Growth in Saint George, UT

It has been projected that Saint George will continue to grow at a rate of 3.9% each year. According to an article by the Spectrum, at this rate the population will reach 607,000 by the year 2050. The population is currently about 120,000. This projection seems way too high for me. Saint George is growing, it's true, but its a retirement community. There are currently over 1200 practicing real estate agents eager to help retirees settle down in this relatively quite, little community. There are five golf courses and dozens of retirement communities. The problem lies in the business infrastructure. The organization which employees the most people in Washington County is the school district. The city is building a new offramp and preparing to build an airport in an attempt to attract larger businesses to the area. Do you think this is going to help, or will Saint George always be for the non-working class?

Is the U.S. the greatest threat to the world economy?

In this article, by Adam Davidson, the United Nations warn that the greatest threat to the world economy comes from the United States. Even though the global economy grew by 4 percent in 2004, the largest increase in years, the U.S. economy could cause an abrupt and globally damaging correction.

There are many reasons for the U.S. to be in this position, namely the huge tax deficit, which exceeded 600 billion dollars in 2004, the largest in history. Next, is the increasing Government debt that also reached record highs last year. Finally, we have the ever weakening U.S. dollar. This was the meat of the article. It stated the U.S. dollar is the primary reserve currency for most foreign countries. This is a concern because when the dollar is weak; all countries that rely on it will have less money to spend. The article goes on to state the treasury will ask for help from European and Japanese leaders to strengthen the dollar.

I agree with the European bankers when they remarked that the U.S. Government should help itself by encouraging savings and reducing the nation’s debt.
http://www.npr.org/templates/story/story.php?storyId=4467938

The Aging Population

All around the world a big percentage of the workers is reaching retirement age, and there are less people to fill the jobs as they become open. A few of the articles that I read suggest that because of the decline in the number of workers, the world's economy is going to decline. In an article titled "Productivity Can Make Up the Gap" http://yahoo.businessweek.com/magazine/content/05_05/b3918035.htm
the authors suggest that just because there is a declining number of workers, the world's economy can still grow. According to the acticle the average productivity in Japan, per worker, has increased 2% each year since 1980. If the trend continues productivity will rise 169% by 2050, raising Japan's GDP by 72%. I would tend to agree with the latter article, if countries can increase productivity then the world's economy will continue to grow steadily, even with fewer workers. For productivity to increase countries needs to provide education and encourage innovation.

Is the Dividend Tax Cut really worth it?

In the article, "The Dividend Tax Cut and Interest Rates", by Mike Moffatt, an interesting point of view is brought to light.(http://economics.about.com/cs/interestrates/l/aa012303a.htm The article talks about President Bush's proposed dividend tax cut which will allow us, as taxpayers, a brake or cut in our amount of taxes that we have to pay in dividends. Normally, dividends are treated the same as income we normally earn, but with Bush's proposed plan those dividends would become tax exempt-we wouldn't have to pay on them anymore. But, do we really understand the effect this will have on other aspects, namely bonds and interest rates? As stated in the article, one of the unintended consequences with the dividend tax cut will be a rise in interest rates in the future. Now I don't know about you, but if you are planning on buying a home or car in the future, that isn't real good news. A lot of hardcore studies haven't been done on just how much this will effect the interest rates, but rest assured that they will be affected. It's hard to say which would be better-no dividend tax, or higher interest rates? I guess it all depends on what boat you're riding in.

Why should the rich get tax breaks?

In this election year you heard one side blaming the other side about giving tax breaks to the rich and not caring about the middle class. Why would you give tax breaks to the rich? First the top 50 percent of wage earners are paying 96.03 percent of all taxes. The top five percent of wage earners pay 53.25 percent of all taxes. If the lower 50 percent of wage earners aren't paying taxes, how can you give them tax breaks? Maybe this was an election ploy by one side to get votes. Another reason is that the top 50 percent are your entrepreneurs and businessmen who create wealth to the economy when they get some extra cash. That is the biggest reason why we give tax breaks to the rich. The rich do something productive when extra money comes their way, they don't blow it.
http://www.rushlimbaugh.com/home/menu/top_50__of_wage_earners_pay_96_09__of_income_taxes.guest.html

Baseball

In this article, by Mike Moffatt, he gives a scenario on baseball and opportunity cost. He believes that baseball fans do not know the concept and just play off of their emotions when a team doesn't sign a certain player. Moffatt gives a scenario that the Totonto Blue Jays had to make in the 2002 season. I think Moffatt doesn't understand opportunity cost. The Blue Jays choice was to pick between Jose Cruz Jr. and five minor league players or sign six average baseball players. Moffatt chose the six average players. The Blue Jays also went with the six players. I think they should of signed Jose Cruz Jr. an emerging young player at the time. That would have given the Blue Jays the opportunity to develop their thriving farm system. Farm system is the minor leagues, by the way. The cost of losing a star player at the time is a bigger cost than not being able to sign six average players and be an average team due to that. Tell me what you think.
http://economics.about.com/cs/sportseconomics/l/aa021903a.htm

Is the Cost of Getting a Degree Killing You?

If you are like me, the cost of your college degree is probably mounting up. College loans and credit card debt are quickly making Americas young adults the most indebted generation ever. We have all heard our parents and grandparents say “get a good education and you will get a good job” Once you get that well paying career off the ground your problems are all over right? Wrong! Your problems are just starting. Payment of student loans starts, credit card interest haunts you daily, and now you need a car to get to work since you can’t walk to the school anymore. During the 1990s, college costs soared by an average of 38%. To make matters worse the costs of rent and housing prices have increased faster than inflation over the past decade. Does this mean we must enslave ourselves to massive amounts of debt, to get a beginning salary that barely pays all of the bills? The sad but all too real story for some students comes in the way of a trade off. Some students decide to quite while they are ahead by dropping out of school before they finish, getting an early start on the debt they have already amassed. Others choose not to attend a college or university altogether to avoid the pain and suffering. And then there is the die hard student who tries to work 60 hours a week, while going to school full time to avoid debt altogether, and in the process becomes a social recluse. Any way you look at the challenge of getting a good education, there are definite economic trade-offs that we must all consider. So what do you think? Should we amass debt to get a good education a hope that we can pay for it when we finally get a job? Or should we try another more effective alternative? Help me out here.

Deflation

(This is a post by Dale that I had to cut and paste here due to technical difficulties.)

Is deflation knocking at the door? The Federal Reserve's now have major decisions to make about the deflation threat. Deflation means a general decline of prices. This has not happened since the Great Depression. Before deflation was just a topic of from history, but now it is becoming something to worry about.

Deflation is an issue concerning supply and demand. By having too much supply and too little demand is where lies the problem prices decline at a fast rate. Compaines will struggle trying to out price competition. In such a battle consumers will react at a much slower pace, waiting for the lowest price possible. Meanwhile, consumers are not stimulated to buy, which will cause a major disaster in the economy.

Despite the positive outlook for the economy, deflation poses great dangers of destroying corporate profits, hurting the stock makret, and pressuring companies to fire workers. Interest rates could be lowered overnight, making it harder for the Ederal Reserve's to stimulate the economy. Farmers and compnaies, more than likely, will default on loans which are fixed while the prices they receive fall.

This article found at www.washingtonpost.com concludes that deflation may require bigger deficits and lower interest rates. Just when America is already full of deficits, this could become a bigger problem.

Yellow Ribbons Everywhere

In the article “Bumper to Bumper” by Giddings, he comments on the wide use of ribbons on vehicles. Giddings refers to another article “Consumed” by Rob Walker; Walker believes that the ribbons make a declaration about what kind of person has a ribbon on their car. So who cares if your yellow ribbon says that you support our troops. Could it be that those who ride around with their magnetic bows on their cars are saying “I have a husband, wife, son, daughter or a family member who is out there protecting yours and my freedom.
The real economics behind this “yellow ribbon magnet” affair is that someone came up with the idea that a yellow ribbon symbolizes our support for the troops and created a demand for it. This demand is making money for several companies. These five dollar “hot” items have made both consumers and business people alike happy. Isn’t that how our economy should be? It’s not a matter of a particular statement a person it trying to make. It’s about capitalizing off of something the public wants.

The Stock Market Is Falling Again

"The Dow Jones industrial average fell 68.50 to 10,47147" stated the Seattle Time's Michael J. Martinez. This is something that no investor wants to here. The Stock Market has been falling for the past several months. In the article Nervous investors push stocks lower http://seattletimes.nwsource.com/html/businesstechnology/2002156407_stox21.html, Martinez tells of how there are many companies that have not meet their projected earnings for the fourth quarter and are now lowering there projected earnings for this next quarter.

Martinez quotes Rod Smyth, from Wachovia Securities the chief investment strategist saying, "We're in a correction right now from the rise we saw since mid-October. It's perfectly natural for markets to behave this way." But what I want to know is this really normal? Could the online traders have an effect on the way the market fluctuates with extreme ups and down? I think the ups and downs come from the ability of anyone to buy and sell so easily.

Does Wall Street Care About Economics?

