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BUSINESS ARCHIVES — FEBRUARY 2010 [RETURN TO commentopia HOME PAGE]
FEBRUARY 22, 2010 -- FEBRUARY 28, 2010 THE STIMULUS: ONE YEAR ON THE ROAD TO RECOVERY
Count me in as one of the Americans that is totally fed up with all the partisan bickering... America is failing while Congress bickers. While I don't like things I'm seeing on both sides, the GOP especially gets my ire as they continue to show that they have only one goal - see that the current administration fails and/or is perceived as a failure. Take the stimulus issue - it is ludicrous to imply that the stimulus has had no effect what-so-ever... that goes against the basic laws of economics. It is also disingenuous to try and make political hay of the fact that unemployment went beyond 8%.... our economy is far too complex for ANYONE to be able to predict exactly where an unemployment rate will fall in such an unsettled situation as the free-fall our economy was in. Such criticisms look immature and childish... and the fact that they apparently fool so many people is appalling. Read the article USA TODAY/Stimulus anniversary celebrated, mocked in words and images <> This all sounds wonderful- as long as you shrink your field of vision to exclude: Read the article HUFFINGTON POST/Happy Anniversary, Recovery Act
The arguments about stimulus strike me as similar to the arguments about minimum wage. The Left likes to raise minimum wage since the poor get more (those that have jobs at the higher wage anyway) and what could be wrong with that? The Right likes to ask if $10/hr is good, why not $100/hr? How about letting the markets decide what an employee is worth? The answer is always crickets or hand waving. The stimulus boosted GDP. It had to since government spending is part of GDP. But if $800 billion was good, why not $20 trillion stimulus spending? The private sector could have been nonexistent and we would have had a massive GDP increase anyway and ended the recession. Doesn't Obama love us enough to spend $20 Trillion we don't have on us? Massive increases in government spending coupled with demonizing various businesses and abusing the rule of law to help favored Democratic groups isn't going to spur the private sector to create anything. It will lead to more public sector growth and make GDP numbers look less bad but the reality is that the private sector is worse off than ever and that will be apparent as soon as the politicized spending frenzy dries up. As to how many jobs it created, the fact that the administration tried to count raises as jobs saved pretty much tells you how few jobs they can actually find to support their claims. Read the article THE ATLANTIC/Did the stimulus save us? <> For those who lack the time, know-how, desire, or fail to have the intellectual curiosity, please note; NY Times, 2/16/2010; David Leonhardt. Read the article DAILY BEAST/Obama: Stimulus saved economy
FEBRUARY 15, 2010 -- FEBRUARY 21, 2010 CORY DOCTOROW: WHEN IS THE DIGITAL PRICE RIGHT?
In the Bold Digital Future(tm) the idea that there will be "a price" seems increasingly unlikely. Amazon, for instance, does absolutely loads of customer profiling. To generate better recommendations, sure; but it also provides them with a strong basis for inferring your level of wealth, response to apparent "sale prices" and the shape of your demand curve generally. They know what you buy, in many cases they know who referred you to a given product you bought or didn't buy. It wouldn't be trivial; but it would be well within the realm of possible, for them to start varying the price per customer. Charge more to those they suspect will be willing to pay more, less to those willing to pay less. The era of near-perfect price discrimination awaits!(which, for customers, is largely a bad thing. Textbook econ tells us that the more perfect the price discrimination, the less of the transaction's surplus value ends up in the pocket of the buyer). Read the article BOINGBOING/Amazon/Macmillan:Price discrimination and demand elasticity
"Macmillan's concern is due, in part, to the indisputable fact that the people who shell out good money for an e-book reader are often precisely the kind of price-insensitive consumers upon whom publishing relies to buy books at full price." If Macmillan views e-reader adopters as techtrendoids prone to flashy impulse buying, they're mistaken. Because e-readers, by design, have, at least until the Ipad, been pitched as a scaled down, almost retro device, but one dedicated to a solitary sedate purpose. Maybe Macmillan would prefer its e-reading customers to be other sorts -- people with the jumps and fidgets, with disposable dollars burning holes in their virtual pockets -- tech-savvy rubes, queuing up to be fleeced at electronic speed. Selecting a book and reading a book occur at a slower, more deliberate pace. Ultimately the ability for e-publishers to win over new market segments will depend on the quality of the written material. Kindle has always been good at delivering the writing without distraction. I wonder if Ipad and its copiers to come, as they set about luring away Kindle, Nook and Sony e-readers, also lure them away from reading, with all the multi-media bells and whistles. Read the article PUBLISHER'S WEEKLY TALKBACK/The Price is Right NEXT CRISIS: RICHARD BRANSON WARNS OF GLOBAL OIL CRUNCH WITHIN FIVE YEARS
