Throwing It All Away

I have been thinking about the fact that part of the downfall of the Croc company was that their product was fairly immortal. It made me think of nalgenes, which are also supposed to be indestructible, and wonder whether they were facing the same problem. However, all the articles I found about Nalgenes had to do with the BPA chemical issue in the bottles and whether or not they're dangerous. So I looked at Sigg instead, the Swiss hardcore reusable bottle maker. It appears that in 2009, despite the recession they saw unprecedented growth and planned for 2010 accordingly:

"The growth we experienced in 2009 is unprecedented," stated Paul Rappoport, COO for LEVEL. "Especially considering the challenging economy, this validates our ability to remain relevant and create differentiating digital campaigns that span a wide range of our clients' industries." The agency's success was a direct outcome of their ability to architect stronger connections between a brand and its audience. Leveraging their expertise in providing global brands with innovative marketing campaigns delivered by proven technology platforms, LEVEL continued to positively influence the way that consumers interact with their favorite brands.

"Humbly recognizing our performance last year, our executive management team developed a strong plan for 2010 and will approach this year with the same amount of diligence," stated Tom Adamski, President | CEO for LEVEL. "We will focus on generating brand awareness for our clients across connected devices while continually expanding our product design and mobile application practices." About LEVEL Studios LEVEL Studios is an independent digital agency that amplifies global brands by innovating across desktop, web and mobile environments. Founded in 1995, the agency now operates three California studios specializing in user experience, digital media and application development.

I wonder whether they are about to go the same direction as Crocs because their bottles won't need to be replaced. What we learned in class is that Croc profits died due to decreasing demand as a result of the saturated market while the producers simultaneously geared up for increased sales. How similar is Sigg to Croc? Will they necessarily go the same direction? I think that the per person demand for the bottles is about as finite as for the shoes because they last forever and are not the sort of object that people usually collect more than one, maybe two of. But I think that maybe Sigg will continue to grow when Croc died because there are more people to convince they should buy reusable water bottles with the expanding environmentally based economy, as compared to people who could be convinced to buy somewhat endearingly ugly juvenile plastic shoes. Sigg should be careful to not overestimate their popularity, to learn from the Croc example, but I think they might continue to see increasing profits if they keep on creating new bottle designs and using marketing to reach more people.

Thoughts on the fate of Sigg? Anyone have one of their water bottles?

Economics and Disasters

About a month ago, I remember hearing on NPR that Chile was an economic success story, having one of the highest standards of living in Central America. This is an important thing to consider when looking at the destruction of the 8.8 earth quake that hit it yesterday. According to the Economist:
"[T]he gap between the two countries’ levels of development and disaster preparation means that the aftermath will be very different. While Haiti is the poorest country in the western hemisphere, Chile has been one of Latin America’s better-performing economies for years, and living standards are similar to those of large middle-income countries like Russia and Mexico. That wealth has enabled it to invest in transport and health infrastructure that far surpasses Haiti’s. This has ensured that search and rescue teams can reach their destinations quickly, and that survivors will receive prompt medical attention. "
Chile has more capital, and a stable government that invested in its infrastructure. It is interesting to consider that government spending on infrastructure doesn't just lead to a rise in the GDP of a country, but also functions as a form of insurance, protecting the country's people and assets and making for a speedier economic recovery. The Economist article highlights this good economy as insurance with:
"Just off its [Chile's] coast is the Nazca plate, which rests below the south-eastern Pacific Ocean and slides beneath the South American tectonic plate by some 9 centimetres a year. The geological fault-line between them has seen 13 earthquakes of magnitude 7 or higher since 1973, as well as the single biggest tremor in recorded history, a magnitude 9.5 quake that struck Valdivia in 1960. As a result, Chilean leaders have had both the foresight to establish strict building codes, and the money and institutional strength to enforce them."
Chile was able to thoroughly prepare itself because it had the money, awareness and the stable government necessary to do so. What this article has made apparent to me is how much riskier anything is when a country is poor. Haiti, for various reasons didn't have the capital or means of distributing it in order to enforce building codes or implement disaster strategies. It has lost more because it was incapable of spending more on infrastructure. Thus, ultimately those who make more can be more prepared and can therefore lose less.
In comparing Haiti and Chile, I would consider this fairly true, but I was wondering about other cases, like say Hurricane Katrina. The article ends with: "Although nature decides when and where disasters strike, it is still humans who determine how much suffering they inflict." Can a disaster prove to be an economic barometer, showing who is rich and who is poor by the means of who suffers the most?
Link to Article is Here

As we are building from the recession, I think it's important to recognize that methods of creating jobs make more sense than others. What I mean is that we ought to be taking advantage of the fact that we are doing a pitiful job of being environmentally progressive and that we are facing 10% unemployment and thus try to create jobs in the area of sustainability because it will create short-term and long-term growth. After reading this article by Thomas L. Friedman about the Copenhagen Climate summit I began realizing how much these sorts of environmental policies tie into economics by manipulating the market for nonrenewable, coal based resources by taxing them (and thus making them less profitable and less desirable) and then using that money to invest in the renewable energy market so that prices, which at this point are not that affordable for the average American due to resources and technology, could be. I think it would be an excellent fiscal policy. Here's most of Thomas Friedman's article, The Copenhagen That Matters:

The more I listened to the Danish minister, Lene Espersen, the more I thought of my own country, where I’ve been told time and again by U.S. politicians that proposing even a 10-cent-a-gallon increase in gasoline taxes to make America more energy independent and to stimulate fuel efficiency is “off the table,” an act of sure political suicide.

Not in Denmark. So I asked the Danish minister: “Tell me, what planet are you people from?”

Espersen laughed. But I didn’t. How long are we Americans going to go on thinking that we can thrive in the 21st century when doing the optimal things — whether for energy, health care, education or the deficit — are “off the table.” They’ve been banished by an ad hoc coalition of lobbyists loaded with money, loud-mouth talk-show hosts who will flame anyone who crosses them, political consultants who warn that asking Americans to do anything important but hard makes one unelectable and a citizenry that doesn’t even ask for optimal anymore because it believes that optimal is impossible.

Sorry, but there are no good ideas proven to work in other democratic/capitalist societies that we can afford to shove off our table — not when we need to build a knowledge economy with good jobs and everyone else is trying to do the same.

“Already the green taxes here are quite high,” said Espersen. “And even though we know this is not popular with business and industry, it has made all the difference for us. It forced our businesses to become more energy efficient and innovative, and this meant that, suddenly, we were inventing things nobody else was inventing because our businesses needed to be competitive.”

The Environmental and Energy Study Institute, a nonpartisan research center, and the Embassy of Denmark recently held a briefing on how Denmark is working to become a low-carbon economy. Here are some highlights:

Although it still generates the majority of its electricity from coal, “since 1990, Denmark has reduced its greenhouse gas emissions by 14 percent. Over the same time frame, Danish energy consumption has stayed constant and Denmark’s gross domestic product has grown by more than 40 percent. Denmark is the most energy efficient country in the E.U.; due to carbon pricing, through energy taxes, carbon taxes, the ‘cap and trade’ system, strict building codes and energy labeling programs. Renewable resources currently supply almost 30 percent of Denmark’s electricity. Wind power is the largest source of renewable electricity, followed by biomass. ... Today, Copenhagen puts only 3 percent of its waste into landfills and incinerates 39 percent to generate electricity for thousands of households.”