It is a common occurrence that when a publicly traded company announces plans to acquire another publicly traded company the “value” of the acquiring company decreases, while the value of the company to be acquired increases. For example, when Oracle Corporation announced its proposed acquisition/hostile takeover of PeopleSoft, the value of Oracle’s stock steadily declined for the nearly 18 month battle while PeopleSoft stock rose $5.1 billion! This seems to occur in spite of whether investors and analysts believe the acquisition will be profitable to the expanded company or not. It is understandable why the public would invest in the company to be acquired- they will usually be paid a premium for their shares. What I question is why the public would believe the acquiring company is so much more worthless because it is venturing to expand. It seems that Wall Street must believe that the economies of scale have reached a saturation point. Of course, there are inherent risks when a large purchase is made. The integration may not be smooth, but in the long run why would the public believe that expansion is devaluing?

Is There a Light at the End of the Tunnel for Tsunami Hit Economies?

As the tsunami death toll rises past 162,000 and over 800,000 people being displaced from their homes (ABC News) economists say the tsunami may have a relatively marginal economic impact. In the economies of Sri Lanka, Indonesia, India, Thailand, and the other affected countries, tourism and fishing make up only a small percentage of the overall economy. Even as it has destroyed the livelihoods of millions of families in South Asia, the tsunami will shave only a few points off the region’s economic growth this year. Depending on the importance of tourism in each country, the decrease is expected to range from less than one percent for Thailand, to two percent for Sri Lanka, and four percent for the Maldives, according to estimates by Standard Chartered Bank.

These countries economies are based on other factors such as agriculture, clothing factories, gas production, and many others economic factors besides fishing and tourism. In Aceh Indonesia, the tsunami apparently did not damage the region’s most lucrative properties of oil and gas production facilities. Most of Aceh’s population depends on agriculture for their livelihoods such as rice, peanuts, soybeans, maize, cassava, and potatoes. It is unclear how much agricultural land was flooded by the tsunami, but it wasn’t hit as hard as the fishing and tourism industry. Sri Lanka’s economy, which is still heavily agricultural, with tea, rubber, and coconuts, was not hit by the tsunami. Sri Lanka also has many garment factories that supply stores like Victoria’s Secret which employ, directly and indirectly, close to one million people. None of these companies have been affected by the tsunami. Also, many economists are predicting that there will be a surge in the construction industry and the production of raw materials such as cement and steel, because of the rebuilding that will take place.

Yes, the tsunami may be one of the world’s largest human disasters ever, but it may be just a small wave to the economies in the South Asian countries.

Gov’t Grants Business Immortality

Why is the government handing out money through subsidies and regulations to preserve dying industries? The living and progressing industries are forced constantly to pay taxes, which keep dying industries alive. As Hayek, in the book “Economics in One Lesson" illustrates, do we keep the ‘horse and buggy’ industry alive because it is dying or do we support the growth of motorized vehicles? Perhaps many of the loans and help granted to such dying industries are because of special interests and the “good ol’ boy” attitude towards friends in high places.

Not only does the practice of subsidizing and regulating some industries promote “keeping the dead alive” but it prevents competition which can and will hurt consumers in the long run. The article "The Price of Deregulation: Subsidies" explains what happens in the long run when subsidies and regulations are taken away. “Just between 1976 and 1990 the estimated savings from deregulation were $5 billion to $10 billion per year (in the airlines industry). Taking the low estimate, that’s $70 billion in savings over just 14 years—and that’s just lower ticket prices. Add in better routes, safety, customer service, innovation, and 14 more years of low prices to the present, and that total’s much larger.”

It’s time to start deregulating and let the ‘horse and buggy’ industries die away. Sure, it will hurt in the short run but it will benefit us all greatly in the long run.

Insurance For the Season Pass Holder

I removed the link to this article (http://www.msnbc.msn.com/id/6667060/) from the title because it was goofing up the overall look of the blog. DT 1/12/05

Recently, National Union Fire Insurance Co. of Pittsburgh brought the idea of insuring against the risk of injury on ski resorts, and the implications created by injury. Unlike most common insurance packages, this new policy covers the loss of season pass capacity. Most season passes cost upward of a thousand dollars. Historically, resort patrons ski and snowboard on parts of the mountain before enough snow has accumulated to cover dangerous hazards. The dangerous conditions often lead to injury. Sometimes, the injury sustained early in winter causes total loss of season pass holders. To remedy the injured pass holder, National Union Fire Insurance has developed an insurance package that covers the loss of a season pass as well as other medical expenses as a result of injury. Incidently the service of indemnifiying someone for a lost season pass is big news, and the source of big time revenue. NUFI has found a niche that is willing to pay for coverage. NUFI got a jump start on a market with high demand. Luckily for NUFI there is a limited number of companies who offer any kind of risk coverage to skiers. The market is an oligopoly. NUFI really cornered the market by offering a product that no other company has. Profit taking is being had right now. Most likely these short term profits and higher premiums will quickly start seeing Cournot model type results as competition stiffens.

Lisa's 12/1 Post

That post is broken - it doesn't seem to be allowing comments.

Anyway, I think Wal-Mart learned this Thanksgiving that their demand is more elastic than they thought it was. Someone probably ought to be fired for that blunder: isn't the whole point of Wal-Mart to demonstrate that everyone else's demand isn't as elastic as they thought?

Monster Burger Is Big Media Talk

There has been a bigger, better, tastier, and more filling burger created in the market place. This burger is huge! As health conscience media and public list concerns over this 1400 plus calorie monster; many burger patrons are finding an answer to their appetite. The “Monster Thickburger” is a double decked burger consisting of bacon cheese butter and other rich in fat amenities. The market strategy for this is reaching those who demand a burger with a more saturated flavor. The strategy thus far is working. Some economist feel that this burger is nothing more then the practice of using excess capacity and inventories to reach those who demand a lot for a low price. There is one who thinks the Angus beef is possibly supplied by an excess of beef supply that is closely reaching expiration dates. The food is then sent to restaurants that have excess capacity; they then treat the meat and resell it at a lower price then it would other wise be sold. The price of the Monster Burger is much higher then an average burger. Thus, the burger is just about reaching a sale that almost generates an almost equal marginal revenue and marginal cost maximizing profits.

Goliath vs. Goliath

It is an oligopoly. Yahoo and Google share 92% of the search engine market. These two companies would seem to have a strong rivalry between the two of them. This is far from the truth. The strategies of Yahoo are night and day and still they somehow are able to compromise to use ideas from each other to better serve their companies. Google encourages their employees to spend a fifth of their work day on crafty innovations to try and find ways to incorporate them into the Google production cycle. Yahoo mainly depends on research and development to innovate new technologies then using other company resources to implement them into the daily framework. The companies also seem to have a common understanding to not compete one against the other but almost create a collusion to help create a larger demand for their product.

Alan Greenspan

With Alan Greenspan being forced to retire in 2006 it will be interesting to see who President Bush puts in his place. Greenspan is a legend, having been at the federal reserve for almost 18 years. It is said that there may be two candidates: Martin S. Feldstein and R. Glenn Hubbard. Feldstein may have a tendency to butt heads with Bush and is said may not be the one to take Greenspan's place. Hubbard worked with Bush before and may be more likely but only time will tell. Greenspan's place will be a hard one to take over. Greenspan has had his own unique risk management method of getting things done. The way he does things cannot just be picked up by the next person to come in. Greenspan is almost a one man show but it will not work that way for the next person. Greenspan has been really good for the United States' economy. Who knows where the nation would be economically if he was not in charge of the Fed. The Fed is more open since Greenspan has been there and the whole structure of the Fed has changed. It will be an economic shock when Greenspan has to leave the Fed.

Airlines Hit Again

It is reported again that Continental Airlines, Pan American World Airways and Eastern are looking at strikes from its employees. Employees feel that because these airlines are either bankrupt or on the verge that their jobs are in jeopardy. It is said that they will not be able to strike because the union does not allow strikes while they are on the contract. Employees say they will strike anyway and that they have a right to walk out on the airlines if something does not happen to them to their advantage. I wonder what would happen to flights if the employees went on strike. It would be interesting to see.

This is not the only thing affecting airlines. There are also rising fuel prices. With jet fuel prices rising 74 percent within the last year, airlines are not sure what will happen to its revenue. Southwest Airlines however are doing really well and are taking the place of many of the airlines. What is happening to the airlines?

You Can Buy Anything on EBAY

When an article in the Spectrum told of a ghost for sale on Ebay, I had to >check it out. The idea of a ghost on Ebay did not surprise me, but amount of the bids did. What’s next?

"Blogging" was it worth it?

Throughout this class we have created numerous bloggs and comments on individual's bloggs, with the incentive to get extra credit. It is a way we can see the views of our fellow class mates. We can go into real world application of the ideas we learn in our economic class. At least that is what we are suppose to think, right? Does it really help to understand economics or is it a easier way to get an A out of the class. I would have to admit I would not even be making this post unless there was an incentive for me. I need a few extra points.

Is it a good thing for Dr. Tufte to have us do these bloggs? I have heard from numerous people that they don't really care what they get on the aplia assignments. If they do bad they will just do one or two more bloggs and that will make up for any points they missed on the assignment. I admit I would never have read so much about oil prices and how they will effect the economy. Or what the merger between Sears and K-mart will do to the retail industry.

