200 smartphones and bills that run around $100 a month, the average household's annual spending on telephone services rose to $1,226 in 2011 from $1,110 in 2007, when Apple Inc.'s iPhone first appeared.

Families with more than one smartphone are already paying much more than the average—sometimes more than $4,000 a year—easily eclipsing what they pay for cable TV and home Internet.

The trend has been a boon for companies like Verizon Wireless and AT&T Inc. (T). U.S. wireless carriers brought in $22 billion in revenue selling services such as mobile email and Web browsing in 2007, according to analysts at UBS AG. By 2011, data revenue had jumped to $59 billion. By 2017, UBS expects carriers to be pulling in an additional $50 billion a year.

But the question for the industry is how much bigger bills can get before the cuts in other parts of the family budget grow too painful.

Melinda Tuers, an accounting clerk at a high school in Redlands, Calif., said she already pays close to $300 a month for her family's four smartphones. She and her husband have cut back on dining out, special events and concerts to make room for the bigger phone bill.

Her household may soon have an even bigger hole to fill. Two of the Tuers's smartphones are on unlimited data plans, meaning she pays the same price no matter how much she surfs the Web. She has taken advantage of that freedom to watch TV shows such as "Covert Affairs" and "Grey's Anatomy" on her phone almost every day.

Ms. Tuers now wants to replace those three-year-old smartphones. But her carrier, Verizon, announced this summer that customers would have to give up unlimited data plans if they want to upgrade their phones at the subsidized price.

Ms. Tuers figures that she and her husband would need to scrape together more than $1,000 to pay full price for two new high-end phones or settle for one of Verizon's tiered-data plans, which she fears would cost a lot more given her video habit.

Streaming 30 minutes of video per day over a 4G connection and doing nothing else on her phone would cost Ms. Tuers roughly $120 a month on one of Verizon's new data plans, according to the carrier's website.

Carriers fully expect people to use more data and pay more for it. "Speed entices more usage," Verizon Chief Financial Officer Fran Shammo said at an investor conference last week, according to a transcript. "The more data they consume, the more they will have to buy."

But some question where the money for that data will come from. Americans spent $116 more a year on telephone services in 2011 than they did in 2007, according to the Labor Department, even as total household expenditures increased by just $67.

Meanwhile, spending on food away from home fell by $48, apparel spending declined by $141, and entertainment spending dropped by $126. The figures aren't adjusted for inflation.

The increase in telephone-services spending masks an even higher rise in cellphone bills, because people have been paying less for landline service.

Much of the revenue growth that industry executives and investors are hoping for is likely to come from higher-income households that do have the money to spend more on wireless data. But the wireless industry also generates a lot of revenue from lower-income users.

Almost nine in 10 of all U.S. adults have a cellphone, according to a Pew Research Center survey. Middle-income consumers increased their telephone spending in 2011 by $59, almost as much as the $64 in additional telephone spending by the 20% of consumers with the highest incomes, according to the Labor Department data.

As wireless service gets more expensive, the trade-offs become more painful. That could threaten to further crimp consumer spending elsewhere—or slow the upward swing in consumer spending on wireless.

That trend is evident in the home of 40-year-old Scott Boedie, a neighborhood service representative for a cable company.

Mr. Boedie said he and his wife now pay $200 a month for cellphone service, up by about $50 from early last year, even as they have managed to cut spending on groceries by shopping at discount chain Aldi and on "fun stuff" by going out to dinner and movies less often.

Looking over the family budget on Sunday night, Mr. Boedie said, his wife marveled at how much of it was going to the phone company.

"It stinks," Mr. Boedie said. "I guess it's the cost of modern-day America now."

Thanks for the Memory Graphic

This chart gives a detailed overview of the term "memory" as used in various branches of academia

I'm enjoying reading Joshua Foer's Moonwalking with Einstein The Art and Science of Remembering Everything. It's a winner!

Charles Burchfield Watercolor

Does This Card Ever Get Played Any More?

Jon Corzine: Criminal Or Just Plain Old-Fashioned Stupid?
by Richard Finger, Forbes contributor, August 27, 2012

It is a story all too common today that our society is practically anesthetized to it: Securities laws repeatedly failing to protect the trusting investors from unscrupulous money managers.

MF Global is a little different twist. Unsuspecting trading clients are bilked to pay for the highly leveraged “cowboy” trades of their very own clearing house which turns out to be nothing but a hedge fund in disguise.

