Bush's Economic Ideas?

Bush's has been trying to get a new tax reform looked at by Congress which would make collecting taxes easier and simplier. He has also tried to get social security back into the mind of the Congressmen. He had talked about social security reforms during his first term and he also used it in his State of the Union address. Many are now against his ideas for social security and taxes. Do you think we should reform the social security system? And do you think Bush should keep pushing his economic ideas?

Ben Bernanke next Fed. Reserve Chairman

Ben Bernanke who will be taking over as the new Federal Reserve chairman after January 31st when current chairman Alan Greenspan who has been chairman for almost 20 years, and has become a well known figure in the government. Some people wonder how Ben Bernanke will be as Fed. Chairman, whether he will support some of the ideas that he helped voice as one of the top economics advisor to President Bush, like tax cuts and federal spending. Will Bernanke make a change if so a good or not so good change compared to how things have gone lately with the reserve and Greenspan?

The Future of Minicars?

An article found on the Reuters website Friday, talked about the future of minicars. A company in California, known as Zap tried to order minicars from DaimlerChrysler, but the auto giant said no thanks. Instead, Zap turned to a Brazilian company and ordered 50,000 microcars called Obvios. The Obvio is very similar to the minis found in Japan and Europe. They are a ridiculously small city car that is a three passenger, and equipped with a huge 1.6 liter 170 horse four cylinder motor that is designed to go 0-60 in 5.2 seconds. Zap has only placed the order for the cars, and have yet to put one on the road. My question is would any one actually drive these cars? I am sure they would get over 40 mpg, but what do you think about Zap's risky purchase, will this mini fad take hold here in the gas guzzling US?

"Elvis is still the king of the crypt"

Some celebrities make a lot of money during their careers but others stand to make even more money after they die. Elvis has been one that after his death, an empire was created. According to the article Elvis made $45 million in 2005. This puts him as the top dead celebrity in making money for 2005. We all see Elvis souvenirs, his look-a-likes and even his CD's still selling.

I was just wondering if any one would be able to predict the new big money maker for next year that is dead. The article mentions that Johnny Cash could be a huge money maker because of his new movie coming out in November. What do you all think about the concept of making money of dead people? It seems weird to me that there is this much money to be made of a dead person.

Yahoo Raises Prices of Online Music - Good Idea?

According to CNN.com, Yahoo is doubling the price of it's online music subscription service from $6.99 to $11.99, which ends a short promotion that attempted to draw consumers from Apple's IPod Music Store. With its service, Sunnyvale, California-based Yahoo joined Napster and RealNetworks in trying to sell the concept of renting an unlimited amount of tunes for a set fee instead of buying copies individually. The rental approach is supposed to encourage customers to sample different genres and discover new artists. But if the subscription expires, the previously downloaded music becomes unplayable. Customers at Apple's iTunes store, by contrast, keep the songs they buy. The songs are all $0.99 each.

Do you think that this was a good investment overall for Yahoo? How do you think customers will react? Should Apple do anything to counter its competitors?

Goodyear and Steelworker's Union to Negotiate Changes in Business

When the United Steelworker's Association's contract with Goodyear expires in July 2006, Goodyear plans to make some big changes. Goodyear is planning to cut wages even more than in the last negotiation and to close a few of its plants across North America. How do you think this would effect our economy? Would there be a drastic change in the steel, rubber, and tire market?

Link: http://biz.yahoo.com/ap/051030/goodyear_steelworkers.html?.v=2

The "ouch" in energy

This winter expect to see a drastic increase in the cost of heating your house. It is supposed to rise thirty to forty-eight percent for gas heating, and thirty-eight dollars for electric users.

America's Fastest-Growing Sport

NASCAR has been a long standing draw for race enthusiasts and drivers. Today, however, in the modern economy big businesses and companies have been investing in advertising their firms by sponsoring racing teams. While this is a commonly held fact, the revenues a generated by racing are a great investment. Millions of people watch, sell, purchase NASCAR related materials and the profits created include not only the winnings of the teams, but the add benefits to the companies which sponsor the teams, and parts manufacturers. Since the popularity of the sport has increased so has the rewards to investors and fans, in fact some of the best returns in professional sports come from NASCAR. Everywhere you look there is a profit to be made from the stands to the track to the garages and concessions commerce is around the track.
What are your thoughts on the growing profits of this growing industry?