Sex Patch Decision could Slow Research

Proctor and Gamble sought allowance of post-marketing trials of the hormone patch Intrinsa, in order to bring the testosterone hormone to market where 3 million women who have had their ovaries removed would be P&G's primary buyers. However a FDA advisory panel, made up primarily of physicians, denied P&G's request citing concerns that in clinical trials cardiovascular safety issues weren't sufficiently tested. This is in part due to a not-for-profit organization's findings that postmenopausal women who take hormones are more likely to develop heart disease -- the number one killer of women in the U.S..

P&G apparently hasn't learned enough from Merck's recent Vioxx woes, if a medicine that turns out to be unsafe goes to market every personal injury lawyer in the nation will soon be filing lawsuits in every state of the nation. Although the potential profits of a drug that can cure sexual dysfunction are great, the potential losses from punitive damage awards could easily be more devastating than the benefits.

P&G needs to be patient and get a safe drug to market and enjoy the fruits with less risk of law suits and health problems for customers.

The article was found at: http://www.cnn.com/2004/HEALTH/conditions/12/03/sexual.disfunction.ap/index.html

Job growth not what predicted, is it really bad?

Every time new job numbers come out there is a negative spin on them. Here is a quote from NBC News that shows my point, “adding just 112,000 new jobs overall in November. It was the weakest gain in five months and about half of what economists had forecast”. Why is this description in the opening paragraph of the story? Why can’t reporters put a positive spin on this and not there normal doom and glum that is ever present in the media. In the same story just further down the page it points out the unemployment rate went down again.

Even though job growth was not what was predicted, any new jobs created is a good thing.

UPS to pay 100 million dollars for China Deal

On Thursday the United Parcel Service announced that it would acquire operations of a large Chinese firm, SinoTrans. This deal would bring the famous brown clad deliverymen to over 200 cities throughout what could soon be the largest cargo market in the world. Rocketing trade in the recently booming economy is what is driving the need for increased cargo business. UPS said it plans to establish a air hub at Shanghai International by 2007. With parcel traffic out of the company increasing 130%, UPS' increasing presence comes without a moment to spare.

United Parcel, as many other U.S. firms, has seen that as China's Iron Curtain becomes more transparent the need to be a first mover in the world's most populous nation is paramount. For UPS they may be little late as industry leader FedEx has had an established presence in China for some time, and UPS faces an uphill battle in that nation. Nevertheless UPS' move will no doubt prove a positive move for UPS shareholders.

This article was found at: http://money.cnn.com/2004/12/02/news/fortune500/ups_china.reut/index.htm

Entrepreneurship

Michael Malone, a guest speaker for the MBA program at Oxford School of Business, talked to the students about entrepreneurship. He asked the audience to raise their hands if they considered themselves entrpreneurs. About 200 out of 400 raised their hands. Malone then reported that four years prior only about 20 hands went up in an audience of about 400. What a drastic increase!

More individuals are seeing businesses be successful and want to join in on those profits. However, with so many entrepreneurs desiring to enter the market, demand will decrease within their industry of choice and economic profits will also decrease to zero. But of course, the market will not support this, so some will pull out and profitability will rise again. However, the cycle continues. Others will join the market hoping to find profits and will decrease demand and economic profits. The only companies that are most likely to survive are those with the most capital and equity to sustain them in the long-run.

Cell Power

I have been thinking about buying a new computer, but I ran across this article that makes me believe that if I were to buy something now, it will be obsolete in about a year and a half! IBM, Sony Corp. and Toshiba Corp. have been working in secret to produce the powerful new “Cell” processor. Cell will be ten times more powerful than conventional chips and be able to shepherd large chunks of data over broadband networks. The three corporations are currently investing billions of dollars to develop and prepare for mass production of Cell. The COO of Sony said that “current PC architecture is nearing its limits.” Toshiba and Sony are both releasing new Cell powered TV’s in 2006, and the next generation PlayStations will be using the microchip. All of the technical details will be revealed in February.

This is awesome for technology, but what about those of us who can’t afford to keep up all the time?

The Federal Government Is Gambling With Our Lives

Due to the lack of funds, scheduled testing on the casks used to transport nuclear waste will not be performed. But even without the testing, the federal Nuclear Regulatory Commission has approved the casks. An estimated 3,000 tons of nuclear waste a year will pass through 45 states in its way to Yucca Mountain in Nevada.

The actions of the Nuclear Regulatory Commission are nothing less than gambling with the lives of more than 11 million U.S. citizens.

Holiday Sales

This christmas it will be interesting to see what kind of sales will take place. Just with Thanksgiving sales the retailers did not get enough sales. In an article on MSNBC it talks about how well retailers did for the two days following thanksgiving. Companies such as JC Penny's, Sears, and Roebuck and Co did really well in its sales. The one company that did not do well was Wal Mart. It was said that because Wal Mart did not lower its sales enough like it did last year it was hurt by low sales on the days following thanksgiving. Most sales are expected to be online this year. Stores are worried about sales being better than they have been in the past. Will they get better?

Daylight Saving Time

Daylight Saving Time can be a real pain come April and October of each year. Why do we really have Daylight Saving Time anyways? I've always thought that we could just have one set time that everyone follows. Of Course, my idea would probably cut down on a lot of confusion, but according to a recent article I found on the internet we would miss out on a lot of energy saving opportunities. The article stated that, "one of the biggest reasons we change our clocks during Daylight Saving Time is that it saves energy. Energy use and the demand for electricity for lighting our homes is directly connected to when we go to bed and when we get up." The article also said that on average about, "25 percent of all the electricity we use is for lighting and small appliances, such as TVs, VCRs, and stereos." Therefore if we can cut down on the amount of time we use these types of applicances we can conserve energy, and Daylight Saving Time does that.

I never really realized how much the time of day could affect our energy consumption, but the idea makes a lot of sense. The United States is not the only country that practices Daylight Saving Time either. The Daylight Saving Time concept is one that is practiced worldwide. Some countries begin and end Daylight Saving Time on different months than the United States, but the idea is basically the same. Some countries are even known to adjust their clocks up to two hours forwards or backwards. Sometimes the time changes can be a hassle, but the logic behind this concept is really quite interesting. I highly recommend you read the article that I have hyper-linked to this post.

Shoplifting Costs Increasing

A recent article on msn.com discusses the increased proliferation of shoplifting and the subsequent costs incurred on suppliers. Heading into the busy holiday shopping season, two recently released reports state that theft costs are starting to become a national problem and a growing financial burden. Companies must spend more money on surveillance equipment, training, and the legal costs associated with theft.

According to the 16th Annual Retail Theft Survey by Jack L. Hayes International, nearly $2 billion was lost to shoplifting and employee theft in 24 U.S. retail companies in 2003. Retail theft -- both by employees and shoplifters -- increased 4.7 percent last year from 2002.

Increased shoplifting is causing an increase in supplier costs which in turn could result in higher prices for consumers.

Many Federal Employees Can Retire in Five Years

Washington may soon be facing a problem when "roughly half of current employees will be eligible to retire between now and the end of 2008, including aslmost 70 percent of supervisors." The article, written in U.S. News and World Report, is calling the potential problem a "brain drain." Many of the departments and agencies are noticing that many of their employees are going to become eligible for retirement in the next few years and are trying to create incentives to retain its workforce until qualified individuals can replace them. Some agencies have begun to market themselves to potential applicants the same way a company would in the private sector. One example is NASA has started putting booths at job fairs at many colleges and universities around the country to attract younger applicants. Incentives such as above-minimum starting salary, and payment for interview expenses may also be used to make the job more attractive.

This may be to the advantage to many of us who are looking for jobs right out of school. The article does point out that many choose to work in the private sector because more money can be made outside government agencies. There are several jobs that pay really well, but those jobs are so competitive that it is nearly impossible to get those jobs. Maybe now that the need for new employees is going to go up in the near future, the job market will become stronger and be to the advantage of the job seeker than to the advantage of the company.

International Pressure to Fix Trade Gap

America's international trade deficit has continued to grow for many year, but economists and those on Capital Hill have put it on the back-burner and now that has drawn the attention of many in the global market. "Overseas officials and international trade organizations have called on the U.S. to deal with the problem before it inflicts global pain," states the author. At the same time the U.S. has become somewhat dependent of global economy. So many solutions and strategies are proposed by policymakers, but the author writes that there is no easy solution. Increased international demand could help the U.S. exports, but growth in both the European and Japanese regions did not meet recent expectations and are thus becoming less dependable for the U.S. to increase its exports. Another idea mentioned would be to increase U.S. savings because it would decrease the need for the U.S. to depend on international funds.

Maybe the international attention will raise the sense of urgency by the U.S. and the U.S. will realize the enormous impact we have on the global economy. The global economy is so dependent of the U.S. and hopefully economists and Capital Hill will find a strategy that will be effective for both the U.S. economy and the global economy.

Tuition Hike Protest

Approximated 7000 college students from around the state of California protested against a proposal that would increase tuition by 44%. Governor Schwarzenegger outlined this proposal do the overwhelming debt that California has witnessed in the last four years. After the increase, the cost of tuition would still be greatly subsidized by the state. States have increased their tuition far higher then the rate of inflation in the last 15 years, and enrollment hasn’t subsided. The demand for higher education has accelerated right along with price keeping a steadily increasing equilibreum. A competitive job market is making the demand for schooling increase. Students don't want to pay higher prices for school but the alternative is not a viable option. No degree makes the individual in many circumstances less marketable. The guestimation is that although students will kick and scream and protest, in the end you will find them in the classroom.

