1/31/2008

Disney Dream Wedding

Disney's new idea is to create designer wedding gowns designed after princesses like Belle, Cinderella, and Sleeping Beauty. Disney already hosts over 2,000 weddings a year at Disney Land and Disney World. Creating a princess fantasy wedding, complete with a princess wedding dress, a pumpkin carriage, and Cinderella's castle could bring in a lot of revenue. I think the demand would be huge. Some may be surprised that brides-to-be would still like cartoon characters, but I think the result would be that most girls would love to have their childhood dream of marrying their prince in a castle in a beautiful gown come true. I think this is an excellent marketing idea that could bring in a lot of demand and profit for Disney. What do you think? Will this turn out to be a cliché marketing idea with no potential for growth past the wedding gown?

Now Hiring Generation Y

With the baby boomers starting to retire, companies are now seeing the need to compete for the best of Generation Y. This article stated that more than half of Generation Y's graduates move back to their mom and dad's house for the extra support and time to help them find the job they really want. Because Generation Y is being so picky, companies are having to be more creative as they try to woo this generation's different wants and needs. It was found that this generation cares more about work-life balance. Jobs that have good people to work with and support volunteering are important. I think it's interesting to see the difference of generations: our grandparents hated having days off because it meant less money, whereas this generation loves having the occasional day off (after expenses are paid for) because sometimes their enjoyment is more important to them than getting a few extra dollars.

Southwest Goes for Modesty

A woman flying on Southwest Airlines was asked to cover up her immodest clothing on a summer flight. Looking at a picture of what she was wearing that day, I don't think she was dressed that badly, but I can see how it could be a negative externality to others, or at least make family-type people uncomfortable. The media made it seem really bad, but after reading the article, the airline was fine with her putting a blanket over her legs. However, was a little skin worth all the negative publicity?


Going Foreign

This 200 second video interview shares how the dollar is down 12.5% from the Euro in this past year. Because cutting interest rates lowers the value of the dollar, now is probably a good time to invest in foreign companies, foreign currencies, and foreign markets. Because investors see that they will be more likely to get a better return by investing internationally, the demand and price of foreign currencies will increase even more. The video stated that the CurrenyShares Canadian Dollar Trust (NYSE:FXC) was up 22.9% this past year. Companies in the U.S. that have a lot of foreign sales or sell inelastic consumer staples, such as toothpaste and soap, should fair better than other U.S. firms, according to the video.

More People Refinancing

With the Fed's dramatic rate cut of 1.25% in eight days, the demand for mortgage refinancing has increased from 66% last week to 73% this week. I also thought that with these rate cuts, now is a great time to refinance my home.

This article, however, warned me that while the refinancing may be good, I'll need to take care of it fast. It is actually the bond market that determines the mortgage rate, not the Fed. Fixed mortgages are linked to the 10-year Treasury, which is actually rising right now. However, these rates are still below 6%, and Quicken Loans chief economist Robert Walters said, "We don't get many opportunities to take a 30-year fixed below 6%." Adjustable-rate mortgages are pegged to the 1-year Treasury, which is expected to continue to decrease, so refinancing would be a good idea here.

1/30/2008

The Facebook Economy

The popular social networking site, Facebook, has enabled third party developers the chance to get easy advertisement, publicity, and money. Facebook's CEO, Mark Zuckerberg, announced in May of 2007 that third party developers would be allowed to add applications to the site, and that they would be able to keep all the revenue they generated from the affiliated ads. After only eight months, there are already more than 14,000 applications on Facebook. Many third party developers have found that they are generating much more awareness by being on Facebook than on some random site on the web. These developers don't have to spend any money on advertising – they just build “requests” into their application that encourage the Facebook user to invite their friends to use the same application. Social networking is certainly spreading the word fast.

Missing: iPhones

Apple reported that they have sold 3.7 million iPhones, but the mystery is that AT&T, the sole wireless provider for iPhones, has only reported 2 million iPhones activated. Where have the other 1.7 million gone? Industry insiders suspect that the iPhones are being “unlocked” to run on non-approved networks. Apple receives $10 a month for every iPhone on the AT&T network, so they are missing out on a lot of revenue from the “unlocked” phones.

