Monday, January 31, 2005

Consolidation is the new trend

Mergers and acquisitions are the new trend in business. As mentioned by two earlier bloggers, SBC recently acquired AT&T. Proctor and Gamble has announced plans to purchase Gillette for $57 billion. Additionally, Sprint and Nextel just last month joined for around $35 billion. Why are so many big mergers/acquisitions occuring? The main reason for consolidations on a general level are the economies of scale which they create. If you take the assets of two companies and put them under the management of one company, the average management cost decreases. Also, the answer is in part due to the "American Jobs Creation Act, which gives US companies a one-time repatriation of dividends from overseas if they will be used to create domestic jobs, go into research and development or capital expansion, or be used in acquisitions." Additionally, foreign companies are looking to take advantage of the weakening dollar, which may lead to foreign purchases. Whatever the reasons for the consolidations, the implications are clear. For executives of these companies to be willing to expand in such leaps indicates that they at least see a bright economy in the near future; they would not make such large investments if they were expecting a weak market. The information for this post can be found HERE.

Apart from the information from the website, I have learned in my finance classes of how this is true in the banking industry as well. The market has been saturated with different banking companies, and it has become common for towns even as small as Marietta to have four or five different banks. Part of the result of such a large number of competitors is the mergers and acquisitions that are becoming so common today.

If you are a land agent, how do you do that?

In winter holiday, I met a very successful land agent. Though young, he has his own big company. He told me something about him and his company. Several years ago, in the city, where he lived, there was a land to be exploited. This was a deserted land, attracting no one’s interest. The place was an entire gutter, and you could see no reason to input any investment. Nonetheless, this land agent decided to do this business after he saw this land. He knew how difficult to exploit this land, but he still foresaw this land would be the center of this city. And the government gave him free tax for encouraging him. After finishing the whole project, he gained more than $ 13,000,000. And now, this land is really the center of this city. But this land agent didn’t tell me why he made this decision and how.
So, I want to ask you, if you are a land agent, how do you to think about this project? What can influence your decision?

State bans unpasteurized milk products

On January the 26th, there was a new state law went into effect. This new state law bans unpasteurized milk products, which is for the republic's health. Obviously, the demand would decline due to this new state law, because this new regulation might hurt the middle and small sized dairy farms.

First if all, instead of selling unpasteurized milk, they produce and sell more cheese and butter to make up for their profits. However, in order to keep the productions from being contaminated, the regulations require farmers making cheese in the rooms separated from the rest of the houses with a tile or concrete floor must be used. As a result, the new requirements may cost farmers from $3,000 to $10,000. Moreover, the new law expands banning not only the sale of unpasteurized cow milk and raw cow milk but also the goats, sheep and other mammals that are milked for dairy products. In addition, all the farms that sell dairy products to the public have to be inspected every six months.

I believe that these regulations show that people are more care about their health today; they pay more money on health care. Also, the government spends more on people's health, and makes more regulations for making our food healthier. But I also believe that those regulations would decline the demand of milk production; the small sized farms that cannot afford the cost of production probably will close. However, I think in the near feather, the technology will be able help the farmers produce unpasteurized milk with less costs.

Chicken or Beef?

Would you rather have chicken or beef? Obviously Americans prefer chicken even though there is the new Atkins diet (no carb diet). It could also be due to the fact that milk and beef are cutting down profits and growth in consumer demand. That could also be because of the weak dollar. The consumption of chicken on the other hand has actually been rising. Chicken is getting cheaper; average price is $1.30 when it should be around $1.40.

Reasons why chicken is cheaper:
There is a lower feed ingredient costs (supply)
Rising exports
Strong demand

There has been a 20% increase in revenue from last year (beef revenues fell). By October chicken accounted for less than 1/3 of the sales (60% of total operating income), while beef has a 45% of total sales (less than 14% operating income). Basically people would rather substitute chicken which is cheaper than paying higher prices for beef. In 2004, the U.S chicken consumption per capita is 85.6 pounds.

Good news for economics

A recent paper said that "Some of the nation's top economic forecasters are encouraged by the way 2004 went out. In a new survey, members of the National Association for Business Economics say the economy picked up the pace in the fourth quarter of last year, and that bodes well for at least the first half of 2005.
The experts say the tail-end of 2004 saw faster growth in wages, employment, profits and capital spending. Meanwhile, inflation slowed a bit.
Most of the economists in the survey look for the economy to grow at a solid three-to-four percent rate this winter and spring.
Investors and analysts will get a lot of new economic signals in the week ahead."
all information above are good: wage, employment, profits all are rising, also inflation slowed! i think that all are the good signals for the economic, and hope it will last as long as posible.

Iraq election was smooth sailing which means the dollar goes up

So why does the Iraqi election have to do anything with the dollar going up?

This just shows that the economic market is interrelated. The dollar was at ¥103.43 on Monday compared to ¥103.37 on Friday. The dollar could go up even more if there is a higher interest rate, which would eventually draw investors to dollar-denominated securities. The euro bought $1.3022, down from $1.3043.

If the outcome of the elections were different would there be a different impact on the dollar? Well, it would impact the confidence of investors on the U.S. The U.S is known as a wealthy nation, therefore even when the dollar fell, investors believed that it was just a business cycle and that the dollar would bounce back. Compared to other countries, the U.S have very good credit with investors. For example, the baht (Thailand in the mid 90's) dropped and investors pulled out their investments because they were not confident that the baht was able to bounce back, which cause the baht to drop even more. The U.S is very strong and will continue to dominate the market.

There will be a Federal Reserve interest rate meeting on Wednesday, a U.S. jobs report on Friday and then finally there will be a meeting of the G7 nations on the weekend. Therefore traders and the public will have the full information.

Are You Drinking Enough Beer

Anheuser-Busch is the house hold name for many beer drinkers. The stock continue to increase every year since 1994 until last year. Oh no there was a 2% slipp up. Rivals like Coors and Molson are taking their share of profits. St. Louis has been the larget brewing company in the U.S. Eventhough there was a 2% decrease in the stock market, Anheuser-Busch have no plans of slowing down. For $2.4 million for a 30 second time slot, Anheuser-Busch already bought 10 out of the 58 spot available during Super Bowl sunday. In addition for other competitors like Coors and Molson, the wine market is gaining a bigger share of gtowth in the U.S. There has been a relativiely stagnat growth rate, about 0.4% increase in 2004 (wholesalers in the U.S).

Eventhough there was a 2% decrease, Anheuser-Busch believes that there will be a 10% increase to $2.73 a share. The sales for 2005 will be increase to 4%, which means $15.5 Billion dollars for Anheuser-Busch. New products are suppose to enter the market like Budweiser select (by the end of february) and B-to-the-E which is Bud Light infused with caffiene, ginseng, and guarana to compete with other alocoholic drinks (Red Bull). There is no slowing down for the Busch company. Not only are they dominating the U.S market they want to conquer the international market as well. There will be a higher potential growth in other countries like Mexico (Mexico has the largest export market). Anheuser-Bush wants partnerships with Canada, Ireland, Spain, Italy, and Argentina. They have alredy expanded to China (4th largest brewer) which is called the Harbin Brewery Group.

OPEC Leaves Output Levels Unchanged

In just finished OPEC meeting, Jan 30.OPEC ministers decided on Sunday to leave their oil production unchanged after meeting here, as they became more convinced that current high prices are not hurting global economic growth.
The energy ministers at the Organization of the Petroleum Exporting Countries maintained the group's production at 27 million barrels a day. And its president, Sheik Ahmad Fahd al-Sabah of Kuwait, said the producers would reduce their output before the group's next meeting in a month and a half if prices tumbled as a result of a seasonally weaker second quarter.
OPEC, which accounts for one-third of the world's oil production, formally abandoned a pledge to keep its benchmark price at $22 to $28 a barrel, saying that the price band had become "unrealistic."
But it did not say what new level it would seek.
"We have to find an acceptable figure to defend," Sheik Sabah said. "As Kuwait's representative, I think $32 to $35 a barrel would be a good number, but all my colleagues have a different number in mind."
OPEC's adopted its price-band mechanism in March 2000 to help it determine when to reduce production to prevent the benchmark price of crude oil from falling below $22 a barrel or, alternatively, to increase production if the benchmark rose above $28 a barrel.
But the target has become irrelevant. OPEC's benchmark price, which is based on a basket of crude oil grades that typically sell at a discount to oil futures traded in New York, has been above $28 a barrel since December 2003.
On Friday, that basket price was at $41.88 a barrel, and the commonly quoted futures price on the New York Mercantile Exchange settled at $47.18 a barrel as traders expected little change in production from the OPEC meeting.
Some oil producers had expressed concern that rising prices last year would stem the demand for oil and slow world economic growth, though the group took no action to increase supplies.
Economists differ on how the United States and China, the two largest markets for oil, have been affected. That has led to renewed confidence in OPEC that the world can live with higher prices.
The Saudi oil minister, Ali al-Naimi, told reporters over the weekend, "The world economy has grown so big that little fluctuations here and there with oil are not doing so much." He made similar comments while attending the World Economic Forum in Davos, Switzerland, last week.
Roger Diwan, a managing director of the consulting firm PFC Energy, said: "They are testing the market. OPEC seems to be saying, 'Tell us how much you are willing to pay and we will tell you what our price is.' "
Most ministers at the meeting seemed to have an idea about new price targets. Iran's oil minister, Bijan Zanganeh, suggested a range of $30 to $40 a barrel. Nigeria's representative, Edmund Daukoru, said he would be "comfortable" with $45 to $55 a barrel; and Libya's oil minister, Fathi bin Shatwan, suggested that prices as high as $60 a barrel in New York would not harm the world economy.
A new price target may be announced when OPEC meets on March 16 in Isfahan, Iran.
Analysts said that while crude oil prices might be high, relatively few consumers had seen rises in their energy bills as great as the oil prices suggested. In Europe and Japan, people have been shielded by the strength of their currencies and the decline of the dollar, the currency in which oil is sold.
"The dollar's weakness is allowing economies to grow despite the high oil prices," said Yasser Elguindi, a senior managing director at Medley Global Advisors. "As long as the Bush administration is happy with a weak dollar, OPEC will be happy with high oil prices."