The Story About Postal Rates

If you believe this article stamps should cost around 24 cents right now. But the price of stamps keeps rising faster than overall inflation. That is partly because the post office has to support itself with its own revenue, without any additional funding from the government. (Even if the government provided funding consumers would still have to pay through taxes). In a lot of ways the post office operates like a private business, and has to deal with heavy competition from companies like UPS and FedEx as well as e-mail. Recent terrorism threats have increased costs as well. Continuously raising prices might drive away customers, and create a need to raise prices still higher.

The U.S. postal service is getting faster though. 15 years ago sending a letter from the U.S. to Europe took around 2 weeks, whereas now it takes 5 days. While e-mail seems more practical for writing to friends in Europe, it is still sometimes necessary to send tangible letters or cards. But how much will postal prices rise? International friends are becomming more and more expensive.

David Stern is A Chump

Just about everyone in the sports world knows about what happened Friday night between the Pacers and Pistons. For those of you who don't there was a brawl that broke out between fans and players. Artest and Stephen Jackson went a little beyond the scope of sanity; but does this warrant a 5 foot nothing fat out of shape chump without a stitch of athletic experience to judge the most athletic entertainers in the world. David Stern has no idea what it is like being pushed to your limits by media and drunken fans day in a day out. Stern doesn't have the credentials to judge these men as peers. It is dusturbing that the NBA (most likely featuring the best athletes in the world) has a chump governing it. In terms of economics, David Stern is most concerned about dollar signs. He wants fans to generate revenue by following the NBA and participating as much in the game as possible. In this case the fans were behaving like monkeys. Throwing beer and other drinks on men who are playing a game with high end emotion is unbelievable. Drunken fans talk trash about wives, family members, and ridicule the most intimate aspects of one’s life. Often times these fans are overheard by those very players immediate friends and family who went to support and enjoy the loved athlete. When heckling ones most intimate emotions is combined with physical abuse, you have one heck of a problem. The David Sterns knows nothing of physical competition or the emotions that come with pushing oneself to the brink of mental and physical stress. Many argue that Artest is a psychotic along with Stephen Jackson, and Jermain O'neil. Columnist Bill Simmons blames Artest for “going after the wrong guy” Simmons says “It wasn’t that guy but the guy behind him who threw the cup of beer”. When you temporarily lose sanity do to the abuse of 20,000 it is hard to tell one apart from the other. Although only say 30 people were guilty of throwing things, most everyone is guilty of defemation of ones character.

The Red Hat Society

A new craze has increased the demand for red hats and flamboyant purple outfits. The Red Hat Society is an organization for fun loving ladies over 50. In the past couple of years, there has been a large increase of chapters, web sites, and merchandise related to the Red Hat Society.

The owner of a Merle Norman store started selling Red Hat items about a year ago. She had a lot of inquiries and people were finding it difficult to find a red hat or any kind of accessories that go with a red hat.

What a great idea...all around us are little ideas just waiting to be found that would have great market potential.

Brain food

If you had the chance to take a pill that would enhance your memory and sharpen your mental response would you? Who wouldn't? But why do we need these pills? If these pills can help the ill then they should be sold. But why are they needed by those who are healthy?

In the past decade there has been much advancement in genetics, molecular biology, and brain-imaging technology. There are over 40 potential enhancers currently being developed. This can help cure the 4.5 million people that suffer from Alzheimers. In 15 years, an expected 6 million will be diagnosed with it. I personally can tell you that this would be a miracle. Some people do not know how hard it is to look at a family member and tell them you love them when they have no idea who you are. Live's can change if these new drugs become a success.

Will it be taken advantage of? Will people be buying this drug, perhaps on the black market, in order to help themself? Will businesses want this drug so that they can remember everything about their customers? This drug could change everything.

Rap album or NBA?

Indiana Pacers player Ron Artest will now be able to take the time off he asked for a month ago to do his rap album. Not because he asked nicely but because he is suspended from the NBA for the rest of the season. Friday night Artest ran into the stands during a game because a fan threw a drink at him. This fan was upset because Artest had fouled his Detroit Piston, Ben Wallace. This lead to the biggest brawl in NBA's history.

Not only will Artest not be playing this season but he will also not recieve his $5 million salary pay. Sadly, this probably means nothing to Artest. Did Artest really learn a lesson or is he just getting this time off now for his rap album?

Artest was not the only player suspended from Friday nights brawl. Stephen Jackson is suspended for 30 games and Jermaine O'Neal for 25. The home team of Detroit also has players suspended. Ben Wallace will sit out 6 games and Anthony Johnson 5. Four other players are suspended for one game because they left the bench during the fight. These players are Indiana's Reggie Miller and Detroit's Chauncey Billups, Elden Campbell, and Derrick Coleman. All suspensions are without pay.

Are these too harsh? Some say they are because the fans need to be in control. Others say it will continue to happen unless harsh punishment occurs. I think harsh punishment is not a 10 game suspension. Harsh punishment is not allowing them to play in the NBA again. Suspension just holds back a pay check that some can live their entire life off of.

Good Samaritan

Recently there have been many issues of alcohol poisoning. College students drinking too much, passing out on the floor, and others just staring blindly at them. These college students were killed because no one called 911. Others hestitated, making it too late for help. Their friends were underage and did not want to get in trouble.

Is this right? Should a person risk getting a ticket for "minor in possession" for their friends death? Is it right to ticket a person for underage drinking when they are helping save a life? Or does it teach them a lesson as well?

University of Missouri-Columbia has now proposed a "Good Samaritan" policy to help solve this issue. This would excuse any student who reports an alcohol emergency from harsh penalties. Instead this student may be required to take part in alcohol classes.

Is this what should be done for students? Will this increase the number of incidents or will it help save more lives?

K-Mart and Sears Merger

On the 17th of November, Sears Roebuck was acquired in a friendly merger with K-Mart Holdings Co.. The new entity will be called Sears Holdings. The merger worth an estimated 10.9 billion dollars was accomplished in a stock swap Sears stockholders are given the choice of receiving 50 dollars per share of Sears Roebuck common stock, or half a share Sears Holdings common stock per SRC common stock. K-Mart were to receive a share of SHC per K-mart share. K-Mart shares closed at 101&1/4 after the merger was announced.

The most surprising part of the merger is that K-Mart is actually the new parent company, considering that this company has just emerged from bankruptcy this news is quite a favorable assessment of K-Mart's management and there ability to turn what was K-Mart fall apart into a new retail powerhouse.

This new merged company promises to be able to give the number 2 retailer in the US (Home Depot) a run for their money and giant Wal-Mart reason to squirm. With strong exclusive brand names like, Craftsman Tools, and Martha Stewart Living, Sears Holding will slip strongly into the position of 3rd largest retailer in the Untied States.

Record Low Dollar

On Friday, Alan Greenspan warned that two of things that are weakening the dollar - trade deficit and budget deficit - need attention. How does the weak dollar affect us? Rates increase with a weak dollar, meaning the cost of money can affect both us as a consumer and our businesses. Weak rate also lead to a decrease of domestic competitions because goods can be produced cheaper overseas. More imports from Americans can make the problem even worse because it will lead to a larger trade deficit. U.S. companies that buy raw materials and parts overseas will see costs rise in dollar terms. But if they can't raise prices for their products, it could cut into profits and perhaps, hiring. The weak dollar has also hit U.S. consumers by putting upward pressure on oil prices.

Although there are plenty of negative affects from a weak dollar, there are a few positives. Such as, companies that sale overseas have a more competitive market and may see an increase in sales. U.S. tourism is another industry that can increase. Foreigners are more likely to visit since their currencies can buy more here, and U.S. vacationers who might travel abroad are more likely to stay home if dollar weakness makes overseas travel too expensive.

Job Growth

Job growth soared in October, although some economist just believe it shows a "bounce-back" from the hurricanes in September. Although the average work week stayed at 33.8 hours, professional and business services and retail sectors were adding the jobs while there was a job loss in manufacturing. Also, there was an increase of hiring in the construction sector but many are doubtful that it will continue. Interestingly, average pay also increased by 5 cents an hour. Why is labor increasing? Will it continue? What is making more business hire at an increased rate while the amount of hours worked is staying the same?

Consumer Prices on the Rise

I know that this is more of a macro subject, but it caught my attention. Consumer prices rose by 0.2% in October, much greater than was expected. The rise was due mostly to high energy and food prices. The question is whether this will continue and what will be the outcome for the U.S. About a week ago, the FOMC raised the short-term interest rates to 2%, and many economists speculated that this would be a "rest stop" to the let the economy gain even more traction before raising the rates again. Now that with the news of price level on the rise, the FOMC may be forced to raise the interest rate again in December to prevent inflation.

The economy is growing stronger as unemployment rates are dropping, but it isn't as strong as we would like to see it. This could be bad news for the U.S. if interest rates go up to battle inflation because it could reverse the progress we have made recently. Income and spending could go down, and unemployment could go up again. Hopefully the price level subsides and things continue to improve.

Kmart and Sears!?