Fraud Suspicions In New Orleans

Among the hardships and losses from hurricane Katrina, a second calamity-fire is raising fraud suspicions at flooded homes. There has been an increase in the nuber of claims in fire losses compared to what is normally claimed, stated State Farm Insurance spokesman Morris Anderson. People are trying to recoup losses they have received from Katrina, but they should not be doing so by insurance fraud.

My question is if this will affect insurance premiums in the future for "catastrophic" geographic areas in the country. This could have a huge impact on the economy. Will this impact be in the short-run, or long-run?

Katrina, Rita Cost 500,000 Jobs

The U.S. government has stated that more than 500,000 people have lost their jobs due to the devastation inflicted by Hurricanes Katrina and Rita. When the Labor Department released its weekly jobless report, 24,000 claims came from people who have been put out of work thanks to the hurricanes, bringing the claims related to the storms to 502,000 since September 3. Before the hurricanes, U.S. employment was shown to be stabilizing at healthy levels. As a whole, weekly claims for aid now seem to be falling and in the case of hurricane related claims, leveling off. Now that Hurricane Wilma has hit Florida, hurricane related claims may rise again, meaning that more people will have been put out of work. There is really no way to protect the job market from this; people have no control over the weather. This would be a hard thing to predict, but I'm just curious as to how long it will take the labor economy to stabilize again, and how difficult it will be for employees to find new jobs in the wake of the storms. Will the job market stabilize itself, or will it require much more government intervention?

Moving to China

Recently it was announced that chemical make Dupont is considering more acquistions of plants in China. It will also announce its second biggest research facility in China. Why would a prominent chemical company be moving its plants overseas to China? One reason could be that its biggest competition almost doubled Dupont's revenue in China last year. Could a bigger reason be that it is cheaper and more cost effective for Dupont to produce in China? Is it cheaper because China has more workers who will work for less money? Is it cheaper because China has lower standards on the environmental side?

http://money.cnn.com/2005/10/30/news/international/dupont_china.reut/index.htm

Another 2 Cent Drop in Gasoline

According to AAA, the average cost of gasoline in the United States dropped another 2 cents. The average gas price per gallon is now $2.51 which is much lower to the gas prices seen since the two hurricanes. Why do you think gasoline is continuing to slowly drop a couple cents a week or two? How low do you think gasoline prices will end up dropping to?

Anheuser-Busch's quarterly earnings go flat

The nations largest brewer had a 24% profit drop recently due to many determining factors which include: competition from other alcoholic drinks such as wines and spirits and a charge for a legal settlement. They only earned $518 million as of September 30th, which is a drop from the $684 million of last year. Patrick Stokes, president and chief executive officer also said, “both the company and the domestic beer industry have experienced volume declines and significant cost pressures.” I think pressures from cost are going to have just a short run effect on the beer industry and it won't be long before their profit will increase back to its normal range.

ISS

The International Space Station has been one of the few space ventures sill in existence. When it was first invisioned in 1980, the number of flights has been downsized from 28 to a mere 18 for completion due to rising costs. It is estimated that its development, including assembly and operation could exceed $100 billion. The expected completion date is tentatively 2010, but this is a flexible schedule due to funding and weather. With all this money wandering around the NASA organization, it's pretty easy to beleive that some of it could get 'misplaced'. Actually, $1.1 billion got misplaced as found by independent auditors. This figure was scaled down to a pocket change amount of $46 million. It was stated in the article that NASA's good at overcoming barriers of space, but is unable to overcome the challenges of good record-keeping. With the five year anniversary of the ISS, should the participating countries continue with the space station, or is it merely a floating block of wasted money?