At a bankruptcy filing date MF Global had a $40 billion balance sheet and a paltry $1.4 in equity. Its annual revenues were only $2.2 billion. When you include up to $16 billion in off balance sheet liabilities you get to a leverage ratio of about 40 to 1 -- not a lot of room for errors.

The Trade Structure

The trades that “brought down the airplane” were quite prosaic in the arcane world of hedge fund trades. It was a simple highly leveraged “carry trade”. Corzine bought $6.3 billion of the sovereign debt of Southern European PIIGS countries and financed it through a repurchase agreement or in trade jargon, “repos”.

The purchased bonds had a much higher coupon payment rate than the loan rate that MF Global would pay to the “repo” lender hence MF global would be making a guaranteed spread or “carry”.

When (if) the bonds ultimately matured and repaid 100% of their face amount, then MF Global contractually would use the bond proceeds to buy back or “repurchase” the bonds from the lender, thus repaying the “repo” loan. 

For example, JP Morgan (JPM) or Bank of America (BAC) took in Spanish bonds as collateral that MF Global had just purchased and made a loan that matured concurrently with the bond maturity date. If the bonds were $1 billion maybe JPM or BAC would loan on the order of $980 million and MF Global would come up with $20 million.

The $20 million or, in this case, 2% of the purchase price is the “haircut” that JPM wanted from the purchaser. The “haircut” or margin required is a negotiated amount between borrower and lender. To a highly creditworthy borrower the “haircut” may even be 0. That is the lender would lend all the purchase money.

The interest rate environment of 2011 when these trades occurred is not significantly different than the rate landscape of today. JPM probably lent on a floating or fixed LIBOR based formula, something like LIBOR +40 basis points or just Libor +40 as it would be quoted. As short term LIBOR was less than 25 basis points (or .25 of 1%) then all in all, MF Global borrow rate was most likely something less than 1% (.25 +.40=.65 of 1%). 

Say the rate on the Spanish bond was 5% and Corzine was able to purchase at a 10% discount to par (100) or 90% of face value. Then the “carry” would be the 5.55% coupon (remember the discount) less the .65% loan rate or 4.90%. At maturity if the bond paid in full as planned then using extreme leverage the return potential quickly gets into triple digits.

The game plan that Corzine had designed was conceptually sound. While he was admittedly purchasing the “junk” credits of Spain, Portugal, Italy, and Ireland the reality was, at the time, there had never been a Eurozone sovereign default and the zeitgeist was to preserve the “union” at all costs.

Further, only short duration bonds, presumably with maturities of two years or less, were bought.  This greatly reduced the risk of the trade. So as bonds would mature, presumably Spain and the other countries would simply “roll over” or sell new bonds to retire the maturing ones.

Worse case, the assumption was the ECB would step in and purchase bonds through EFSF or ESM or the direct bond purchase program in place.

All was copacetic until the plane hit some severe unanticipated thunderstorms, with lots of lightning. As part of the “repo” agreement, the amount of margin or “haircut” was subject to be increased as the price of the collateral (the bonds) fluctuated and were “marked” to the market on a daily basis or if the credit of the underlying borrower (MF Global) deteriorated.  

Headlines swirled, Greece caused turmoil for the entire Southern Europe bond market.

On October 24, 2011 Moody’s, due to the European exposure downgraded MF Global debt to one level above “junk”. One day later MF Global reported a $191 million quarterly loss. The following day, the 26th, Moody’s hammered Corzine’s firm with a further two notch downgrade placing the firm at Ba2, or in solid “junk” territory.

Net, Net, MF Global was now repeatedly being called for more and more margin as both their company credit and the prices of the European bonds deteriorated rapidly. It was a liquidity crisis. With credit lines completely used up -- where was there left to turn?

Crossing The Line

On October 26th and the ensuing five days before the bankruptcy, who did what, when, and why, on whose instructions is a main crux of the issue.

On the 26th $615 million of segregated customer funds were approved for transfer by assistant treasurer Edith O’Brien from accounts at JP Morgan. This transfer was supposed to be a loan that was to be repaid by the end of the same business day which would have been legal.

Needless to say the funds were not returned. On the 28th per e-mail trails, Corzine ordered a $175 million transfer to cover an overdraft at JP Morgan.
Ms. O’Brien tapped another $200 million of customer funds to meet this obligation. We know there were many more transactions wiring customer funds out of what were supposedly statutorily segregated at the broker dealer level.

Hundreds of millions of the customer money was funneled to an MF Global UK subsidiary. Ultimately, MF Global Inc. bankruptcy trustee James Giddens found as much as $1.6 billion of misappropriated customer funds.