Who would have guessed that K-Mart and Sears would have merged to create a new company! Sears Holding Corp. is the fresh title. “The new company is expected to have $55 billion in annual revenues and 3,500 outlets. It will be the third largest retailer in the U.S., after Wal-Mart Stores Inc. and Home Depot Inc.”

I am shocked by this merger! I really do wish the best for K-Mart and Sears, but it really doesn’t make too much sense. Both companies have been struggling to keep up as of late, and both companies have different images!

Sears has a great reputation for the quality of their tools and other home appliances. I’m wondering how that will match up with the saying “K-Mart Fall Apart!” Is Martha Stewart still going to be around and involved with Sears Holding Corp.? I really hope that they have some excellent ideas for success, because I think this will be a huge challenge.

Christmas Reading

Truck and Barter has a nice list of reasonable reading in economics (although I would avoind Bucholz).

??? RETIREMENT ???

What should we do about Social Security? Should the government allow individuals to allocate a portion the social security funds? What will the government do about the baby boomers? What will government do about the echo generation? Are these even the questions we should be asking?

The reality staring at each of us is that Social Security, more than likely, will not be there for retirees in the not too distant future. The question each of us should be asking is what am I doing to prepare for retirement? People are saying they can’t rely on Social Security for their retirement, but they still are not saving adequately themselves. Though people’s words are say they can’t rely on Soc. Sec., their actions are saying that they will rely on Soc. Sec. The fact remains that something needs to be done to preserve Soc. Sec., but even if it is preserved Soc. Sec. will still not fully fund a person’s retirement. The question that should be plaguing peoples minds is what should I be doing to fund my retirement?

Oil Supply and Demand

Since the ease of the hurricane season, oil prices have fallen $9 a barrel from the record high of $55 a barrel. The last supply numbers however include ominous signs that price is likely to increase. With winter quickly approaching demand is likely to increase slightly and with production levels at only 1% above demand levels any increase in demand is likely to have proportionate effects on price.

In the latest report by the U.S. Department of Energy said that stockpiles of crude oil rose by 800,000 barrels. However, heating oil and diesel fuel fell by 1 million barrels or 14% below year ago levels. This is why diesel prices are often higher then gas prices at local gas stations.

Diesel fuel prices have soared above $2.10 a gallon up 60 cents from a year ago. U.S. Economic growth has contributed to part of this increase. U.S. consumers have been spending more and many of their purchases are contributed to higher imports. In fact, there has been a 15% increase in imports. Trains and trucks are packed full. Interstate commerce has had their hands full the last couple months and it is taken a toll on the diesel fuel supply.

Oil Traders have been keeping a close watch on oil supplies. Princeton University’s geologist Kenneth Deffeyes predicts global output will reach its limit by late next year and then gradually begin to decline. As price to sustain such production begins to divert consumers, demand will have to fall.

In the more immediate future, other suppliers of oil such as Yukon in Russia, and Nigeria both have political pressures that at any time could cause problems in the business cycle. Any reduction in supply would greatly impact price anywhere from fifty on up per barrel.

The Need to Create

A MSNBC article entitled "An Insatiable Hunger to Create, Create, Create" reports that over 300,000 patent applications were registered at the U.S. Patent and Trademark Office in 2003. During that same year almost 200,000 previously filed applications were granted patents. These numbers more than double the numbers for 15 years ago. Seventy-five percent of patents get their start in corporate Research and Development labs. This makes sense since corporations need new products to make a profit in monopolistic competition. They are even reaching out to "independent inventors" to help them come up with new products.

The race for the next "big idea" continues at full-throttle, and I'm excited to see what new things will be offered in the future, things we can't even imagine right now.

Wal-Mart's Potential New Competition

Kmart just bought Sears for 11 billion dollars. Kmart and Sears are merging to one company. Now consumers will be able purchase Martha Stewarts and Joe Boxers product line in the mall. On the other hand, consumers will be able to purchase Craftmens tools in Kmarts. Because of this merger, this company just created a larger consumer base, will have greater buying power with distributors and wholesalers. Both Kmart and Sears stock moved up. Sears went from $9.43 to $54.63 per share (NYSE) and Kmart jumper from $16.58 to $117.80 (NASDAQ) this morning.

Because of this merger, will Kmart and Sears give the Wal-Mart a run for its money and be able to compete more efficiently or is this more to save both companies from Wal-Mart's empire?

Something else to think about, Craftsmen tools have built a reputable name for itself for sometime and now Kmart will be able to sell these tools in their store. Will Craftsmen tools reputation stay the same or will Kmart give it a bad, cheaper name?

Tomatoes in Short Supply

Three hurricanes, an irregular rainy season, and pests have contributed to a shortage of tomatoes. The largest producers of tomatoes in the country are: Florida, California, and Mexico. Each state has had their problems with disasters that have constrained the output of tomatoes. According to the Agriculture Department the average consumer demands 18 lbs. of tomatoes a year. Much of the 18 lbs are provided through restaurants that use to the tomato as a side ingredient in a wide array of dishes. Restaurants and grocery stores are faced with the dilemma of accommodating customers without the rich resource of ripe tomatoes. Not only has the price quadrupled from last year, but the supply is poor. The quality of the tomatoes are very poor, apparently the high selling price has provoked farmers to deliver premature tomatoes to a market that is in high demand. Many large restaurant chains are being forced to alter marketing decisions and promotions do to the rash of tomato shortages. Some full service restaurants are faced with the tough decision of weather to absorb the price increase, divert the price to the consumer or find some sort of alternative to the tomato. Safeway a large grocery chain has absorbed some price but has shared the increase with the consumer as well. Much of Safeway’s produce is supplied by greenhouse agriculture; the ratio is usually around fifty percent. Since the shortage of supply Safeway has had to outsource as much as seventy percent of its supply from greenhouse suppliers. The Subway sandwich chain has provided posts inside their stores letting customers know that some sides may not be available do to market complications.

Are Computers Good or Bad?

As people become more dependent on computers there are unforseen hazards. For many people, the longer they sit and stare at the computer the worse their vision gets. According to the article Heavy Computer Use Linked to Eye Disease, staring at the computer all day can cause or increase the likelihood of glaucoma. As computer use increases among people, so to does the need for optometrists that understand glaucoma.

Is it then safe to say that as the demand for computers increases so will the demand for optometrist and eye specialists?

What Rights Are You Willing To Give Up For Identify Theft Protection?

Identify theft is quickly becoming our nations fastest growing crime. Since the September 11 attacks there is a new sense of urgency for a higher standard in issuance and sources of identification documents. According to the 9-11 commissions report"Fraud in identification documents is no longer just a problem of theft."

Legislation implementing some of the 9-11 commissions recommendations have passed. This includes standardizing drivers licenses nationwide. The Department of Homeland Security will decide what documents must be presented to obtain the license and what kind of data could be included, such as iris scan or finger prints. This license could be linked to a central database and your information could be accessed at screening points set up for public transportation and public building.

In the October publication of the St. Petersburg Times, Robyn E. Blumner shares her concerns. Would all this intrusion really make us safer? Would terrorists find their way around it? Who will have access to the information? How long is the information retained, and what kind of security features will protect it? "Who's to stop Government employees from using your information for their financial gain?"

Instead of using our nations resources to track law abiding citizens, shouldn't we use existing information such as the thousands of FBI's backlogged terrorist-related intercepts more effectively and investigate real terrorist leads? Is the security of our nation worth giving up our individual freedoms of liberty and privacy?

Blogging Technology

In an article on MSNBC new blogging technology is discussed. With new technology could it make our class blogs easier? One of the new technologies is a program that is called Flickr. It is a program that interacts with blogging websites and allows the user to add effects to their blogs. It has the capability for you to take a picture with your camera phone or your video camera and send the file to Flickr and they will attach it to a blog of your choice. There is also some technology called AudBlog that will allow you to call a phone number and leave a four minute message which in minutes is uploaded to a webpage blog and then you can hear your audio blog online. Could this technology make our blogging assignments easier if we were allowed to use this kind of technology? If not easier then more exciting?

How much oil is left?

Many people wonder how much oil remains to keep up with our increasing demand. An article discussing this very subject indicates that no one can effectively predict this.

I propose that we will never run out of oil. Higher oil prices will eventually reduce demand as consumers choose more efficient cars and energy producers develop alternatives like wind power. When the cost of finding and extracting oil becomes higher than the consumers willingness to pay for it, the oil producers will not be able to make a profit and they will be out of business. This indicates that we will never completely deplete the oil supply.

Wal-Mart Again

Is there any time of day is Wal-Mart not been brought up whether in class, media, or just by your roommate? On a previous article about Toys R Us, there has been more companies have now come forward and expressing their problems because of the Wal-Mart giant. Besides Toys- R-Us, Best Buy, Home Depot, and Bed Bath & Beyond are expressing their opinions on how Wal-Mart is effecting their earning.

As Wal-Mart continues to grow, they are predicting by 2010 Wal-Mart company will reach a half a trillion dollars in sales and expand to 3,000 supercenters up from 1,600 this year.

That kind of growth will make Wal-Mart Number one in plenty of other product categories. It will also put an even tighter squeeze on existing companies that Wal-Mart already dominates such as food and apparel. "With a lion like Wal-Mart on the loose, no store is ever safe."

