The Marketplace Confessional
The business world can be a real pressure cooker. Don't take out your frustration on the interns — duck into The Marketplace Confessional and let off that steam anonymously.
Rant about inane and unfair policies, share the latest Dilbertism plaguing your office or 'fess up to your dirty little business secret. Bonus points if you make us LOL. No repentance required.
The latest from our listeners:
Well, my part of the stimulus was $29.95; that won't even cover 1\2 tank of gas. So much for helping stimulate the economy.
Clearly the double black diamond lane in the airport security line (see Kai's final note) is for those who show up naked carrying only their boarding pass, a few dollars, a credit card or two and their identification.
Regarding the story about the filly Eight Bells breaking down after the Kentucky Derby, I and many other horse people feel the biggest contributing factor is that they start them racing as 2 year olds, which means they start training as long yearlings. A horse's skeletal structure is nowhere near mature enough for those kinds of physical stresses at that young age. It's probably a minor miracle that there aren't more catastrophic breakdowns like that. You'll note they refer to the horses as colts and fillies, indicators of the maturity level. A colt is defined as an uncastrated male horse under 5 years old. Filly is, of course, a female horse under 5. Horses aren't fully grown 'til 5. If the racing industry would raise the lowest age for racing to 5, I feel there would be far fewer breakdowns. That way the trainers would probably start them at 3 and bring them along more slowly, and, in that instance, the issue isn't trainers or jockeys, it's owners. Owners want their horses out there making money as early as they can, and if trainer A doesn't think the horse is ready to run at 2 then owner B will send the horse to a trainer that will run them that young. So until the racing poo-bahs raise the racing age, breakdowns like Eight Belles will continue to happen.
In Food Fight, Duncan Greene indicated that Oxfam believes biofuels production is the major factor in the food shortage crisis. I've read a lot of other sources that indicate it's factory farming and our overwhelming demand for more and more meat this is the biggest problem and a main contributor to global warming pollution. The U.N.'s report "Livestock's Long Shadow: Environmental Issues and Options" states, "The livestock sector emerges as one of the top two or three most significant contributors to the most serious environmental problems, at every scale from local to global." It turns out that raising animals for food is a primary cause of land degradation, air pollution, water shortage, water pollution, loss of biodiversity and not least of all, global warming." A University of Chicago report found, "Producing a calorie of meat protein means burning more than 10 times as much fossil fuels -- and spewing more than 10 times as much heat-trapping carbon dioxide -- as does a calorie of plant protein. The researchers found that, when it’s all added up, the average American does more to reduce global warming emissions by going vegetarian than by switching to a Prius
.Re: Vandals focus on French police cameras. This extends beyond France.It is unfortunate that some public officials are so unsophisticated or unprincipled that they sanction a policy so far outside the public interest that it incites such an extreme reaction. The public sees right through their specious safety claims and understands the cameras are there to generate revenue.
Regarding soaring food prices, I am an onion farmer, and I think the focus should be put on retail food prices. Presently, we are destroying thousands of pounds of onions because of very low prices. Our price in the field is less than we can harvest for, but if we do harvest we can hope to receive 10 cents per pound of onions. The retailers are selling those same onions for $1 or more per pound! Not even the oil companies can mark up fuel that much.
You had a story about why consumers should pay sales tax on internet purchases, and I could not disagree more. Sales tax were put in place to pay for the infrastructure that brick and mortar business need (sewer, streets, police, fire, etc.). The only infrastructure that internet businesses require is a phone line or broadband internet connection, and these are already taxed heavily by both the state and federal governments. I believe states covet the sales tax on internet purchases because they are cash poor at the moment. That does not make it right.
I was listening to Michael Mazerov's commentary on sales tax for online vendors yesterday, and wanted to offer an alternative proposal: get rid of sales taxes. I agree that it's unfair that local merchants have to charge sales taxes and mail-order and online vendors may or may not (depending on where they are). However, from the standpoint of the online vendors, tracking sales tax for hundreds of localities across all 50 states is a nightmare. A local merchant charges whatever the local tax is based on where the store is. An online merchant has to charge the tax based on the location of the buyer. Keeping all of that information up to date is a huge burden. My home zip code crosses 3 different counties, each of which has its own sales tax rate. What a nightmare! So, let's ditch sales taxes completely in favor of something that works with some semblance of sanity in the modern economy.
As the owner of a company with internet sales, I would be happy to collect state sales tax as soon as the States make it practical for a small business to do so. Without an unaffordable software solution with high recurring costs, how could small business be expected to deal with the more than 10,000 different tax jurisdictions in the U.S? The enormous burden of keeping track of the current tax rates for each location and then submitting returns for each state would make selling online unprofitable for all but the biggest online retailers.The commentary on the Internet retailers having an unfair advantage over local retailers is the same old saw about competition and lower prices. Internet retailers have to charge for shipping and give discounts. Local stores charge list and do not have the variety. Also, if the Internet retailers were to charge sales tax, how much would they charge? There are over a thousand different rates in the U.S.
I totally agree with the commentary about taxing online sales. As a small retail store operator I must charge and collect sales taxes by law. I also pay ever increasing shipping costs to get the merchandise to the store. The online stores pass the cost of shipping on to the customer but do not charge sales tax. The public hates to pay tax but they will pay shipping. The suggestion to require taxing online sales would somewhat level the playing field although manufacturers still give deals to the high volume internet stores. There's nothing like selling a manufacturers product to find it online (sometimes their own Web site) or cut price on QVC.
I'm not so sure if the Internet purchase sales tax exemption is "unfair" or not. I do think that requiring sales tax to be collected will be counterproductive and will reduce the frequency of Internet purchases. Also, don't forget consumers usually have to pay shipping costs for items. With respect to those who can't afford their own computer, they can always use a computer at a local public library. If anything, I'd like to see a compromise -- maybe impose a limit, say 2 percent or 3 percent sales tax on Internet purchases. That would be nationwide.
Your story on NFL rookie salaries reminds me a lot of what I see at my office -- first year college recruits with starting salaries that equal mine after nearly seven years. After a whisper campaign, the HR department finally came through with a salary “bump” to those of us with less than 10 years. The reporter is right. Brady an experienced player sets the price and demand for more employees (offensive linemen). It caused a significant moral problem in the office.
Heard your story about drug companies about to lose their major moneymaking drug patents and think a change in the drug patent system to allow drug companies to have longer patent lengths in return for lower cost drugs would be useful. That way, consumers get low-cost medicines sooner and pharmaceutical companies get a longer-lived revenue stream. Imagine it would be better for big pharma PR too.
We are making too big a thing out of the unemployment numbers. Going back to 1980, unemployment averaged 6.1 percent. During the Clinton years, it was 5.2 percent. So far under the Bush administration, it has averaged 5.3 percent, not much different from the Clinton years that supposedly were so wonderful. The latest numbers are two tenths of a percent lower than the average for this administration and one tenth of a percent lower than under Clinton. Sure doesn't look like a recession to me, except for one sector, housing.
Your April Fool story about getting air conditioners instead of stimulus checks was either prophetic or my wife and I are victims of a secret unsponsored radio plot. Last night our air conditioner motor suddenly flamed out. We started to smell the kind of smell you get in winter from distant chimneys. The fire brigade came. The noise and whirling lights caused phone calls from neighbors. And the end of this is that our check from the government is going guess where. I probably will not listen on April 1 next year. Who knows what could happen next!
The American take on "Farmer wants a wife" is not just novelty. Just like the French, American farmers really do have trouble finding spouses. My father grew up on an farm in rural central Washington. Of four brothers, he was the only one to marry and have children. Although my uncle who inhereited the farm recently did get married -- to the woman who was his next-door neighbor for 40 years.
Re: Bill McConnell's commentary on the boom and possible bust in the farm sector, we've been there before, back in the mid '70s when wheat prices collapsed after a runup during the "Russian wheat deal". It's been 30 years of decline in America's farms and small towns ever since. I find it reprehensible that funds come in and out of the commodities markets for a quick buck. Farmers are in a occupation of public trust, feeding our nation as well as people in other countries and their children. Because of that responibility, farming shouldn't be played hard and fast by funds in the commodities market or speculators in the farmland market, nor should farmers and farm workers be kept on the bottom rung of the economy. We want stability for ourselves and others.
Re: Chris Farrell's arguments for raising the gas tax: The U.S. has the highest per capita petroleum consumption in the western world and likely the planet. We also have the lowest pump prices for fuel thanks to low taxes and subsidies for shipping, protection, and etc. Aggravate this by having the third largest population of any nation and one can easily see how vulnerable we are to any of many factors disrupting supply of a dwindling resource. "High" fuel prices -- less than half what the EU pays -- are a good time to significantly raise gas taxes gradually. I would push for $2.50 a gallon bringing us to near the EU. Unfortunately, I think such moves are necessary to convince Americans of the need to significantly reduce consumption which also has major environmental and human health benefits.
In reference to your story about college text books rising in price, the University of Wisconsin, Platteville, has resolved this issue by renting books to students. Every book required by the professor is made available at the university for rent. Rental fees are quite reasonable too, in fact, it's free to rent a book so long as it is returned at the end of the semester with no more than the normal wear and tear.