OPEC expect their decission will not block the global economic growth, but it really does.In New York, one barrel of oil is up to $41 and it has trend to rise. We should consider about whether their decission is a real unhurt decission for our economic growth.

AT&T, who just joined with Cingular wireless, is going to be acquired by SBC

According to NY Times, Jan 31st Edition. SBC Agrees to Acquire AT&T for $16 Billion.

SBC communications this morning concluded a $16 billion deal for its former parent, AT&T, that would lead to the virtual disappearance of one of America's best known corporate icons and set off what promises to be a new round of competition between the Baby Bells, executives close to the negotiations said.
SBC's board approved the deal while AT&T executives met far into the night trying to reach an agreement. In buying AT&T, its national network and three million corporate customers, SBC can aggressively expand into the turf of its regional Bell siblings, who themselves are grappling for ways to move beyond their borders.
AT&T, the former monopoly, has been undone by cheaper Internet technology, growth in a cellphone industry where it has no role, and regulatory changes that squeezed it out of the local phone market.
The AT&T brand and operations are likely to survive inside SBC, which has its roots in the Southwest. But it will disappear as an independent company that for generations provided reliable phone service to the masses and steady returns to shareholders, and at its height employed more than one million workers.
"AT&T was America's answer to Communism, serving everyone's needs," said James E. Katz, a telecommunications historian. "But neither Communism nor AT&T is suited to capitalism in the 21st century. Like other once-dominant players, when the technology changed, it couldn't survive."
Consumers would be largely unaffected by SBC's purchase. AT&T, based in Bedminster, N.J., has stopped marketing its traditional local and long-distance services and prices for these products have been falling steeply regardless.
In expanding nationally, SBC hopes to create a company that largely resembles but does not equal the monopoly popularly known as Ma Bell that was broken up in 1984. The acquisition would vault SBC past Verizon Communications, which itself became the nation's biggest telecommunications company when Bell Atlantic bought GTE in 2000.
SBC is expected to pay $15 billion in stock and $1 billion in cash, an amount based on AT&T's closing price of $19.71 on Friday, the executives said. The new company will have combined annual sales of $70 billion and 212,000 employees, and it could well retain the AT&T name.
The companies expect to generate about $15 billion in cost savings and new revenue, executives close to the negotiations said. The companies have not decided how many jobs they plan to eliminate. But industry analysts expect SBC to lay off large numbers of workers in AT&T's shrinking consumer division.
SBC's chairman and chief executive, Edward E. Whitacre, Jr., will remain in those roles after the acquisition. David W. Dorman, AT&T's chief executive, will become president of SBC. Mr. Dorman will also be given one of AT&T's three seats on SBC's board, which now has 16 members. SBC will keep its headquarters in San Antonio.
Regulators must approve the deal and they could request certain divestitures. The outgoing chairman of the Federal Communications Commission, Michael Powell, however, signaled last week that the acquisition would not face stiff resistance.
SBC, formerly known as Southwestern Bell, was one of AT&T's oldest affiliates. When AT&T's monopoly was broken up, the company became one of the seven regional Baby Bells.
In one shot, SBC would now become the biggest long-distance carrier and the largest provider of phone and data services to corporate America. SBC also provides local phone service to more than 50 million customers in its 13 states and holds a 60 percent stake in Cingular Wireless, the country's biggest mobile phone company.
In taking over AT&T's $22 billion corporate phone and data business, SBC will add a new source of revenue that will offset the decline in its residential phone business, which has been shrinking with the spread of cellphones and the Internet.
With AT&T's network, SBC will gain the ability to sell services to customers outside its region, which includes California, Texas and Illinois. This threatens to turn the Bells into direct competitors instead of opportunistic allies that teamed up to fight rivals, regulators and others who have tried to loosen their grip on local service in their regions.

Is that will be a successful example in annex company in business history?

Academy Award Nominated Films Make Big Bucks

Once again, there is no big surprise this week at the North America box office. Robert DeNiro and Dakota Fanning's latest film, Hide and Seek, took the #1 spot with $22 million. DeNiro is on a bit of a roll as of late, especially with the incredible success of Meet the Fockers, which has grossed over $250 million in the U.S. alone.

However, the most interesting movie news this week involves films nominated for Academy Awards. Being nominated for an Academy Award (especially for Best Picture) is like a touch by King Midas- small films that otherwise wouldn't have enjoyed such success are suddenly the hot film to see. The films nominated for Best Picture- The Aviator, Ray, Sideways, Finding Neverland, and Million Dollar Baby have mostly all seen a jump at the box office as of late. Ray and Finding Neverland were released a few months ago, so their increase is minimal. However, The Aviator, Sideways, and Million Dollar Baby are all doing very well.

For example, look at the movie, Sideways. This is a very small production- a very small movie all around. It has been in theatres for 15 weeks, and this past weekend (the first weekend since Academy Award nominations were announced), it hit the top 10 for the first time, making $6.3 million. A non-blockbuster of this sort would almost never make any money in any other situation- but now that it is up for Best Picture, everyone suddenly wants to go see it.

The Academy Award nomination is cinematic gold for a motion picture. A nomination for a movie means many millions of dollars more than it otherwise would make. For an actor or actress, a nomination (and especially a win) instantly makes that person more appealing to Hollywood, and he or she will make a guaranteed higher salary for their next film.

Sunday, January 30, 2005

NHL Lockout

With the NHL lockout still going on, the season is in danger of being cancelled completely now. Negotiations have resulted in very little progress between players and owners. With the NHL not playing any games for the first half of the year, and possibly the entire season, there are a few economic implications. One of these is that all the people employed by the teams like ticket salesmen, ushers, and seating attendants have been forced to look for other jobs, which there is a scarcity of. The lockout also takes business away from stores and restaraunts in the area around the arenas where the games are played, because there are no longer large quantities of people coming to the arenas. The lockout has increased the scarcity of resources that already existed. To read about the most recent negotiations, go to: http://sports.espn.go.com/nhl/news/story?id=1977341

MLB Steroid Policy

Not in any means do I condone steroid use, but I just don't see what's the big deal, and having to make an even more strict policy. Call me John Denver...but I don't ever recall hearing that steroids enhance a baseball players vision. If you've ever played baseball, everyone knows that the key to hitting isn't bat speed, but it's vision. I think that these professional athletes need a little more privacy, and shouldn't have to pee in a cup or give blood randomly. To me, it seems like the big leagues are trying to find any reason to bust and fine these players. The MLB needs to loosen up, and worry about turing baseball into an American past-time, because their ratings are shooting down. I feel very strongly that, these MLB superstars are making millions of people millions of dollars, and they don't need to be stripped of their dignity. The MLB needs to realize without these big name guys(Barry Bonds, Jason Jiambi...etc.) the MLBs numbers will drop even more severely than they are right now.

Coaching Fines

After his team lost on a questionable call on Monday, Detriot Pistons coach Larry Brown was fined $35,000 by the NBA for criticizing the officials. The call in question was actually a call that wasn't made on what Brown felt was a goaltending violation. He voiced his displeasure with the no-call after the game and the league fined him. The issue of coaches being fined raises a couple of questions. The first one is whether they should be fined for criticizing officials. $35,000 is a lot of money to anyone. Why shouldn't coaches and players be able to criticize officials during interviews? We read in the newspaper every day how the media criticizes players and coaches. What makes umpires, and referees immune to being criticized? Another question this raises is do the coaches feel it is worth it to criticize the officials and receive a fine? Do they make this decision based on the margin and feel that the marginal benefits (maybe receiving favorable calls in the future) outweigh the marginal costs (being fined)? While some coaches may think that this helps them to receive favorable calls from the same officials in the future, I think that they are less likely to. To read the article, go to: http://sports.espn.go.com/nba/news/story?id=1978707

Touchdown Celebrations

I think anyone who is a fan of football knows what this is all about. A few key names may help...T.O., Randy Moss, and the most recent I remember that seemed to go unnoticed Freddie Mitchell.

T.O. has done almost every touchdown celebration you can think of sit-ups, pom-poms, the Ray Lewis dance, sharpie, and middle of the star in Dallas. These are the most well-known.
Does anyone else not see a problem with these?

I am tired of hearing Dan Patrick and every other ESPN Radio broadcaster bash T.O. just because he likes to enjoy himself out there. I am a big Dallas fan (yeah I know too bad for me) but I found T.O. dancing on the star to be quite humorous. If I was that talented in football and couldn't be stopped I would celebrate too. People say that he is embarassing to the league and is a show boat but look at all sports. EVERYONE CELEBRATES! There is trash talk from the professionals all the way down to the high school level. It's just a part of sports.