California Takes Steps To Prevent Utility Shutoffs

"California became the latest state to restrict utility shutoffs this winter, fearing that many consumers won't be able to afford skyrocketing natural-gas costs for heating. This means that utitity companies cannot terminate service to customers who pay at least half of their bill amounts and who agree to deferred-payment plans... Although many states are trying to do more to help poor households, some blanch at the fact that it means costs not paid by some consumers must be borne by others. In California's case, millions of dollars in gas costs will be redistributed to people who pay their bills in full, equivalent to a rate increase of about half a percentage point."

Do you think that states should help the people who can't afford heating? and if so, should the consumers who can afford to pay their bills in full have to bear the responsibility?

Windfall Profits Tax for Oil Companies: Should We Try Again?

ExxonMobil had one of the largest quarterly profits in U.S. corporate history, with a profit of $9.9 billion. Profits for many of the oil and gas companies around the world have been steadily increasing with a rise in gas prices. With such profits, a skeptical eye has been put on the large oil and gas companies by the public. A windfall profits tax is one idea that is circulating. This tax would decrease profits of the oil and gas companies, and has been tried before in the past. Should a windfall tax be implemented now? I believe it shouldn't be implemented because a windfall profits tax would give companies a disincentive to drill and produce, and smaller companies would shut-in marginal wells and choose not to drill risky exploration wells. With demand increasing, a decrease in supply would not be the right direction to take, and a windfall profits tax would decrease that supply. A decrease in supply would cause gas prices to increase even more. Like I said before, this tax has been tried in the past, but the tax eventually disintegrated because companies were not drilling as many wells and shutting in many of their smaller wells. Your thoughts?

Oil and the Economy

The past few months have been hard on the economy due to the active hurricane season, interest rates, and some inflation. However, the economy has not suffered as much as some people thought that it might. The factors listed above have helped to cause the price of oil to increase due to a decrease in the supply. According to the article, oil prices are currently at about $60 a barrel and some people are starting to worry that companies are going to start having consumers pay more in order to cover the higher costs.

What impact do you think that an idea such as passing along costs to consumers would have on the economy?



<http://money.cnn.com/2005/10/27/markets/markets_november/index.htm>

Howard's end...and beginning

Starting in January of 2006, Howard Stern will be leaving the traditional radio airwaves--and the constant treat of FCC indecency fines--for satellite radio, where he will be free to say anything he wants. Last year, Sirius Satellite Radio announced that it had signed Stern to a five-year multi-million dollar contract starting January 1, 2006.

For Viacom, owner's of Stern's current radio home, the financial impact is minimal. Stern brings in about $100 million in ad revenue a year, some speculate that Viacom will find it difficult to replace Stern and the ad sales he brought in. Viacom is looking to have as many as six hosts fill Stern's current time slots. Without Stenr's expensive contract, profits could get a boost, assuming the decline in ad revenues is not too steep and they wont have to worry about FCC fines.

Sirius could wind up seeing a large boost in subscribers and revenues. As of Sept. 15, Sirius had 2.1 million subscribers and the company has said it expects to have 3 million by the end of this year. Stern's presence on Sirius could even lead to subscriber gains against its rivals.

What does this deal mean for investors in Sirius and Viacom? What is the opportunity cost of Stern moving to Sirius? How does this effect the market? How is the demand for Sirius effected by this deal? How is the demand for Viacom's Infinity Broadcasting effected by this deal? Who do you think got the better deal?

A Coffee Shop or a Record Store?

The Rolling Stones recently announced a deal to sell a new CD of rare songs in Starbucks locations. The CD, entitled Rarities 1971-2003 , will also be marketed in traditional record-selling venues such as record stores and discount retail chains.

Whoever thought of this is a marketing genius! I know that this is not the first time that Starbucks will be carrying a CD, but I think the Stones got the formula right. By working out an agreement with Starbucks to carry the CD - but not excluding their other distribution partners, they are basically extending the base of available consumers for their product. The article states that Starbucks had a similar non-exclusive deal on a Ray Charles CD and sold more than 730,000 copies of the total 3.1 million copies sold. While in Ray's case this doesn't matter as much, but the recording industry celebrates the sales of 500,000 copies of a CD as a moderate commercial success (gold album). That means that marketing music through Starbucks could make a huge impact on recording artists.