I absolutely agree about the need to increase tax on gasoline. It should have happened many years ago, but "now" is all we have. Follow-through on miles per gallon goals that were set back in the '70s would have been productive. So would disincentives for purchasing SUV's and the other enormous gas-guzzlers that crowd my freeways and parking lots. Advertisers feed Americans' sense of entitlement; we don't need our administration and legislators reinforcing it. I'm voting for the presidential candidate who does the least pandering.
I just listened to the segment on raising the gas tax over time. I have heard this idea before and think it would be an excellent idea. I also liked the idea of giving lower income and possibly industries that rely on fossil fuels (airline, comercial truckers, etc.) a tax break to offset the higher gas price. The money raised by this user tax could help finance many thing, the top things being the wars in Iraq and Afghanistan, research or capital investments in alternative fuels, or even helping to pay down the deficit. In fact, I would even support a higher tax increase of $2 to $3 per gallon (even more) in exchange for lower income tax. This would be a win-win for the U.S. It would cut fossil fuel usage and create more tax revenue for the U.S. Imagine the creativity, innovation and business this tax would ignite! In a time when the U.S. in in two wars where the average American is not affected significantly, a gas tax is a small price to pay and will help focus the real reasons we are fighting at least one of these wars.
Chris Farrell gave the argument for a steadily increasing gas tax, to signal the market to invest in alternative energy and conservation strategies. Given the impact of climate change, I'd say we need to go further, with a revenue-neutral carbon tax on all forms of fossil fuels as they come out of the ground or into the country. Revenue-neutral will mean it is not regressive, the money that comes in from the tax is distributed equally in the form of a check to each citizen. It would send clearer signals to the market than cap and trade plans, with less overhead in regulation and enforcement.
With all the hand-wringing and hyperventilating over high food prices and the blaming of everything from biofuels to Congress to the weather as the cause, everybody has completely overlooked the real cause of the problem. According to the Census Bureau, 253 persons are born per minute, that is a net increase of about 80 million more mouths to feed every year. The plain and simple truth that people don't seem to want to face is that there is not a shortage of food, there is an excess of mouths to feed. The solution to the problem is not destroying forests to grow crops or replacing biofuels with petroleum or nuclear energy or any other of a myriad of environmentally unsound projects, but family planning. Now that is something every one of us can do right at home in our own bedrooms. Just think, if everybody went on a baby strike for one year, that would be, globally (according to Census Bureau data) 133,353,798 persons not born, plus 55,532,963 worldwide deaths per year, and you can see how quickly and easily the population could be balanced with the food supply.
In response to the gas tax holiday commentary: Drive like you have an egg between your foot and the gas pedal. Try not to brake the egg. you will increase your milage 3-6 miles per gallon in town.
In "Green energy could cost more to feed," you made those Germans sound pretty silly paying more for their energy and subsidizing those fat cats who could afford solar panels and wind turbines. But the key surely is that the government-encouraged/mandated demand generates volume and research. The price of German panels and turbines will come down by many factors, while the price of oil will keep going up. The quality, and therefore competitive position, of the alternative energy hardware will rise with more research and practical refinement. And who will benefit by the investment? Not the American manufacturers, or the American consumer. The "green" benefits are just gravy on what will become a major industry.
The reason gas prices are rising is exactly the same reason coffee costs $4 a cup: because people are willing to pay it. Why doesn't anyone state the obvious fact that consumers are to blame for rising gas prices? Even in front of Congress nobody will state the obvious. They will stop rising prices precisely when they earn less.
You had Warren Buffet spending billions of dollars for candy and people in Mauritania unable to sell their goats to avoid starving to death. What's wrong with this picture?
After listening to the "New Chinese aphrodisiac: real estate" report, I wrote this haiku for the single Chinese male in China:
How do I love thee?Let me list the locations
of my apartments
I was struck by [the Final Note] on the price of diesel fuel. I have a diesel car, and, while I have noticed the increased cost, I am still spending almost half what my gas using friends spend at the pump. Right now it costs me about $45-$50 to fill up, and that will last me a month. In closing, I am still bullish on diesels!
Per your story on IBM and reclassification: Sounds like the ideal time to unionize! Where are the unions, and have the big companies forgotten about them?
In discussing his new book on Bullsh*t, Sam Culbert told Marketplace, "It's just like in the history of the world, no one has ever washed a rental car." In August 1999, in the middle of what would be a 10,000-mile roadtrip around the U.S., I not only got my rental car washed, I even took it to Jiffy Lube for service. It was a white Ford Taurus, and it was covered from front to back in dead insects and gravel from driving around the open roads of the west at night, and I just had to break down and get it washed before the white car turned some other color (and was too brainwashed by Jiffy Lube ads to think the car could last 10,000 miles with no oil change). Mr. Culbert will be happy to know that he's not alone in his thinking. My best friend was with me at the time and could not believe what I was doing. At my wedding, his toast included the quote "Brad is the only person in the history of the world to get a rental car washed and change the oil."
When I heard the story about Lita Powell-Drake, I was so surprised, I almost ran off the road. You see, when I was growing up in Nebraska, Lita Powell-Drake was a television personality. She was so elegant! So beautiful! One of her many roles was on "Romper Room." Everyday when she would look through her looking glass, I wanted her to see me. I understand that she is an amazing woman who had done many things with before she even started her television career.
I was so pleased to hear about Deb Cage of Blessings Salon in Grand Rapids, Mich. My close friend is in a wheelchair and rarely gets the opportunity to have her hair done, because we cannot find a place that can accomodate her. I wish there were places like Deb's salon here in this area. She will earn more than just money with her attitude. She will earn blessings from all of the people who are lucky enough to have her available.About the "deadbeats" who aren't or can't pay their credit card debt: If we really want to stimulate the economy, why don't we bring back the ability to deduct credit card interest from our income tax? I remember those days and it was great!
Your report on the personality traits of Mac users is probably true for the majority, but I must admit I found the story minimally offensive. I began using a Mac a few years ago and never looked back. Why? Not because I eat organic food (the crumbs from my hot-pocket are falling dangerously close to my keyboard), not because I drive a hybrid (my SUV uses about $400 in gas a month), not because I feel superior (I take a mild antidepressant every day and see a therapist occasionally for chronic low self-esteem), and not because I identify with the Mac commercial Mac guy (he dates Drew Barrymore last I heard). No, I use a Mac for two reasons mainly: they work better and I don't like Bill Gates' marketing philosophy.
I really enjoyed your piece on Mac owners. I agree with and laughed at how true most of the artical was. As an uber-Mac owner myself, I do see a lot of me in "the Mac guy" from the commercials. I, however do not see myself a superior, nor do I wallow in self hatred as the person that was interviewed suggested. I happen to make wiser (but more costly) purchasing decisions when it comes to buying computer technology that is more stable, durable and safer from viruses and less prone to failure. Does that make me overall superior because I like using an operating system that is more user friendly? Does more of what I want it to do with less headache than XP or dare I speak its ugly name....Vista!? I am a self proclaimed computer geek and my three Macs are like children. The two PC's in my house work like, well PC's, clumsy, slow and they frequently have IT issues. Is it any wonder that even my PC-using friends tend to come to me to fix there computer headaches. Why then are they usually in awe of my Macs when I show them what they can do and how easy they can do it? It comes down to you get what you pay for. Most people are not willing to pay the extra cost to get a product that will cause them less grief. I am a proud Mac owner, I drink Starbucks when I can afford $5 coffee, and it's good! But I usually can't, because I need to pay off my expensive Mac. Superior? No. Wiser? Yes. Enjoy time spent using my investment rather than getting mad at it? Definitely!
I find the survey about the Mac users highly suspicious. While I do not doubt that there are some Mac users who fit the stereotypical profile, in my experience most of the Mac users are resembling more the PC man than the Mac man: the work they do on their Mac looks a lot like unintelligible lines of code rather than UTube videos. I am myself a Mac user, for reasons that have nothing to do with the coolness of it and every bit to do with the fact that: a) MacOsX is a Linux-based operating system, which allows me to run scientific packages developed under UNIX as well as various open source programs; b) Macs have featured 64 bit processors since 2003 which allows for more memory and faster data manipulation; c) Macs are way more stable than PCs.
Yea, I have seen the Mac Man. I use a Mac about 90 percent of the time at home and I use none of those things mentioned on your program. I use a Powerbook because it is way more intuitive to my brain and way more dependable, if not necessarily faster. Macs may not be for everybody, but I certainly do not feel superior because it works for me. I am 51 years old and my first experiences were with MS DOS, which was like using a teaspoon to drill North Sea oil wells. The few other people I know who use Macs also have normal altitudes.
Kriss Clark's report on the Yahoo!-Microsoft culture clash is just what any investor in these companies should be considering. The best opportunities for engineering talent in Silicon Valley are at startups. If they haven't left Yahoo already, they will if a big company like Microsoft takes over. As a point of pride, Microsoft will waste a lot of effort replacing the open source software such engineers favor with its own (some would say inferior) versions. This is kind of like a steel company buying an office building and replacing the perfectly good steel girders with its own product. So what will Microsoft have gained in the end -- eyeballs? Just as NBC loses market share competing with 500 channels, MS will lose market share on an Internet of a million channels.
I laughed out loud today when I heard [the Department of Homeland Security] is proposing fingerprinting passengers on their way out of the country and expects the airlines to pay for it as a "cost of doing business." Maybe what would be a better idea is for oil companies to pay for the fingerprinting. Afterall, supporting the oil-rich regimes that produced the terrorists that make such a program necessary is just the "cost of doing business" for Big Oil every day. Not to mention it's the oil companies -- not airlines -- collapsing under high fuel costs and they can afford such a burden.