It sounds like there's plenty of demand for the iPhone, but that the problem is the low demand for the AT&T network. There are plenty of substitutes for different networks, but not as many for an iPhone. Maybe Apple could come up with a different strategy that didn't depend so heavily on one network.

Snow in China

Recent weather problems in China have caused over $3 billion in damages in what appears to be the worst winter weather in decades. Many people are trying to get home for the Chinese New Year celebration, and 500,000 people have been left stranded in one train station. The travelers are upset, but who can you blame when it's weather that's the problem? Leaders have been in damage-control mode and are doing their best. Will the Chinese economy fall apart under this crisis, or will it unite the people and create more economic activity?

Forget Drunk Driving, We've Got Cell Phone Driving

A study has shown that driving while talking on a cell phone is similar to driving drunk, even if the phone has a hands-free headset. I at first thought, there are tons of other distractions while driving in a car, like tuning the radio, eating, singing, watching people walk down the sidewalk, or talking to the person next to you. How could a cell phone be any worse? After thinking about it a little, I realized that talking to someone who is not physically there is different. The article mentioned that the worst distraction was texting while driving. I can see how this would be an extreme distraction which could definitely cause accidents. Would I be right in saying that fellow motorists who text while driving is a negative externality to other drivers?

Saving Like It's The Depression

In 2005, the U.S. savings rate hit it's lowest level since 1933. Personal savings dropped to negative 0.5%, which means that Americans spent more than they made and dipped into their savings to make up the difference. The only other time the savings rate has been in negative numbers (according to the article published in 2006) was in 1932 and 1933 – prime years of the Great Depression. Analysts argue that a cause for the increased spending was consumers' confidence in the value of their homes.

I wonder how confident consumers are feeling about their homes in 2008?

Home Owners Beware

When it comes to owning a home, most people think homeowners can do what they want with the property. However, this is far fom the truth. Most subdivisions today belong to homeowner associations. The associations' guidelines or "covenants" are set up by the developers of the subdivisions. The interesting fact is that most developers rely on city laws to help them in regulating what homeowners can build on their property. This can sometimes cause problems. I read an article entitled "'Covenants' can Mediate in Neighborhoods". The article addresses an issue that arose when some homeowners became upset when a particular neighbor of theirs constructed an unfinished plywood shed on his own property. Although it was within the legal code of the city, they claimed that this eyesore would affect the value of their homes. There were no "covenants" within this association that addressed this issue. This is an important issue, however, especially during this time when homes across the nation are losing value from the decline in the economy. In my opinion, the shed either needs to be removed from the property or finished with siding or brick. I think that it would be the courteous thing for the shed owner to do. This eyesore, if not taken care of, will eventually decrease the resale value of homes in this area. The homeowner association should look into setting up "covenants" that cover such issues.

1/28/2008

The Writers' Strike

The lack of agreement concerning the writer's strike at NBC is costing not just the writer's their salaries, but also the network, advertisers, and actors, to name a few. According to this article, at the recent Golden Globes show, “NBC lost millions of dollars in ad revenue, and award winners were deprived of instant publicity that could provide a box-office bump.” Last year's Globes ceremony had 20 million viewers, compared to a mere 5.8 million this year. NBC normally earns over $15 million from advertisements, but they will receive much less this year. The Hollywood Foreign Press Association lost a $6 million license fee from the network.

NBC and the writers have been at a standstill since December 7, 2007. While they continue to argue, more and more dollars will be lost to many. Plus, viewers won't get to watch the shows they enjoy. It seems that everyone is losing out here, but yet, still no agreement.

May Contain Nuts

- “Manufacturers stamp bags of peanuts with warning that they “may contain nuts”

- Parents asked not to bring homemade cakes to school fĂȘtes

- Flowers banned at a hospital in attempt to stop the spread of MRSA

- Hanging baskets banned in case they fall on people

- Children banned from using egg boxes in art class in case they catch salmonella

- Children forced to ride inflatable sheep at a Welsh Donkey Derby”

Ridiculous, isn't it? This article shares some of the things people and organizations in Britain have had to do to protect themselves from lawsuits and penalties. The overly protective rules have caused numerous unnecessary costs, hurting the economy.