The Danish government funnels energy tax revenue “back to industry, earmarking much of it to subsidize environmental innovation,” wrote Monica Prasad, a faculty fellow at Northwestern University’s Institute for Policy Research, in a March 25, 2008, essay in this newspaper. Therefore, “Danish firms are pushed away from carbon and pulled into environmental innovation, and the country’s economy isn’t put at a competitive disadvantage.”

It’s why Denmark, with only five million people, boasts some of the leading wind, biofuel and heating, cooling and efficiency companies in the world. Energy technologies are now 11 percent of Denmark’s exports. Oil exports and energy taxes also subsidize mass transit and energy efficiency, keeping bills low for Danish consumers.

The Great Re-Depression

As we all know, the world is still recovering because of the near collapse of the financial system. However, according the the Economist, this past decade was the worst for Americans since the Great Depression. It is hard to imagine this because people, although hurting, are not sleeping in shanty towns in Central Park.

The Economist states:

Real GDP in America grew by an average of 1.9% a year during the 2000s. This may not sound all that terrible, especially for a decade that saw one short recession and another particularly deep and long one. But it is the economy’s worst performance for a long time. During the previous six decades, average growth was 3.9% a year. Only the 1930s—when growth was a mere 0.9% a year—were worse. And America’s population is growing smartly, so GDP per head has grown a good deal more sluggishly than GDP as a whole. The story is much the same when the growth in Americans’ personal consumption during the ten years to the end of 2009 is compared with previous decades. Again, only the 1930s were worse".

The employment rate outside of farming was also a wash in the 2000s, because it fell by 0.8% where as earlier between 1940 and 1999 in increased by an average of 27% each decade. Furthermore, "in January this year, the number of people who had been jobless for more than six months reached 6.3m", and though the economy has grown for each of the past two quarters, the unemployment rate has only just begun to slowly lower. Though the recession is now technically over, the 2000's economic performance could be a sign for what is yet to come for America in the 21st century. Do you think the Baby Boomers could account for this change, or is it a new economic trend?

If this is a new economic trend, then what will our generation do for work, or will it be necessary for the Baby Boomers to retire? Furthermore, as U.S. Government plans to give out more stimulus money, will the U.S. need to create jobs by expanding exports in order to stop the job regression in the 2000's, as we have discussed in class?

How does this information affect the "Stimulus Plan"? How can America continue to grow at a rate seen in previous decades? Does the end of the Cold War and free trade have anything to do with this slump in economic growth? How do you get the 6.3 million people who have been jobless for 6 months jobs again. Is this really a Great Recession, or actually a Great Re-Depression?

Dannon loses $45 million for Deceiving Consumers

Dannon loses over $45 million for Deceiving Consumers

In a competitive market, sellers sometimes compete unfairly to gain an advantage in the market. However, when such companies like Dannon tries to cheat the system, the government steps in as law enforcer. The government tries establish a maintain a fair competitive market by various sanctions.

According to abcnews.com, "For two years Dannon hs been touting Activia and DanActive yogurt products as "clinically" and "scientifically" proven to regulate digestion and boost immune systems.

Despite the claims, Dannon must pay consumers up to $45 million in damages under the terms of a class action settlement, reached in Federal Court. The agreement also calls for Dannon to change its health claims for Activia and DanActive.

"This is victory for just about anyone who benefits from accuracy in food labelling" lawyer John Climaco told ABC News.

Both yogurt sells at a 30% percent premium over the other brands because they claim special bacterial ingredients that the company advertised as clinically proven to help strengthen immune systems and regulate digestion.

According to Timothy Blood,the lawyer of the complainant" 'Deceptive advertising has enabled Dannon to sell hundreds of millions worth of ordinary yogurt at inflated prices to responsible, health-conscious consumers".

What are your thoughts about this article? Why do you think it took two whole years for these "false" yogurts to be found out? Do you think that $45 million law suit is justified for such a flaw? Are the regulators doing a good job on a whole at ensuring that quality products enter the competitive market?

Jobs report critical after mixed economic data

Investors are seeking direction. Friday's report on employment could give them exactly what they want.
The Labor Department's monthly snapshot on employment has always been crucial for investors trying to figure out where the economy is headed. This month's report comes at a time when the market cannot figure out which direction it wants to go. Economic indicators domestically and around the globe are as murky as they've been in months.
Markets have alternated rallies and retreats in recent weeks -- sometimes even within a single trading session -- following fallout from European debt problems and recent reports on housing, manufacturing and consumer confidence that sent mixed signals.
On top of that, the last two weekly jobless claims reports have shown surprise jumps in people filing for unemployment for the first time. Both weeks economists had forecast declines.
The uncertainty means investors will delve deeply into the monthly employment report. Underneath headline numbers that aren't apt to improve much, traders and analysts will dissect other data from the report looking for signs that the economy is on the right path.
The report could suggest the U.S. is following Europe, where growth is almost nonexistent, or it could show that the fourth-quarter gross domestic product jump of 5.9 percent can be sustained.
Consumer spending accounts for about 70 percent of U.S. economic growth, making it critical to a strong recovery.
The headline numbers in Friday's report -- the unemployment rate and jobs added or lost -- will still be important. Economists polled by Thomson Reuters project the unemployment rate rose to 9.8 percent in February from 9.7 percent a month earlier.
At the peak of the recession, employers were shedding more than 700,000 jobs a month. In February, they are expected to have cut 20,000 jobs for the second straight month.
"Job losses have slowed significantly," said Arpitha Bykere, a senior analyst at Roubini Global Economics. "A recovery now hinges on hiring."
-- Underemployment: In addition to those considered "unemployed," this rate factors in workers who have given up looking for work and part-time workers who would prefer to work full-time. The current rate is 16.5 percent, meaning nearly one in six people aren't working as much as they'd like.
-- Hours worked: The average number of hours worked is one of the better leading indicators in the report, analysts say. That's because current employees can only work so many hours before new staff needs to be hired. A continued rise in average hours worked would point to job creation in the coming months.
Economists forecast hours worked rose to 33.4 hours in February from 33.3 a month earlier.
-- Temporary employment: This is also considered a good indicator of which direction the unemployment rate will go in a few months. With employers still unsure about the recovery's strength, they'll add temporary or part-time workers at first if they see a surge in demand.
Temp services added 52,000 jobs in January, the fourth straight monthly gain.
Analysts say employers won't add permanent jobs, because of the high costs of salaries, benefits and training, until they are sure business has returned for good.
-- Unemployment duration: Roubini Global Economics' Bykere said more than 30 percent of unemployed people have been out of work for at least six months and half at least three months. Those signs are troubling, she said.
The longer someone is unemployed, the harder it is for them to find a new job, especially for people who have to retrain to find work in a new profession.
Does this prove that the US is still in a recession or it simply means that the US is just having trouble getting back up?

Copper in Chile

Copper mines have joined the list of casualties and damages in the recent Chilean earthquake.