Next, Randy Moss. Moss was fined in this years playoffs for fake "mooning" the crowd. In my opinion it was hilarious. He was making fun of the Green Bay fans who after the games go out and "moon" the visiting teams bus as they drive off. If Randy Moss can get fined for this display of celebration why can't Packers fans get fined for their celebrations. Couldn't that be indecent exposure or something? It's not like kids don't learn what "mooning" is before they ever enter kindergarten.

Lastly, and my favorite by the way Freddie Mitchell. Being a teammate of T.O. he must have stole his touchdown celebration from his injured teammate. After scoring a touchdown against the Vikings in the playoffs Freddie Mitchell did a reverse "mooning" by reaching down to his ankles and pretending to pull up his pants. I laughed for probably ten good minutes after this display. What I found even more funny is that FOX the television network that shows more than any other wouldn't show the replay of his celebration. Freddie Mitchell made fun of Randy Moss and whether you are a Vikings fan or not you have to admit it was funny.

So what does this have to do with economics? It is putting people in the stands and on their couches in front of the television. I am not all that interested in the playoffs since Dallas didn't get in but I watch the games. Why? Because I want to see the touchdown celebrations. I honestly think the league should be patting these guys on the back. Not only are they doing their job but they are doing it well enough to score touchdowns. They are putting the NFL's name out there.

Like it's been said "bad publicity is better than no publicity."

Safety Sells?

General Motors has the idea that increased safety will sell more cars. Within all of their new cars GM has decided to install OnStar which is a satellite positioning device. This along with a newer technology they call the electronic stability control is what they believe will make their product more desirable to the public. The kicker is that they will provide this new technology in the first year for free, so long as the buyer purchases a new car.

Would GM's plan to appeal to potential buyers work and will the opportunity cost outweigh the benefits of such a risky move?

Contaminated Money

Straight from the source :
"Money that has been contaminated with a virus; it’s a whole new possible direction for bioterrorism. It is a case that the FBI terrorism unit has taken over from state police that involves several cities, including Philadelphia."

"...Earlier this month, Pennsylvania State Troopers intercepted $250,000 dollars during a routine traffic stop. The alleged drug money, which had been sealed in plastic, was being driven from Columbus, Ohio to Northeast Philadelphia.

According to law enforcement sources, after counting the seized cash, troopers began feeling ill and one trooper was even hospitalized with flu-like symptoms.

Sources tell CBS 3 that tests on the cash counter revealed the presence of a toxin derived from the bacteria staphylococcus.

Dr. Joseph Smith, a local terrorism expert says it may be a new application of terrorism, although this time it was used as a deterrent among thieves: “I am not that surprised, this is the nature of terrorism. By its nature, you have to say we must always be mindful and careful of new applications.”

Is this a new way to terrorize the U.S. economy? I think that if this is in fact a new direction for bioterrorism, what's next? Money passes through millions of peoples hands daily. Opening this scenario to the public could cause lots and lots of chaos. If more and more cases of this happen around the United States, people could stop using paper money! This could have a huge impact on the production, regulation, and distribution of money.
I'll stop ranting...your thoughts?

Legalize Marijuana

Should marijuana be legalized???
I think that the potential benefits for the legalization of marijuana are unlimited. Here are just a few economic benefits of legalizing marijuana, because we all know that the U.S. government is all about making decisions based on economic value and the benefit of them. (1)marijuana use for paper production(2)medical uses(3)stop black market and reduce crime(4)save well over 50 billion for tax payers. Those are just a few reasons why the United States should legalize marijuana. Unlike the Ohio lottery...Government should make a legitimate deal, that a portion of the taxes will be used to help improve education nationwide. Education wouldn't be the only entity that would/could benefit from the legalization of marijuana. I realize this sounds ridiculous, but we all know that social security is projected to run out before the nations youth can take advantage of it. Not to mention we pay into the fund every week when we get our minute pay checks. Anyways, I figured that legalization of marijuana could help replenish this fund that government has ever so messed up. So what are your thoughts about the legalization of marijuana??..and where do you stand?

AT&T buy out

Today news came that AT&T going to be bought out by SBC for 16 billion dollars. Of the 16 billion dollars, one billion is going to be split up between the shareholders and the rest is for the buy out. AT&T has been thinking about selling because the competition has been taking there businees. AT&T has been around 120 years and in the last couple of years they can't keep up. I feel that this is going to be a bad thing for our country because SBC is becoming to large of a company. This is also bad because with less competition, companies can raise the price of phone calls. This has been a new trend for big business to keep buying each other out and I do not think that it is good for our country.

Stocks Face the Storm

Major stock indexes have shown that stock prices have declined and could continue to decline in 2005. The key issues as to why these prices have gone down are speculatively due to the upcoming elections in Iraq and the new spike in oil prices. Investors are nervous that there will be increased violence, that voter turnover will be low, and that there may not be a clear winner. As a shareholder, I would be very hesitant to invest as well at this present moment and do not blame other investors for waiting to see the results of the election. When a new government is being set up in a country, it is important to take things slow and to not judge the entire year's economic growth based on three weeks of declining investments. Furthermore, Iraq should prosper with this new government and there should be economic growth. There are several reports that indicate ecomonic conditions that are due to come out in the next two weeks. After analyzing these thorough reports, we can then determine the accuracy of the stock index.

Salary Cap in Baseball?

With all of the free-agency signing this off-season in baseball totaling more than $1 billion, this being a record, should there be a salary cap? With a salary cap, this could open up even play between organizations. So a team like the Yankees couldn't get more players just because they have more money. Teams right now who don't have the money are suffering because players are leaving for the money. This could really damage an organization financially because their revenue won't be as high with the loss of all these players to other teams with more money. Those teams who struggle financially still have to find a way to compete and get players and this could draw them into bankruptcy. So I really think there should be a salary cap so teams can't dominate the league and other teams who don't have as much money can compete.

Walmart Sales on the Rise

It was reported that general merchandise sales were on the rise for Walmart stores, especially the ones located on the East coast. For the stores that were open for atleast a year have shown an approximate 2.5% rise just in the month of January. And due to the superbowl happening in February, a week later than last year, the pre-superbowl sales are not included in January's data. I am glad to see that Walmart's sales for general merchandise are on the rise. Hopefully this means that more people, despite the war in Iraq and other economic downfalls, are starting to spend more money and thus, helping to raise our economy.

Cost of Technology, But Is It Worth It?

At what price do we pay for the latest technology? We are people of fast moving times. We want everything quick and easy, but at what cost? We have computers that we rely heavily on for entertainment, work, school, and contacting others. Is it worth it though? Computers are always getting a virus, and a person always has to worry about indentity fraud online, hackers, and computer crashes. We share and burn things that we don't pay for. The advancement in technology has really took a big chunk of profit from the entertainment world. Most importantly, by us continuing to advance in technology and making things quicker and easier to access, are we damaging ourselves? Is it good to have the internet for your child to do homework, if after they get done with their homework they can access porn? Is that an even trade? Is all this money we are putting into technology really helping us and our economy? Is it really important to have a camera phone? The demand for the latest technology is out of hand, and what we are willing to pay for it as consumers is crazy.
I feel that "we" the consumers of technology determine the cost of it. How much we demand of the newest gadget to make our lives simpler, determines how much we pay for it. We shouldn't have to pay top dollar for a cell phone because in has a two-way installed in it. We should not be demanding new technology just because we have it. We lose out when we do that, we don't get our money's worth. For example we should pay top dollar for a phone that will get us the best plan and the best service. Simple case of convince vs. quality.

Bidding for Adelphia

Two firms, Time Warner and Comcast, are making a joint bid on Adelphia Communications, the fifth largest cable operation in the United States. After filing chapter eleven bankruptcy in 2002, the founder John Rigas is being sentenced in February for fraud. The operations were split into seven geographical groups for bidding. They chose to auction the company because they feel they are only worth seventeen billion and they don't think they will get any more than that. Companies may bid on some or all, but Adelphia does not guarantee that they will sell any at all. I feel that it is good that Adelphia is auctioning itself off. They were in financial trouble especially since the owner was arrested for fraud. Hopefully if another company buys Adelphia they will be able to keep the company alive, raise sales and boost the economy.

Election In Iraq

The election in Iraq took place on Sunday and there was a lot greater of a turn out then many officials expected. Unofficially there was a 72% turnout. There were many threats from terrorist groups saying that they were going to fill the streets with the blood of the voters. Although over two dozen people were killed and 71 were wounded, an extensive security plan prevented more terrorist attacks from happening. Some Iraqis waited up to an hour just to vote. People who were disabled were pushed in carts to vote. This just shows that people in Iraq want democracy and freedom.

I believe that with the election taking place with success in Iraq, it is a big step in the process of rebuilding Iraq. Many people thought that this election wouldn't go through and many people think that Iraq can't be rebuilt. So I think this should open the eyes of the people who don't believe that Iraq can be rebuilt.

