Minority firms getting few Katrina pacts

Minority-owned businesses say they're paying the price for the decision by Congress and the Bush administration to ignore certain rules for Hurricane Katrina recovery contracts. About 1.5 percent of the $1.6 billion awarded by the Federal Emergency Management Agency has gone to minority businesses, less than a third of the 5 percent normally required. The govenment said to speed aid, many requirements normally attached to government contracting were set aside by Congress. My question is this the best way to rebuild the economy in New Orleans? Is it fair?

Do hurricanes really raise the price of gas or is it just price gouging?

Do hurricanes really raise the price of gasoline or is it just a reason for price gouging? I believe that it is a reason to simply raise prices and take advantage of a natural disaster. When the gas companies see a natural disaster coming and they have scared Americans they know that they can jack up prices and take advantage of everyone. The hurricanes hardly affected any oil refineries at all. Therefore the gas prices should not have hiked like they did. I think it is interesting that after Katrina the prices went up, but after Rita the prices stayed the same. The gas hikes are because of the greed of the oil companies and nothing else.

Gas prices put brakes on auto sales

This article is a perfect example of how compliment goods can effect the demand of a good. The more gas prices go up, the more the demand for SUV's and pick-up trucks is going to go down. However, the rise in gas prices will increase the demand for fuel efficient vehicles. The demand for fuel efficient cars should effect which cars, car companys promote.

Inflation Worries

Today it was reveiled that Dallas Fed President Richard Fisher said the central bank needed to be vigilant in fighting off high inflation. This triggered worries that the Fed's rate-hike campaign won't be ending anytime soon. Fed officials are worried about inflation rather than slowing growth. Manufacturing reports of post huricane Katrina and Rita show that the economy is doing "ok."

Do you believe that we need to worry about inflation rather than the growth of the economy? It seems to me that inflation is beginning to run wild with itself and there is no telling when it will stop, if ever.

Eric Dowler

Money Going Outside the Storms Path

As government is pouring money into hurricane relief, it has become clear that only a small amount of the contracts have been given to the local companies. The article points out that only about 10% of the contracts have been given to companies in the the states affected by Katrina. Local officials are fearing this will lead to the local companies not being able to do their share in the rebuilding and they could possibly close. They feel the idea of this relief should be to help the overall economy in those areas. The administration had also pledged that "federal funds for Katrina relief will become an engine of local economic redevelopment". The money does not seem to be reaching the small firms that desperately need the work. Large corporations seem to be benifiting by receiving the contracts.
My question is: if this is fair? Should the companies in the areas be given the contracts, or is it ok to give outside companies the contracts? Is this aid designed to help only that area or should the whole U.S. benefit from this?

Hurricane's impact New York

According to CNN.com, the prices of New York City luxury apartments have dropped in this recent third quarter. The average sale of a luxury home dropped about 26% in a single quarter, dropping from $5.2 million to now $3.8 million. It was also 7 percent below the average price of $4.1 million. Not everything was down in the third quarter, however. The average price per square foot rose 1.4 percent, to $984, compared with the second quarter and it was up 22.5 percent from the year-ago price. Economists are putting the blame on Hurricane's Rita and Katrina, but what do you think could be the reasoning behind the drop in price of New York City real estate? What other factors caused such a huge drop between quarters?

Steel - Get Ready for Hard Times

Today, Novamerican, a large Canadian steel producer, reported 3rd quarter financial numbers. Novamerican reported a drop of revenue of 5.2%, but found a fall in net income of over 80%. Sounds remarkably odd, doesn't it? Well, this is the financial result of a company that has been in the situation of surplus within its industry.

Recently, within the steel industry, companies have been trying to shed excess inventory within the market under very unfavorable conditions. Prices of steel tonage have been at very low levels since the beginning of 2004, and companies sitting on this inventory have been looking to sell at higher market prices. Prices were "artifically" low, so to speak, as energy prices were lower, and the amount of steel on the market was quite high - a result of producing as much as possible while the prices of production implements were low. As the prices of natural gas - a very important implement in the production of steel - have risen quite rapidly, the cost of producing steel has increased, which, along with market pressures as a result of the surplus, have driven prices of current inventory back to pallatable levels for manufacturers.