Chile is the world's largest producer of copper, and mines have now been closed for two days. Among the closed mines is El Teniente, the world's largest underground copper mine. What I'm getting at, is Chile is a major producer of copper, and production has come virtually to a halt.

Although many mines are expected to reopen within the next few days, even a small change can make a huge difference. An analyst Macquarie Group Ltd. says, "We see copper as the tightest of the base metal markets. Even if it's just 1% of global supply that is affected, it would be significant."

This could mean a lot for Chile, seeing as copper make up about 50% of Chile's $53 billion of exports. Even in the last few years, prices for Copper have more than doubled, and just in 2009, production rose nearly 1%.

Assuming mines do reopen within the next few days, what could this mean for the Chilean economy? How much of this will affect the world economy for copper?

Shut down of Hummer Brand

Shut down of Hummer Brand

The recession had a tremendous on many products. The recession has pushed many products further to the point of shutdown among the Hummer brand which will be shutdown.

To see image of a Hummer vehicle: http://rw-3.com/wp-content/uploads/2009/02/hummer.jpg

According to CNNMoney.com, General Motors' deal to sell its Hummer brand to a Chinese automaker fell through Wednesday and the company said it now plans to shutdown the brand.

The large SUV brand is based on the Humvee military vehicle. It was always a niche vehicle but its image and sales were hit particularly hard by rising gasoline prices earlier this decade. Last year, GM only sold 9,046 Hummers, down 67% in 2008.

Hummer is the third largest brand that GM is being forced to shut down as part of its bankruptcy reorganization last year.

Chinese automakers have shown interest in buying established western brands as companies there strive to become more global players.

Why do you think are some of the possible effects of the shutdown of Hummer? Other than the rising gas prices what do you think are the other reasons why Hummer reached shut down point? Do you think that GM is losing out in the competitive market?

So Far, E-Books Aren’t Making Sales Waves

The publishing industry’s alarm over the electronic book isn’t based on current use. Last year, less than 2 percent of all books sold were e-books, according to Bowker, which tracks the industry.
By contrast, trade paperbacks and hardcovers made up approximately 35 percent each of unit sales, Bowker says. Mass market paperbacks came in at 21 percent.
But we all know how fast technology can take hold. Not long ago, e-commerce sites like Amazon.com were just a blip on the bookselling scene, and now they are major players.
Book chains still hold the lead in the percentage of books sold, at 27 percent, but they are now followed by e-commerce sites, at 20 percent. Independent booksellers, meanwhile, account for only 5 percent of books sold.
With e-books costing less to make but also selling for much less than printed books, it’s no wonder that publishers are anxiously eyeing the horizon.
Do you think purchasing e-books on the Internet will benefit more on the economic side and the environment side? If people begging to buy for e-book , less paper will have to be use and we can be saving some money while caring about the environment.

More Google. ...Sorry.

Although Google may take a bit of a blow after withdrawing from China, it seems a new question has taken the spotlight. It's not whether China can survive with the restrictions after Google brings them to light in Western countries.

My point is, how many people would have known the effects of China's questionable activities and had the knowledge to question them if it were not for Google?

Until now, Western corporations have primarily gone along with China's policies. However, now that Google has taken the admirable step of seeking open and public resistance to China's policies, other Western corporations will be questioned why they collaborate with China's demands to not only censor material, but also assist in prying into private emails (Yahoo).

Priorities will become all too apparent in companies like Microsoft, who's search engine Bing censors information both inside and outside of China, and Apple, who block the downloading of apps relating to the Dalai Lama.

And besides the approximate thousand scientists who participated in the survey I mentioned yesterday, there are still an estimated tens of millions of Chinese citizens who use Google everyday who will begin to question the Chinese government if they choose to drive Google out of the country rather than lowering their demands.

Biden delivers middle-class task force's first annual report

In its first annual report released Friday, the Obama administration's middle-class task force introduced plans to address the "middle-class squeeze" in the U.S. economy.
Vice President Joe Biden, who heads the year-old task force, said that the administration's focus over the past year has been on issues including retirement security, access to affordable education, the balance of work and caregiving and the creation of jobs for middle-class workers.
To address these issues, the task force has introduced new initiatives for fiscal year 2011, such as a plan to protect retirement savings, a way to lower student loan payments and a proposal to increase a tax credit that would help with rising child care expenses.
Retirement: The retirement savings initiative would introduce new regulations to "improve the transparency and adequacy" of 401(k) savings, and employers will be required to enroll employees in a payroll-deduction IRA if the company doesn't already offer a retirement plan.
Under the same plan, the saver's credit for working families will become fully refundable and will be expanded to match 50% of the first $1,000 of a person's retirement savings for families who make up to $65,000.
"After a lifetime of employment, American workers deserve a secure retirement," the report said. "Yet for middle-class workers today, especially in the wake of the historic losses to retirement savings and housing wealth in the financial crisis, retirement seems anything but secure."
Education: In order to make college more affordable, the administration plans to make efforts to reform student lending, cap student loans, and proposes to permanently extend the American Opportunity Tax Credit, which is worth up to $2,500 per year.
Caregiving: As a way to help middle-class families handle the high costs of caregiving, the administration said it is aiming to nearly double the Child and Dependent Care Tax Credit and boost funding for the Child Care and Development Fund by $1.6 billion.
Jobs: The administration's plan to protect employees and create more jobs includes passing the Employee Free Choice Act to help workers who want to form unions, and offering tax benefits to small businesses to encourage hiring.
In order to support the manufacturing sector and encourage the creation of green jobs, the administration also plans to improve the process of procuring government contracts, invest in clean energy manufacturing and infrastructure, and add $5 billion to the $2.3 billion Advanced Energy Manufacturing Tax Credit.

I am an avid knitter and believe that it is part of the solution to saving Detroit. Already making the empty land into a garden is a process in motion, and knitting would be a complementary aspect to revitalizing Detroit based on self-sufficiency.

While freeing themselves politically from the British, Gandhi recognized the importance of being socially, culturally, and economically free too. So, he created constructive programs to help Indians regain their dignity and learn to provide for themselves. He even said that someone helping the campaign for independence should be either in jail, involved in civil disobedience, or weaving clothes. Gandhi considered pursuits of craftiness on the same level as going to jail for the cause.

Under this logic, in order to free Detroit from the inside-the-box manufacturing mindset that led the city into the problems its experiencing now, Detroit ought to learn how to support themselves. I think that in order to correct the problems of international trade, community, laziness, warmfuzzy disorder, the recession, and sustainable farming, we need to knit. We need to renew the making of useful items as opposed to the buying of superfluous ones.

If Detroit becomes a sustainable farming community-- so that everything would be local, could be organic, animals kept on the farm too--then the animal fur could be used for knitting. All the people who are unemployed, posessionless, and homeless, may not be able to find work but they could cut the middle-money-man and just make the products they need: food and clothes. It would be a highly sustainable economy because all materials would be local, supplied with carbon-free human labor, and could even be exported to other cities to bring in money. Knitting also creates a sense of community because it is best done together, and this would reduce crime problems. Knitting would instill a sense of connection to simplicity and responsibility for consumerism. Detroit + Gardens + Knitting = Success

Google vs. China

As I briefly touched on in my last post, Google is contemplating pulling out of China due to various web attacks on Chinese freedom activists. China is standing firm on the issue, and the ultimatum is drawing closer.