I totally agree with making the oil companies pay for fingerprinting travelers and not the airlines. Are we trying to put every airline in the United States out of business? The money being wasted on TSA and "security" is infuriating. My father was a pilot for United until 1973 and he predicted the downfall of the entire industry due to government regulations. He even had his own comic strip called "By the Numbers." In it, everyone had their identity replaced by numbers, except for the boss, of course.
I disagree with Peter Lindert that Social Security itself isn't in trouble. And I saw one of the biggest problems with the system when a certain tax return was released to the public last week. I refer to the problem that everyone who pays into Social Security is allowed to draw out a payment, regardless of their financial need. One thing we need to change is the attitude about Social Security. It needs to be viewed as an insurance plan, not an entitlement or savings plan. Social Security should be a Poverty-Prevention plan, a program designed to help low and middle class Americans to make ends meet, and people with high household incomes should not qualify for it. There should be no way for a person to draw a Social Security benefit if he is married to a multi-millionaire, earning hundreds of thousands of dollars per year and employed full time as a U.S. senator, especially if he is also running for the office of president.
Marketplace reported that some secular Jews in Israel were not giving up bread or pizza for the Jewish holiday. One woman when interviewed about pizza on a matza remarked, "no way would I build a pizza on a matzah, some things you just can't mess with (pizza)." I have to disagree. My son and I are gluten intolerant. We build pizzas on rice cakes. They are quite tasty! We find them a great substitute for the wheat pizza crust. There is a way to enjoy pizza with an alternative crust.
Will the mortgage industry learn anything from their current position? Given the industry fellow who said that lenders want higher loan-to-value ratios for current loans because their previous loans are resulting in walk-aways, and that "they don't want to be put in that position again," probably no learning will happen. The public did it to them, "put them" in that situation. The mortgage industry has met the enemy and it is us.
I just heard your commentary on the A's and the rise of SABR metrics. I take issue with the commentator's assertion that the Red Sox's success evidences the success of Moneyball tactics. Look at their payroll. The Red Sox have the second highest payroll, much higher than the A's ever have. Theo Epstein is not playing Moneyball; he is playing Steinbrennerball, and it is working. More money = better players (especially pitchers, e.g., Dice-K) = success.
Regarding the couple in Oak Park who weren't able to buy a home: they make $145K a year and hadn't saved more than $17K for the downpayment? I wouldn't loan them the money either! Our household income (family of four, each self-employed parent works 2/3 time) is half that, and we have $115K saved up for a downpayment. Now, if only homes in our area (SF East Bay) weren't still running $600K for 1,000 square feet.
I heard you story about Machinima and, having worked at a video game company where we discussed this possibility in the 90s (lousy graphics back then...), I have another way people could make money off of this technique. The series produced could be a prototype, so if it became somewhat popular, a traditional media company might buy the rights and produce a big budget version using more traditional methods. Also, it would be very easy to produce a gaming engine specifically for this application so as to divorce it from content concerns of any one franchise. After all, that's just a question of artwork and storyline, not technology.
In the coverage he rise in world food prices, I had heard many explanations that have been proposed including: 1)the increase of energy costs of production and distribution, 2) the effect of demand of biofuels on crop demand and 3) mass panic in poor countries. However one obvious issue that has not been addressed is the effect of speculation on the commidities and futures markets. Pure speculation in the market seems like an obvious contributor to the increasing price of food commodities.
Have you gotten much mileage out of your college degree? That was a question on your show, and I have to answer with an emphatic "Yes!" I went to Bryn Mawr College where they empowered me to design my own undergraduate major (in Linguistics), which included taking courses at Swarthmore, Haverford and Penn. My interest in linguistics was well timed; while I was in school the voice recognition industry blossomed and I've been working as a professional Linguist (and speech recognition business consultant) ever since graduating with an MA in Linguistics from the University of Texas.
I graduated from college 3 years ago, and my first job has taken me from New York, to Texas, and now to Finland. I've been living in Finland for 1 and a half years now, working as an engineer in a shipyard. The work and life experiences of living abroad are amazing. I would never have these opportunities without my college education. My company only recruits from about 20 American universities, and sometimes I think that I was at the right place at the right time.
Does a degree make a difference? For me, I would have to say no. I have a Bachelor of Science degree in microbiology with a minor in biochemistry, an Associate in Applied Science, Medical Laboratory Technology and an Associate of Arts. Twenty years ago, I left a job as Director of research and development at a small testing lab and entered an Instrumentation/Electrical Apprenticeship. As an Instrumentation Electrical employee, I make twice the money I would as a microbiologist. The only place a degree helped was in the Army National Guard, where I got my commision and retired as a Major after 25 years as first a Chemical Officer, then Engineer Officer and finally an Intelligence Officer at an Engineer Group headquarters.
A college education is NOT a paycheck! It is a blank canvas, a set of brushes and the knowlege of what to do with them. What a student creates with these tools determines the size of his or her paycheck.
I was a Math major at a small liberal arts college, and graduated in 2005. After spending around $500 on books my Freshman year, I began buying all of my books used on amazon.com, and never spent more than $300 each year after that! Because I was at a small school I had some added flexibility, so even for math classes where the used books I got were an older edition with different exercises, I just got homework problems from a classmate - the math itself doesn't change from edition to edition - and I never had a problem. For one calculus class, I did buy a new copy of the most recent edition and still saved money: the college bookstore was selling a paperback version for $125, but I bought the hardback, brand new, for only $75 online. That was probably the most I spent on any textbook after my freshman year!
You want to find a way to keep textbook costs down? Stop underestimating students by trying to turn textbooks into cartoons that are "fun" to read. Stop trying to "increase" the perceived value of the textbook "package" by including all kinds of useless extras.
I wanted to put my two cents in on the textbook segment. I am a graduate instructor at the University of Utah, and I along with many of my colleagues (both graduate instructors and professors) DO take into consideration the costs of a textbook when planning our courses. Having graduated from college four years fairly recently ('04), I recognize that students can struggle with the costs of textbooks, because I was in the same position. So to say that overall professors across the board do not take that into consideration is a gross misstatement. Many of us "do the research" and either ask the reps how much the text will cost, or search the web to see what previous editions cost, and estimate what a newer edition will cost. Others will use the "new" editions, but let studen ts know that because such newer editions are very similar to the older texts, they can pick up a used copy of an earlier edition (2-4 years in a good situation) and be in decent shape. Many, if not all of us, also put textbooks on reserve at the campus libraries for students to use for free.
I listened to your piece on soaring textbook costs and have just stopped seething long enough to send this. Blaming rising costs on professors is ludicrous. I teach a freshman biology course (surely one of the most lucrative textbook markets), and yes, the publishers provide a staggering amount of supplemental stuff (study guides, DVDs, animations, test banks, etc.), nearly ALL of which is practically useless except to justify the cost of their absurdly inflated textbook package. Their Powerpoints may work as a starting point, but I spend hours writing my own lectures and never use their testbanks.
With regards to the story about rising college textbook prices and the comments of the publisher spokesman: They have to raise their prices because demand is down? How insulting. I was taught that prices drop when demand goes down. Do they publish an economics textbook? Maybe he should read it. They have a captive group of buyers and are sticking it to them. Nothing new with that.
I can't believe anyone could've taken that April Fool's story seriously. It was a totally unbelievable premise, the actors sounded like actors, and you immediately debunked it on air by suggesting that listeners check the date. In today's show it was revealed that it received a ton of comments; I can only hope that most of them were of the "Ha ha!" variety, because the idea of that many people being duped by so obvious a charade is more than a little disconcerting.
If I remember correctly, video games draw in more money then Hollywood. The release of Halo 3 was one of the biggest multi-media releases, EVER. I believe video games will increase not only in their economic influence, but also their cultural and artistic as well. Take the Halo franchise for example. The movie rights have attracted such big names at Peter Jackson and his WETA studios. Even in the face of adversity, Jackson continues to say it is only a matter of time until the movie is made. Jackson has even been quoted as saying he would rather work on video game material, then films! Can anyone underestimate the importance of this? The reason for this, expansion, of video game influence is their improved storytelling. Recent games like Halo, Half-Life, Bioshock and Mass Effect garner most of their acclaim from their dynamic, artistic storytelling. They offer a unique, excessively immersive effect beyond the scope of any other storytelling medium. YOU ARE the protagonist, in ever way, shape and form.
The real problem with not collecting sales tax online is that in addition to the states losing money, it is killing small business. I install swimming pool equipment for a retail store. People are calling more and more to install equipment they bought off the Internet, because they save money when they buy it, and they don't pay the 9.25 percent sales tax. If you throw in free shipping, small business can't compete. I know of at least one store that went out of business for this reason, and there are probably more. Sure, we all hate taxes, but this is really unfair.
I'm sure the staff at Marketplace are nice people, but for the most part, I heartily despise your programs. I get so sick of hearing all the little cutesy puns and other wordplays -- the treatment of such important topics in what I suppose is intended to be a "hip" manner. And "do the numbers" -- I think that misguided misuse of a verb fell out of favor about a week after it was introduced -- in the early '90s, I believe it was. And what exactly is a "sustainability desk"? I'm sure you have a smart staff -- use them to do truly intelligent reporting -- maybe "do the words" better.