Sanitizing the Super Bowl

Everyone knows that the commercials shown during the Super Bowl are supposed to be the best of the year. This year, a 30 second commercial is selling for approximately $2.4 million. This is up six percent from last year alone. Fox has already sold 90% of the 59 commercial spots they have available. This puts them at over $140 million that they will make off of commercials alone during the Super Bowl. The Super Bowl is the most watched sporting event across the nation. A normal commercial on prime time will typically cost around $400,000. Are the benefits of showing a commercial during the Super Bowl that great? To spend a little over $2 million more than normal on a thirty second commercial does not seem as beneficial to me as it does to others. However, it probably needs to be taken into consideration that the companies that are advertising during the Super Bowl can afford $2.5 million without thinking twice about the cost. I will admit that sometimes my friends and I will watch the Super Bowl just to see the commercials because they are supposed to be so amazing.

The half time show is also something people are already looking forward to this year. Not many people have forgotten last year's show. This year Ameriquest Mortgage is paying $15 million, which happens to be a record, to sponsor Paul McCartney. $15 million is 50% higher than what America Online paid for the half time show in 2004. The Super Bowl is becoming a bigger event year after year.

European products

The German cars, French purfume, Italian clothes make up the important main products of European imports.

A european government officers said that the luxury products have been an important parts of china-Europe exchange products which also have created a huge profits by doing the exchange. he also said that the european companies are very interested in trade with chinese markets. China econ markets attracts them because the huge size and the big potential. Because of the huge population in china, the market have more room and posibilities for the foreign company to corperate.


Since the Europe and China has establish a foreign relationship for 30 years, the relationship between our country and Europe have a better and visible future for sure. And for Business trade, it also needs the government have a same focus or corporate attitude. It should push this kind of trade , import and export, have a more smooth and health development

Social Security Crisis?

For more than twenty years now, the Social Security system has been collecting more money than it's paid out; thus creating a "surplus."

Initial reaction: "That's great! No worries about getting the Social Security owed to me when the time comes around." However, this seems to be a misconception. All the money that the Social Security system has collected has been put into the government's general revenue pool to pay for other 'expenses.'

So what does all this mean? Well, when it comes time to pay out all the Social Security owed, the government will have to find a way to pay back all that was taken out of that 'surplus fund.'

A few of the options are:

-Borrow the money by issuing more public debt.

-Raise the payroll tax, which is the percentage of your earned income that gets paid into Social Security.

-Raise income taxes or other general taxes.

-Cut spending on other programs.

-Reduce Social Security benefits.

These options seem to imply that the workers who've already paid into the surplus will incur added expense for replenishing those funds later. Doesn't seem very fair, does it?

Some argue that everyone who's paid into the surplus has, in fact, enjoyed some of the benefits from the governments borrowing and spending in other areas. However, others say that if the government didn't have access to these funds, it would have spent less.

What do you think? Would you be satisfied knowing that the money you think is being taken out of your paycheck every week isn't all going towards your "Social Security," but in reality going somewhere else and you'll be paying for it later? OR Do you think the government is justified in making use of these funds now to pay for present costs?

Congress proposes tax on all Net, data connections

An influential congressional committee has dropped a political bombshell by suggesting that a tax originally created to pay for the Spanish American War could be extended to all Internet and data connections this year.
For details, the link will show. We are using the internet everyday, is that really help?

60 Companies Plan to Sponsor Health Coverage for Uninsured

Today, there are approximately 45 million uninsured Americans. 60 large employers are joining forces with the attempt to sponsor several low-cost health insurance options for these people. This program will be offered for a minimum of two years with the goal of getting insurance to part-time workers, contractors, early retirees, and others that are not typically eligible for the employer health plans.

5 of the largest sponsors will begin in April and May to get health care coverage to 7% of the unemployed in the US. These sponsors include General Electric, I.B.M., McDonald's and Sears.

The employers are not going to subsidize the health care coverage, but with a large enough group of participants, the insurance rates that the individuals have will decrease.

The cost of this new plan can range from $5 per month up to $300 per month. By paying $5 per month, a person will be receiving discounts on doctors visits and products that come from the pharmacy. By paying the full $300 per month, a person will receive a high-deductible plan to cover medical and hospital expenses.

This sounds like such a good idea; however, some people are still against it. This is because if a person is not making much money and is spending more money than they are actually making, then some feel that insurance with a deductible isn't worth it. Personally I think that giving people the option of having a cheaper form of insurance is better than nothing at all.

Tollway funding is question of control

A company selected to build a toll road from Dallas-Fort Worth to San Antonio has a reputation for aggressively collecting money from motorists, treating customers poorly and frequently raising tolls without public input.
Those are among the complaints lodged against Cintra -- selected in December to build the first leg of the Trans-Texas Corridor -- by motorists on the company's toll roads in Toronto and Chicago.
Across North America, private companies such as Cintra are spending billions of dollars to build roads in exchange for the right to collect tolls for 50 to 100 years -- relieving taxpayers of the financial burden.
But critics warn that some agencies may be giving up too much authority, blinded by the instant gratification of traffic relief.
"In some cases, because people were hungry to see something done to get a road built, they gave away the farm," said Alan Pisarski, a researcher and author of Commuting in America.
Some toll-road companies can raise tolls without a government hearing, or send collection agencies after drivers with past-due accounts.
Some even negotiate noncompete clauses into contracts so that governments cannot expand other freeways that might take business away from toll roads.
Just how much power Cintra will have is being negotiated behind closed doors in Austin. State officials say that within weeks they expect to sign a contract, known as a comprehensive development agreement, identifying Madrid, Spain-based Cintra as the lead agency, along with San Antonio's Zachry Construction Corp. and other minority partners.

OPEC

The control exerted over western countries by OPEC never ceases to amaze me. What twist of fate gave these predominatly Islamic countries the ability to make the U.S. jump when they say "jump", because that is the situation. We are so dependent on oil as the life-blood of our economy, that we are at the mercy of the oil producers. Over the last year, we witnessed over a 33 percent increase in the price of crude oil.
OPEC's official range for the price of crude oil is between 22 and 28 dollars a barrel, however many analysts are suggesting an average of 40 dollars a barrel as a new target benchmark price. Currently the price is 47.18 dollars a barrel, and OPEC has already warned that as the demand for oil decreases in the spring, production will also decrease in order to keep prices from falling. So, for now consumers, say goodbye to the days when 15.00 dollars could get you over 10 gallons of gas.
Will we ever find a perfect substitute for oil?
http://www.nytimes.com/2005/01/30/international/europe/30opec.html

Saturday, January 29, 2005

the high prices of luxury cars do good or bad to china?

Recently, the luxury car price doesn't show a tendence of changes. The high price of these cars made chinese people feel uncomfortble. But the quantity of sales is still in a high number level. Does the high price do good or bad to chinese car market?

Jan 12, 2005. The CEO of BMW company declared that the price of BWM 300/500 will decreased by 100,0000 RMB. Experts said the BMW company was the biggest winner of this Game. By doing this ,BMW attracts a few customers who was supposed to buy the domestic cars on the same price level. Whether the other car company will have new policy or decreasing the price or not, BMW has been the first winne. Maybe this is just according to the Dominant Strategy in Econ theory.

Anyway, the Chinese market didn't show a significant feedback to BMW's new declaration. But something should happen in the futher market. Let's wait and see ...

Stem Cell Research

Stem Cell Research is a highly debated topic right now. The main arguements against this research is that using an unborn fetus is unethical and also that this is a step closer to cloning humans. But with all of the recent research, there are alternatives to using embryonic stem cells. One alternative is adult stem cells. These are stem cells taken from the bone marrow of adults, they may not be as usefuly as embryonic stem cells, but they aren't taken from aborted fetus' either. Another alternative to this is an 'ethical embryo' which has been created by British Scientists. In addition, these cannot be contraversial because they dont involve and unborn fetus, and these cannot form actual humans. I think that stem cell research is something that needs to be government funded because it has the potential to cure so much. Bottom line is that I feel that Stem Cell Research has nothing but positive potentials. I'd like to see what other people think about this particular topic.

State of the Union

With the state of the union address on Wednesday. A few issues I have with the address come to mind. I have watched them in the past and I have made some observations; for one, it is clear that this is nothing more than a political pep rally, with all of the pausing for standing in clapping, I have a hard time even knowing what the president is talking about because of all the interruptions. I understand that this is an important event and is a necessary because it is an opportunity for the President to talk to the nation. But I wonder, should the clapping be limited, in addition, what kind of things will George W. be speaking about on Wednesday? Any opinions would be interesting for me to hear.

Friday, January 28, 2005

Bush tax cut = tax shift

When you buy something, you usually have to pay the tax. Maybe you were thinking, it would be nice if we didn’t need to pay so much tax. It seems like the Bush Administration is trying to do a “nice” thing by cutting taxes. Actually, tax cut are not always a good thing. Our financial aid, medical cares and various other services all come from tax income. The Bush administration cut tax while spending a lot of money on things like the war in Iraq. They made a huge deficit which will be a burden on low and middle income people. And his tax cut policy didn’t stimulate consumption too much, because most of the tax that he cut was for high income people. But high income people will not spend more money because of they get a little bit more money from the tax cut. However, if Bush cut more tax for low income people, they will have more willingness to spend more money. For more information about how Bush Administration shift tax cut, click: http://www.faireconomy.org/press/2004/ShiftyTaxCuts_pr.html Tax cut also increase the interest rate, which restrain the willingness of investment on both domestic and foreign markets. This will make the value of the dollar increase. So the foreigners tend to buy less American products, which lead the deficit in international trade.