However, it's questioned whether China can afford a web without Google's power. Google is a huge and reliable resource, bringing nearly anything you desire into one page within a fraction of a second, and in multiple languages. If we think back to the PPF, Google's absence as a resource would shrink the curve, and China would suffer accordingly.

As a huge country, one might question how much Google's absence would really affect China. The answer to this lies in the solution itself. I googled it.

What I found was that Chinese scientists are pretty worried. A survey was recently done asking how scientists feel about Google's role in their field. Many found it was "indispensable" to their work. 80% said they regularly use google for academic papers. 60% said they use it to stay current on new research. Their other alternative, Baidu, has a far more limiting resource bank, and does not seem adequate for the researchers.

Says one ecologist, Xiong Zhenqin, "Research without Google would be like life without electricity."

AIG's $9 billion loss helping to stabilise their company?

AIG's $9 billion loss helping to stabilise their company?

Without a course in Economics, I wouldn't clearly understand the fluctuations of a business. As Prof Mckinney said on Thursday, it is normal for businesses to go through a cycle of profit and loss. Now, AIG is going through the motions of this cycle with fluctuations in revenue and profits.

According to CNNMoney.com, AIG reported a substantial fourth-quarter loss Friday, largely due to costs associated with selling off large stakes in its insurance businesses to reduce the debt it owes to taxpayers.

The New-York based insurance company said it lost $8.9 billion, or $65.51 per share, during the three month period ended December 31. A year earlier, the company lost $61.7 billion, the largest quarterly loss in history. The fourth quarter loss was due to billions of dollars in reconstructing costs that AIG logged in the last three months of 2009.

In Decemeber, AIG sold two large foreign life insurance companies to the US government in exchange for a $25 billion reduction in the amount that the company has to repay. The company also sold a Hong Kong life insurance company at a loss of $2.8 billion and a further $2.3 billion for its increasing loss reserve.

AIG said the moves stabilized its insurance businesses and will help it pay back its debt to the US government. The insurer received a bailout worth up to $181 billion from the Fed.

"I think it's fair to say that we made substantial progress in refocusing our business on growth and profitability, and we set in place the framework for repaying the U.S taxpayers for their support of our company during our darkest days," said Chief Executive Robert Benmosche.

Although AIG is a very large company, I think that a loss of $9 billion is huge.Why do you think this loss will help to stabilise their company? Do you think this loss with have a significant long run improvement for the company? Will they make a comeback from this loss and with what business strategies?

Apple. That's it.

Despite the pressure to write about healthcare..

I saw on Bloomberg that Apple held it's annual shareholders meeting. There were many questions that were expected to be answered at the meeting, such as who would host it, as CEO Steve Jobs has been on medical leave, and was not healthy enough to attend last year's meeting.

During the meeting, Jobs discussed what the company plans to do with the $25 billion in flexible cash. And by flexible, I mean they can do whatever they want with it. Including distribute it evenly to shareholders in the form of dividends.

However, Jobs said the company is better off keeping the money safe, saying the money gives the company "tremendous security and flexibility." Quite frankly, he's right. This stockpile of money is more than what both Google and Microsoft have. This amount of bank allows Apple to do basically whatever they want. Safely. "We know if we need to acquire something- a piece of the puzzle to make something big and bold-- we can write a check for it and not borrow a lot of money and put our whole company at risk," Jobs said.

And I hate to keep using quotes, but they're effective.

Jobs went on to say, "You never know what opportunities are going to be around the corner. We are a large enough business now that, in order to really move the needle, we have to be thinking pretty bold--pretty large."

What could they be planning?

Well, the meeting also brought to the spotlight plans to open 25 new outlets in China in the next two years. . To put this into perspective, it was only in 2001 that Apple opened it's first outlet, and now has 286 stores worldwide, although 222 are in the United States.

Although Apple's stock was up $1.34, or 0.67%, these moves could easily be seen as questionable. First, do you think Apple should distribute this money to shareholders, or at least some of it? or start up some form of buy-pack program for stock?

And second, what could this large expansion mean for Apple and also for China, especially in light of all the activity regarding Google in China?

Blockbuster facing Shutdown point?

Blockbuster facing Shutdown?

In class today, we discussed some very interesting issues about profits, loss and perfect competition. When I stumbled on this article about Blockbuster closing over 250 stores soon, I thought about the shutdown point of a company.

Struggling video-rental chain Blockbuster posted another dismal earnings report for the fourth quarter--a period that is usually its strongest because of the holidays. The company long under assault from Netflix, rental kiosks and online video offerings, shut down 253 of its U.S. stores in January. It now plans to shutdown another 150 or so in April. Additional closures are planned for about 500 and 545 stores in 2010. The latest moves follow blockbuster closing 374 U.S. stores last year entering with 3525 in 2010.

The beleagured chain posted a wider quarterly loss following after Wednesday's closing bell, hurt by massive charges relating to the diminshing value of its assets. For the most recent quarter, the Dallas based company reported a loss of $435 million, or $2.24 a share, versus a loss of $359.8 million, or $1.89 a year ago.

Revenue decreased to $1.o8 billion from $1.31 billion in the prior-year period.

"Indeed the revenue erosion despite bolstered inventories and higher advertisement spending affirms our stance that the competitive landscape has changed permanently and Blockbuster is at a severe competitive disadvantage," wrote BMO Capital market analysts Jeffrey Logsdon.

Competition is hitting Blockbuster from all fronts: Netflix, online video offering from Apple among others. Blockbuster's dying by mail business, its half-measured entrance into the kiosk business and its huge sums of debt.

Do you think that this represents a perfectly competitive market? With this increase competition, will Blockbuster eventually reach shut down point or will they recover? Why did Blockbuster suddently plunged in the sea of losses? If you were the CEO of Blockbusters what would your response to this situation be?

Something's Gotta Give: Rising Retail Profits Meet Falling Consumer Confidence

With the noatable execption of Wal-Mart, the past week has brought a string of stronger-than-expected fourth-quarter results from major retailers. Stores such as Saks, Target, Sears, TJX and Macy's reported sharp year-over-year profit increases.
The results would seem to justify the roughly 40% rally in the retail sector in the past year. But if the stock market really is forward looking, the future is not looking as bright; most retailers were dealing with very easy year-over-year comparisons and and several offered cautious guidance after reporting "blowout" fourth-quarter earnings.
"Longer term you have to be concerned about deleveraging [and the] lack of credit availability," says Barry Ritholtz, CEO of Fusion IQ and author of Bailout Nation.
The combination of consumers actively "getting out of all the excess credit they took on," plus stagnant wages means continued downward pressure on retail sales, Ritholtz says. In addition, the kind of sharp decline in consumer confidence as reported this week is generally "not pretty for the stock market," he says.
"Things are not in that frozen wasteland what we saw [a year ago] but people are dealing with difficult times," he says. "People are doing a little more spending but there's little evidence of a V-shaped recovery."
Are consumers changing the way they are spending? We discuss this on class the other day, how consumers saving more will cause a dowfall in the economy because no money is been spend.Is the recessino still affecting us now?