Why Starbucks? I'd love to see their demographics, but I bet they include a variety of age ranges - and we know that if someone can afford a $3.20 Grande Pumpkin Spice latte, they may be willing to throw in a copy of the latest copy of whatever CD is gracing the serving station and playing on the stereo system while they wait the insufferable long time it takes to make that Grande Pumpkin Spice latte as well. Music stores categorize their selections - Country, Rock, Hip Hop, Jazz, Folk - and if people are just browsing, the usually go to the section with the music they like to listen to and see what they find. Starbucks eliminates that categorization, which could eliminate some pre-conceived notions about a particular genre of music.

Do you think the "Starbucks Strategy" will help to extend the market for music CDs? What economic impact will that have on the music industry? Record stores? Starbucks?

The Stones and Starbucks.

This Thanksgiving, The Rolling Stones will release an album of rare tracks in partnership with Starbucks and the group's Virgin Records label, who will simultaneously realese the album in traditional music stores. This nonexclusive deal differs from recent controversial arrangements Starbuck has had with other major artists. Singer Alanis Morissette allowed Starbucks to sell her most recent album six weeks before everyone else, resulting in many chains ripping her albums off their racks in protest. The same situation happed to The Stones in 2003 when they gave Best Buy an exclusive sales window for their DVD package. Starbucks has recently tried to boost revenue by adding CDs in its stores and has had big success with it, selling 730,000 of 3.1million copies of the Ray Charles "Genius Loves Company" album.

What is the opportunity cost of exclusively selling major artist albums only in Starbucks? Would artists make more money if they continued to offer their albums everywhere? Is this exclusive deal fair for other traditional music store competitors? How does this effect the market? How is demand effected by this exclusive deal?

Let's not go to the movies

Movie attendance is down to some of the lowest numbers Hollywood has ever seen. The box office slu mp is bad news for owners of movie theater chains. Regal Entertainment Group, the nation's largest theater owner with more than 6,600 screens in nearly 580 multiplexes, is expected to report a sales increase of just 1.6 percent and a decline of more than 25 percent in earnings per share when it releases third-quarter results Thursday. And analysts are forecasting a nearly 75 percent drop in third-quarter profit for Carmike Cinemas, the third largest movie exhibition company in the U.S.

Investors may be betting that the worst is over for the industry. Some believe the box office can see a bounce in the next two months thanks to high-profile releases, such as Harry Potter and the Goblet of Fire. Income-oriented investors may also be intrigued by the big dividends that the two companies offer, however, if the industry has another off-year they may not be able to continue to offer such high dividends. Despite increased optimism about a box office increase in 2006, this is not reflected in the sales and earnings estimates for Regal and Carmike.

Movie theater attendance is down and the reason for this is a subject of intense debate. Is it a backlash against rising ticket prices? Why do ticket prices keep rising? Are the movies just not very good? What would make 2006 movies better than 2005? Would people rather sit at home and watch DVDs or OnDemand Movie Services? Is the opportunity cost of going to see a movie in the theaters higher than watching it at home? Should investors be rushing into investing in these movie theater chains?

Storms may cause some insurers to stop Fla. policies

Due to the numerous amounts of hurricanes in Florida between 2004 and 2005, many small, private insurance companies may have to shut down or raise their rates extremely high to stay in business. It is estimated that the losses for insurance companies from hurricane Wilma will range from $4 billion to $10 billion. Private insurers are going to have to stop writing policies in Florida and push them to get the state's insurance-of-last-resort program. Average Florida rates are already $738 for insurance policies, which is thirty three percent more than the national average.

If private insurance companies begin increasing their rates, how will people be able to afford the high costs? Or will the public companies take over and force the private companies to shut down completely? Would this eventually cause a monopoly for homeowner insurance in Florida? Could the frequent and numerous hurricanes force all insurance companies out of Florida to a more secure state?