[Response]: Today's confessional read "I get so sick of hearing all the little cutesy puns and other wordplays -- the treatment of such important topics in what I suppose is intended to be a "hip" manner. . ." I just wanted to counter with a less than eloquent response of "I think Marketplace is both "hip" and hellacool -- wordplay, turned phrases, and all!"
[Response]: Wow -- "cutesy puns and other wordplays"? I, for one, think Marketplace is a welcome breath of fresh air in a polluted news world that takes itself way too seriously. To the staff at Marketplace, I say "good for you" for putting a little fun into the news day! If the program makes you sick, there are plenty of other humorless alternatives.
The segment about raising capital gains tax caught my ear, and it gave me an amazing idea: why doesnt the government, instead of raising taxes, start taxing gains at the exact same proportions as income is taxed: some get the current 15 percent, some get 10 percent, and those rich men you mentioned as a waning percentage of gains makers can pay their fair share of taxes like everyone else. Frankly,I don't care if this will make tax receipts go down.
I found your commentary on increased capital gains tax very interesting. So far, this week, I've paid township tax, county tax, state tax, federal tax, school district tax, per capita tax, estimated state tax and estimated federal tax. God help anyone who approaches me for a donation to anything -- at least until I regroup.
Capital gains are profits made by people doing nothing but carrying cash. No work. Sit on your butt because one is fortunate. The worker who earned his fortune has to pay a higher rate of tax because he doesn't have the rich boy's club paying off politicians to write and implement policies and laws that favor the worker.
Lisa Napoli's conclusion about credit cards with usage limits surprised me. The obvious target market she identified was parents who want to give their kids spending freedom -- but not too much freedom. It seems even more obvious to see these controlled credit cards as a solution to last week's GAO report that over 40 percent of credit card purchases in multiple government departments did not follow purchasing procedure and may have been fraudulent.
In your piece about the decline in golfers, you left out the fact that many golfers have found another pasttime due to the cost and time factors involved with the game. For many folks disc golf has taken the place of golf. It has basically the same rules and is just as fun and frustrating, but costs next to nothing and takes less time to play. It is one of the fastest growing sports in America with new courses opening weekly. The courses tend to be in public parks and are therefore free or very inexpensive. The courses require very little maintenance; no fertilizers, special mowers, overseeding, etc., which makes it attractive to local recreation departments. To learn more about this wonderful sport check out PDGA.com. The feeling of an ace is the same whether you are hitting a little ball into a cup or flinging a plastic disc into a basket (hole).
I was intrigued by your story about the $6 billion tax break program to home builders. It seems that our economy should benefit from shedding inefficiencies and from weeding out poor performers. That would allow for a more streamlined and efficient sector and the re-allocation of the skilled labor central to home building. This is not a painless process, but again an example of a dynamic economy constantly striving to achieve maximum utility. The gulf between what's best for the economy and politicians' self-interest again become clear. This type of blatant pandering by the Senate shouldn't shock me as much as it does, but it still sickens me all the same.
I was listening to the story re the Senate wanting to give big tax credits to home builders. What they ought to be doing is prosecuting them for fraud. Granted a whole lot of speculators are going broke but thats what happens sometimes when you speculate but the majority of people in foreclosure were not speculators. What are the builders going to do with these credits?? There is a huge glut of new homes sitting empty, thousands of foreclosed houses sitting empty,and with income what it is what makes anyone think that they will use their tax credits to put people back to work.
Help the building industry with tax breaks? You have got to be kidding. They have made millions and no they should not be given a tax break. This was a too easy bill to pass in congress since the building industry is a large contributor to various campaigns, etc. The people who need the help are perhaps first time buyers who had not a clue as to what they were signing. I have no patience for the people that bought the 4,000 square foot mansion, no money down and an interest only loan. I remember when one family was interviewed on TV and the woman just said, if I get into trouble, I can just get an equity loan, i.e. money machine. The people in the range of $25,000-50,000 I think had a different mind set. So NO to home builders receiving any tax breaks.
Chris Farrell, in his comments on Regulations affect insurance industry," sees the Federal regulation of the insurance industry as a good move. My concern is that this oversight might become similiar to the U.S. Office of the Comptroller of the Currency, which regulates the credit card industry Depending on the agenda of the administration, this office has not always sided with the consumers on industry abuses such as "universal default". In fact, because of the Federal oversight, this industry is not subject to State consumer protection laws. Letting this industry off of this leash cannot be good for the consumers.
Will Wilkinson's comments that Congress potentially helping people with bad loans might seem like a tax on prospective home buyers really resonated with me. I don't want to seem like a ghoul, but why should my tax dollars go to help people who made poor financial decisions and that will effectively increase the amount I will pay for my family's first home?
I've been wondering about (what else?) the economy and the housing market portion. I'm trying to figure out why the most immediate focus for the Fed and the Federal government is the top? When subprimes were an option, they tended to be options for people who desperately wanted to own a home and were made to believe or wanted to believe they could. And it's hard to blame them. Shame on professionals in the mortgage industry to the CEOs who certainly should have known better. When it comes time to bail someone out, we work with the biggest lenders, and this comes very quickly, while all the john q. subprimes will lose their homes. The answer put forth is that if we save Bear-Stearns, we will prevent a possible economic collapse. however, companies like this are in trouble primarily because of the overall subprime market. But if the government would instead inject money into the finances of subprime borrowers to help save thousands or millions of houses, we can eliminate the underlying problem of so many companies. call it trickle up economics.
Much of the rise in grocery prices is due to transportation costs. I am a truck driver. If you want to see how a razor thin profit margin can make or break a business, you should talk to some independent owner/operators. Approximately 90 percent of the freight moved in the U.S. is moved by the small business trucker. The one or truck operations. Many of them are having to park their trucks and/or let them go back to the finance companies. What is the root of all this? Its the outrageous fuel prices.
Despite what Symantec has said regarding the value of stolen credit card numbers going down, the values have always been very low (cents per number). This has more to do with trust among carders (the informal name given to those who deal in these things) and the way in which numbers are stolen than with the reasons you gave in your show. Since the only value of a stolen number is in the number itself the potential buyer can't 'try it out' as you could a real product and thus can't ascertain its value, thus the low price. Whether there is honor among thieves is another question but i'm sure the process is filled with suspicion on both sides.
Yesterday General David Petraeus briefed Congress on U.S. military strategy in Iraq and provided a sober but overall positive assessment of the success of the surge in the numbers of soldier deployed to Iraq. Although Petraeus was unwilling to commit himself to any specifics about when the U.S. might begin withdrawing troops, the consensus of Senators, reporters and pundits was that we are likely to have 140,000 troops in Iraq by the end of 2008, a figure higher than when the U.S. began the surge in 2007. The problem with taking General Petraeus's testimony as a guideline for future Iraq policy is that it can't see the forest for the trees. After five years, the U.S. remains committed to a “stay the course” policy of establishing security in a country that many military analysts believe will require at least three more years of a U.S. occupation to achieve that goal. That assumption doesn't include the growing evidence that the current Iraqi government under President Nouri al-Maliki is completely incompetent and has made little if any political progress towards a genuine power-sharing agreement between Shiites, Sunnis, and Kurds. The problem with the “endless” war in Iraq -– and that is precisely what General Petraeus's testimony tends towards -– is that it provides no accountability and no real way of measuring progress. As long as we narrowly pursue the will-o-the-wisp of security in Iraq, we fail to debate the larger questions that are far more important.
A lot of people talk about gas (really??) and how expensive it is. I don't think they really mean it, though. If you've ever gone through the McD. drive-through or the drive through bank, on a cold morning waiting for the car to warm up for 15 minutes or, even more odd, the busy Sheetz gas station. They all leave their cars running..and running..and running. Even after they are finished, they sit with the engine on and wait -- maybe for Godot.
.I am commenting on the commentary on the proposed national service requirement for American youth. As a two-time AmeriCorps volunteer, I can speak to the impact of national service on my life. While it wasn't a requirement, I can say that it is certainly a good idea (given the right structure). The criticism of the gentleman that AmeriCorps volunteers could possibly pull business away from local contractors for "cheap" labor I believe can be dealt with positively. I worked for two local non-profits that used AmeriCorps funding during my service, and saw first hand the power of our service on the local economy. I first did my year of service with Montana Conservation Corps and we built two greenhouses for local community gardens, painted housing for non-profit that served the developmentally disabled and cut nearly 100 miles of trail in the MT backwoods. I also worked for the Bay Area Youth Agency Corsortium in Berkeley, CA, providing environmental and outdoor education to at-risk youth (providing tutoring and after-school education). These were profound experiences that trained me to deal with diverse populations, and helped me develop a passion for the environment.
Ben Casnocha's message on National Service brought up an interesting point that I hadn't considered. There's an obvious point that can't be mentioned enough: that mandatory volunteerism is a contradiction. But, more fundamentally, the idea of serving others (altruism) appears to be far from ideal –- let alone compatible with a happy, healthy life. Countless cultures have festered and degenerated, often into massacres, under the virtues of serving society. For how it could play out here, in the USA, a read of Atlas atlasshrugged.com is indispensable.