Nobody Knows Anything

“I simply do not know where the money is” Corzine droned at a Congressional hearing. OK, if you don’t then who does? There is some evidence now that this money filching scheme began as early as August 2011 over two months prior to the October 31 bankruptcy filing. Mid –level employee Edith O’Brien pleaded her Fifth Amendment rights when she was called to testify about her role in the scam.

In what was surely dozens of illegal transactions, miraculously there is a dearth of memory cells purporting any knowledge of the purloined funds. Between the CFTC, the CME, the SEC, and the Justice Department investigations, astonishing and incredulous am I that none of these agencies could piece together enough forensic accounting evidence to levy even a few indictments against Corzine and his henchmen.

Lurking conspiracy theorists say MF Global was a client of Eric Holder and his deputy AG Lanny Breuer’s former law firm of Covington and Burling and Corzine is a huge Obama fundraiser so therefore any probes will be superficial and inconclusive.

Well, that has certainly been the headlines in recent days -- no criminal charges are expected. I guess you’re not paranoid if they’re out to get you.

Contributor 
From all accounts Corzine was a very hands-on manager. He relentlessly walked the trading floor and was chief architect for all the sovereign debt positions.

He is an expert on the asset class; he used to trade sovereigns back in his Goldman days. Consequently, because of the extreme leverage employed even small moves in interest rates could mean big margin calls. Any person with any attention to detail would be constantly monitoring all trades and calculating exactly what margin may be due and where the money to fund them was going to come from.

Corzine did not get to be head of Goldman Sachs, a senator and governor of New Jersey without being an very bright, attention to detail-oriented person.

Anytime a big margin call came in, who do you think was notified first? Ultimately whose decision was it as to where the money to meet the call was going to come from?

It’s perplexing why can’t regulators trace over a billion dollars in wire transfers? “Judicial Watch” got so tired of asking they have filed suit under the FOIA requesting all documents relating to missing customer funds. 

Trustee Giddens is so angry about desultory regulators; he vows to seek state venues for criminal action. So unless Mr. Corzine received some unclosed head blow which resulted in a rapid cognitive decline, the odds are, to me, thin indeed that he remained ignorant of MF Global machinations.

The sad thing is that Corzine just ran out of time. Most of his European bets have already been refinanced and paid off in full. As they say in accounting, it was just a “timing difference”.
Except in this case someone misappropriated $1.6 billion of money that didn’t belong to them.

Will Mr. Corzine realize his next dream of starting his own hedge fund or will he get to spend the next decade or two doing what I think he should be doing, time, and preferably not at some “club fed”.

In the News: Richest Americans' net worth jumps to $1.7 Trillion - Forbes

Art by the great Warren Kremer.

By Dan Burns, Reuters

New York (Reuters) - The net worth of the richest Americans grew by 13 percent in the past year to $1.7 trillion, Forbes magazine said on Wednesday, and a familiar cast populated the top of the annual list, including Bill Gates, Warren Buffett, Larry Ellison and the Koch brothers.

The average net worth of the 400 wealthiest Americans rose to a record $4.2 billion, up more than 10 percent from a year ago, while the lowest net worth came in at $1.1 billion versus $1.05 billion last year, the magazine said. Seven in ten of the list's members made their fortunes from scratch.

It was a bad year, however, for social media moguls, whose net worth fell by a combined $11 billion. On the heels of Facebook Inc's rocky IPO in May, the No. 1 social network's chief executive, Mark Zuckerberg, was the year's biggest dollar loser: his net worth fell by nearly half to $9.4 billion from $17.5 billion. He also slid to the No. 36 slot from No. 14 a year ago, Forbes said.

Facebook shares have fallen 40 percent from their IPO price of $38 a share in May.
Dismal performances by other social media stocks dropped some executives from the list altogether, including Groupon Inc Chairman Eric Lefkofsky, No. 293 on last year's list, and Zynga Inc Chairman and CEO Mark Pincus, No. 212 on the 2011 list.

"The gap between the very rich and merely rich increased and helped drive up the average net worth of The Forbes 400 members to an all-time record $4.2 billion," said Forbes Senior Wealth Editor Luisa Kroll.

Collectively, this group's net worth is the equivalent of one-eighth of the entire U.S. economy, which stood at $13.56 trillion in real terms according to the latest government data.

But the 13 percent growth in the wealth of the richest Americans far outpaced that of the economy overall, helping widen the chasm between rich and poor.