Americans Less Likely to Spend

According to a recent Forbes report Americans are less likely to spend money due to the hurricanes, rise in gasoline prices, and job market worries. The Consumer Confidence Index fell to 85 for this past October. This is the lowest level the index has reported since October 2003, and down from 87.5 from this past September. This is the sharpest decline in 15 years. The unexpected decline in consumer confidence came as a surprise to analysts, who were expecting an increase to 88.

Do you think this consumer pessimism will continue to rise even after the huricanne season is over? What effect will this have on the up coming holiday season?

Natural Gas prices raise.

With the winter season coming up, prices of gas seem to be on the rise. Natural gas, which heats our homes, raised about 10 percent because of the early cool weather. My question is, is that with these high natural gas prices, what do you think the effect on the economy will be. Also what do you think we can do about it, to ease the high prices that are being put out.

Texas plans first U.S. offshore wind farm

The state of Texas announced that it plans to construct wind turbines along its coasts to create the first US offshore wind energy farm. These turbines will join oil and gas platforms in the Gulf of Mexico. The wind farm was originally proposed off the shores of Massachusetts but was delayed by local residents who complained they would obstruct the view of the shore. The $300 million project will generate over 150 megawatts of electricity on a 11,355 acre site. This would generate enough energy to power nearly 40,000 homes. Current wind power generating capacity in the state is about 2,000 megawatts, with most of the wind turbines located in the western part of the state.
The coast of Texas is covered with oil and gas production platforms, however the state must continue to develop new energy sources. Ignoring the effects of natural disasters such as hurricanes, Texas has come to the realization: we're going to be out of oil and gas at some point.

How will the construction of a wind farm effect gas prices in the US and Texas? Should wind farms be constructed in more shorelined states? Are they just an eyesore or an effective energy producing method? Will wind energy eventually replace oil and gas?

Wilma among top three most costly storms

Insured losses from Hurricane Wilma have been predicted to come between $6 billion and $9 billion, according to AIR Worldwide, a firm that does catastrophe modeling for the insurance industry. If these numbers were correct, it would put Wilma behind only Hurricane Katrina and Hurricane Andrew (1992) in terms of insured losses. Most losses will occur on Florida's east coast between West Palm Beach and Miami, where the firm estimates that there is more than $500 billion of insured properties. Wilma is the seventh hurricane to hit Florida in the past 14 months, and oil prices have been lower since oil platforms and refineries along the US Gulf Coast, recently hit by hurricanes Katrina and Rita, were spared from the storm.

How do you think the government will respond to the disaster caused by Hurricane Wilma after their response to the destruction caused by Hurricane Katrina? How do you think the economy will be effected from all the insured losses? How do you think oil prices will react?

Fill 'er up -- with beer?

According to an article in the Denver Post, Coors Brewing Co. has been using waste from the production of beer to produce millions of gallons of ethanol, which is in turn sold in the wholesale market. The paper reports that Coors, who has partnered with engineering firm Merrick and Company, plans to build another ethanol facility due to their current success as the demand for ethanol, a gasoline substitute, is at an all-time high in the United States. The beer waste is put through a two-hour refining process that produces 200-proof ethanol. It is then mixed with gasoline and shipped to gas stations across the country. The article also mentioned recent criticisms of ethanol, many claiming that it is not fuel efficient. The Post says the second facility, which will double Coors' current ethanol production, will transform into ethanol the millions of gallons of byproduct from more brands than just Coors, such as Killian's Irish Red.

Will this program reduce current gas prices? If so, is it worth using if it isn't as fuel efficient as current gasoline? Should modifications be made to current fuel systems in order to make it more fuel efficient?

Another way to make money by spending money?

According to CNN.com, banks are destroying that timeless classic: A penny saved is a penny earned. Instead, banks are rewriting the lesson to state that a dollar spent could lead to a penny earned.