Back in Black

We talked in class about the national budget deficit and how much of a threat it is. Ways of eliminating debt as discussed are paying off the debt, debasing it through inflation, or defaulting on the debt and simply not paying it. Looking at the graph of factors that have contributed (slide 5 of the power point from Tuesday, February 16th) we can see that the Bush era tax cuts are the greatest contributors to the national deficit. This makes me wonder: why have the taxes not been reinstated? Is it because getting taxes past is too difficult? Is it because if Obama pushes for higher taxes for the wealthy he'll have to put up with even more crap about being a socialist? (I just saw another article today where Obama is defending himself against the accusation. He assures them that he really does support a competitive economy and want to create jobs. This is really sort of funny though since he was a community organizer so why anyone would seriously doubt his commitment to the middle class is beyond me. I also love the irony of citizens who value public education and public police force and social security attacking an ideology they actually support. Anyway...)

Returning to debt and taxes, I don't think we're ready to accept defaulting as the option yet; our American pride is still too strong for that. And I think that the quantity of debt we are currently buried under is too much to debase. So the question is: how do we go about paying it back?

Even if it's not an immediate concern, if we don't start being more careful about our fiscal policy we could follow in Greece's footsteps. In the words of the great Lao Tzu, "If you do not change directions, you may end up where you are heading."

Call me a liberal, but I do see tax increases as the only realistic way out of the deficit. Re-raise the taxes on the wealthiest 1% of Americans who got a break from Bush that they can live without. Raise taxes on commodities with indirect costs like cigarettes and gasoline and carbon so that those products are simultaneously discouraged and revenue is created. Some of the revenue could be invested in alternative energy technology so that it is more affordable. But it seems to me that the bottom line is that we are a society of intense consumers: we believe in the principle of economic growth and dismiss the fact that all growth has a limit. Why not learn to start making do with a stable economy, have less loose income, get the government out of debt (and debt reduces national saving and long term growth so it does need to be dealt with).

Alright, those are my thoughts on American consumerism, socialism, debt, and Lao Tzu. What are other ideas about getting us out of debt?

Exxon. That's it.

Recently, exploration and production company ExxonMobil took over XTO Energy. The move was expected to be a shift in strategies by Exxon, but Exxon did so because of the diminishing supply and it's newfound lack of ability to find and replace reserves. It acquired XTO Energy for their supply of natural gas. Exxon sees natural gas as the only short term solution to America's energy needs, a demand that will only grow, as Exxon expects.

As alternatives to gas are increasingly in the spotlight, how long before they are another viable source for our increasing energy demands? And what does Exxon's acquisition mean for us?

I'll copy and paste what another article states, but I'd be interested in hearing your own opinions.

The mainstream belief that shale plays have ensured North America an abundant supply of inexpensive natural gas is not supported by facts or results to date. The supply is real but it will come at higher cost and greater risk than is commonly assumed. The arrival of ExxonMobil and other major oil companies on the shale gas scene is positive because they will not follow the manufacturing approach, and will do the necessary science that should make shale plays more commercial. This does not, however, ensure success.

Is Apple facing a real Competitive Market?

Is Apple facing a real Competitive Market?

Apple is a very innovative company. They find countless ways of remodelling and creating new products to satisfy the demand of consumers. With all these technological advancements and huge sales on the world market, I sometimes wonder if Apple is facing a real competition. A competitve market is a market with many buyers and sellers trading identical products so that each buyer and seller is a price taker. Based on this definition from Mankiw, do you think that Apple's products especially iTunes have strong competition?

I was reading a news article today about Apple, its economic profit and total revenue. According to CNN.com, if the current pace of downloads continues (about 100 songs per second), Apple's (AAPL) itunes store will reach the 10 billion song mark sometime Wednesday (today). Apple always says it runs iTunesa at just about break-even; its main purpose afterall, is to sell Apple's hardware.

Since it opened for business in April 2003, however, the store has become America's no. 1 music vendor, generating revenues of $520 million in the last quarter alone, according to Piper Jaffray's Gene Munster.

Here's what the iTunes store has: margins that are better than the best e-commerce companies around, no marketing costa and a built in audience; sales of nearly $3 billion a year from its existing business; and a new $1 billion business on the way. Apple doesn't have as much explicit or implicit costs as other companies: they do not pay shipping fees nor handling fees. Apple does pay for the Internet bandwidth to deliver its applications, music and videos it sells but still its marginal revenue is very high. In addition, Apple iTunes doesn't have to spend any of its profits on marketing because it is already built in the software of its products: iPhones, iPods etc.

Apple's iTunes store and sale of iPods accessories alone had sales of $2.5 billion in 2007, and $1.7 billion in the first half of 2008. To view chart of Apple's Revenue, follow this link: http://fortunebrainstormtech.files.tech.wordpress.com/2010/02/screen-shot-2010-02-24-at-8-13-42-am.png

To celebrate what it is billing as "one huge milestone for music," the company has promised to reward whomever downloads the 10 billionth song, a $10,000 iTunes gift card.

Based on the in information I read, iTunes is the most successful ecommerce business in the world. What are your thoughts on iTunes and its mega-success? Does this seem like a competitive market for Apple iTunes? Do you think that the sale of Apple's products will decrease as they make more (diminishing marginal product? What do you think are some of the possible reasons why iTunes may have such gigantic sums of marginal revenue in comparison to other such corporations?

Starcraft II beta accounts fetching astronomical prices

Want an early look at Starkcraft II, widely expected to be one of the year's hottest PC games? You can -- but it's going to cost you.

Starcraft II, a highly anticipated game.
Considered by many to be the best real-time strategy game ever made, Starcraft has racked up nearly 10 million sales since its 1998 debut. It's a stalwart of the professional gaming scene at home and abroad -- and especially in South Korea, where televised Starcraft tournaments continue to attract millions of viewers, and the game's still something of a national obsession.
Analysts expect its sequel, Starcraft II, to sell as many as 8 million copies when it's released later this year -- but a select, invite-only group of fans are getting to test out the game early, aiming to help its developer Blizzard squash bugs and address gameplay problems.
Access codes to the "beta test" were handed out for free, with many thought to have come from giveaways at a 2008 fan festival organized by the game's developer, Blizzard. But a few enterprising fans promptly put theirs up for sale on auction sites like eBay-and the going rate is as much as $400.
Impressed? It's certainly a high price for a few months' play. Typically, beta accounts stop working shortly before the game's release, and testers need to purchase the game just like everyone else, if they're not already sick of it. It's also of questionable legality -- it's not clear whether recipients of the keycodes actually "own" them -- and Blizzard would be entirely within its rights to cancel any beta accounts it deems to have been acquired in ways it considers inappropriate.
All that said, the prices are far from a record for Blizzard. Beta keys for the most recent expansion to its hit online game World of Warcraft were changing hands for over $1000 in 2008.
Many people say that we are still in a recession, but this proves that people will find a way to obtain money to purchase this game simply for entertainment when they can have something else. Do you think this game will have as much success as people think it will during these hard economical times?

No Multi-million Dollar Corporation Left Behind

We talked this morning in class about campaign financing and the supreme court decision to treat corporations like citizens. From an economics perspective, what is this going to mean?