Whether the oil crunch comes in 5, 10, 20 or 100 years we need answers and alternatives, which we don't have at the moment. There is a total lack of imagination and urgency in key bits of government, and the civil service. We would do well to look for alternatives before we absolutely have to and get left to the sweet mercies of the market. Methane and ammonia could both be used as liquid fuels for many modes of transport. Read the articleU.K. GUARDIAN/Branson warns of oil crunch within five years <> Branson is right to raise this issue. The solution is pretty simple and wildly unpopular - raise taxes on oil consumption so that behaviour changes. The perceived price of oil should be above $100 per barrel...lets say $150 for the sake of argument. We need to stretch out consumption and design vehicles and other systems that use oil to use less so that that the peak oil effect does not produce uncontrolled price rises. There would two other obvious effects. One would be to reduce output somewhat during a controlled transition to a higher oil price and second would be to fill the depleted treasuries of western governments. So a coordinated program of tax increases should take off as economies improve. Read the article U.K. GUARDIAN/Branson warns of oil crunch within five years <> If Branson says the world is running out of oil, why is he the only person on Earth organising tourist trips to space? Why is it every time this man opens his mouth I get the distinct impression he has some hidden agenda? Read the article U.K. GUARDIAN/Branson warns of oil crunch within five years FEBRUARY 8, 2010 -- FEBRUARY 14, 2010 MAGAZINES ON THE RACK AS NEWSSTAND SALES PLUMMET
Newsstand magazine prices are outrageous as compared to a subscription and the unfortunate reality is that the editorial content for the most part is extremely meager. I have been a Time subscriber for many years and most issues have been no more than 56 pages thus far this year. I was fortunate to have received a free subscription to The Economist last year and it is far and away vastly superior to both Time and Newsweek. While I believe it is fairly expensive at the newsstand, it is still reasonably priced for home delivery. Read the article NEW YORK TIMES/Magazine newsstand sales fall 9.1% <> It's interesting to note that the publications geared towards mass market - TV Guide, Business Week, etc. - are losing readers and the niche magazines, like the Off Road magazine, are doing much better. I am sure that the Internet has taken away many readers, but you also have to look at the product. Is there anything worth reading in TV Guide? Read the article NEW YORK TIMES/Magazine newsstand sales fall 9.1% PAUL KRUGMAN: DEFICIT HORROR OR HYSTERIA?
Policy is "headed" in the wrong direction? We've been going off the rails for at least 30 years, when Ronald Reagan started to popularize the notion that we could simultaneously cut taxes, increase spending and balance the budget. Three decades of wage stagnation, bubbles followed by bust, crumbling infrastructure, and ballooning debt haven't shaken the fervent belief of most Americans in this economic orthodoxy. Any politician crazy enough to try to talk straight about these issues is on the certain road to oblivion. And that's where this country is headed, unless the citizenry faces reality. As long as reality includes tax increases for nearly everyone, social security and health care reform/cost containment, serious cuts in defense/homeland security spending, most Americans will prefer to maintain the fantasy of voodoo economics, until the ship of state sinks altogether. Read the article NEW YORK TIMES/Fiscal scare tactics <> Maybe deficits don't bother you but they bother me. You can play ostrich if you like but the facts are still facts. At the current rate of spending the interest payments on our debt will become our biggest expenditure as a government. Me and mine (the generation in college now) is gonna have to pay for that through taxes. That means less money we'll be able to spend on important things like education, defense, and keeping you alive long enough to see you eat these words (SS and Medicare). Read the article NEW YORK TIMES/Fiscal scare tactics <> As Spain and Greece are finding out, deficits do indeed matter. They spent like the current US Government is proposing, on a list of social welfare, energy subsidies and government job creation. Unfortunately it has left the countries at risk of defaulting on their debt and unable to tap the markets for any new credit needs. As so many in the real world have discovered, you can indeed borrow right up until you can't. Read the article HUFFINGTON POST/Deficit hysteria resembles Iraq war scare tactics UNEASY DRIVERS: TOYOTA'S CRISIS OF CONFIDENCE
This article is almost a year old: Read the article NEW YORK TIMES/U.S. starts inquiry into brake problems on Prius
<> No car company has been free of massive recalls in the past. What worries me is not the problems we know about, but the one's we don't. In a year or two another car manufacturer will have a massive recall of their own and we will all be criticizing them. The worst part for Toyata is the timing of the recal when a recession is "ending" (debatable) and consumer confidence is at its lowest. They will survive, how well is to be seen! Read the article CBC NEWS/Toyota boss apologizes for mass recalls <> Secretary LaHood's political grandstanding is transparent. He and his fellow Obama Administration colleagues might want to take note of the fact the faulty part at the root of this Toyota problem is manufactured by an American company. Toyota can prevent a recurrence easily enough by outsourcing to an Asian firm instead. Continually bashing businesses for political gain can only backfire when it comes to jobs creation requiring investment and spending by businesses. Read the article WALL STREET JOURNAL/If you were in the market to buy a car today, would you consider a Toyota? <> Toyota's problem is an example of the unintended consequences of complexity. The vehicles in the recall are drive-by-wire systems. There is no direct mechanical connection. Toyota is now admitting the problem may be deeper and could reside in the computer, which may be susceptible to electrical interference, such as from cell phones. If this turns out to be the case, Toyota is in deep, deep trouble, and other manufacturers, since they all share subcontractors, need to take a close look at their own vehicles. Read the article NPR//LaHood backs off "Stop Driving" remark
FEBRUARY I, 2010 -- FEBRUARY 7, 2010 U.S. GDP GROWS T0 5.7%: POLITICAL SPIN OR RELIABLE INDICATOR?