Forbes attributed the growth in net worth in part to the performance of the stock market and a recovering real estate market.

But while their wealth grew faster than the economy as a whole, which expanded at an anemic 1.7 percent annual rate in the second quarter of 2012, the super rich generally failed to keep pace with the stock market. The benchmark Standard & Poor's 500 index rose nearly 20 percent over the 12 months ended August 24, the last date of market performance measured for this year's list.

Familiar Names at the Top

Gates, the chairman of Microsoft Corp., topped the list for the 19th year in a row, with $66 billion, up $7 billion from a year earlier.

Buffett, chairman and chief executive of insurance conglomerate Berkshire Hathaway Inc, stood second with $46 billion, followed by Ellison, head of software maker Oracle Corp, with $41 billion. Brothers Charles and David Koch, who run the energy and chemicals conglomerate Koch Industries Inc and who are active in conservative politics, were tied for fourth with $31 billion, Forbes said.

The ranks of the top five were unchanged from a year earlier.

Two notable names dropped from the top 10, however. Casino magnate Sheldon Adelson, also active in conservative political causes, fell to the 12 spot from No. 8 last year, and financier and liberal philanthropist George Soros dropped five spots to No. 12.

Michael Bloomberg, the billionaire founder of Bloomberg LP who is now in his third term as New York City mayor, rose to the No. 10 slot.

Newcomers to the elite club of 400 include Laurene Powell Jobs, the widow of Apple Inc (NSQ:AAPL - News) cofounder Steve Jobs who is now the wealthiest woman in Silicon Valley, and Jack Dorsey, the co-founder of Twitter.

Just 45 women made the cut, up from 42 last year, Forbes said.

California has the largest share of Forbes 400 members, with 87, followed by New York, Texas, Florida and Illinois. Among cities, New York City topped the list, with 53. San Francisco, Dallas, Los Angeles and Houston rounded out the top-five cities.

One quarter of the Forbes 400 come from the finance and investment sector while another quarter come from either the technology, media or energy industries.

The complete list can be found at: www.forbes.com/forbes400 .

(Additional reporting by Edith Honan in New York; editing by Matthew Lewis)

'Always Look To the Bright Side of Life'

Some say we at A&G are overly negative when it comes to the global economy; that to paraphrase a Monty Python song, we don't look at 'the bright side of life'..

So we're sorry.. truly sorry.. deeply truly sorry.. really deeply truly sorry... (Its another Monty Python reference btw-- the 'Dirty Fork' skit)

So.. yes, lets try some positivity:

We are sure everything will get better with the economy now that QE3 will be implemented adding $40bil/mo to the $45bil/mo already committed to by the Fed via Operation 'Twist' 2...

"A quiet day on Wall Street turned into the worst sell-off in three months after a Federal Reserve official said he doubted the bank's effort to boost economic growth would work.  Charles Plosser, president of the Fed's Philadelphia branch, told an audience Tuesday that the Fed's effort to support the economy would likely fall short of its goals."  (AP)

And if things ever get worse with the economy, don't worry-- the Fed has unlimited options to fix everything so our lives are not altered one iota

"The latest round of extraordinary Federal Reserve stimulus is risky and leaves little room to maneuver should another crisis hit, economist Lawrence Lindsey told CNBC's "Squawk Box" on Wednesday.

Lindsey said that with the Fed purchasing at least $40 billion a month in mortgage debt through QE3, "they are buying the entire deficit." ... He added, "If this becomes the new ordinary, it's hard to imagine the Fed's maneuvering room" should another crisis hit. "  (CNBC)

Life is good..and the holiday shopping season this year is going to be just 'Crackin!' (to borrow a Welsh expression)..  Its going to be just 'Smashin!'

"Since the beginning of June, when the Europeans promised endless QE and the Fed leaked that QE3 would be coming, most commodities have had huge runs from trough to peak.  As these price increases move through the system, consumer goods prices will increase at least as much as the commodities, and just time for the Christmas inventory channel build.

So, you want to buy your wife some jewelry? Gold and silver are up almost 15% and 25%, respectively. Want to make a nice dinner for the family? Corn is up 40%, wheat is up 50%, and soybeans have risen 30%. If you care to drive anyone, anywhere, oil and gas are up 30% and 35% respectively and the basket known as the CRB index of commodities, which includes energy, grains, industrials, meats and precious metals, is up 20%."  (Yahoo! Financial)

And Europe..  Let us tell you about Europe..  Ever since Mario Draghi, head of the ECB promised the to act as a Euro-version of the Fed and buy up everyone's debt, there are just smiles abound in the Old Continent...