However, current inventory levels are declining, and the level of production has been lower than in recent quarters within the industry. Combine this with the higher cost of production, and I believe hard times are coming for the industry in the form of a shortage of domestic steel - and an opportunity for foreign manufacturers to dump steel in our market.

Will Copy-Protected CD's Increase Piracy?

In the record industry's ongoing struggle to reduce piracy, major labels such as Sony BMG and EMI are beginning to release new CD's that block listeners from copying those songs onto their iPods. This process is called digital rights management (DMR) and it only allows the user to digitally copy music into certain formats, excluding MP3. It also sets a limit as to how many copies of the files can be made. EMI specifically is testing and preparing a similar process to be ready for widespread use by 2006.
Some artists whose music is being subjected to this new type of protection are actually speaking out against it. Dave Matthews, Foo Fighters, and Switchfoot have taken action by going public and giving their fans different options on how to beat the system.
In this way, it seems that the companies are promoting the exact thing they are trying to prevent. By disallowing the transfer of music that has already been legally paid for, they are punishing the consumer for going out and buying the CD as opposed to illegally downloading the songs in the first place. This could increase the quantity of illegal downloads that are demanded. People will stop buying CD's if they can no longer do what they want with the songs once they have acess to them.
How do you think the copy-protection suit will affect the market of illegal downloads? Will all CD's eventually carry DMR? What does the future hold for the music industry?

Musicians Tell How to Beat System

Sony BMG is now releasing U.S. titles on cds that have digital rights managment. These rights select which file formats consumers can to copy the music and how many copies can be made. Right now MP3 is not one of the formats. Currently, the software on the cds is only compatible with Microsoft Windows Media programs, which means that Apple users cannot use these protected cds to rip music on to iPods. Many artists whose cds are protected are unhappy with this new regulation. Artists such as Dave Matthews Band, Foo Fighters, and Switchfoot, are making posts on their websites to let fans know how to get around this new technology. There have been many complaints to Sony BMG, and the result of compaints? Sony directs customers to a website that shows how to get around the DRM protection. In essense, SonyBMG is only hurting itself by angering the consumer.

My question is will this have an impact on the sales of cds by Sony? Will they lose business from consumers who own iPods and Apple products, or will there be any affect on the company since many artists are showing consumers the way around the DRM regulation?

Snow and Greenspan Will Head to Beijing

In a recent article from the Washington Post it talked about how secretary of the treasury John Snow and the federal Reserve chairman Alan Greenspan are to go to China to discuss certain issues, one being the reform of China's currency. The reason for this is because last July Chinas government took the Yuan value away from the U.S. dollar, as a result of this the value of the Yuan fell in value, giving China some trade advantages. Another issue is that the trade deficit with China has grown to 162 billion dollars. One of the reasons for the trip is that the treasury department has to issue a currency report to the Congress.
I was wondering if this trip will be successful in helping China reform there currency which in turn could help the United States or will nothing get done? Another question is, the reason we are trying to work closely with China is because of its growing economic power?

Benefit-Cost Analysis

In my Environmental Economic class, we have learned the model of benefit-cost analysis; we compare the social benefit and cost due to an environmental regulation by net benefit or benefit-cost ratio. We often focuses on how much it will cost us to implement a certain type of emission control technology and claim that it costs us too much than it benefit the environment. However, when examining some specific programs, we should also take the benefit on human health into consideration. A research accomplished by MIT indicates that the pollution in air may damage human health, which leads to a short expectation of lives. As a result, the productivity of labor would also decreases. Consequently, it reduces social wealth since there is not such sufficient human resource to produce the potential GDP. Different from common understanding, the regulation of emission will leads to an economic gain rather than an economic loss. According to the study, social welfare has increased by $350 billion from 1975 to 2000 in the United States correlated toward environmental regulations (shows in the graph above). The research also estimates that by the year of 2025, China would benefit $25 billion for the country as a whole if it implements some emission control policies.