Young Guns

The Salt Lake Tribune just came out with an article on the growing trend of young people becoming entrepreneurs. With the down turn of the job economy in the past couple of years, graduating students have been searching for jobs in vain. Some are getting creative, however, and becoming successful on their own! Hell yeah!

It is difficult to estimate exactly how many young business owners there actually are because the Federal Small Business Administration does not keep statistics by age, but there are many signs of growth.

The Virginia-based Young Entrepreneurs' Organization, a group founded in 1987 that requires $1 million in annual sales before it will admit a business owner, now counts 95 U.S. members younger than 30 in its ranks. And a first-time survey done this year by the National Association for the Self-Employed found that about 15 percent of its members are in their 20s or early 30s. Also, small business consultants are finding that more and more young people are seeking advice.

This news can be great, or detrimental, for us all! Some people really like the idea of flexibility and being our own bosses, and some of us would rather not deal with the stresses of being in charge. I thought this article was very interesting, because this will be an issue that we will all be facing this year or next!

Abandon your baby

South Carolina's Department of Social Services has now made it easy for a mother to abandon her child. A mother has up to 30 days to decide whether they want their child or not. What does this do for society? This only makes it easy for women to try to raise a baby, decide they can't do it, and they just give there baby away.

Daniel's Law is what gives mothers this option. A parent cannot be prosecuted for abandoning their newborn if they take the baby to an employee at a hospital or an outpatient facility. The person leaving their child does not have to reveal their identity but will be asked to provide medical history of the parents. This will help the medical staff treat the baby if neccessary. The hospital will be providing medical care to the newborn while The Department of Social Services has custody of the baby.

Instead of the mother taking responsibility for her child and either putting her child up for adoption or taking care of it, this allows mothers to have no worry and just leave the baby at the hospital. It makes it even easier for a parent to ignore their responsibility. Is this something our society needs? An easier way to get rid of their child? Is 30 days too much?

Cheaper Oil?

Timothy Guinness and Tim Evans both agree that the price of oil per barrel will drop within a year but they have differences on what will happen in five years. Guinness thinks that oil will shoot up to $100 per barrel and Evans believes it will stay the same. Evans' arguement is quite interesting and is based upon supply and demand. Evans' beliefs are based upon econonomic pressure, low costs, and incentives to find more oil.

Economic Pressure. Oil companies need to maintain their stock prices and do that by finding more oil than they use, proving to Wall Street that they have a viable future.
Low Cost. The cost to recover oil is around $7 to $9.
Better late than never. One oil company isn't in a rush to find new resources because they know they can last for 20 more years and they don't want to invest to find more resources when it isn't a demand for them now.

There is also sweet crude and sour crude. Sour crude oil, which is a little more difficult to process is getting easier as companies learn how to refine it. So, the supply of usable oil will grow. Who knows what the price of oil will be like by 2010 but Evans does provide another way of looking at the long run.

Chinese Import Tariffs

Retailers, manufacturers, and importers are now bracing themselves for the possible repercussions when the import tariffs on Chinese furniture go into effect next week. The preparations began last spring as US retailers and wholesalers began decreasing their purchases from Chinese furniture makers, according to a recent article on msn.com

About one year ago a group of US furniture makers petitioned the ITC and US Commerce Department to impose the tariff. After further investigation, the Commerce Department found that 35,000 US jobs in the industry had been lost over the past 4 years due to the increase in the amount of American consumers that are purchasing the cheaper Chinese furniture.

Industry analyst, Ivan Cutler, predicts that if the average tariff exceeds 20% it will force some companies out of business, and if that happens some of the larger Chinese furniture makers with low tariffs will become more dominant and simply buy out the smaller manufacturers with higher tariffs. Donald Parker, senior vice president of merchandising for retail giant Rhodes Inc. said, "It's been the most divisive issue in this industry that I've seen in my 38 years in this industry."

Through the experiments that we did in class on Aplia, I have a hard time seeing how import tariffs can be beneficial for anybody, consumers or suppliers. If I remember correctly, during the experiments, the tariff that was imposed only seemed to diminish profits for one party or the other.

Strong Gains

Since the incumbent re-election of George W. Bush as president, world indecis have been performing very well. Many factors both foreign and domestic have spurred a slightly bullish economy. Slight increase of oil supply days before the election bolstered indecis world wide and have not slowed down since. Other factors directly correlated with Bush administration policies seem to have reassured investors that the United States has a strong governing body with unwaivering policies. North Korean officials have made efforts to reaffiliate themselves with the Bush administration to renegotiate terms on nuclear research. This is the first time since President Bush made a speach addressing his refusal to negotiate any further terms with North Korea that there has been any public correspondence between the two countries. Palistinian authorities asked for the US to assist in a state wide democratic election to determine the next Palistinian President (since the recent death of Arafat). In Fallujah US forces backed by an Iraqi army are working hand in hand to put an end to a guirella insurgence. Each of these factors have reaffirmed the world that although the United States does have some contriversial policies it seems as though they are working. Optomism regarding world issues is always a settling scenerio in the mind of the investor and it is evident that investors are feeling more confident through the gains in the world indeces.


http://www.msnbc.msn.com/id/3683270/

Horse jockeys

How nice would it be to know that before every event you begin, you have the first $100,000 of your health covered? In most states, horse tracks pay for this amount in insurance. But what happens if the rider becomes paralyzed? What if costs are more than this amount?

Jockeys feel that this is not enough. When asked before the Churchill Downs meet in Kentucky, some jockeys voted no on this issue. Because of this, they were ejected from the rest of the meet. Jockeys who were banned from riding at Churchill are still able to ride elsewhere in the country. It is the individual track that determines whether to stick with the jockeys ejection from another track or to let them ride.

Whey should they be able to obtain more money for their insurance when they put themselves at this risk? Shouldn't they be partially responsible? Honestly, it isn't the track that comes down to the reason why they get hurt. (Except in some cases, which is a completely different issue) It can be the horse, the rider next to them, or just a simple jockey error. Injuries are common in this line of work.

Because these jockeys are not riding, it can hurt the economic point of view as well. There are less jockeys racing, making less award money available. Is this going to hurt the horse owners? The horse owners pay the jockeys to ride. The jockeys don't ride. The jockey's don't get any award money. Therefore, the overall winning dollar amount is lower. Is it worth a horse owner to put a jockey on their horse to race when the cost can be greater than the reward?

Don't Fear Wal-Mart

Wal-mart isn’t “putting” other stores out of business. The businesses are putting themselves out of business. Wal-mart comes into town and the first thing these mom and pop shops and small chains start trying to do is beat Wal-mart at their own game. These shops start a price war that they are never going to win. These smaller companies are not going to beat Wal-mart on price. Wal-mart is cutting costs all the way back to raw materials, not just at the retail level. You don’t beat an enemy by continuously slaughtering your own troops against there most powerful strong hold. Like Achilles, even the great Wal-mart has weaknesses. If companies would capitalize on those weaknesses and stop battling with price they would have much better chances at survival and even possibly come off triumphant.

Halo 2

On Wednesday, Microsoft announced that 2.4 million copies of Halo 2 were sold within the first 24 hours of the game being on store shelves. Sales reached up to $125 million! That’s 25 % more than what was predicted. One retailer sold 200,000 copies of Halo 2 before daybreak!

This is exciting news for Micosoft! I think it is amazing to have such hot items to keep a company in business after their main product has already reached an almost mature stage in its life cycle. Halo 2 provides an incredible competitive advantage for this company. I find the video game industry very interesting in terms of business and technology.

On a different note, just to spark some conversation, what does this news tell us about American culture? In just one day of sales, over 2.4 million copies were sold. How many of those do you think are burned and copied by now? That means, at this moment, at least 2.4 million people and their friends are crowed around a T.V. playing a video game! Just think how many people will be playing this after Christmas morning?

There are so many issues that this news can spark...

Walmart Getting Too Big For Some

With Walmart getting so big lately it is no wonder why so many businesses are going out of business. Walmart has put Kmart out of business in its own industry lately and now it is working on other industries. Toys R Us is saying that Walmart could put them out of business. Toys R Us started the business of specialized stores. From Toys R Us came stores such as Best Buy, Home Depot, and Bed, Bath and Beyond. It is said that Walmart could start taking out stores in the consumer electronics, banking, pharmacy, gasoline, and fashion industries. Walmart is the worlds largest retailer. It is number one in sales for food, apparel, jewelry, and home furnishings. Walmart may be getting too big for its own good.

Europeans Looking to Dump Microsoft

European governments are becoming more and more discouraged by the American giant Microsoft and are looking for an alternative to improve their role in the software industry. Many consider Linux as having the best chance to improve that role because of its European base. A number of large cities in Europe have already begun to switch to Linux. In an article written in Business Week, the author writes that Microsoft has launched an offensive to keep European governments from switching to the Linux operating system by discounting up to 35% to stay with Windows. Mircosoft has set up a website which contains statements from customers and problems that have been found in the Linux operating system. One problem that many companies are facing in deciding whether to switch to Linux is the cost to train their employees on the new system, and many notice the savings by sticking with Microsoft.

The fact the European governments want an increased role in the software industry is understandable. They see the American-base company as a monopoly and want a share of it. Microsoft shows that it will do what it takes to maintain its dominant position by discounting and continuing to be the leader in the innovation.