Your "working" feature on the boat captain Hussein Ralib Esfandiari
brought one of those driveway (or in my case, parking lot) moments for me where I couldn't turn off the car till the story was done. The reporter really painted a vivid picture not only of Mr Esfandiari's job but also of the crazy, and in this case, foolish lengths a reporter will go to get a story. Everyone's livelihood and safety was risked when the reporter decided to get in the boat despite local/international laws and cultural norms. Just when I was thinking how idiotic the reporter had been, Mr Esfandiari's detainment turned out to be a serendipidous escape from yet another destructive storm. The story behind the story was what made the whole feature so gripping.
Wow, I have always felt sympathetic towards the homeowners who were "led" into unscrupulous loans that they would never be able to afford. After listening to this weeks special on the housing market, I am re -evaluating my sympathies. Listening to the two homeowners who are sanguinely walking away from their homes and their responsibilities outraged me. To hear them say they were aware of the risks and were willing to take them and now they should be allowed to throw away the keys and the debt leaves me disillusioned and cynical. What an interesting side of this messy subprime mortgage story. I am sure there are some who really were fooled by lenders, and who are devastated to be losing their dream home, but it is also good, as a listener, to realize there is always more than one story.
A big thanks for such a great show on the housing issue across our nation. Knowledge is power and telling both sides of the coin is key in the housing market right now. I believe your show succeeded at giving the knowledge about the concerns right now in the market AND letting everybody know about the opportunities. Las Vegas has hit every Top 5 list: number of foreclosures, number of people filing for foreclosures and drop in housing prices.
This baby boomer can remember his old man laying the business section of the newspaper on the kitchen table and teaching us about "fundaments" and how to invest for growth and value over the long haul. Now, the new game is run by speculators backed by millions of dollars playing with OTC derivatives, credit default slots, complex credit derivatives, etc. As an independent investor, I am investing/buying a part of a team and hoping the team grows in value over the years. My investment game is regulated. The speculators on the other hand are making money betting on the side that the team will loose. Speculators get to play in an unregulated dark market. The new Wall Street economy is no longer interested in true economic growth, innovation and long lasting properity, but short term bets/derivatives looking to get rich quick.
Regarding your story on blue laws in Georgia: You also can't buy alcohol on Sunday in Delaware or Pennsylvania - additionally no alcohol is sold in grocery, convenience stores or gas stations. In PA, you can't even buy beer and liquor at the same store.
After hearing the piece by David Frum, a fellow at the American Enterprise Institute, I am astonished that you, or any other program such as Real Time with Bill Maher, continue to give Mr. Frum airtime. As a person who considers himself very well versed on current affairs through the years, I have seen and heard Mr. Frum on many shows, many times. In my mind, Mr. Frum has little or no credibility, because as a "recognized intellect", he continuously speaks with a lack of understanding of the topics, framing his words carefully with half truths, and misleads the American public with what I assume to be the messages he is given by his "neo-con" contacts in the Bush administration. Cases in point include word for word justifications for going into war in Iraq, a la Richard Pearle, and their constant justifications; his justifications for the illegal wiretapping a la John Yoo; and now his lack of expertise concerning world economic affairs and how China will be negatively affected by a U.S. "economic slowdown", which many experts of recent past have already labeled a recession on your own show.
Your report about Ohio changing the flex time rules brings to mind a speaker I recently had the privilege of hearing at a leadership conference. The speaker was John Medina and from his work in brain research it sure appears that the decision to cut the flex time is a move in the wrong direction. It might also be a interesting topic to highlight on the show.
Here's the thing I don't like about the bail out of foreclosures. I'm 44 and have 2 kids. I tried to refinance my house to get a lower rate, but since I bought my house 2 years ago I have no equity. Why can't the government't allow me to use my 401K money to buy equity. It is just trading a virtual investment for a real one. I could get a much lower rate since I would not be borrowing 100%. A $50K buy of equity on my mortgage would save me $500 a month in repay with lower interest. The squeeze is get me into trouble. My income is not keeping up with price increases and if I don't get help somehow I will be in foreclosure within 2 years. This way the Gogovernment't lets me use the money I have and it will stimulate the economy at the same time. I realize 401Ks are for "retirement" but I have 20 years left and right now I'm not investing at all.
On your story "IRS making sure your rebate gets spent," I did not find it to be very funny. I did not hear the last part about it being a April Fools joke and I contacted all my representatives about this. Because I have no trust in the government or the IRS I found the story to be believable.
You got me!!! Nice IRS Rebate story!!! The April fools arrived late, podcasting on April 2nd. I thought I was in the clear.
Re: IRS making sure the stimulus gets spent. While I appreciate a good April fool's joke, during difficult financial times like these this story hit too close to home. Unfortunately, due to the way the Bush Administration has been running our country into the ground, it makes the story all the more believable. I would like confirmation the story is a hoax and I think Marketplace owes the listeners an apology. I e-mailed that story to alot of people and you should realize that has the potential to spread alot of fear and anxiety for some people.
Masterful work on your April Fools segment covering the IRS's strategic initiative to spend tax rebate dollars for those likely to pay off debt with the money. I'm not a terribly emotional person, but you had me yelling at the radio by the end of the piece. Thank god I had parked, as I was doubled over when Kai came back on and told me to "check my calendar."
I heard that Ford's figures were down. I have NO SYMPATHY for that, inasmuchas the day before, I heard that while Ford was advertising the heck out of Escape Hybrids, there were few to be bought. If American automakers won't supply what the American people are asking for, then they should all go bankrupt with no bailouts!
It's interesting that the U.S. is in a recession and yet we have all the real wealth. The global investors have worthless junk bonds, we have houses. Investors might recover their debt if they now bought shares in homes from distressed home owners, or bought foreclosed homes. Then they would own real wealth. I'm reminded of a story about World War I German war debts (true or false?). The Germans had no money, so they paid with manufactured goods. England suffered depression and German industry prospered, even as they gave their goods away for free. There is definitely something wrong with economics as practiced.
Re: "Will Vermont cash in by selling lottery?" We are not even finished with one money manipulation fiasco when a new one is being proposed by Wall Street, selling or leasing a state's lottery to a private company. Let me explain some basic economics in terms that even a Harvard MBA would understand. Lotteries in their basic form are merely a method to transfer wealth, generally from the lowest economic strata to the upper strata. Unless they have a gambling problem, the rich do not play the lottery. Lotteries do not provide a service, nor do they provide any goods. By pure luck, they make occasional outlays of cash to winners, but this is simply a marketing expense. A state-supported lottery at least provides the potential for receiving goods or services from the investment. The profit from the lottery, after marketing expenses, is supposed to go into public schools or roads or other services. This is not the case in private lotteries. If there are investors looking to buy or lease a lottery it is certainly not because they think they will lose money. To quote Jeff Heyman with JP Morgan Securities from your own program: "There is extra value in this asset, and it is extractable." What does this mean to the state? Well, it depends on one of two things. Let's assume for the moment that Jeff Heymann is wrong and there isn't anymore money out there to be had. Ultimately, it means that the state's share of the take would be less than if they kept the lottery. Jeff and his investors expect a profit. That profit would flow out of the state and quite possibly out of the country to foreign investors. OK, now let's assume that Jeff is right. The state may still make as much as it is now, but more wealth will be extracted from the state to get the same amount they are getting now. A higher investment-to-return ratio you might say. The state would then also have to deal with the results of people gambling in higher numbers and for larger amounts. I don't have nearly enough time to talk about those implications and there are socialogists out there better trained and with more statistics than I have who would be happy to talk to you about it. My presentation here is merely an application of basic logic, which seems in real short supply in some state houses right now.
[Henry] Paulson or Robert Reich -- both are right about more regulation. But what that means is more undeciferable forms for us consumers to sign. What the market needs for the average investor to stay in is clarity. The powers that be can add a thousand pages of leaglease to sign (that nobody reads) that says we the company will do as we please. What needs to be done (as we the small investor) keeps the markets running is to implament a plain language agreement. That is the opposite of what we have now as the legaleese. This will restore confidence in the markets as we will now know what we have bought/sold and why.
You ask, "What to do about the housing crisis?" One solution is to stop building new houses and put the unemployed construction workers to work instead building renewable energy infrastructure for electric vehicles, schools, et cetera, such as solar and wind plants. Take $100 billion now to do this and temporarily nationalize these workers and everybody wins. Now here's a question for you: Why do you suppose the answers that our business and government leaders offer are entirely about bailing out corporate interests, while the root problems of too many houses and growing unemployment in the construction sector go unaddressed? They've proven that "letting the free market work" is empty rhetoric when white-collar jobs are threatened. Well, any answers there? Anybody? Wall Street isn't listening, are you?
Seems that Washington may finally be doing something to reign in aggressive and dishonest mortgage companies: encouraging loans for more than the value of homes. Regulatory light now needs to shine on predatory student loans. Many of the same individuals dealing with spiraling mortgage rates are also saddled with huge student loans 10-20 years after completing college. We have a generation of former students who were encouraged to borrow money far in excess of actual tuition. Several months ago, some stories came to light about colleges themselves benefiting from these loans. But no changes were made. Recently, I spoke with a teacher in her 30's who is worried about sending her child, now in middle school, to college because she would not have her own loans paid off by then. If we are indeed a consumer economy, something needs to be done to free another generation of lifelong student loan debt. In European countries, college education, as with health care, is free. We are placing impossible burdens on our future generations due to greed and lack of protective regulation.