Britain's government has set up a national campaign to stress the importance of self-reliance and to inform the public that the government is not responsible for every random accident that may happen.

If you asked someone if they wanted the world to be safer, naturally they would say yes. But we must keep in mind the trade-offs and that there is no such thing as a free lunch. I think it's sad how out of hand some laws have become, but I'm sure those laws were made for protection from lawsuits.

Do they really know what they are doing?

During the last week Washington has rallied to show us that they can “work together” and benevolently hand the common people a few dollars in hopes of stimulating economic activity. We also saw the Federal Reserve cut rates in hopes of swaying the U.S. Economy away from a possible recession. What are the real consequences of these actions taken by our political and financial leaders? Will economic growth be stimulated and move us into prosperous times or will there be unintended consequence that actually move the economy in the opposite direction? The unintentional consequences are what worry me. Dubner and Levitt in a NY Times article discuss unintentional consequences citing three different examples of good intentions causing unintended result. We all know that you don’t get something for nothing and someone will have to repay the Government rebate checks. These rebates are in essence a loan and they will need to be repaid sometime. Will the dollar weaken further and inflation rise because of drastic rate cuts. Some believe that the possible unintended consequences may lead us to repeat the 70’s and 80’s with high inflation followed by high unemployment. We will have to wait and see the consequences, intended and unintentional, as they unfold over time. NY Times Article

1/27/2008

Loss Aversion

Loss aversion is the tendency for people to strongly (usually two times as strong) prefer avoiding losses as opposed to achieving gains. This article demonstrates that a person would rather make $50,000 a year while those around him or her made $25,000, as opposed to making $100,000 a year while others made $250,000. Most people would rather “pay” $50,000 to be the one with the highest salary and not have the feeling of a loss. People would rather receive less money in a winning situation than to receive more money in a losing situation. Rationally, this does not make sense. However, psychological factors definitely come into play with salary, the stock market, and many other things in the business world.

1/25/2008

The future of athletics?

Marion Jones was recently stripped of her Olympic gold medals for her use of steroids.  It is terrible our talented athletes are being punished for using technology to enhance their performance.  Society has long accepted many advances in sports/athletics.  Newer shoes, caffeine, B12, light weight materials for bicycles, and helmets in football are all perfect examples of mainstream technologies that enhance performance.  Athletes should be use any technology available to increase their level of achievement.  Athletes have been able to break records because of technology in the past and should continue to do so.  There are risks involved by using these drugs but they are rewarded very heavily in the forms of multi-million dollar contracts.  Professional sports could be amazing and potentially tap into new markets of viewers, which would drive revenues even more through increased demand.  I, for one, would love to see the amazing heights that could be reached in these enhanced sports.  12 foot basketball hoops, 500 foot fences in baseball, 3 minute miles- who wouldn't love it?

US goes Green?

I'm an avid car lover and have noticed something very strange about the upcoming cars for next year.  After reading this article, I saw that many of the cars were the opposite of "green."  Almost every company came out with a line of hybrids parked right beside their newest gas-guzzling horsepower machine.  All the media is telling us the American consumer is demanding more efficient "green" cars but the supply tends to show automakers forecast strong sales in their less-efficient cars.  It is very interesting to see the difference in what automakers are projecting and what the media shows as popular.  It seems as though talk of "green" is still merely lip service.  

1/24/2008

Recession Recession Recession - yadi yadi yada

Are you tired and scared of the recession that is going to be hitting us pretty soon? Do you think this two consecutive quarters of negative economic growth (which economists define it as recession) would throw us in recession? Do you feel threatened that this credit crunch problem, troubled housing market is going to throw out in "great recession" that we are just not used to seeing anymore? Well, worry not guys - because we would most likely not face recession. Even if we are in recession - we wouldn't even know it/feel it.
This website - http://www.american.com/archive/2007/december-12-07/the-great-recession-of-2008 - believes that the economic relief package incentives that Bush has sent would stimulate the economy and prevent a recession. Many economic forecasters expect a growth, the weak US dollar would make American exports more competitive (which would increase economic growth and employment), and the recession thing would not last "several months" to call it as recession. So don't worry guys - we are going to survive - we are going to stick together!