GDP and Stocks

With economic uncertainty continuing, American corporations are holding fast to large reserves of cash, hoping for a better economic environment in which to expand. And as the recent merger activity has shown, many companies are opting to use that cash with elections in Iraq on Sunday, a Federal Reserve meeting beginning Tuesday and the Labor Department’s monthly job creation report due next Friday, investors used the GDP figure as another reason to sell stocks ahead of these uncertainties to buy other companies. I personally believe that if I had money in the stock market that I would leave it there. The economy is continuing to grow but that is not to say that I would not sell stock and invest the money in another company which is doing well. I believe that there have to be some people who are willing to take risks. What is your opinion? Do you think that these events should really have an effect on your decisions you make about the stock market? Why do you think some people are willing to take risks while others will sell stock right away?

Economic Growth

The economic growth in the United States for the fourth quarted was slightly below the forecast. The U.S. GDP value increased by 4.4% in 2004 which was up 3% from 2003. These figures along with other information in the article show that the U.S. economy is making a comeback. I personally feel that the reason for the economy is continuing to grow is because the smaller companies continue to created jobs and the unemployment rate is very close to the natural rate. I also believe that the President is doing a good job and encouraging Americans to go ahead and invest and ensuring them everything will be alright. I think that some people are too worried about what might happen next and looking in to the future too much. What is your opinion? What do you think is the cause of this growth?

Cell phone laws

The other day as I was driving home from class I heard an interesting news report on the radio. The government is trying to pass a law that will not allow teen drivers to use the cell phone while on the road. It doesn't matter if the phone is hands free or not. I looked for an article on this but was unable to come up with anything.

  • My thoughts on this are why just teens?
  • Are teens on cell phones the only people causing accidents?
  • Are teen drivers the only ones who use cell phones while driving?
I do feel that cell phones can be dangerous while on the road. I have experienced it by running my car into a ditch while trying to find my cell phone but that doesn't mean the cell phones are always the cause. If I wouldn't have ran my car into a ditch looking for my cell phone I probably would have put it in the ditch while looking for a cd.

Does that mean the government should ban the use of cds in the car? Maybe they should just up the driving age until 21. They claim we are adults at the age of 18 but we are still labeled as the dumb teenagers. Soon enough you will have to drive a car with no music and no distractions. Anything you have in the car must be put in the trunk so its only you and in the interior of the car. They may even pass a law that states teen drivers are not allowed to ride with one another.
Does anyone else just feel like they are picking on the young and inexperienced?

Clear Sky?

There is currently much debate in Washington over President Bush's Clear Skies initiative, which essentially repeals the New Source Review aspect of the Clean Air Act. Without going into great detail on what exactly New Source Review (NSR), it is sufficient to know that it was an attempt by Congress to regulate the externality of pollution caused primarily from power plants. NSR required plants, currently operating, to put in place pollution decreasing technologies when major maintenance of the plants occurred. Bush is formulating a policy that would not require this to be done. Instead he would like to set up an emissions trading program, where older plants will be able to purchase "emission points" from newer, cleaner facilities.
I do not claim to be an economist or a political scientist, but I see some major flaws in the president's initiative. Under NSR, all plants would eventually use the same pollution reducing technologies. Bush seems to be acting under the belief that requiring old plants to convert to the new technologies would be so costly that they would no longer be able to compete with the new plants which already possess the technology. However, wouldn't the new plants still have a competitive advantage over the old, because they will be able to sell their unused portion of emissions to the old plants? Also, by allowing plants to trade emissions, there is a real threat of "hotspots" developing in regions where most of the power plants are old, which could lead to increased health risks.
Once again, there is much that I don't understand about economics, but does it make sense to try and marketize an externality like pollution?

http://www.greenwire.com/web_landing/sr_nsr_G.htm

Thursday, January 27, 2005

Merging Phone Companies

There are some reports that SBC is in talks with AT&T about a buyout. Reports are stating the buyout could be worth as much as $15 billion. It seems to me that lately many phone companies keep merging together. If you recall a few months ago, Cingular bought out AT&T Wireless. With companies merging like this, is this good for the economy or are one or two companies going to control the market and have their way with the prices and force the consumers to pay too high prices? What is your opinion?

Student Debt

I realize that no one really wants to think about this, but the average debt of college students has significantly increased over the past few years, according to the article it has increased by 66% from 1997 to 2002. In 2002 the average college graduate came out of a four year college about $19,000 in the hole. What a way to start off the rest of your life. Anymore a college degree holds about the same significance as a high school diploma did 30 years ago. You really can't get much of a job without one and sometimes can't get much of a job with one. Has college become a trap for the less fortunate in America?
Scenerio- Your poor; you want to better yourself; you go to college; to pay for it you borrow money; you graduate and get a job; you make more than your dad did but after 6 months you are burdened with school loans, combine those with car loans, rent, the new furniture you bought for your apartment, car insurance, taking your girlfriend out 3 nights a week so she doesn't complain you never go out, cable, gas bill, electric, new clothes for your new job, the list goes on and on.
Is college the holy grail that it promises, or is it the start of a life of owing others?
Should some people forget about college and start working construction right out of high school?
What do you think?
Link http://www.nelliemae.com/library/research_10.html

Wednesday, January 26, 2005

A Sony PSP in your Pocket, or just a Clone?

Do you think a Sony PSP is worth $400 imported from Honk Kong? For about $100 less you can have a PSP clone. Companies overseas are trying to clone the best portable gaming systems. If you ever thought about buying a clone you should probably expect dissapointment. The quality of a clone is going to most likely be very poor. Do you think that the PSP is worth the big price tag? Or should customers look to the cheaper clone products?

Who's the real winner

A recent blog has brought attention to an international issue, the weakening of the dollar. Over the past few years the purchasing power of the dollar has continued to dwindle, increasing the strength of other "major" currencies including; the English pound, the European euro, and the Japanese yen. As the dollar value decreases, exports from the U.S. become cheaper to foreigners and imports to the U.S. become more expensive. From an economic standpoint, this occurrence increases the demand for U.S. made products and decreases the demand for foreign made goods.
Last week a meeting was held in Paris, which was attended by the finance ministers of Germany and France. The general attitude at this meeting was one of concern to say the very least, because they have already endured some of the negative consequences that a stronger currency brings. Some seem to think that President Bush is not concerned with the weakening of the dollar, because it could lead to a reduced trade deficit. In other words, the U.S. is seen as receiving all of the benefits from a weaker currency. However, I think this isn't the case.The real winner in this situation is the relatively silent and somewhat overlooked China.
China has tied its' currency to the dollar, which means that its' currency has dropped as much as the dollar has. The U.S. has an enormous trade deficit, which is a contributing factor to a weaker dollar; however, China is experiencing an economic boom with a consistent trade surplus. By fixing its currency to the dollar, China's currency has become extremely under-valued, creating an even higher incentive to buy Chinese goods. Also, since both of our currencies are tied to each other, the weakening of the dollar is not a disincentive for us to import Chinese goods.
When will China begin to float its' currency?
http://www.stuff.co.nz/stuff/0,2106,3166588a6026,00.html

Tuesday, January 25, 2005

Cadillac DTS

WIth new cadillac DTS limousine taking President Bush to the Inauguration ceremony. I really dont think that Cadillac's plan to get high profile people back buying armed Cadillac limousine. The lexus and toyota armed cars have a lot more stye then the new Cadillac DTS. But I wll say that this was a great PR move and that it was a great way to advertise their new car. I guess we will just have to wait and see what happens with the DTS.

Monday, January 24, 2005

Driving Privileges: Should senior citizens be required to pass road tests?

First of all, picture yourself driving to - lets say, work. There is a bad traffic jam for the freeway, so you decide to take the back roads to defeat the traffic in order to not be late for work. On your way, cutting lefts and taking rights, you end up behind some late 90's Cadillac going about 15 under the speed limit. Patiently waiting for it to pull off to the side, your nerves really start to get to you. You finally pass the "ol' geezer" and are on your way to work. About 10 minutes later, you hear schreeching of loads of tires and loud banging and smashing of metal. You look to the freeway on your left, and see that the same Cadillac, which was causing you hell earlier, just caused a 10 car pile-up for pulling out infront of someone going 70+ mph. If that doesn't bother you, then you must not read on.

Within the past few years, senior citizens and their driving abilites, or shall I say "disabilites" have been making the news. Every now and then, you'll hear of some 75+ year old man or woman carelessly causing a critical (and sometimes deadly) automobile crash. Many of you may know about the crash out west, where a senior citizen male crashed through a market place killing some people and injuring some as well. Well, there is a similar story that hit my hometown. About two weeks ago, on Rt. 50 there was a very bad crash right outside of my town. I live in Belpre, Ohio..about 15 minutes away from Marietta, and there are stop-lights down our highway to "prevent accidents." Adding to this, is a 50 MPH speed limit, in which you should follow. Well, a mom and her daughter were driving down the highway, and were coming up on the lights. They were green, so they preceeded to go. Just within seconds, a senior citizen driver ran the stop light and hit the woman and her daughter. The womans husband was following behind them in his car. He stopped the car, jumped out of the vehicle, and tried to get his wife and daughter out. Minutes later an Ambulance arrived: sending the daughter to the hospital in critical condition, and the wife being pulled out of the car with the jaws of life, and later on dying from loss of blood. This is only one, of MANY nationwide cases which happen week after week.