"Violence has erupted in Greece after an anti-government rally in Athens that drew about 50,000 people.  Riot police used tear gas and pepper spray against several hundred demonstrators near the parliament... Shopkeepers, teachers, customs workers and car mechanics were among those taking part in the march in central Athens, held during a general strike against new austerity measures."  (AP)

Yes, there's been much excitement.. um.. we mean happy excitement.. Everyone in Europe is very happy and smiling and excited over their future...

"On a recent evening, a hip-looking young woman was sorting through a stack of crates outside a fruit and vegetable store here in the working-class neighborhood of Vallecas as it shut down for the night.

At first glance, she looked as if she might be a store employee. But no. The young woman was looking through the day’s trash for her next meal. Already, she had found a dozen aging potatoes she deemed edible and loaded them onto a luggage cart parked nearby.

“When you don’t have enough money,” she said, declining to give her name, “this is what there is.” 


The woman, 33, said that she had once worked at the post office but that her unemployment benefits had run out and she was living now on 400 euros a month, about $520. She was squatting with some friends in a building that still had water and electricity, while collecting “a little of everything” from the garbage after stores closed and the streets were dark and quiet.

Such survival tactics are becoming increasingly commonplace here, with an unemployment rate over 50 percent among young people and more and more households having adults without jobs. So pervasive is the problem of scavenging that one Spanish city has resorted to installing locks on supermarket trash bins as a public health precaution."

See.. Everything is Wonderful..  Now everyone can go back to worrying about 'real' problems like when the NFL will replace those replacement refs.  Just a National Travesty --  Nudge Nudge, Say No More!!

More Omega-3 Fish Oil Syrup for my Waffles, Please

Fish Oil Supplements: Do They Do The Body Any Good?, Scientific American 

by Melinda Wenner Moyer

If you've been following the media trail on fish oil lately, you've probably been tempted to forgo the smelly capsules. A systematic review of 20 studies published last week in JAMA The Journal of the American Medical Association reported that neither eating extra helpings of fish nor taking fish oil supplements reduces the risk of stroke, heart attack or death. In June a review of studies published on behalf of the Cochrane Collaboration, an independent, not-for-profit organization that promotes evidence-based decision-making, concluded that fish oil pills fail to prevent or treat cognitive decline. And a 2011 meta-analysis by Yale University researchers debunked the idea that omega-3s alleviate depression. These proclamations run counter to what we have been told about fish and fish oil for decades. So why is the consensus changing? Is it time for us to toss out our pills for good?

Not necessarily. Although it's true that early research on fish oil seemed far more promising—one 1999 trial, for instance, reported that people who took omega-3 pills were 10 percent less likely to have a heart attack, stroke or die from cardiac disease than people who did not—some researchers think that recent negative findings reveal more about us than they do about fish oil. Omega-3 pills may be beneficial for certain people but not for others, they say, and existing studies may not account for individual differences.

There's no question that polyunsaturated omega-3 fatty acids—the technical name for the good fats found in fish and fish oil—are important parts of a healthy diet. Our bodies can't make them, yet we need them to survive, as they form part of our cell membranes. Although the mechanism by which they might prevent heart disease, cognitive decline and depression isn't well understood, research suggests that they reduce blood pressure and inflammation and that they increase brain blood flow and give neurons structural strength.

And no one questions the World Health Organization's recommendation that pregnant and
nursing women should consume at least 300 milligrams of omega-3s daily to boost fetal brain development. "That [benefit] has been clearly demonstrated in trials," says Dariush Mozaffarian, a cardiologist and epidemiologist at Harvard University, who studies fish oil.

But for other adults, the health benefits of supplementing have become much harder to gauge. That's in part because many of us get lots of these good fats from our diet anyway: According to the United Nations Food and Agriculture Organization, per capita fish consumption has doubled (pdf) since 1961, and "more consumption doesn't really add much bang for your buck," Mozaffarian says. In other words, adding more omega-3s to an already omega-3–rich diet does not do much good, a fact that could help explain why recent studies have been more equivocal than studies from several decades ago, when fish was less popular. "We have no evidence from populations whose dietary intake of omega-3 fatty acids may be low and who may therefore benefit from supplementation," says Alan Dangour, head of the nutrition group at the London School of Hygiene and Tropical Medicine and co-author of the recent Cochrane review. In addition, preliminary research suggests that certain ethnic groups—such as Japanese and Italians—may benefit more from omega-3 supplements than others, perhaps in part because of how well their bodies absorb the fats.