I have been with the same company for 29 years now. In that time I have seen our company's sales increase in the months before recessions end. That is what we've seen since November. Our plants are working more hours. I can tell by the number of trucks leaving the plants and going into our Distribution Centers that the jobs will come late this summer. At some point in the summer the production lines that are running extra hours will have to go to extra shifts. Things aren't going to be great, but they sure will be better than a year ago. It's the most reliable indicator I have know for over 20 years. Read the article POLITICO/Growth numbers greeted cautiously <> Some very basic math. 3rd Q GDP was ultimately revised downward from 3.5 to 2.2, or approximately 37%. The 2.2% was essentially generated by the cash for clunkers program, i.e. government stimulus, meaning essentially flat economic growth otherwise. If similar revisions occur to 4th Q GDP, the effect would be a downward revision from 5.7 to 3.6, virtually all of which is a result of the inventory component. Bottom line, the consumer still isn't spending. And with unemployment still in double digits, and the congressional budget office forecasting it to remain there into 2011, I say we're in deep trouble. I'm not an economist, but I do have a good understanding of economics... not the politically spun version either. Read the article WALL STREET JOURNAL/GDP expands at 5.7 rate <> There is a mix of good and not so good news in the details. Inventory build up, particularly among automakers accounts for 3.4 pts. of the 5.7% growth. That's good if the inventory sells. And exports were up 18% contributing to 2 pts. of the growth. Consumer spending was still a bit sluggish (up only 2%) so it did not contribute much to the growth. Read the article MCCLATCHY/U.S. economy grew 5.6 % in fourth quarter, capping a dismal year SEVEN REASONS WHY WE SHOULD WORRY ABOUT THE ECONOMY
The bubble that too many Americans lived in was crafted and maintained by the creators of an economy driven by consumption. Consumption not of our own goods and services, but those made overseas at below minimum wage levels allowing for cheap imports of cheap goods. And, because if something broke we just bought (on credit) a new one, the financial tsunami kept growing and growing. Read the article HUFFINGTON POST/Seven things about the economy everyone should be worried about <> We are in big, big trouble. It is all because our entire government and the entire American people do and did not understand intelligent economic policies for the last 80 years. The country now runs on the Military Industrial Beltway Think Tank Complex and gamed federal programs since FDR .All government programs start out as viable good ideas and are then completely gamed for profit by the insiders in the Eastern Establishment elite. War has been gamed for money and profits for a tiny few while others are sent to kill or be killed. Everything else is "make a law, make a business." Everything has been gamed. Even reform will be gamed unless people start to educate themselves and monitor every move. Many have. I hope more do. Read the article HUFFINGTON POST/Seven things about the economy everyone should be worried about <> Dan Froomkin deserves credit for taking such a thorough but simple approach to analyzing the situation we're in. His reference to the Washington Post and the deficit hawks is indicative of a bigger problem in journalism. Except for pockets of hardnosed independent journalism -- found primarily in books and blogs -- there has been very little reporting of this crisis that has taken an intelligent, outsider's view of things. The Washington Post barely knows where Wall Street is; The Financial Times has chosen to take a sociological approach; and the Wall Street Journal likes to impress us with its understanding of the granularity of things. Ironically, only the New York Times has taken an old fashioned investigative journalistic approach in explaining things like the Goldman Sachs/AIG relationship and what was really behind the collapse of Lehman Brothers. The United States is suffering today from a dysfunctional political process and a press corps that is too in love with itself to see the forest for the trees. Read the article HUFFINGTON POST/Seven things about the economy everyone should be worried about
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