I know the question that comes to most people's minds: How can someone driving so slow, be so dangerous? Well, in today's world, nobody really ever takes their time anymore. Going too slow, can cause careless bumper-to-bumper accidents, road rage, and sometimes all-out car pileups. Something needs to happen to prevent further deaths. There should be some type of road testing for senior citizens to pass once every few years (or maybe even months!)

In my opinion, the public is usually scared of teen drivers hitting the road; but, what about these senior citizens?
There are various things about senior citizen drivers which infuriate me:
1. Leaving their blinkers on 10 miles after they have already turned.
2. Going 10-20 miles per hour UNDER the speed limit in safe road conditions.
3. Not knowing how to correctly park a car.
4. Pulling out infront of you, then going SUPER slow.
5. Not being able to hear your constant horn honking when you are trying to tell them something.
6. Passing one old person, just to end up behind ANOTHER old person.

Please tell me your opinion on this and what should be done....

Professional Sports Teams Can Use Their Own Money

Over the past 10 years there has been an enormous rise in professional athlete’s salaries and a rise in the number of new stadiums built to house these athletes. Stadiums being built today range from $150 million to $400 million. It is understandable that owners feel they need to have the top of the line stadium to attract the best athletes, improve their team, and increase their wins. That is what they are in business, to produce winning teams. But, why do so many owners feel it should be the city’s burden to shell out hundreds of millions of dollars to build these stadiums around the country and not their own?

Since 1997, 14 new stadiums have been built. Each costing at least $150 million, with the highest costing $534 million in Seattle. Subsidies were used to pay for at least half of the costs, if not all, of each stadium, except for three. Across the nation subsidies for professional sports stadiums cost taxpayers over $500 million annually. This is $500 million that could go to road improvements, more police on the streets, better equipment for firefighters, or improving schools. This $500 million could also go back into the pockets of taxpayers.
Why are cities willing to shell out so much money to build a place that millionaires can run around and play in, when many of them will never see the inside or will not be allowed to go where the millionaires go? One way owners push for new stadiums to be built is by threatening to leave a city and move somewhere else. By doing this they may put two or three cites into a bidding war with one another. Many cities want to be a "Major League City". They think by having a professional sports team that it will improve their cities economy. This is not the case.

One strong argument for the subsidizing of new sports facilities is the creation of new jobs. If a new stadium is constructed in a city in which the team already has a stadium, these jobs will simply be transferred. Only a small number of new jobs may be created. If a city outbids another city, and the team relocates, then jobs are simply moved from one city to another. In the case when one of the leagues’ offices grants a city an expansion franchise, new jobs would be created, although many of these jobs are only seasonal, which could be anywhere from 8 months to 6 months out of the year. A majority of the jobs created are not full-time positions. Many are only part time, because most positions are only needed when the team has a home game
By providing sports franchise with subsidies to build new stadiums, a deadweight loss to society occurs. If the construction of new stadiums are not funded by subsidies, they will be built by private developers. Owners would be forced to spend their own money, causing more time to be spent "in the planning, construction, and operating phases of such projects in order to achieve the economic returns necessary to attract and maintain the capital investment." There is no economic development when one stadium is abandoned and a new stadium is built down the road. When facilities are still functional and then deserted in order to build a new one, no societal value is gained. One economist remarked, "It is make-work: no different in principle from digging and re-filling ditches."

My question is why do citizens of cities continue to subsidize stadiums for professional teams, if there are no economic benefits for their city? Is the extra tax citizens’ pay worth the cost of living in a "Major League City", or is it something else?

Sunday, January 23, 2005

After the Inauguration

After President Bush’s inauguration (http://www.rnc.org/ ), there will be another four years of Republican Party. The Republican Party prefers minimal governmental regulation of business for it gives more individual freedom, which means it tends to protect the individualism of business from “Big Government.” The Republican Party held great power back to the Civil War period since business development was taking place on the land and society needed relatively free market. However, during the Great Depression, American business lost such power in the society, the small impact from government was challenged. Nowadays, after the terroristic attack, American business seems not as active as it used to be. So is it good to protect those individual business groups, or the government needs to pass some laws to solve social problems?

Ohio Republican Party: http://www.ohiogop.org/

Asian Economic Potential

Asian economic is stronger in recent years. In 2004, Aisa once again is a bright spot in the global economic picture. Asian financial markets have done well, outperforming other regions in most asset classes. Asia is expected to grow at 5 percent in 2003 and 5¼ percent in 2004, making it the fastest growing region in the world. http://www.imf.org/external/np/speeches/2003/101203.htm Desipte the effect of SARS and recently the serious affect of Tsunami, Asia's economic growth forecast for this year has been underestimated. Beside some big countries like China, Japan, South Korea..., the other countries in Aisa are also developing well. Indonesia may achieve GDP growth of 5 to 5.3 percent for this year, up from the firm's earlier forecast of 4.5 percent. The potential for Thailand is 6 to 6.2 percent, up from 5.7 percent previously anticipated. Malaysia may reach 5.3 to 5.8 percent, up from the earlier 4.8 percent forecast. Philipines is 4.8 to 5.5 percent growth, compared to the earlier forecast of 4 percent... http://www.taipeitimes.com/News

China:Market social economy

China used to be a planned economy country. Government tried to give each individual equality of opportunity. We were not rich in material, so China did not develope rapidly for many years. Because government did not give people enough material incentives. But now China choose Market social economy. The income distribution according to how much you worked, I think this is very fair. What is the difference between our market economy and other counties'? I think is that besides we encourage competition in market, we also consider about the weak group's benefits. Do you want to know more about Chinese economic system, please click http://www.china-window.com/china_economy/Socialist-Economy/index.shtml

Saturday, January 22, 2005

Buy your book online

Have you ever buy your text books onlie? If you have done that, you must have figured out the price online is much cheaper than the textbooks in bookstore. and sometimes, you can get a new book with very low price. But the price online is not always very low, it has some fluctuation which according to supply and demand. If there are not too many a certain book, the price of this book will be higher. The prices are set by sellers according to how new(new, like new, acceptable) they think their books are. So do you think online book market is Monopolistic competition ? which means involves many firms, each having some price-setting power as a result product differentiation(cited from Comparative Economics).
And do you also think online book market is a underground economy? http://www.freerepublic.com/focus/f-news/1312260/posts
Will it affact the accuracy of GDP? I think that if we considered used books, we cannot put the income from selling the used books into GDP, because they may not be produced in a given year. However, if we imagin selling books as a job, the income from it should be people's wages which is part of GDP. So what do you think?

Friday, January 21, 2005

Washington Capitals Ice Rink to benefit Area

The Washington Capitals and Arlington County are going to develop a community ice rink. It will serve as a training center and a place for the community use year round. This should help with the increasing demand for time by local hockey teams and skating groups. This ice rink should benefit local restaurants and retail stores. The rink will also generate taxes from the revenue of the complex. I think this will be a great addition to the community in Arlington, Virginia.

What can 40 million dollars buy?

What can 40 million dollars buy? If you are President Bush and his administration the answer is a lot. A lot of celebratory propraganda and unnecessary party favors. In a time of constant warfare, soldiers' struggles, and economic hardship, Bush decides to throw the largest party to welcome himself back into office. The inaugural bill exceeded 40 million dollars. While the large majority of this was from private contributors, you can guarantee the me and you, tax payers, will be fronting some of the bill.
Who needs this kind of celebration? Is it a president who has seen a decrease in popularity, or one that needs a boost of confidence? Once again the world had to stop so all eyes can be fixed on Mr. Bush. While millions are grieving, picking up the pieces, or still in shock in East Asia, Mr. Bush decides this would be the perfect time to celebrate. Not just any kind of celebration, but a 40 million dollar one.
So what could 40 million dollars buy, putting all unproductive means aside? Could it help to fund the unfunded Bush mandate that is to leave no child behind? Could 40 million dollars help contribute to the tsunami relief efforts? Or possibly could the 40 million dollars be used to fund our troops which are fighting his war? No! 40 million dollars was better spent on parades, champaign, and celebration.
One must ask himself or herself the price of happiness. Would you spend 40 million dollars at your graduation party, or would you contribute that to people around the world who lost everything? What is the value of Life? To Americans is it 40 million dollars to recognize one man when all in East Asia is lost?
While inauguration is a big event and should be celebrated, there are factors that must be taken into consideration. Current events should have demphized this inauguration, but the Bush administration had to distract from reality again.
Instead our tax money is being used to toast Mr. Bush and friends. That is one expensive toast!

Social Security and the Economy

Social security was a large issue in the 2004 election. Now that Bush has been re-elected, the issue of social security is back in the news. NBC nightly news did a story saying that social security is not as bad as it seems. The real danger may be 50 years down the road according the the news program. The link in the title gives a tax analyst's point of view on the issue of social security. From the past election, and what you have heard in the news, what do you think about the issue of social security?

Thursday, January 20, 2005

SuperBowl Commercials

When we think about the SuperBowl the first thing that comes to mind are the commercials. But are the companies that pay for these multi million dollar advertisements really trying to promote their product or are they just having fun comming up with new ideas to get Americans to laugh? One of the most famous commercials during the SuperBowl was the Budweiser frogs commercial, where three frogs spell out Bud-weis-er. But what do frogs have to do with beer? The answer : nothing! Budweiser tries to use the frogs to make their commercials funny so that people remember them more often, but does that really help in selling their beer or just in remembering their name? Although I find the commercial humorous, I have to say I wouldn't buy Budweiser beer just because three frogs can croak out the company's name. I always thought the point of commercials was for a company to prove that their product is better than their competitors. That isn't what the commercials shown during the SuperBowl accomplish. Their main objective? To influence people to buy their product. What have they done? Make people laugh and only remember the name. Which is more important: a famous name or larger sales?
Link: http://www.suberbowl-ads.com/2005/index.html
Go to 1998 selection and it is the second Budweiser commercial.