An alternative to spending our way out of the "R" word is to invest our way out. Rather than spurring the economies of China, Taiwan, or other overseas suppliers of consumer goods, put the money into our infrastructure. The repair of our infrastructure -- schools, roads, bridges, sewers, water lines -- benefits everybody; all economic levels get something now and in the future. It would create good jobs that can't leave the USA, both in construction and supplies. Projects can be implemented immediately -- most communities have plans waiting for funding. The good news is the money could be available as loans from Social Security funds. The trust could charge low interest rates to local governments and the long-term availability of funds would allow long-term planning for local governments. In return, the trust fund has a rock-solid guarantee (a lock box for Social Security) given that balanced budgets have been required of local governments since the 70's.
I was disheartened with the relatively meager story on auction rate securities. Kai punted on a description with the whole "used to be good/bad now" comment. It would have been just as quick -- and a lot more illustrative -- to say that they "are short-term debt instruments that a lot of investors began to treat like cash . . . except that auction rates aren't liquid unless there's a buyer for every seller" or something to that effect. Yes, these securities are a bit arcane (although with $300+ billion outstanding, not too arcane). But the real story behind this story is how investment managers for large companies (JetBlue) didn't bother to understand what they were buying and/or didn't assess the liquidity risk of the investment if the auction rate market suffered some sort of shock. Investors who don't need the liquidity are actually benefiting from the auction rate crisis. Investors' credit exposure to the bond issuer may not have changed, but they are earning yields on their bonds multiples of times what the market for those securities was as recently as early February 2008.
Your piece with the realtor made me ask, "Could financing institutions require a personal finance/budget seminar be attended by first-time applicants for ARMs?" Perhaps offer a slightly lower interest or closing rate if the individual(s) complete the seminar. True, it may lead some applicants to decide they can't afford the loan risk, but of completed loans, perhaps fewer would default, leading to better investment risk for the banks financers. I'm sure mortgage insurance was once thought of as unthinkable to require, yet it is quite standard to require of novice borrowers.
I'm having a very difficult time sorting out my feelings on the mortgage crisis. I recognize that lending institutions made risky loans and that as a consequence people will lose homes (and maybe everything they have). I am really struggling with the "homebuyer as victim" image. My real problem is that I cannot really understand the mindset of people who signed things they didn't understand (or at least I'm struggling with the idea that that's what happened across the board). Ms. Hymes spoke of people who were taken advantage of because "they wanted to be homeowners" so badly. Isn't there (or shouldn't there be) a difference between "wants" and "needs?" Did everyone who made a bad home loan decision sign loan papers under duress? Or is it in any way possible that some of the borrowers "gambled and speculated" -- and lost? Like taking on an ARM that's 80 percent of their income? Shouldn't there be some element of personal responsibility in all this? Is anyone willing to say "I made a mistake," instead of "I am a victim?" Maybe it's just that election years make me cranky!
Interesting comments by Ann Hymes. She chose an ARM because she couldn't afford a fixed interest product. I fail to see what separates her from all the other folks who took on ARMs. Although I am sure there are people who just did not understand the terms of their mortgages and what they were getting into, there are likely many more who were just as optimistic as Ms. Hymes about their abilities to afford their unrealistic mortgages. I would have liked to hear how she planned on affording her ARM if she lost her job or the adjustable interest rate increased. A debt ratio of 80 percent of her income leaves no room for ANY changes. I agree the problem isn't the ARM itself. The problem is a buyer not considering the affect of changes in their life circumstance or their interest rate. Perhaps Ms. Hymes is independently wealthy and has no need to consider those things, but your story does not give the full picture.
In such an emotionally-charged issue as real estate, I wonder how you might differentiate between victims and risk-takers, with those in denial somewhere in between. Now it appears to me this industry has always been driven by profit. So if we have the courts deciding case by case who is a victim, it seems likely that those with education and wherewithall to afford a decent lawyer may benefit. This system could have the effect of skipping over the actual victims. On the bright side, it does serve capitalism employing many more lawyers and enlarging government to process it all. What part of that was bright?
Contrary to an opinion aired, the cause of the current economic crisis was not induced by greedy builders constructing too many houses. Actually, years of building too few houses to meet demand caused housing prices to escalate faster than inflation. This led people to use unsound loans to finance their purchases. When reasonable housing can be purchased for three to four times household annual income, people can use conventional mortgages. The laws of supply and demand caused housing prices to far exceed a reasonable level of affordability. The exorbitant cost of developable land was the real problem that caused housing prices to become too high, which caused people to take out interest only and variable rate loans, causing the current crisis. Now that people are losing their homes to foreclosure, loans are difficult to obtain, and people are even losing their jobs due to the economic slowdown, supply outweighs demand and prices have dropped. In the meantime, the builders have stopped building. So, when the economy recovers, people will buy up the temporary surplus of homes and there will again be a shortage homes on the market. Why doesn't the government buy the foreclosed homes and rent the properties? This would stabilize the housing market by taking homes off the market, allowing supply and demand to become balanced. As the economy recovers, housing prices will recover also, and the government could sell the homes at no net cost to the taxpayers.
Regarding the "fast-track drugs" segment, this must be the greatest news flash since the story broke that McDonald's serves hot coffee! I am incredibly surprised each time I hear about a study that states the obvious! Is anybody actually surprised to hear that the FDA's fast track process is harmful to humans? It is appalling that today's industry sacrifices research and development for the pursuit of profits; but when the government encourages such behavior, I have to ask who is running this administration. Big business is having its way again, and let accountability and responsibility be damned.
About the commentary by Benjamin Barber and his story about Boeing and Airbus. The problem isn't that Boeing can't make a good airplane, it's they can't make a good airplane as cheap as a multigovernment-subsidized European company. Military contracts are awarded on price, not quality. It's not surprising that Boeing can't compete. I'm a licensed aircraft mechanic, and in the industry we say "scarebus" instead of Airbus and "If it isn't Boeing, I'm not going." Boeing makes the finest aircraft in the world. The tankers the military are using were made by Boeing 30 plus years ago. I highly doubt that any of the new Airbus tankers will be in service in the year 2050. P.S. 85 percent is larger than 60 percent.
I heard a show from last week about the rising cost of the war in Iraq. A point was brought up by the University of Chicago economist regarding the opportunity cost of the $500 billion to $1 trillion we have spent on the war. For example, we could have secured Social Security for 75 years or we could have rebuilt all public schools or built 3.75 million new homes in with that money. An important point missed is that we would not have done anything like that because we lack the visionary leadership to solve those problems. What I took away from that story is the capacity America has to change the world -- for good or evil -- if we have the leadership of one man or woman to lead us. Think Abraham Lincoln's vision to keep the country as one, FDR's vision to bring a safety net to all Americans, Ronald Reagan's vision to end the Cold War victoriously, and George W. Bush's naive vision to bring democracy to the Middle East. It is not about our ability to do this, it is about our willingness. I wonder how long will we have to wait for a leader who will rebuild Social Security, or fix the education system, or fix the health care system.
I listened with great interest to the story about Motorola splitting off its cell phone division. I don't believe the media was provided with all of the news out of Motorola yesterday. Motorola laid off the majority of employees at their Plantation, Florida campus, essentially throwing my husband and approximately 349 of his colleagues (high-level engineers and management) off the life boat. They shut down the handset division of their highly touted WiMax technology program with Sprint/Nextel. I recognize that this is a small number of employees in comparison with some of their recent layoffs (and those of other companies), but still an interesting side note to yesterday's story that never made it to media attention. We are very lucky in that in a few months I will be finally completing the training portion of my medical career. However, with a baby on the way, a nice size mortgage and $200,000 in medical school loans that I need to start paying back, I still have visions of tracking down Chris Galvin and Ed Zander sitting with their millions of dollars in compensation packages and demanding they explain/justify what they did to this once strong company.
If the Fed provides insurance for commercial bankers, who provides insurance for investment bankers? The Fed and the taxpayer? If Joe Taxpayer is providing insurance for investment bankers, should Joe not reap the rewards of successful investing as well? After all, he is assuming the risk of the investments going sour. Who is behind investment bankers' insurance companies, and why aren't they able to do their job? If the investment banker didn't buy insurance, then he, like everyone else who drives his car without insurance, should be liable for the full amount of an accident. Oh, he's uninsured or underinsured, is that Joe's problem? Yes, it is. If Joe can't be made whole again by the resources of the at-fault party, then Joe will suffer. Joe is right that it's not his problem, but he'd best not be dead, right? So, why then did the Fed cut a deal with Morgan that leaves Morgan with all the gain and Joe with all the losses? That smacks of Bernie bending over backwards for big business. Quadruple B rating = BBBB.
I can't understand why the government is looking for new ways to bail out people's mortgages when they already have two programs that VERY FEW people know about. The USDA and HUD (FHA) both have direct loans available and have had for decades. USDA Direct loans are for the more rural areas and HUD direct loans are for the larger cities. Many farmers are aware of this and have used the USDA loans, but almost no one else is aware. They come at a reasonable rate, have loans that can be written down in the event of emergency and if the person doesn't get hoodwinked into going with a lender, they do not have foreclosure clauses. What better way to solve the housing situation and get those with really bad situations into something worthwhile? The legislature is not telling anyone about this and those in the HUD offices may not even know what they are. Most of the USDA offices are familiar with the Direct loans. Folks don't take no for an answer and don't be swayed to a "loan guaranteed lender," but go get the Direct loan to buy or refinance your home now. There are lending caps depending on the area, but again, don't take no for an answer.