1/23/2008

What next? Government-mandated toilet paper?

http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=59298

This article announces the ban on incandescent lightbulbs which will take full effect in 2014. Wow! When I first heard this announcement I thought it had to be a joke. The government is now in control of what kind of lightbulbs we use. Before you know it they will be mandating the kind of toilet paper we use, how much, and how often.

I understand the underlying reasons for this new regulation: energy conservation. However, it seems that the approach could have been handled differently. For example, energy efficient automobiles, a.k.a. Hybrids, are on the market. There is no law requiring consumers to drive these vehicles rather people choose to drive them because of the energy-saving benefits they provide. They have increased in popularity and become more affordable since their first debut several years ago. More and more people are driving them by choice, not by government mandate.


Could the same idea be applied to the lightbulbs? Of course! The technology for a more energy-efficient bulb is already in effect: the compact fluorescent bulb. It is available on the market but apparently not being used by consumers as much as the government, power companies, and light bulb manufacturers would like.


Don't get me wrong--I am in favor of energy conservation. My issue with this new mandate is the degree of involvement the government has in our lives. It is not right for every aspect of our lives to be under government scrutiny and control. Consumers will choose compact fluorescent bulbs when the product makes sense by price as well as efficiency.

1/20/2008

Supply and Demand for Wii

This article describes the mismatch between supply and demand for Wii game consoles. I wanted to get my husband a Wii game console for Christmas, since my son said they were a lot of fun. I found out that Best Buy did not carry them because they sell out so fast, and that Amazon.com had a restriction on the number of consoles that a customer could buy. I decided that others needed those consoles more than I did this year. I guess Nintendo has been having trouble keeping up with demand since they introduced the Wii earlier this year. The article describes their situation, decisions and reasoning.

1/19/2008

Are we in a recession?

If we want to throw this term around loosely, then yes, today's NY Times suggests, our nation currently may be in the grips of a recession. Lately there has been a lot to be said about our "are we, or aren't we" recession. But the discussion could end so easily and with a definitive answer. We learn in our most basic macro textbook that after two consecutive quarters of negative economic growth we then will find ourselves in an actual recession. I've heard the story of Ronald Reagan redefining "depression" and "recession" to help him win the election against Carter, but that was all just slick political posturing.

To be more accurate, what our national economy has recently suffered is merely slow growth, but "slow growth" is boring and doesn't get the same frenzied reaction as "recession". Certainly everywhere we look we see a gloomy picture with the housing, job, and stock markets dropping and oil prices, unemployment, and inflation rising, but luckily we can all take comfort in knowing that we are not, by its standard definition, in a recession.

1/18/2008

Fed Rx

The stock market is currently in turmoil.  The country hasn't seen sustained losses like this in many years.  The housing disaster, fickle oil prices, and the falling dollar have caused investor uncertainty, causing the market to suffer the consequences.  The market has fallen 2,000 points in a couple of months causing fear of a recession and a decrease in stock prices as demand for stocks falls.  In a recent article, by Michael Sivy from Money Magazine (found here), a new perspective is provided about the Fed's ability to influence and affect not only rates but the stock market in general.  He states that the markets do much better in times where the Fed cuts rates.  Market returns usually hover around 12% but rise to 17.4% during times of rate cuts.  As the Fed prepares to bail out the groaning economy by perhaps lowering rates again, equity investors can expect to see greater returns in the near future.  
It seems the lower rates obviously help businesses and decrease demand for debt instruments.  This shift in preference by the investing market leads to a more successful stock market for those willing to invest in such uncertain times.  While this change may be great for investors, it is truly sad that our economy must rely on intervention to save us from our own stupidity.  Bernanke, in yesterday's address to the budget committee, stated something to the effect that it is not the job of the Fed to protect investors from their own decisions.