Supreme Court: Corporations, unions free to fund campaigns

BY DAWSON BELL
FREE PRESS STAFF WRITER

The political world was in an uproar Thursday over a U.S. Supreme Court decision striking down a long-standing prohibition on campaign advocacy by corporations and unions -- a decision hailed as a victory for free speech and assailed as an open invitation to corruption.

President Barack Obama said that the court's 5-4 ruling gives "a green light to a new stampede of special interest money in our politics."

For voters, the ruling could dramatically increase the volume of hard-edged campaign advertisements by opening the door to corporations, unions and trade groups to directly pay for those ads.

"I'd be surprised if there is any corporate money in Michigan that doesn't know how to get in the game right now," said Rich Robinson, director of the Michigan Campaign Finance Network.

Still, others said it was unclear how the court's decision would change actual campaign practices.

The ruling overturned federal restrictions that had blocked distribution of an anti-Hillary Clinton documentary during her 2008 presidential campaign.

It also reversed a 20-year-old precedent that barred the Michigan Chamber of Commerce from buying a newspaper ad in a state legislative race.

The court upheld bans on direct corporate contributions to candidates and maintained reporting requirements that will apply to unions or corporations that choose to spend independently in support of or opposition to a candidate.

What occurs to me is that it's this sort of relegation of judgement into the hands of non-transparent corporations that caused the housing crisis. We just went through this situation where we counted on Americans who are being intentionally deceived to be able to unearth the truth for themselves. What sort of future meltdowns might arrive because of this?

Superman's Debut Creates Super Profits

Superman's Debut creates Super Profits

Superman's debut comic book was sold yesterday for $1 million dollar! I am still amazed at the amount of money that people will pay for such antiques. As we discussed in class today, the main purpose of a firm is to earn profits. Although, this transaction is carried out between a private buyer and a private seller, the same principle applies to partnerships. According to CNNMoney.com, Vincent Zurzolo who co-owns the the auction site ComicConnect.com with founder Stephen Fishler said "it was the single most important event in comic book history."

Zurzolo and Fishler posted a rare copy of Action Comic #1 on their website on Monday morning. It was the issue where the man of steel made his debut in 1938. They were selling it on behalf of an unknown collector. Within ONE minute, another unnamed collector bought the comic for $1 million. Zuzolo stated that only about 100 copies of Action Comic #1 are known to exist, and of these, only two are known to be in such good shape.

For comic book lovers, who have struggled to elevate their trade to the level of fine antiques, paintings and even collectibles coin, record-breaking sales make for a big victory. In the last year, Zurzolo said he's seen more non-comic fans than ever purchasing rare copies as investment vehicles during the recession.

"When you look at what happened to real estate, the stock market and in banking people are terrified. They are not making money in the banks, they're not sure about real estate and the stock market is like playing roulette," Zurzolo said. "With comic books you feel more confident. Now we've hit a point where you can lump us in with fine art."

About 15 years ago, the Action Comic #1 sold Monday went for $150,000. In its original state in 1938, it would have been sold for about ten cents.

This sale is one of the amazing I ever heard of. The collector who bought this comic book, spent only 10 cents. After only 72 years, he made such a million dollars in economic profits. What do you think are some of the possible reasons why the debut made such huge amounts of profits? The comic auction site is making considerable amounts of profits, do you think that the amounts of profits earned will continue to rise? If collectors continue to put more of their antique comics for sale on this auction site, do you think that there will be a diminshing marginal product (the property whereby the increase in output that arises from an additional unit of input declines as the quantity of the input increases? Would you invest in the comic industry as a means of earning profits in the near future?

What Obama’s New Health Care Plan Means for Small Businesses

The White House, in advance of a televised summit meeting aimed at reviving revive stalled health care legislation, posted last week that is meant to “bridge the differences,” in the words of Dan Pfeiffer, White House communications director, between the House and the Senate bills. The White House basically follows the Senate bill, except that in a handful of key instances it weighs in with a Solomonic compromise. “We view this as the opening bid for the health meeting” that will be televised live this Thursday, said Mr. Pfeiffer.
One of those areas is employer responsibility. Recall that in the Senate bill, any firm with more than 50 full-time employees that did not offer insurance would have to pay a $750 penalty multiplied by the number of full-time employees should even one of those employees choose to rely on a public subsidy to buy individual insurance. (The new law would require almost everyone to buy insurance.)
The White House compromise both softens and sharpens that blow. On the one hand, it carves out a 30-employee deduction on the penalty, so that a firm with 51 full-time workers, for instance, would multiply the penalty by only 21. On the other hand, it raises the penalty from $750 to $2,000. Under the White House amendment, a 51-employee firm would pay only $3,750 more than it would under the Senate bill. But a firm with 100 employees would pay $65,000 more.
“One of the issues during the Senate debate raised by the Congressional Budget Office and their scoring of this was that you needed to make this strong enough that employers would have an incentive to participate and provide health insurance coverage,” said Nancy-Ann DeParle, director of the White House Office of Health Reform. “And in testing it, that number of $2,000 was one that made it stronger and helped us get more employer-sponsored coverage.”
The president would also eliminate the Senate bill’s much lower employee threshold for construction firms (five workers instead of 50). In addition, the Senate bill prohibits firms that offer coverage from making new hires wait more than 90 days for their insurance to take effect and assesses companies a fee if the waiting period is more than 30 days but less than 90 days. The president would keep the prohibition, but eliminate the assessment.
Is it necessary to spend this much on health care or can we use that money in different areas of the economy? How does this affects business owners? Should health care be tied to employment? How will this impact our economy?

Corporate Jets vs. Unemployment

During today's lecture, one thought that struck me was corporate jets vs. unemployment.

I'm sure we all remember big companies who were cutting insane amounts of jobs, while still taking corporate jets out for a spin.

Although this period of outrage is primarily over, or at least kept out of the public eye, companies are still cutting whatever they can to maximize profit in a period where not long ago, profit was a rare and desired word. Many companies now find themselves trying to find a balance between maximized profit and maximized efficiency. However, this is not an easy thing to do. Many companies cut so much employment that any more job cuts would start eating into efficiency. In this article from the Wall Street Journal:

'"A number of firms had to slash costs as a survival exercise and it is the right thing to do

when you don't have time," Mr. Seale says. Yet, he says, most companies still need to become more efficient but can't do so by shedding more jobs, as they already cut so many

during the early stages of the recession.'

As more jobs are cut, more responsibility falls on those who remain in the workforce, and as we saw today, as more and more of an input is used, all else held constant, less and less additional output will be produced. So now, companies are looking for any other alternatives to cut corners while still maintaining maximum efficiency and maximum profit.

I know this is old news, but my question is: What next? How far can companies go before going under?

Good News?

For my last blog post I read an article "celebrating" the one year anniversary of the stimulus plan. I can barely remember a year going by, but here we are, one year later, and how do we feel. Well personally I still turn on the news only to be bombarded by bad news about Michigan economy. So this article I felt would be a good read, since it was advertised to provide an overview of what has been accomplished by this $787 billion expenditure.