A lot of the talk associated with the bailout of Bear Stearns has been that it had to be done to preserve the rest of the economy. I would like to hear a segment justifying/refuting that claim. From the viewpoint of ordinary citizens it comes across as socialization of Wall Street -- the transfer of wealth from taxpayers to those already rich. Economists apparently use the term "moral hazard" -- for the economy to avoid distortion, a person must endure the consequences of risky behavior. Why is that not true for corporations? Especially when one reads about how shady some of the Bear Stearns deals have been and how their management will get golden parachutes.
Hearing Hillary Clinton say that she speaks "millions of words a day" made me wonder about that number -- it seemed awfully large for one day's speech. So I looked it up. Sure enough, "The normal English speaking rate is between 130-200 words per minute (wpm)." Now, Hillary speaks pretty fast, so let's give her a 50 percent bump on the high-end of the words per minute, so that's 300 wpm; and she seems to always be talking; and let's assume she only sleeps four hours a day and she doesn't talk in her sleep. That makes 300 words per minute, times 60 minutes in an hour, times 20 waking hours a day, equal to 360,000 words in a day. Seems to me that she should keep her mouth closed a little more and think before she speaks, because she clearly covered up one lie with another. Or I suppose you could call it a hyperbole.
Re: Dan Roams book, The Back of the Napkin. Well, won't he be surprised. He said people who listen to Marketplace probably are driving in their car and something about having money so that marketplace is of keen interest to him. I'm a poor as dirt artist, haven't had a car in over 20 years (but would love one) and always listen to Marketplace. [I have a] part-time night job, which I go to right after my part-time day job and I do squeeze in time to paint. Actually have a great life. But I caution folks to not assume who does or does not listen to finance shows. I learned a lot today and am going to look for a nice cheap house that needs a ton of work. I find Marketplace full of info -- and as an artist I love it when the market roars -- I sell paintings when that happens, and some day may get to dump one of my part-time jobs. BTW, I was doing great for a while and didn't work at all, but the last two years have been tough and I'm a one-income home.
I'm an every day listener to Marketplace Money (on my treck home) and to be honest can hardly stand the liberal drivel and anti-conservative views spewed by the program daily. I guess I listen because you should know what your enemies are up to. Today, however, I thoroughly enjoyed the David Roam segment on napkin presentations. I long for the old days when the message was judged on content rather the bling of the presentation. I'm guilty of schooling myself on Presentation Blingology and it has served me well. In the "good old days" assertiveness, confidence, and subject knowledge were king.
Thanks to Susan Lee for her commentary, "How bad could economy get? Hold on!" Our public figures, eager to ameliorate the economic pain caused by the current slowdown, seem to be losing sight of the inflation risk posed by their actions. Normally, we consider housing to be investment, not consumption. Thus the idea of protecting Americans' wealth by protecting their investments seems a sound one, and should help direct the economy towards a path of growth. However, low interest rates, subprime lending and low inflation over the last several years caused a "bubble" in the housing market. Speculation and the ease of entering or moving up by those not truly able to afford it lent the market a distinct flavor of consumption. Prices skyrocketed. The rapid rise of the price of an illiquid commodity of limited supply is not "growth," but rather "inflation." Now that the bubble has burst, there are proposals in the U.S. Senate to prevent a downward correction in housing prices. This accomplishes nothing other than rewarding the speculators, and continuing the inflationary trends established during the bubble. Imagine a news story in which the words "oil" and "housing" were switched: "Housing prices hit record highs today, while the price of oil fell to new lows." You can bet that politicians wouldn't be rushing to shore up the "weakening oil market" for fear of its impact on the economy at large. Letting housing prices continue to slide -- that is, allowing the natural correction which is long overdue -- will help offset inflation in energy and food. This will ultimately result in more stable (albeit slower) growth. A housing bail-out, whether directed at lenders or homeowners, is just another money-printing scheme which will only result in further inflation and, as Ms. Lee observes, could lead us into stagflation.
You started a series this morning on people affected by the subprime housing mess. Initially I thought "great example of media keeping a 'crisis' alive." Then I listened to your example of a crisis victim and cracked up! The best (worst) you could come up with is a lady in northern California who sells real estate, has no monthly bills and whose husband has a full-time job with full benefits. She must be suffering terribly! If that's the best you can do, you might actually uncover the truth about this fiasco -- that a very small percentage of homeowners held/hold subprime loans, that an even smaller percentage won't/can't make their mortgage payments and that many of those are speculators who were attempting to get rich by flipping property.
When interviewing a realtor from California, she responded that she had to think positively in this crisis, that she was not a failure, that "the real estate market is the problem." I wonder if she questioned herself, when business was going extraordinarily good, whether she was not a real success, that the real estate market was doing everything for her while most Americans were working much harder and longer hours and making much less in more productive jobs. Realtors made a ton of money when overvalued houses sold with minimum effort on their part. Now, when the time has come to prove themselves, I hear nothing but whining and complaints. It is not fair to the rest of us, who have invested many many hours of study and hard work, to listen to such complaints. It's like listening to a Hollywood actor complaining on how bad business is it nowadays that people are not going to the movies.
I love "Marketplace," I really do. I listen to it every evening as I'm wrapping up with work -- running outreach for an open source collective action website. Do you know what that requires me to be able to do? I definitely have to do more than snap pictures of my friends and call things "cute." Seriously, Kai -- I had much higher hopes when you announced the story. It's true that women outspend men on technology -- and that story never gets told. I found it disappointing that you would waste the opportunity to talk about that spending gap by plugging products of companies that are no more interested in catering to women than the companies that offer pink, glittery phones with puffy paint. I'd love it if you would do a follow-up -- and I can connect you with loads of average women who happen to be pretty tech-savvy and could run circles around Kevin Pereira. We're waiting for our stories to be told -- can you help us?
It struck me that what makes most of this tech "appeal to women" is that it has intuitive, a.k.a. good, design. Could it be that the explanation for this broader marketing of gadgets is that the glass box around male geekdom made of jargon and ego is beginning to dissolve? Is this just what technology looks like when you don't exclude or ignore women as we have for most of the digital age?
Re: Your story on Bhutan and the changes taking place there. As a psychiatrist who recently returned from Bhutan, I can tell you that one thing that that Himalayan nation DOESN'T need is the American economic system, whose grotesque materialism, alienation, and merciless "me first" mentality have reached absurd levels in recent decades. Life in Bhutan isn't perfect, but at least people there know that Gross National Happiness beats Gross National Product any day of the week.
Hoover gets a bum rap! In her report, Amity Shlaes listed all of the wrong moves that Hoover made which failed to keep the United States from slipping into an economic depression. But Hoover didn't take office until 1929, when all of the equity bubbles had already formed and were just waiting to pop. Hoover was the "fall-guy." Carter -- "fall guy." Bush Senior -- "fall guy." In January of 2009, President McCain-Obama-Clinton will take office. Before he/she gets comfortably seated in the Oval Office, reporters may already have microphones shoved in his or her face demanding answers about the economy. They'll say: What are you going to do about falling home prices and foreclosures? Now that Fed interest rates are at zero, what are you going to do about the "liquidity trap" (the latest buzzword)? What are you going to do about all of the cities, counties, and states who are going bankrupt? And by the way, your proposed budget will result in a trillion-dollar deficit. The question for President McCain-Obama-Clinton will be: "fall-guy" or "fall gal?"
Your commentator on the Bush-Hoover connection just about made my wife and me ill. What a case of the fox commenting on the security of the hen house! With the flat-earther/Friedmanite favorite cautionary fairy tale about Smoot-Hawley having finished off the U.S. economy, I just turned the damned radio off. We are so sick of unchallenged corporate globalist liars. No doubt GE wouldn't tolerate a few minutes of sense from the likes of Vandana Shiva or Kevin Danaher.
OK, the bailout and buyout of an investment bank might be one of many solutions by the feds, but what about the forgiving of all the student loans made under the federal loan programs? This solution would free up a tremendous amount of debt that people amassed to further their education, which is what we should focus on instead. Many low, moderate and middle-income families and individuals went into debt to advance their education and career. A tax rebate is not the long-term solution, but education debt forgiveness would be. It is easy to do, easy to accomplish, and would not fill the pockets necessarily of those top 10 percent of the wealthy families in the U.S. Bailout those individuals and families who amassed debt to get an education, not investment banks who were greedy and homeowners who may have been both ignorant and/or greedy. We are more willing to have my large tax dollars go to reduce individuals student debt than investment banks and financial institutions. But who are we? Definitely not the CEO of Bears Stearn or JP Morgan Chase or Chairman of the Federal Reserve, or an economist. Just a hard-working middle-class family of two professionals with two kids.
This morning, the three papers I read all had articles about Borders Books possibly putting themselves up for sale. I have been selling books at my business for 37 years. Books have a problem that no other product has. Most of them are prepriced by the publisher, with the price printed on the book. When a book seller has costs go up, they cannot charge more, the way other businesses can. I tried to bring this up many years ago at an annual meeting of the American Book Sellers Association. I was told that federal rules do not permit such groups to discuss prices. Therefore this subject never gets talked about in public. I think it needs to be looked at if book selling is to continue in this country.