Marijuana

Since we were talking about drugs in class I came across an article on marijuana. The article talked about the pros and cons to leagalization. Most of the points that the article talked about were brought up in class, however the article went one step further. The article said that the government needs to way the amount of money that it would recieve from taxing sales of marijuana with the amount of money they would have to spend on increased health risks. By legalizing the drug people will probably do stupid things while on this drug. This will increase health spending.

Bush Calls For More Refineries

On Tuesday, October 4, Bush stated at a press conference in the Rose Garden that more refineries should be built to alleviate the recent increases in oil prices. Bush says that "It ought to be clear to everybody that this country needs to build more refining capacity to be able to deal with the issues of tight supply." I agree with Bush's statement 100%, our supply in this country is on a tight rope, and it wasn't truly realized by the American public until that supply was threatened by Hurricane Katrina and Hurrican Rita.

The article states that no refineries have been built since the 1970s. Why is this? My opinion is that no incentives are given for companies to continue to build refineries. Even environmental regulations have been a major detriment to building new refineries. In order to increase current refinery capacity and build new refineries, a bill needs to be signed that will give companies incentive to build them. What kind of incentives would these be? Or will the government force companies to build new refineries? Even if a bill would be past to alleviate the problem, it would not immediately effect gas prices. It will take many years to build these refineries.

Delta cuts jobs

Delta is currently the worlds 3rd largest airline carrier. They plan to cut up to 9000 jobs , reduce employee pay, and make changes to its routine network. Why? Delta says they need to restructure there costs in bankruptcy and focus more on international flying. This major cut will save them an additional 3 billion by 2007, on top onf the previous 5 billion they planned to save by 2006. Not just low level employees are taking the pay cut. The cheif executive is taking a 25% pay cut while all other executives are taking a 15% pay cut. Besides pay cuts for executive there will also be a 9% pay cut for supervisory and other administrative possitions. There will also be a 10% pay cut for frontline employees. After 9/11 delta had planned to make 25,000 job cuts, these new job cuts would be on top of that. Although Delta is not clear on how many actuall employees they have, they have 52000 mainline employees currently.The new cuts will come 8 days after the company files for bankruptcy protection. They say they will lay off 1400 flight attendents by January.In the bankruptcy case, Delta's goal is to save $970 million annually through debt relief, lease and facility savings and fleet changes. Another $1.1 billion in annual savings is expected to be gained through changes to Delta's route network.Roughly $930 million in annual savings will be gained through reduced employment costs, employee productivity improvements and overhead reductions.

-Do you think these aggresive actions of Delta will save the company?
-Do you see a strike in the near future of Delta employees?
-Do you think Delta is trying to do too much too fast?
-Do you think Delta will loose its 3rd place world wide ranking when it starts concentrating more on budgeting than constumer satisfaction?

Auto Executives Call For Gas Tax Hike

The recent gas prices of around $3 a gallon has some auto industry leaders calling for the U.S. government to adopt a more aggressive policy to decrease dependence on oil. Mike Jackson is the CEO if Auto Nation inc. which is the country's largest auto retailer. He suggests a 10 cents a year increase to the current federal gas tax of 18 cents per gallon. The increase on the gas tax is designed to persuade people to buy more fuel-efficient vehicles. "gas prices would have to rise to about $6 a gallon in the U.S. for consumers to change their behavior and buy more fuel efficient vehicles" says Mike Jackson.

The auto makers' argument is that consumers won't buy more fuel efficient vehicles unless they have an economic incentive to do so. Is increasing the price of gas by means of taxes the best way to go about making the change to more fuel-efficient vehicles such as hybrids?