Wednesday, January 19, 2005

When will this bubble burst

After the bubble burst in stock market, more and more people start investing money on real estate. During the past three or four years, both supply and demand stand on a very high level. On December 2004, housing starts jumped 10.9% from previous month, and reached its “biggest gain in seven years”. However, will housing still hot? When will the bubble burst?
Some economists believe that the increase in buying due to the low mortgage rates. So I guess if like David Lereah, chief economist for the National Association of Realtors has said, the fixed-rate loans would rise to 6.75% from about 5.70% now by the end of 2005, number of people buying new houses would begin to shrink. No one wants to face such a huge number of credit repayments. Nonetheless, other people maybe anticipate in rising interest rates and invest more just like what they do in stock market. You buy at lowest, sell at highest.

Second, as the price has already reached its summit, it must start to decline. In other words, we got a “saturated market” now. The weakening in November is a sign; the US’s “housing market bubble is at risk of bursting”. Furthermore, job losses and international market would also be a shock. But some realtors say that demand is still strong since there are higher-than-expected immigrations who need to buy a house.
More information can be found here.

Competitive Health Care

As college students, many of us take our health care for granted. If we get sick we may just go to the Student Health Center, or to our family physician, and our parents insurance takes care of all but $30 or $40 worth. Since we’re only paying $40 we do not care how much the physicians visit is, or how much it may be for a x-ray or MRI. We just go anywhere we want to go. But, what if we were consumers of our Health Care? What if we did care how much it cost? If you needed an MRI and there were two physicians beside each other, one charging $1000 for the MRI and the other charging $800, which one would you go to? Well under traditional old health insurance plan, many people would not care. They are only paying $40 either way. They may never even know how much it costs. But, if they were paying for it out of pocket, they then would become price conscience consumers of their health care. The U.S. economy is based on competition for consumers. Health care does not have that competition because many people do not care how much it cost.

In the news recently there has been much discussion about America’s health care system and about the growing number of physicians quitting the profession or moving state’s because of the high cost of malpractice insurance. Cost in the health care industry continues to rise because of a lack of competition, and the lack of consumers shopping around. One idea the White House has came up with is Health Savings Accounts. A health savings account is a tax-sheltered savings account similar to the IRA, but earmarked for medical expenses. Deposits are 100% tax-deductible for the self-employed and can be easily withdrawn by check or debit card to pay for medical bills. Larger medical expenses are covered by a low-cost, high deductible health insurance policy. HAS earns interest and what is not used from year to year stays in the account. By having people use these accounts for their first medical expense, it will cause consumers to shop around for their medical service, and will increase competition in the health care industry. By this increase in competition, consumers may see health care cost fall, while services continue to improve. This is by no means a save all for Health Care. Do you think competition is good for the Health Care Industry, or do you believe the traditional way of co-pays and high insurance costs is the best? If most of our economy is based on competition, and free market, why should our health care be any different?

Internet Shopping (Ebay, Overstock, Etc...)

Internet shopping has been on a steady rise. With online retailers like Ebay and Overstock, I am beginning to wonder if the online shopping is actually hurting some retailers. As an avid shopper of Ebay, I know that a lot of things people buy can be found on Ebay for a lesser price. I have purchased everything from textbooks to tickets to Kenny Chesney. Do you think these online powerhouses are helping out economy or hurting it in the long run?

Tuesday, January 18, 2005

Video Game Monopoly

EA makes the most recognizable football game in the video game industry: Madden NFL. They have dominated the market for football games ever since Madden NFL was first introduced “back in the day.” Why? Madden was a better game in every way to its competitors. EA was proud of this fact, and very aggressive in keeping their game on top. Last year, they were challenged by a well know video game company, Sega. Sega, a couple of years ago, changed their business format from hardware and software, to just software. Sega is a large company with good business sense (arguably bad luck, but that is another topic). Sega saw the market for football video games and jumped at the chance for profits, and with their new focus on software, they had the ability. Their answer to EA's Madden NFL was ESPN NFL, using both the ESPN and NFL name rights. This game has been in the market for a while, but last year, with new vigor, Sega attempted to make it the first game to truly compete with Madden. They not only made a fine game, which for many people, was better than the Madden game, they reduced their prices to about half of Madden (I don't know how they were able to do so, but that is also a different issue). Well, for Sega, it worked. Their game was successful and Madden finally had a comparable rival. Just as the market is leaning towards competition, in comes the aggressive stance that EA has taken in this particular genre. That aggression has finally went too far. In December EA made its first move by acquiring a deal with the NFL for exclusive rights. That means that only EA can use players’ names, NFL logos, NFL endorsements and anything else that comes with the NFL brand name. That was already a slap in the face to its major competitor, Sega. There was even, what turned out to be rumor, talk about EA making the same move for MLB, NBA, and NHL rights. Now, EA made the final blow that is so aggressive, I view it as a personal attack on Sega. They bought the exclusive rights to ESPN, the very organization that Sega’s game is named after.

One consequence from EA’s actions, is that their competitors in the broader sports genre of video games are forced to make self preservation moves, though Sega themselves was not one of them. Soon after EA bought the rights to the NFL, another competitor made a move for exclusive MLB rights, and a follow up story hints that this deal is going through. There is also talk about the companies attempting to get exclusive NBA rights, though the NBA seems to resist this.

These actions are very controversial in the gaming community. I personally got in an argument with someone from that gaming community about the underhandedness of EA. The argument at first was about bias toward one game or the other, but it soon turned to an argument on whether or not EA is a monopoly. In comes my question: I believe that this action not only gives a certain amount of market power in the football genre of video games to EA, it is enough to classify EA as a Monopoly in this market. So, I ask, do you believe that EA should be considered a monopoly and the government intervene, or do they have the right to grab up exclusive rights deals such as they did?

Also, if EA were to be considered a monopoly, should its competitors response by securing the MLB rights be considered the same, or should it be justified as a self preservation move and given an exception (at least a temporary one)?

Why not in the U.S.?

All of us here at Marietta know what WalMart is, what great prices they have for college kids, and what a fun place it can be to hang out at if you are really bored. Another thing WalMart is known for is bringing hundreds of jobs to a community. Many people accuse WalMart of running the "little person" out of business and this may be true, but overall most Walmart’s increase employment in a community. This is well in good, but how well does WalMart treat its employees? Well, that is the first mistake I have made, there are no "employees" at WalMart. WalMart prefers to call them "associates". One writer from the Washington post called Walmart’s "associate"; "a term that connotes higher status and collegiality and that actually means lower pay and workplace autocracy."

Since Walmart’s existence it has always called it employee’s "associates", and it has always opposed every effort of its "associates" to form unions. In the U.S. if WalMart employees, sorry "associates," formed a union, WalMart would not deal with them because WalMart does not recognize unions. But, this is no longer the case for Walmart’s all across… China.

In the last week of November of 2004 WalMart of China, now called China WalMart, decided to let Walmart’s across China to form unions. Independent trade unions in China are illegal, so any unions formed at any one of the 40 Walmart’s in China would have all associate belonging to the "Communist Party controlled umbrella body All China Federation of Trade Unions (ACFTU)." Under this new system China WalMart must only allow their "associates" to form unions if they ask for a union. Currently no store has asked for a union.

Why will WalMart allow unions to be formed in China and not in the U.S.? Some economists believe WalMart opposed unions in the U.S. because it allowed them to keep wages low and benefits to a minimum. Unions in the U.S. fight for their members by demanding fair wages and benefits, and speak out when these are not achieved. Why would WalMart feel China would be any different? Unions affiliated with the All-China Federation seldom push for wage increases or safer machinery. There are few union uprisings in China and those persons who seldom speak out about workplace abuses and pay are dismissed, organizers of labor protests face imprisonment. In the United States WalMart itself has fired at least 5 percent of workers involved in unionization campaigns. This is illegal in the U.S.

I am not trying to make WalMart look like an evil empire. I just feel it is a unique situation that one of the largest cooperation’s in the United States is willing to allow its branches in a foreign country establish unions ran by a Communist Government, but will not allow unions associated with the AFL-CIO to be established. Is WalMart really looking out for the best interest of their "associates" or trying to keep boosting profits by keeping wages low and not having to worry about anyone complaining?

A few kinds words for a communist...

Zhao Ziyang, former Premier of the People's Republic of China, has passed away at age 85 while under house arrest. Zhao was instrumental in helping to introduce market reforms into communist China during the 1980s. His radical proposals included dismantling the commune system that dominated agriculture and introducing private ownership of small plots of land in order to encourage agricultural production. Zhao also argued for price reforms to free up prices from central control.

What set Zhao apart from others in the Communist Party hierarchy was his fervent belief that economic progress was critically linked to political democratization. Unfortunately for Zhao, his sympathies toward political openness lead to his eventual downfall (and house arrest) in the aftermath of the Tiananmen Square protests and massacres during the summer of 1989.

My question: Must economic and political liberalization always go hand-in-hand? Is the Chinese model of social reform (market economy with limited political freedoms) a viable long run choice? My sense is that once you give people a taste of freedom in one area (the economy), they will thirst for even more freedom in the other area (politics).