[Jerry Taylor] baldly claims that imported energy cheaper than domestic energy production. By what measure? If measured by money, his stance only makes sense in the short term. It is critical to remember that the transition to energy independence is also the transition to domestic renewable energy. These require a substantial initial investment, but they pay-off in the long term. Consider the case of an oil field. You must pay to find the oil, drill the oil, extract and transport the oil, refine the oil and finally distribute the gas (or diesel) produced. But eventually the oil in the field runs out and the whole process must be repeated. The next field will be harder to find, more difficult to access and smaller. Now consider a wind farm. Initially, costs are substantial and the return on investment for the electricity is slow. But consider the following question: At what point do we run out of wind? This demonstrates that Jerry Taylor's analysis is fatally flawed. Even more disturbing is his neglect of the environmental effects of greenhouse gas emissions and the terrible cost in blood and suffering of our soldiers, sailors and marines.
[Last] week was the fifth anniversary of our invasion of Iraq. Five years ago, oil was $25 a barrel. The nation had no long-term debt and had stopped selling long-term bonds. The U S went to war and cut taxes. Very few questioned or criticized how we as a nation would pay for the war. The other day, your commentator stated that we were in a period similar to that of the early 1970's. To me, this period is much more like Japan in the early 1990's. In the late 1980's, the Japanese, flush with cash, paid far too much for properties, both at home and abroad. Then the music stopped. For much of the 1990's, the Japanese banks and firms kept many nonperforming loans and assets on their books. To encourage consumers to spend rather than save, the BOJ cut interest rates to a quarter of 1 percent, where they stayed for a decade. Because of their failure to write off nonperforming assets, it took more than 10 years for the Japanese economy to recover. Months ago, we heard about the "unwinding of the Carry Trade." Firms were borrowing money in Japan where it was cheap and lending it in countries with much higher interest rates, making money on the spread between money borrowed and money lent. Yesterday, I received a credit card offer from Chase offering a card with a 16.49 percent interest rate. We need to deal with the cause of our economic ills (the housing bubble), not just its symptoms. Representative Barney Franks' proposal is a good starting point. Until we deal with the cause (housing), the Federal Reserve will have to continue to pull rabbits out of its hat.
Jerry Taylor's commentary does not hold water for me. If, as he says, we import oil simply because it is cheaper, then why do we have oil drilling companies running all over the West drilling for oil? If the oil embargo of 1973 was just symbolic, why was I only allowed to buy five gallons of gasoline, at a 50+ percent higher price, after waiting in line a half an hour? There were a large number of oil wells drilled in Colorado during the 80's that needed $25 a barrel to break even. He needs to go back and verify his sources, if he has any.
Thursday's commentary regarding the value of pursuing energy independence avoids the issue. The total cost of oil dependence is not reflected in its trading price. From greenhouse gasses to bad foreign policy decisions, dependence on oil has far-reaching repercussions. Given our inability to satisfy our oil demand given domestic resources, energy independence really means transitioning away from oil, which is a long-term economic loser.
Jerry Taylor's piece on energy independence sparked a strong response from me. Not that his logic on oil prices was flawed, but that his view of energy independence was so narrow. Part of our remaining a leading 21st century nation will be generating cleaner, less expensive and more plentiful sources of energy than oil. Take solar energy as a leading example. Solar energy is immensely plentiful, local, clean and inexpensive. The U.S. must take leadership in developing and manufacturing solar, wind, geothermal and like technology, and then energy and oil independence will be an afterthought.
Your report on carbon taxes versus cap-and-trade might have included the two studies from the Congressional Budget Office that showed carbon taxes work better. The "certainty" the NRDC touts with a cap doesn't exist, since we can't just turn off the lights when the permits run out. The high carbon tax rates the NRDC worries about are easily solved with a revenue-neutral program. The real problem is political, and we're not solving it by wasting time on a gimmick that creates windfall profits for polluters and brokers.
Having heard stories about government bailouts and regulation and why they're both bad, I was wondering if maybe there wasn't a way to relate the two. Require companies to purchase government "bailout insurance" and their premiums will be set based on risk factors just like any other form of insurance. If companies want to dabble in risky behavior or have opaque accounting, fine, but they will have higher premiums. How much various risk factors influence the premium should be under the control of the Fed, giving them another set of controls to work with. New regulations could be eased into enforcement indirectly, and the rate of corporate participation will help establish accurate measures of the cost of compliance.
In your report on House Finance Services Chair Barney Frank's suggestion that the Fed should have some regulatory access to investment institutions in exchange for backing the institutions' failed risks, I was a little shocked to hear Wall Street Journal's Stephan Moore's comment that "The people who should be making the decision about what a prudent risk is are the people that are investing their own money," implying that the Fed should "butt out" of the deal –- at least in terms of regulating risk. I don't know who Mr. Moore thinks ponied up the $3.2 billion to fix the Bear Stearns debacle, but if it was the Fed then it was essentially MY money. And I believe that if I am sponsoring the reckless (or prudent) risks of investment companies, I believe that the folks I hire to watch over my money -- like Representative Frank -- should be required to do their job and not just let my money be a "mommy's purse" to folks who have a lust for high risk investments and a distaste for regulation.
Regarding your story "Sanctity of Islamic Bonds Questioned," regarding the Islamic prohibition on "usury" which the religion interprets to include all interest-paying transactions, it is my understanding, as an American and an attorney, that some U.S. banks have been hoodwinking Muslim home purchasers by claiming to provide them with "interest-free" home mortgages. I understand that typically under these arrangements, the bank adds the projected total interest over the term of the mortgage to the home price, adds in fees, divides that sum by the number of months in the mortgage period, and then charges the customer monthly "rent" over the period of the mortgage term with the understanding that the customer "owns" the home when all payments are complete. The arrangement does not provide for the purchaser to build any equity -- if he seeks to transfer the home title before making all payments, he forfeits the net of his prior investment in the home. In other words, the customer is duped into a worse deal than he would get under a conventional mortgage, on the false assurance that he is not paying "interest."
I had to laugh out loud during your story on "Lessons learned" during this financial mess. The only lesson I see anyone on Wall Street learning is that no matter what they do or how big a mess they get us in, the government will always bail them out. As for reregulation? [That's when I laughed out loud] Gentlemen, not in your lifetime, and certainly not in my lifetime. It's greed, greed, greed and the nation-wide mind-set that whatever goes wrong is somebody else's fault. Nobody has to take the responsibility or suffer the consequences of their foolish actions, be they on Wall Street or on Main Street. It's a damn shame!
Pouring water into a bucket having holes which have not been plugged is certain to result in further loss. The lack of due -- and overdue -- regulation in the long untouchable financial sector banks, "Insurance" and "investment" brokerage companies ARE the holes in the bucket. Governments solely dependent upon an unsound. shaky base will collapse due to having built upon sand. Any value not adequate to meet all needs is a sham and certain to result in disillusionment, however serviceable it has been in the shorter term. Until peoples and nations and their governments are willing to scrutinize, re-examine and carefully evaluate their priorities and values, they may find them yet weighed in the balances and found wanting. True values cannot be manufactured overnight in printing presses, however convenient and selectively allocated the results.
Re: "Forgetful Fed repeats errors of the past" by David Frum. While listening I was flashed back to school test days, "Why can't you learn from your mistakes?" Maybe it's because I was never taught how to learn from my mistakes. The physical is easy, the body figures it out. Stick your hand in fire once and your body won't do it again. But, what about the intellectual? I'm practical -- for my lady's birthday I ordered flowers arranged on a clear glass cake pedestal. The arrangement came with two birthday candles, the flowers looked like a cake. It was a hit and the clear glass cake pedestal was, well, practical. Humor aside, would society benefit if a course on "How to learn from your mistakes" was taught? When we get a moving violation, we have to go to driver's training. Maybe when someone breaks the law, they should go to "How to learn from your mistake." By the way, I've learned from past practical presents. I was tempted, but didn't send the cake mix with the flowers. Maybe I'll send it anonymous. Any suggestions?
In David Frum's essay yesterday about Federal reserve policy, he stated that he remembered "the little white stickers my family's favorite steak house used to overwrite last month's price." I would make two points here. First, Mr. Frum is born and bred in Canada, specifically Toronto, Ontario, and it appears that the nearest American soil, Niagara Falls, New York, was about 80 miles away. Given the number of steak houses available in Toronto, it is likely that the menu of which he spoke was for a Canadian restaurant, and using a Canadian restaurant to describe U.S. inflation is not the basis for an honest discussion of any policy. Second, this was in the days when plain paper copiers were a rare beast, so reprinting a menu was a significant issue, even if it was done only once a year.
Listening to your explanation about why mortgage rates haven't gone down -- you are dead wrong. Why ask economics professors? They don't trade the MBS that are the "benchmarks" by which lenders (that use Fannie and Freddie to finance their loans) set their rates to borrowers. Your comment that the Fed has more on its mind than mortgage rates is dead wrong, too -- actual participants in MBS, Treasury and other bond markets [yesterday] widely thought the Fed had at least one eye on consumers when they cut three-quarters of 1 percent. You talk to stock brokers now and then -- when are you going to go to the bond market to understand bonds?
I am an American living in Canada. I find it interesting that there is a question that the U.S. is in a recession. I feel that the U.S. is in a self-imposed recession. Bush and his close few have done what they can to horde finances. It seems like their goal of ultra control will ultimately fail. They are trying to control the global markets by controlling oil and hiking the price. They are willing to keep the U.S. in close to catastrophic national debt and keep the middle class and poor scrambling for the next paycheck. Ultimately, this tactic will not work -- the U.S. economy will not support this. It is unfortunate to see that