Maine's Rural Towns Increase Taxes

High property taxes in Maine are leading to the demise of many small towns. Maine is the postcard happy place that many people see it as - nice coastal towns. No, rural Maine is falling apart as property taxes increase. Small rural towns with only 100-200 residents aren't great attractions. Business go out of business, the population is aging so they just hand everything over to the state government and don't worry about anything. By so doing the local taxes decrease while government costs are increasing. Small rural towns just become "unorganized territory" that don't have any local government. By doing so, is this going to cause our taxes to increase to help Maine's state government take care of everything from education to snow removal for all these rural towns that are benefited by not doing anything?

Online Music

Thanks to the fast-moving technology, millions of songs are available on the internet and we are able to download - legally or illegally - songs we want in minutes. In recent years, digital music players like iTunes have made it possible for consumers to download and carry over 100 songs wherever we wish. Online music has proved that it is here to stay. Unfortunately, these new advancements have led to a contant decline in CD sales which have also led to many artist complaints. Now the question is (thinking economically)what about the musicians? Will the decline in CDs sales and other money making opportunities that were lost resulting from file sharing be enough to keep new musician from entering the industry? Or are concerts, fame, and other money making opportunities enough for artist to keep entering? What incentives are keeping complaining artist in the industry? And if artist are staying in the industry, there must be more incentives to keep them in the industry. If that is so, is file sharing such a big deal?

Outsourcing

One of the bloggers from Marginal Revolution and another economist had a debate set up by the Wall Street Journal about outsourcing. We all know that outsourcing is a controversial subject. But it all depends on how we look at it. For one, in certain industries, it is not just a matter of being cheap and wanting higher profits by cutting labor costs. For some, it is a matter of staying competitive and surviving.

If we take a look a the situation through partial equilibrium analysis we conclude that outsourcing causes unemployment. Yet, in general equilibrium analysis we consider the interdependence of all factors in the economy. Take the example of a production worker who makes cars loses his job as his company sends labor overseas. Without looking at the whole picture we conclude that outsourcing causes unemployment. But let's consider that the country where the car manufacturer moved production imports steel from the U.S. By looking at the big picture we can see that demand for labor in the car industry went down and the demand for labor in the steel industry went up. Not only that, the price of cars goes down and many people can benefit.

Check out the debate. It was interesting.

Cellular's data fixation

The newest trend in wireless services is data trafficking. Currently there are 35 million subscribers in the United States, a number which is expected to expand to 73 million dollars by the year 2007. Currently Sprint is the earliest leader in data services with 150% year over year growth and 24 billion dollars in total revenues per year. Perhaps one of the biggest developments in data services is television quality video available on some types of cell phones. This recent development is leading some analyst to make some radical prediction for the industry over the next four years.

A recent study predicts that adult wireless content will be a 1 billion dollar industry by the year 2008. This is due to a long history of adult content jump starting quickly into new technologies, as with video, internet, and pay per-view content. Of course the true amount of revenue derived from adult content is somewhat muddled, media giants like Comcast and Dish Network gain large profits from pay-per-view adult content but the profits from porn aren't separated from other business activities. That aside the recent innovations in wireless data trafficking make companies like Sprint an attractive investment avenue.

Wireless content is defiantly a booming sector by all accounts, but I'd hope that our society isn't so fixated with porn that it will be demanded on cell phones. Morally and culturally this study is frightening, because the adult industry is believed to be more profitable than MLB, NFL, and the NBA combined, it is likely that this study could be very close to actual outcomes in the year 2008. That aside wireless video technology is an exciting new innovation that has a promising outlook for large future profits.

This article was found at: http://money.cnn.com/2004/10/27/technology/techinvestor/hellweg/index.htm

The Low-down on Low-Carb

At the beginning of this current year it seemed that the low-carb diet was the answer to American’s problem of obesity. Food advertisements everywhere were promoting this new wave dieting technique. Companies that didn’t jump on the low-carb band wagon were left behind by advocates of this low-carb craze. Like any other diet, the craze didn’t last long. The low-carb advertisements that used to be so prevalent are now a thing of the past. Occasionally, we still see companies hanging on to the concept of low-carbs for the die hard dieters out there, but it appears that the Atkins diet trend is beginning to slowly fade.

Recently a study done by the NPD Group, a research firm, stated that, “the percentage of Americans following diets like Atkins and South Beach dropped to 4.6 percent in September from 9 percent in January.” What would be the cause of this drastic downturn in demand? According to ACNielsen LabelTrends, “dollar sales of such foods rose 6.1 percent during the 13 weeks ended Sept. 25, down from double and triple-digit gains in the previous six periods.” Could the increased price for low-carb products be the cause of this decline in demand or was the low-carb diet just a fad that was destined never to succeed?

Look Out: Here Comes Hillary!

In a recent Associated Press article, many Democrats are being mentioned as possible candidates for a run in the 2008 presidential election. Hillary Clinton just happens to be one of those posturing for an eventual run at the White House. She already has name recognition and a wide following. Other contenders named were John Edwards and possibly John Kerry. It will be an election in which both the Republican and Democratic nominations will be up for grab.

If given the Democratic nod to run in 2008, Hillary might find herself suffering the same fate as would be president John Kerry did in 2004. Namely for reasons like being a liberal Democrat coming from the Northeast. I think Hillary will be given the 2008 Democratic nomination, but I just don't see her being moderate enough to get elected. I do believe however that she would put up one heck of a fight and I do think that she would win a couple of southern states- namely Arkansas. It makes me laugh to think of Bill being the first First-man in the White House. I think Hillary would find much of her time going to making sure Bill kept his hands off of any female staff or visitors.

Thinking on the Margin

Everyday we check the news and there is always something involving oil. Today it is considered common understanding how oil can have an effect on everything. Marginal analysis started a long time ago by forerunners such as Leon Walras, Carl Menger, and William Jevons. This evolved into neoclassical thinking by pioneers such as Alfred Marshall. Much of the principles of economics that we study today come from these schools of thought.

Walras is credited with furthering marginal analysis through general equilibrium. Through this he was able to demonstrate the effects of changes in supply and demand in all markets and not just a single one, for instance oil.

Partial equilibrium analysis held that everything remained unchanged, except for the variable being studied. General equilibrium analysis shows the how other factors can change. In the case of oil, a reduced quantity of oil will drive prices up. But this will also affect the demand for substitute goods such as coal. It also affects the price of gasoline and even things sucn as a the demand for automobiles and car washes.

All of this pertains exactly to managerial economics as we study regression analysis and use econometrics to find the demand for a firms product and the demand for inputs.

Trump Hotels Files for Chapter 11

On Thursday Trump hotels filed for chapter 11 bankruptcy protection, after reaching an agreement with bondholder to recapitalize debt. The plan will ease Trump's 1.8 billion dollar bond debt. the bankruptcy plan calls for 400 million dollars in debt reduction with an 8.5 % reduced interest rate. These measures should save the casino giant 98 million dollars a year in interest payments. Mr. Trump remains as chairman of the board and chief executive of THCR (Trump Hotel and Casino Resorts) Trump is expected to renovate and expand many of its existing properties, such as Trump Taj Mahal, Trump Plaza, and Trump Marina.

The debt restructure is in exchange for 74 million dollars in cash, 395 million dollars in common stock, and 1.25 billion dollars in new debt at the reduced interest rate of 8.5 percent. This restructuring seems like a fairly unfavorable use of chapter 11 bankruptcy. The reduction is debt is only 550 million dollars, with a fairly large increase in outstanding shares of common stock.

This report is after Donald Trump nearly was fired by his shareholders for consistent losses for all investing shareholders. The trouble that Trump is having also points to a lack of ability for Atlantic City casinos to be able to compete with the more family oriented Vegas gambling houses. Vegas' competitive advantage starts with more activities for all ages, including amusement parks, arcades, shopping and entertainment for families. Vegas' departure from adult only activities led Las Vegas into its largest economic boom in history.

Article found at: http://msnbc.msn.com/id/6305752/

Wall Street the Day After

What an interesting day on Wall Street. The day George W was decided the victor indices world wide made large gains. At the opening bell, the Dow Jones jumped 180 points. At the end of the day, the down jones industrial index closed a good 101.32 points higher then it did the previous day. Bond prices fell as investors jumped on top of stocks.

The correlation with the re-election of George W and the strong day on Wall Street is due to business friendly Bush platforms. Market strategists said Wall Street was pleased with the outcome. There was evidence of world wide confidence of Bush with the gains in global indices.

Relief set in as a clear victor was named promptly following election day. In 2000 the official results of the Presidential Election took a month leaving investors unsettled. The rally today may be a bit temporal however, as some analyst speculate that other news regarding labor, oil, and other factors will damped the optomism.

A clear positive was seen in the drug sector. The Bush’s administration is expected to reduce the threat of government-imposed price cuts on drug makers. John Kerry said he wanted Medicare to negotiate price cuts on drugs. Threatening profits to the drug sector. Today turned out to be a strong day for the economy, but will these rallies continue, or are domestic and foreign problems too great to overcome?

www.msnbc.msn.com/id/3683270/

Five Convictions in Enron-Merrill Trial

Four Merrill Lynch executives were prosecuted Wed. November 3, 2004 for conspiracy and fraud. This was the first criminal trial to emerge from Enron’s 2001 demise.