No More Paparazzi?

According to an article on CNN.com, Arnold Schwarzenegger the governor of California recently signed an anti-paparazzi law. The article stated that the law will allow California celebrities to triple their winnings from the paparazzi if they are assaulted during a shoot. It also denies the photographers from profiting from any of the pictures taken during these altercations.

My question is, how do you think this law will effect the tabloids?
These people make a ton of money off these pictures taken during altercations with actors and actresses. By cracking down on this, will this market still exist, or will it create a type of "black market" that will make these pictures more sought after by the public? Besides, with modern day internet abilities, these photos don't necessarily need to be published on the front pages of those supermarket tabloids to make the photographers a reasonable profit???

Google

In the short span of time that Google has been in existance, it has started to take control of an already crowded market. It has taken Google a mere seven years to transform its business as an everyday search engine to one of the most prolific technology companies out there even competing with Microsoft and Yahoo. Lately, Google has launched an effort to create entire digital libraries, triggered a system for talking over the internet and has investigated wireless networking and free internet access nation wide. Some questions explored at the link are as followed: Is the company simply exploring different ways to distribute the ads that generate virtually all of its revenue, or is Google pursuing a much grander plan that ultimately will transform the way people work, communicate, shop, read and even watch TV?
What are your thoughts on this topic?

G.M. and Ford Sales Tumble in September

The sales of SUV's decreased dramatically in September. Some automakers said that there were still strong car sales, but when gas prices increased after Hurricane Katrina SUV's took a hit in the U.S. market. All major companies saw their sales fall by at least 18 percent. General Motors Corp.'s SUV and truck sales fell 30 percent and to make up for the decrease in sales, they began letting the customers pay the employee price starting in June.
Ballew said that gas prices weren't the only reason for the decrease in SUV sales. He said "an aging lineup of SUV's and more car-based crossover options also are affecting SUV's." For the first nine months of the year GM's and For Motor Company's overall sales were flat. So Ford also let consumers start paying employee prices and it helped deplete the automaker's 2005 inventory.
Do you think the SUV sales will remain low due to the gas prices? Do you think if the gas prices begin to decrease that SUV sales will start to increase?

Increases in Manufacturing

According to a recent article released by Forbes, the nation's manufacturing sector expanded in during the month of September. However, the price of raw materials have been on the rise. The higher prices for materials has some economists worried about a rise in inflation and interest rates.

The manufacturing index has risen from 53.6% from August to 59.4% in September. Any reading above 50% indicates the industry is expanding. This expanation is above the 54% many economists were predicting. Along with the manufacturing index rising the price index for crude oil rose 15.5% from August, topping off at 78%.

Do you think the increase in cost of raw materials will cancel out, or even out weigh the gains from the increased manufacturing industry? Is the increase in the manufacturing industry short lived? Will it decline rapidly after the cleanup from the hurricanes have passed? What about the idea of increased inflation and interest rates?

ESA

In the early 1970s a landmark bill was passed into law which has since provoked heated debate on the tradeoff between the economy and the environment. The law I speak of it the Endangered Species Act (ESA). Since its creation, the ESA has delayed, and in many instances prevented, development projects across the country. Portions of forests are not allowed to be logged because they provide a necessary habitat for endangered plants and animals, such as the spotted owl. Some farmers who wish to develop their land are prevented from doing so because vital habitat for an endangered species would be lost. It is clear why the ESA is so controversial. People equate the situation as a tradeoff between “trees and jobs.” Despite the controversy, the ESA has, for the most part, been successful in preventing extinctions of species.
Last week the House passed an amendment to the ESA that, if also passed by the Senate, would greatly reduce the power of the act. The specific details of the amendment can be found through the link at the bottom of this post. My question to the audience is this: is our economy at the point now where saving endangered species like the snail darter and the red-legged frog should take a backseat to more pressing issues?

http://www.cnn.com/2005/POLITICS/09/30/endangered.species.ap/index.html