Another potential problem is that most of the research on fish oil and heart health—including all of the trials included in the recent JAMA analysis—have involved subjects who already have heart disease or established risk factors. Whereas this isn't necessarily a problem in itself, it means that very little research has addressed whether fish oil supplements benefit healthy people. "The jury is still out on whether omega-3 supplements can prevent a first cardiovascular event in people at usual risk," says JoAnn Manson, an epidemiologist at Brigham and Women's Hospital in Boston who is conducting a trial to answer this question, which she estimates will be finished in 2016.

Moreover, because so many trials have involved subjects with heart problems, subjects in recent years have been "taking multiple medications, such as aspirin and statins, which can obscure the effects of supplements," Manson says. (Half of the studies included in the JAMA analysis were conducted after statins became commonplace.) This fact could also help explain the outcome discrepancies between recent trials and older ones carried out during the pre-statin era. Indeed, a February 2012 analysis of a large European clinical trial reported that fish oil supplements do not prevent second heart attacks among people taking statins, but that it cuts risk by half among people who don't take the medications. (Because there were so few non-statin users enrolled in the trial, this finding did not quite reach statistical significance.)

People who enroll in and complete omega-3 trials may differ from typical Americans in important ways, too. "Members of the public who volunteer to join randomized controlled studies are frequently healthier and more active than the average for the population," Dangour says, which could affect outcomes in unknown ways. In addition, he adds, people who drop out of trials are often the sickest, and they might be the ones who would most benefit from supplementation.

There's also more than one type of fish oil. Typically, in omega-3 intervention studies, subjects take pills containing a near-equal mixture of two fats, docosahexaenoic acid (DHA) and eicosapentaenoic acid (EPA)—but some research suggests that in certain situations and for certain outcomes, one may be better than the other. For instance, a 2011 meta-analysis concluded that fish oil capsules don't help treat depression, but a group of British and Norwegian researchers challenged these findings, citing evidence that pills containing at least 60 percent EPA do seem to provide mood benefits. Another controversial question is whether the omega-3 dose is important in and of itself or whether the ratio of omega-3 to omega-6 fats one consumes is more important. (Although omega-6 fats are important for survival, Americans tend to consume far more of these fats than they need.)

Finally, whereas the recent JAMA analysis concluded that fish oil has no effect on cardiovascular outcomes, the researchers did find that omega-3s reduced the risk of cardiac death by 10 percent, an effect that was statistically significant (having a "p value" of 0.01).

The researchers did not report the finding in their conclusions because they subsequently modified their statistical calculations to account for the fact that they had used the same data set to ask a number of different "exploratory" questions: In this case, does fish oil prevent heart attacks? Strokes? What about sudden cardiac death? The team wanted to tighten their definition of statistical significance to account for the fact that the more questions one asks, the more likely one is to get a positive result by chance. Still, Mozaffarian says, "if you combine all the data and look only at cardiac death, there is a statistically significant benefit. A 10 percent reduction in the number-one cause of death in both men and women in the U.S. is a big deal."

So, should you take fish oil pills or not? Most researchers agree that oily fish such as salmon and mackerel are far better way to get your fill of good fats. Many of the early, promising studies on omega-3s involved fish rather than fish oil pills (in one, men who were advised to eat fish were 29 percent less likely to die in the two years following a heart attack than men who were not), and a 2010 study by Columbia University scientists reported that following a Mediterranean diet—which, among other things, is rich in fatty fish—reduces the risk of Alzheimer's disease by 34 percent. "Not only may people be benefiting from the omega-3 fatty acids in fish, but the fish may be displacing such foods as hamburgers and quiche from the diet, both high in saturated fat," explains Alice Lichtenstein, director of the Cardiovascular Nutrition Laboratory at Tufts University.

If you don't eat fish, then the question of what to do becomes more difficult. Researchers argue that, ultimately, we need more randomized, controlled clinical trials on omega-3 supplements—particularly in healthy people who don't take medications—but these are becoming rare, in part because the supplements will never be big moneymakers. "Generic fish oil is available, so drug companies don't have any strong motivation to fund trials," Mozaffarian says.

But despite the murky science, if you don't get omega-3s from other sources—or if you have heart disease risk factors but aren't taking medications—omega-3 pills may still be a good idea. "There's no harm in taking a fish oil supplement, and there could be benefits," Mozaffarian says. "The bottom line is that getting some [omega-3] is better than getting none."