The details involve the counterfeit sale of interest in power plants mounted on barges to Merrill Lynch. The purpose of the sale was to bolster Enron’s sales in order deceive the general public of Enron’s earnings capacity. The sale was to be bought back in six months. Enron in turn promised to compensate Merrill Lynch in the future by giving them more lucrative business partnership.

Merrill avoided prosecution for their involvement in Enron’s collapse last year by paying a substantial $80 million to the SEC. The compensation settled civil allegations concerning the barge deal, and Merrill never admitted wrong doing.

www.msnbc.msn.com/id/6401108

"Great" President

We have witnessed another presidential election. Bush wins! But what kind of president will he be or what kind of president has he been so far? Does the outcome of Iraq effect how we view President Bush? What makes a great president? We all know the names George Washington, Thomas Jefferson, Abraham Lincoln; we all consider them great presidents. What about those that are not admired? "The Great Engineer, Herbert Hoover, took the oath of office in 1929 as the most admired politician in America and left four years later at the depth of the Great Depression as its most reviled." Was this president just a victim of circumstance that perhaps was started before his administration and was beyond his control?

Who do we consider great presidents and who do we consider not so great? Is a great president determined by circumstance and what he does during that circumanstance?

Presidents

The election is over.....did you do anything to help?

The debate comes up every election year. Does voting matter? Looking at the margin, probably not. Especially if you live in Utah. Others suggest that there is more to voting than the motive of swaying the decision. Some, or most, see it as a moral obligation-their patriotic duty. Personally, this has to be the reason for voters in Utah where the majority goes to Republicans and where the electoral votes really don't matter. Yet, maybe in states such as Ohio, it does matter even at the margin. The coach of the Ohio State Buckeyes football team required all 105 of his players to vote in yesterday's election.

One writer at "Marginal Revolution" gives some suggestion on how instead of voting, one might better serve their fellow man.

I once had an Econ professor who lived by this principle and refused to vote. He argued that his vote would not matter. I don't know if he was Republican or Democrat, but he seemed to be at peace with himself knowing that his vote didn't matter.

Of course, proving this would not change the way people act. I agree that the moral and emotional elements are far too influential to stop people from voting. The paranoid public who do vote would always be asking themselves, "What if I don't vote? What if nobody votes?". Maybe next election I will heed the suggestions of certain bloggers who said working in a soup kitchen or even driving people to the polls.

Small Business and Your Candidates

Both President Bush and John Kerry know first hand about the challenges of owning and operating a small business.

First, Pres. Bush founded Arbusto a small energy company that he started through a trust fund. Soon after President Bush sold his equity in the company and moved to the Texas Rangers. Both ventures were short lived.

John Kerry's experience was much different. After law School John Kerry and a friend started a cookie and muffin shop in Boston's Quincy Market. This venture also was short lived and quickly thereafter John Kerry moved into politics.

The differences of the candidates are quite different when it comes to small business. Bush wants to give tax breaks and less regulation on small business, and at the same time minimizing the Small Buisiness Administration (a low interest loan company that grants small business easy access to loans).

John Kerry wants to increase federal support to the SBA granting more money and lower rates to Small Business ventures.

If rates become lower for small business, then barriers of entery decrease as well as lowering the return on debt. This will only propetuate government assistance and dependance. Masking the actual demand of small business.

www.msnbc.msn.com/id/5961811

catastrophic losses

Insurers got zapped this year. Specifically, third quarter storms accounted for 21.3 billion in insured property insurance. Insurance payed out $24.7 billion for the first nine months of 2004. This years first nine months losses is second only to 2001's first nine month losses of $26.1 billion. Majority of losses incured during 2001 is mostly do to 9/11 terrorist attacks.

This year four major hurricanes in Florida accounted for $20.5 billion-a bit more then the $20.3 billion loss caused by Hurricane Andrew in 1992. The frequency of catastrophic storms in a given 40 day time frame is very unusual and were far from the calculation of premiums.
However, there have been very few insurance insolvencies, indicatina that the market will remain strong, and be able to rebound from this storm season.

With such catastrophic losses the demand of storm insurance will likely climb as well as the premiums. Although insurance companies as a whole were able to absord such a catastrophic third quarter, the likelyhood that insurance companies will be able to absord a similar blow in the near future without some major changes in premiums is highly unlikely.

www.msnbc.msn.com/id/6392536/

Shove This Up Your Bruttosozialprodukt !!

The Germans have a funny, catchy little tune about their GDP. Here's part of the chorus:

ja ja ja jetzt wird wieder in die Haende gespukt,
wir steigern das Bruttosozialprodukt...

It means now we're going to spit in our hands because the GDP is rising. Here is a basic definition of GDP; Gross Domestic Product. The total market value of all final goods and services produced in a country in a given year, equal to total consumer, investment and government spending, plus the value of exports, minus the value of imports.

I found a lovely site that shows how US GDP compares to other countries. The U.S. is of course in first place. But I have a plan to make GDP rise to even higher levels. The plan is this: We should include all of the work thateveryone does. For example, as a housewife, the work I do is insignificant when calculating the GDP. But I am producing something, namely well adjusted, hard working adults that, with any luck, wont crowd the prison system. What about college students? I, for one, am trying to produce a happy i.e. well paid CPA with my efforts on things like this blog. Why don't we give homework a value in the GDP?

If you look at what goes into the GDP you can see what our society values, and more importantly what it does not (me). I'm not sure having a high GDP is all that important anyway, but if we're going to have one I would like to be included.

Toyota, records Record Sales and Profits

Toyota reported record sales and profits for the period ending Sept. 30th. The extraordinary results cam after strenuous cost cutting and marketing effort by the Tokyo-based auto maker. The auto makers net profit jumped 11.4 percent from a year earlier 584 billion yen, or form 153 yen per share to 176 yen per share. Also Toyota Consolidated posted a record high 1.16 trillion yen of net profit for the business year ending March 31st 2004. Toyota said that cost-cutting efforts and marketing boosted net profits by 260 billion and 70 billion yen respectively.

With such phenomenal results from cost-cutting and marketing, American manufacturers must be wondering what marvelous cost cutting maneuvers have the Japanese invented now. If anyone is wondering why American jobs being outsourcing is such an attraction for American businesses, this is a prime example why. With consolidated net profit of 1.16 trillion yen in a single business year, American businesses must able to cut cost wherever possible. There hasn't been this large of a increase in Toyota's implementation of JIT, and other cost cutting manuevers of the 1980's.

This was found at http://www.msnbc.msn.com/id/6380984/.

Check This Out

Unbelievable!

Oil dipped today below $50 a barrel. Oil closed just above $50 which is remarkable do to the fact that just a week ago the price per barrel was just over $55 with no ceiling in sight. After prices reached $55 a barrel pressure was put on world suppliers to bolster the oil supply. The next day supply increased dropping prices. The reaction in the markets today was a mass “short covering”. What this means is people who sold oil to people at a specified price at a specified time in the future bought oil today at or around $50 a barrel. The significance of this transaction is that analysts feel that the price of $50 a barrel is highly discounted and the price of oil will more then likely increase substantially.


The information that analysts are using to calculate possible oil increases are alarming. In Nigeria the average worker gets paid just over a dollar a day, while Royal Dutch/Shell is reaping record breaking profits off of Nigeria’s rich oil fields. The largest workers union in Nigeria has threatened to walk out and go on Strike. Nigeria is the US’s fifth largest supplier of oil.

Argentina is another large provider of oil to the US. The Argentines labor force historically has been less then spectacular. And with the turmoil in the middleast and a lack of overall supply to boot the outlook for oil is very unstable.

One potential temporary solution as mentioned by many analysts is the supply of the U.S Strategic Petroleum Reserves to provide some easement of oil prices. The SPR consists of 727 million gallons that are only to be tapped when a major interruption such as war has occurred. The Bush administration has made a strict policy regarding the use of the SPR denying access to the public.

Kerry on the other hand has considered some moderate usage or at least retention of supplying the SRP.

The fact is that oil is fast on its way to becoming a scarce resource and the world’s excess capacity is currently one percent of the world’s daily consumption of 82.4 million barrels.

www.msnbc.msn.com/id/5612507/

Spending jumped in September

Consumers slowed down their spending in the late summer. However, the lack of spending was made up in September. Consumers boosted their consumption by .6 percent in the month of September. The gain in spending outpaced the growth in income.

The commerce department follows consumer spending closely because it accounts for one third of all economic activity. Researchers attribute the growth to big ticket consumption. Big ticket items include cars, or other big cash items.

Income growth increased to .2 percent, following a .3 percent rise in August. Economics illustrates, the greater the inflow of income the greater the inflow of consumption. The moderate spending in August bolstered savings. In September another growth in earnings attributed to a less thrifty consumer.


Third quarter GDP results were reported earlier in the week. Although GDP grew to 3.7 percent in the July-September quarter, GDP for the year is lower then expectations. Consumer spending which contributes to GDP was up 4.6 during the third quarter. However, the second quarter had anemic growth of 1.6. While GDP is rising is a good thing, the growth is less then analyst expectations. Sup par reports mean sell offs on Wall Street, which despite a few days here and there is what is being observed in the markets.

www.msnbc.msn.com/id/6380810/