Powerful, yet non-smelly manure?

What in the world am I referring to? Well, with the farms in America facing more and more struggles to stay out of debt, some farmers in Vermont have found what could be the way to save their farms and power America at the same time.

In Vermont, 1,500 cows now not only provide milk, but electricity! Yes, the methane gas from their manure is being routed to a generator, and then injected straight into the power grid of a nearby city. The 1,500 cows provide electricity to over 300+ residents already. Now the farmer has income from the cows' milk and manure, more income for the same amount of capital. The residents pay 4 cents more for this 'special' electricity than they would normally, but it's cleaner than coal, and most definitely renewable. And, a final plus is that after the methane gas is removed, the manure has virtually no smell left and can still fertilize, just without the threat to your nose.

Is this the new electricity generator? It very well could be. I'm wondering how fast other farmers will try to do this same thing and capture more income. Will rural America be revitalized? What will the coal burning companies do? Granted coal is used for more than just electricity, but it is the leading electric production input. Will places like West Virginia face more layoffs in the residual mining towns? With the pressure for environmentally safe inputs, could coal see a decrease in demand, with companies either being forced to lower price or to buy into the manure market? Only time will tell!

Click
here or the title if you want to read the story!

Sunday, January 16, 2005

Strong Growth in Germany

Germany's gross domestic product grew 1.7 percent last year compared to a 0.1 percent decline the year before, the Wiesbaden-based Federal Statistics Office said. This is also greater than that previous three years combined. Germany is considered to be Europe's largest economy, but as seen in this article, this large economy can't expect to see more substantial growth in the future with the fluctuating Euro/Dollar exchange rates. The Euro has shown tremendous strength all through 2004 and continues to stay strong into 2005.
I spent 7 months in Italy last year (Jan.-July) and I saw the direct affects of a strong Euro. For us it meant that our Dollar wasn't worth as much which made things more expensive. In addition, because of the exchange rate European exports were down and prices were increased domestically. We kept praying that the Dollar would one day jump back up to the 1 to 1 rate seen in January of 2003, but were never fortunate enough to see that happen. We talked about it in International Finance and thought that perhaps a new American president would help strengthen our currency but that didn't seem to be the case because the Euro continues to stay above 1.30.
I'm not an expert on currency exchange, but I've learned a lot over that past year and fear that the Euro's high trend won't end anytime soon.
http://specials.ft.com/euro/FT3OAVRRCZC.html
As many experts say, this will hurt European exports but it tends to help America's exports to Europe because of the Euro's purchasing power.
I'm interested to see if lagging European economies will at some point slow the Euro's growth. It's also a bit ironic that Europe is hurting itself with its own currency. So the ultimate question remains: Is there a point where the Euro is TOO strong; and how will it be weakened?

The Hockey Blues

As an avid hockey fan, I really missed the chance to attend NHL games over this semester break. I'm sure others share the same blues about his issue. What went from a supposed half-season lockout has now turned into a full season lockout. Hopefully the arenas can survive, especially those that are not multi purpose stadiums such as the Igloo in Pittsburgh. There's only so man circuses and concerts a venue can put on due to nearby competition, but is it enough to keep the arenas alive without the stream of income from hockey?

So what's with hockey these days? Should the finger be pointed toward the owners or the players? Are the players truly underpaid (which from comparing NHL players’ average salary to that of MLB players, they are) while the owners are 'tweaking' book profits? Or are the profits what they are and the players will have to take a salary hit if they still have enough passion for the game to play?

These are all questions I'm wondering, but right now I'd like to focus on one possible reason for the long lockout, arbitration. The NHL uses traditional arbitration, which would consist of a player, or the NHLPA, putting forth a salary offer and the owners, or the league in this instance, countering the offer. In traditional arbitration the arbitrators examine both offers and can decide on either offer, but generally tend to favor something in the middle of the two. This leads to problems, long arbitration and small contract zones. The players have the incentive to overvalue themselves while the team owners have the incentive to undervalue the player. This can lead to a very small contract zone and leave little or no room for negotiation. Click here for a list of all of the hockey players that sought wage arbitration in 2004.

Now, click here to compare the amount of NHL players asking for arbitration to that of the MLB. I found this to be grossly disproportionate, especially given the fact that there are many more players in the MLB (30 teams in both leagues, but average roster for MLB is 40 and only around 20 for the NHL). But, MLB utilizes a different 'flavor' of arbitration, called "final offer". In this environment, a player and team both submit salary offers as before, but the arbitrator(s) chooses only one offer, there is no 'middle ground' per say. If the player shoots too high and the arbitrator agrees with the owner, he could risk losing a lot, and vice versa for the owner. This induces both parties to put up an initial offer that is close to what each side estimates would be the arbitrator's decision in the matter. In doing this, the contract zone is expanded, and often in the MLB, arbitration is not used as an active tool, and most cases that do go to arbitration have a wide contract zone. The player and the team both have the incentive to negotiate 'out of court' or such.

Could this be something the NHL should look at instituting?

Thursday, January 13, 2005

Are Emily and Greg More Employable Than Lakisha and Jamal?

That's the title of a paper by Marianne Bertrand and Sendhil Mullainathan published in the most recent issue of the American Economic Review (September 2004) and available here. Bertrand and Mullainathan (henceforth B&M) conduct a field experiment by sending out fictitious resumes to a number of employers in Chicago and Boston. The resumes were constructed to depict high quality candidates and low quality candidates and then randomly assigned White-sounding names and Black-sounding names. B&M then recorded the rate at which candidates were "called back" in order to setup an interview. White names received about 50% more callbacks than Black names. The differential callback rate is taken to be evidence of continuing racial discrimination in American labor markets.

B&M go on to discuss the implications of their results for the leading economic theories of labor market discrimination, namely, taste-based and statistical discrimination models. Taste-based models essentially argue that employers (or fellow employees or customers) have a "taste" for avoiding people with particular characteristics (race, gender, etc.). Such prejudice comes at a price though: a discriminating employer willingly passes up on a highly qualified minority, thereby overpaying for a worker from the majority group. (See Gary Becker for details on this theory.)

Statistical discrimination is primarily the result of imperfect information regarding the productivity of potential employees. Employers may resort to using group-based characteristics as proxies for individual productivity as a means of reducing the cost of searching for new employees.

According to B&M, their results imply that "training programs alone may not be enough to alleviate the racial gap in labor market outcomes...[and] if African Americans recognize how employers reward their skills, they may rationally be less willing than Whites to even participate in these programs."

My take: I wonder if African American parents will feel pressure to choose White-sounding names for their children in the future.

Wednesday, January 12, 2005

Where's the BEER?

Ever notice how after the Budweiser frogs had their 15 minutes of Superbowl fame, beer commercials seemed to taper off (save for the occasional clydesdales playing football)? When one thinks of the main corporations sued during civil lawsuits that deal with alcohol 'problems' and violations, what comes to mind? Anheuser-Busch and the Miller Brewing Copmany is the correct answer. It is the beer industry that is always targeted for lawsuits, but could this have had regulatory effects on how much this industry could advertise? I don't personally know enough about the issues offhand to know whether there were ramifications from lawsuits that constituted more than monetary issues.

Alright, you're at a concert long before the gates open, presently tailgating in the parking lot. What do you picture 90% of everyone there drinking, if indeed they are consuming alcohol? Beer, that's right. The beer industry has a problem though, believe it or not, it's losing its market share in the U.S. In 1995 the beer industry constituted 59.5% of all alcohol sales in the U.S., while by 2003 that percentage had slowly slipped to 56.7%.

What could cause this possible slip in market share? It is that the government imposed advertising limitations on the industry, or perhaps the beer industry had crutched too much on past sales and past market shares and saved money on advertising solely by its own decision. Maybe demand has just tapered off with all of the 'diet crazy' of the 1990's, or beer might have just lost it's appeal, or could it be competition?

Depending on how widely you define the relevant market, spirits and wine could act as perfect susbtitute for beer. If this were the case, and beer prices were to increase, then consumers would exit the beer market, lowering demand and price, while entering the markets for spirits and wine, increasing demand and driving up price in both of the latter markets. In 1999 the spirits market grabbed a mere 28.6% of the U.S. alcohol market, but by 2003 it had edged its way up to 29.7% The percentages for both the beer and spirits industries may seem marginal, but it could be a hint into future trends.

Another issue perhaps we should consider is advertising. The spirits industry unloaded a cool $100 million out of its pocket to be spent on broadcast advertising alone in 2004. A huge chunk of this change is focused on the younger demographic as well, capturing the market of the 'new drinkers'. Also, by far the biggest consumers of beer are the Baby Boomers. But as the Boomers age, they tend to prefer the 'finer' things in life and switch from beer to wine or mixed drinks, something that's said to be more cultured. It could be this shift in preference that is driving down the demand for beer slowly over time. As noted in the
Yahoo! article, it could also be a rebelling of Generation X to drink wine coolers, mixed drinks and other items in an attempt to stay away from the traditional beer consumption of their parents and other elders. Only time will tell if this trend will continue.

Can the beer industry gain back its lost ground? I believe so, but in order to accomplish the said task, it will have to start becoming active 'recruiters' versus passive producers. Anheuser-Busch has already started to allocate more for advertising in 2005 as has Miller Brewing, so let the games begin!