The article did as it promised provide a summary of what has happened with the money. I don't know how rose tinted the author's lenses were, but reading this did give me a refreshing reassurance that the stimulus was making some progress, and doing what it should have been. It was also comforting to know that at this point in time, the stimulus isn't supposed to have had its full impact:

As much as its impact has been debated and discussed, the stimulus has barely kicked into gear. The package was designed to be rolled out over a three-year period, in part because of logistics (it's tough to approve tens of billions of dollars of loan guarantees to wind-energy farms and solar power arrays in a matter of a few months), and in part because of politics.

While I am fully aware that I'm no expert at analyzing economic growth or decline, I am anxious to see what will happen and how things will look up in terms of jobs for me when I graduate in the next four years. So I will be watching and hoping. In the end, if I can grasp this principle of fiscal policy I can look at the stimulus package of 2009 and tip my hat, or shake my fist. We will see how things turn out.

Toyota Boss to Talk About Recall in Washington

Toyota's global president has said he will testify to US politicians next week about the carmaker's giant global recall program.

My friend’s mom wasn’t too happy when her mother’s car happened to be one of the Toyota car models that was recalled. But she had had some problems with her car so she wasn’t that surprised. But Toyota’s global pres, Akio Toyoda, kind of sends mixed signals if you ask me. First he says he’s not going to travel to Washington to discuss the giant global recall and instead lead the recall from Japan, and then he changes his mind and goes on to say he’s looking forward to speaking directly with the Congress and the American people.

Mr Toyoda is now due to appear before a congressional committee on Wednesday of next week.

Call for clarification

His apparent change of heart came after the chairman of the committee in question - the House Oversight and Government Reform Committee - formally called Mr Toyoda to go before it.

Democrat Representative Edolphus Towns said he wanted Mr Toyoda to "clarify" how the recall is working.

"The public is unsure as to what exactly the problem is, whether it is safe to drive their cars, or what they should do about it," said Mr Towns, in an open letter.

Toyota is continuing to recall 8.5 million vehicles worldwide, including six million in the US.

It has been hit by three main faults - faulty accelerator pedals, accelerator pedals getting stuck in floor mats, and a problem with the braking system on its Prius hybrid model.

Too slow?

Toyota has been criticized in the US for being too slow in both starting and implementing the recalls.

The matter is being investigated by the US car safety watchdog, which earlier this week ordered Toyota to hand over documents relating to its mass vehicle recalls, to see if the firm reacted quickly enough.

Toyota has denied any cover-up, and said it would "co-operate to provide all the information" requested by the US National Highway Traffic Safety Administration.

On Wednesday, the carmaker took out full-page adverts in major Japanese newspapers to apologize for the recent recalls.

Nuclear Power

For the first time in over 30 years the United States is set to begin construction of new nuclear powerplants. Not since the nuclear reactor meltdown at Three Mile Island in 1979 has the U.S. attempted to contruct an new sources of nulear power. The creation of new nuclear powerplants in the United States can help this nation to reduce its dependency on non-renewable sources of energy and according to president Obama the construction projects for the two powerplants, which are set to be constructed in Georgia, would produce,"thousands of construction jobs over eight years and then hundreds of well-paid jobs" in the factories when they become operational.

Nuclear power currently provides around 1/5 of the nation's electricity. Do you believe that nuclear power provides a good alternative energy source given that nuclear powerplants produce indisposable nuclear waste, which can itself be harmful to the environment?

http://news.bbc.co.uk/2/hi/business/8518670.stm

Are they testing the price elasticity of consumers?

In the space of 18 months, the concept of a plane ticket has been transformed from an all-inclusive purchase to a pay-as-you-go plan, turning the relationship between airlines and customers increasingly sour.

Every time a passenger books a ticket, it seems, major airlines have come up with more ways to charge for what once was free, like fees for reserving more desirable seats in the economy section of the plane.Mr. Stewart, who is 6 foot 5, says he managed to cajole a gate agent into seating him there anyway. But ahead of and behind him, an entire section of aisle seats sat empty, apparently because other passengers declined to pay for them. “It’s bad customer service,” says Mr. Stewart. “It would be in their interests to do this better.”

Adding to travelers’ frustration is that the long-cited reason for the switch to “à la carte” pricing — record oil prices — is no longer the driving force behind the changes.

.....lately, the pace of change has been faster, and made travel more complex, uncomfortable and aggravating. back then, bus lines didn’t charge to take a suitcase, or to select a specific seat. And analysts say the airlines have bungled the switch from all-inclusive to à la carte, irritating already cranky fliers even more.

It now costs an average of $25 to check a first bag on many major airlines, though discounts are available if booked ahead online. The airlines have also added surcharges to travel during the most popular times, like the week between Christmas and New Year’s.

What do you think of all the additional fees for the airline traveling? Are they really necessary?

http://www.nytimes.com/2010/02/21/business/21service.html?pagewanted=2&ref=business

Psychology in Economy

A New York Times article begins:

"Forecasts involving climate change are highly uncertain, denialists assert — a point that climate researchers themselves readily concede. The denialists view the uncertainty as strengthening their case for inaction, yet a careful weighing of the relevant costs and benefits supports taking exactly the opposite course."

Now, this is an article about global warming, but it is in the Economy section of the website. So I read on:

Essentially, the risk is that if current estimates turn out to be wildly pessimistic, the money spent to curb greenhouse gases wouldn’t have been needed to save the planet. And yet that money would still have prevented substantial damage....

Moreover, taking action won’t cost much. According to estimates by theIntergovernmental Panel on Climate Change, a tax of $80 a metric ton on carbon dioxide — or a cap-and-trade system with similar charges — would stabilize temperatures by midcentury.

This figure was determined, however, before the arrival of more pessimistic estimates on the pace of global warming. So let’s assume a tax of $300 a ton, just to be safe.

Under such a tax, the prices of goods would rise in proportion to their carbon footprints — in the case of gasoline, for example, by roughly $2.60 a gallon.

A sudden price increase of that magnitude could indeed be painful. But if phased in, it would cause much less harm. Facing steadily increasing fuel prices, for example, manufacturers would scramble to develop more efficient vehicles.

The article goes on to discuss how rationally it is an easy decision. Global warming needs to be stopped and the opportunity costs of taxing carbons and trading in fuel inefficient vehicles is small compared to the obvious benefits of preventing climate change. This is where the article takes an interesting turn.

It discusses why people aren't worried about global warming, and why change hasn't happened yet. It's a psychological answer. "Global warming is bad," says Harvard psychologist Daniel Gilbert, "but it doesn’t make us feel nauseated or angry or disgraced, and thus we don’t feel compelled to rail against it as we do against other momentous threats to our species...Moral emotions are the brain’s call to action."

I found this point intriguing, as it suggests that without the proper psychological incentive, rational decisions can be tossed aside. In the case, the actions against global warming seem both environmentally and economically rational, so I wonder what it will take for people in power to take the necessary steps to fix this problem.

"Globalization"

Let's talk sports. There are a few things that have brought the World together; at times crisis, at times music, and every two years the Olympics. Many Americans have been tuning in to see the best face off against the best in Vancover, Canada, this past week. Now what does this have to do with Economics class? (Bare with me...I think I have a point.)

A little more than a year ago I was crossing my fingers for the 2016 Olympics to be held in Chicago, a city that I love and visit often. But the final decision came in and my hopes were shattered. Instead the games are to occur in Rio de Janeiro, Brazil. This will be the first time that the Olympics will take place in South America, and the third time they occur in the Southern hemisphere. More than just a time of coming together for the world, the Olympics have historically given their host cities a chance to "prove themselves".

Politically and economically and even as a candidate for Olympic host South America has been left out of the picture, because the majority of it classifies as a developing nation. As the world "grows smaller", the need to take these countries into account becomes more obvious. What do they have to offer? We briefly discussed in class how China sees Africa as an asset for its raw materials. On a concrete level, let me paint a picture of Rio de Janeiro.

Since the Brazilian capital was transferred to Brasilia in 1960, Rio's fortunes have declined; most of the city's 1,000-odd shanty towns are now controlled by heavily armed and very violent drug gangs, and many businesses have abandoned the city in search of safer and more profitable places to set up shop.

taken from: http://www.guardian.co.uk/sport/2009/oct/02/rio-de-janeiro-2016-olympics

The city is, without a doubt, beautiful, but will undergo some serious work to impress the world in 2016. And hopefully the hosting of the Olympics will benefit the city in the "development" (ie. building and construction) that it will elicit. The Olympic games have an exceptional ability to change things for a location. the money they draw in, the publicity they get, and the work that goes into "cleaning up" before, that will last (hopefully) long after. I find this to be pretty impressive, for a sporting match. What kind of changes can this sort of thing bring to the Economy in Brazil?

The Price of Global Warming

Everyone has heard about global warming and understands the serious threats that it presents to environments around the world. Although it is uncertain just how large these negative affects will be it is nearly certain they will occur and becoming increasingly necessary for nations to attempt to do something to combat the emission of greenhouse gases. The estimates for just how much global temperature will increase within the next century are troubling and according to a recent estimate from MIT, " the median forecast is for a climb of 9 degrees farenheit by the century's end.

One possible solution which is discussed in an article at www.newyorktimes.com is that, "According to estimates by the Intergovernmental Panel on Climate Change, a tax of $80 a metric ton on carbon dioxide — or a cap-and-trade system with similar charges — would stabilize temperatures by midcentury." The article goes on to conclude that given this price the cost of stablizing climate change is relatively small.

Do you believe that a tax such as this will truly be able to bring climate change under control in time to be effective?

http://www.nytimes.com/2010/02/21/business/economy/21view.html

Millions of Unemployed Face Years Without Jobs

There are no bad jobs now. Any job is a good job,” said Jean Eisen, who became unemployed more than two years ago.


Even as the American economy shows tentative signs of a rebound,
, the human toll of the recession continues to mount, with millions of Americans remaining out of work, out of savings and nearing the end of their unemployment benefits.
Economists fear that the nascent recovery will leave more people behind than in past recessions, failing to create jobs in sufficient numbers to absorb the record-setting ranks of the long-term unemployed.

Call them the new poor: people long accustomed to the comforts of middle-class life who are now relying on public assistance for the first time in their lives — potentially for years to come.

What I think about this article is...the global society we currently live in is collapsing around us. The reason for this is that the core philosophies of our societies no longer resonate with the new energies, and a new philosophy is now essential. The axioms of the newly emerging paradigm go far beyond merely 'going green' or reforming the rules that govern corporations or ethical standards in government. A philosophical and humanistic change is taking shape which is to move us, finally, beyond scarcity and limitation into abundance and sovereignty. This mandates a foundational reordering of our society. We need to become more and more aware of our innate need to care for each other, as we witness our growing distress at the alienating and degrading social codes under which we live. These unsatisfactory constraints, intrinsic to our society, are beginning to break down, as demonstrated by the recent, ongoing crash of our financial and economic system. The need for 'something quite new' grows more urgent by the day!

UK Retail Sales Suffer Steep Fall on Crappy Weather

I never really think about how the winter season can effect the sale of car fuel and food sales until I read this and thought about it. It makes sense that car fuel sales go down when the weather is bad and people don’t want to drive their cars due to fears of getting in an accident. But I am surprised that food sales slip in the winter, at least with my teammates and friends, we eat more now than we usually do J. But the effects of the weather are talked about in this article focusing in sales in the U.K.

Poor winter weather drove UK retail sales down by 1.8% between December and January, the sharpest drop in 18 months, official figures have shown.

The fall was more than three times faster than analysts had forecast.

However the figures were weighed down by the inclusion of petrol in the official figures for the first time as drivers stayed at home in the snow.

The data, from the Office for National Statistics, adds to concerns about the fragility of the UK economic recovery.

Sales by value were up 0.9% from January 2009.

Fuel sales slipped by 11.1% on the month. When the impact of car fuel sales was stripped out, overall retail sales fell by 1.2%.

Food sales fell by 2.4%, but the ONS said the cold weather had boosted sales of clothing.

'Double-dip' risk

The period covers the first month since Value Added tax (VAT) returned to 17.5% after a temporary drop to 15%.

This is thought to have brought some sales forward to December, thereby hurting the January figures.

The data follows on from news that UK inflation had accelerated to 3.5%, that the government borrowed another £4.3bn in January to plug the growing hole in the UK's finances and there had been an unexpected rise in people claiming Jobseeker's Allowance.

"January's retail sales figures round off a pretty awful week for news on the UK economy," said Jonathan Loynes, chief European economist at Capital Economics.

"Of course, we knew the January sales figures would be bad after the VAT rise and bad weather. But the drop is even worse than the retail surveys had suggested."

He added that sales could bounce back in the coming months - but that as people's wages grew only slowly and prices roses, spending growth was likely to slow.

"At the very least, these numbers provide a very weak platform for sales in the first quarter of this year and therefore raise the chances that the economy may succumb to a double-dip (recession)," Mr Loynes said.

The so-called 'double dip' refers to an economy in recession returning to growth, then quickly contracting again.

A bit off topic...; An opinion.

Crisis happens. There's really never a time in human history when it hasn't. Sometimes it is accepted as something to overcome, and other times people get caught up in it, begin pointing fingers and giving into to chaotic behaviors. I would even say that some types of crisis have a tendancy elicit only one of those responses. An economic crisis, such as the one now, brings out the latter.

Amazing how much more a country can lose trust in a government when money, and financial well being is on the line. For example: In yester-presidency the nation allows George Bush to remain president for a second term though he started a war that many had doubted from the start. Today Obama loses credibility with everyone because the financial crisis has consumed the thoughts and television screens of America.

Agree or disagree, one thing I declare unassailable is the distrust of our government in this time, to make the right decisions. One article from the New Yorker discusses the Tea Party activists from yesterdays news in the Times. It reads:

[T]he real danger to any democracy comes when military conflict or economic dislocation swells the ranks of the permanently alienated with legions of people who are temporarily disadvantaged or angry. And that, I think, is what is happening now.

taken from: http://www.newyorker.com/online/blogs/johncassidy/2010/02/tea-party-usa.html#ixzz0g2yCQemO

This is what gets people angry. The Economy, this is what heats us up the most, what has fueled our major political and wartime decisions, what has lead to the greatness of this nation. Our wealth. So why is it, that we cannot trust our government to handle these affairs anymore? In this blog, greed is something that has been touched on time and time again. Why does it seem that economy has such close correlation to this primal and destructive characteristic?