It may seem a bit confusing, but Bank of America and American Express both claim that their customers will actually save money by spending money with their respective "Keep the Change" and "One" program. Bank of America's "Keep the Change" program will allow its debit card users to round up the price of their purchases to the next dollar and will put that "extra change" into a savings account. American Express' "One" program will depost one percent of customer spending into a high-yield savings account (currently at a rate of 3.15 percent) every month and will allow consumers to put extra money into their account through their separate checking, savings or brokerage accounts.

Will these programs increase the consumer spending behavior of the average person? Will these programs encourage consumers to opt for "money back" credit and debit cards?

Global Warming; Responsability of the World OR the Industrialized World?

Global warming is a problem that the entire world faces. It doesn’t just affect those who emitted greenhouse gases – like carbon dioxide – into the atmosphere; it changes the world’s climate for everyone.

In Africa, the consequences of global warming have been detrimental. They are facing problems ranging from desertification and the loss of wildlife to flooding and increased thickets threatening livestock. And African nations account for only a small part of the emissions. In the US, we are upset about the devastating effects of hurricane Katrina; a mess that will probably be cleaned up within a couple of years. It could take decades for Africa to recover from the natural disasters caused by global warming.

African nations need the industrialized nations of the world to take responsibility for the pollution that they are causing. They need the industrialized world to sign the Kyoto Protocol and clean up. After all, these countries bare most of the blame for global warming in the first place.

So, why doesn’t the US sign the Kyoto Protocol, where the objective is the "stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system"? Isn’t Africa facing enough problems without having to deal with suffering from the mistakes of the industrialized world? Granted, the US and other industrialized countries can’t control the temperature or the natural climate of Africa. But there are other ways to help them overcome the natural disasters caused by global warming. Industrialized countries can finance early warning systems and create disaster management plans to help Africa deal with these natural disasters. They can also help find new water sources and help set up a new agricultural system.

By financing Africa’s recovery and preparation for natural disasters, the industrialized countries of the world would be paying for at least some of the damage that they have caused. Is this the best way for polluters to make amends? What other options are there? Should the US sign the Kyoto Protocol? Will the Kyoto Protocol produce optimal amounts of greenhouse gases?

THE BIRDS (Not Hitchcock)

As I am sure that you are all aware of, the "Bird Flu" is being touted as a possible pandemic flu virus. Scientists and politicians alike are all waiting for the moment when the flu mutates into a form that can be passed directly from human to human. Many countries have already confirmed that there is presence of the bacteria infected birds in their country, i.e. Greece, Romania, Russia and China among others. While the U.S. has the luxury of being somewhat cushioned from the virus by the oceans that separate it from Eurasia, this does not inhibit the transportation of people or animals from an infected country into the U.S. LAX has even already put into place a system for bird flu quarantines.

With a virus that has a mortality rate anywhere from 50-75%, what will this do to the economies of the infected and non-infected nations? It's plausible that tourism will take a hard hit in areas such as China where 2,600 birds were just found dead via the flu. Travel could also be totally suspended as it was with the SARS epidemic. The infected nations, as well as those nations that have not yet found strains of the virus within its borders, will all be trying to stockpile vaccines in the coming months. This will raise production within these pharmaceutical sectors. But, will this be enough? Below is an excerpt from Yahoo! article citing the problems with just relying on increased production.

Today's 1950s-era manufacturing method requires growing flu viruses in millions of chicken eggs, and it takes nine months or more to make a batch. Says Beadle: "The pandemic will have come and gone before we have the vaccine. That is what
shocks me."

Is it possible that such a horrible possibility looming in the future could produce technologic innovation and increased production in the economy?

College is Worth it

More people are attending college today than ever before. Realizing that the future benefits brought about by attending college outweigh the immediate costs (both opportunity and accounting), students are investing more and more money in themselves; creating a huge market for universities across the country.

However, in order for many of these colleges to take advantage of this market, they have to be able to attract students. This article, entitled “The Arms Race In Campus Construction”, argues that a major determining factor in a student’s decision to attend a specific college is the value of life they think they will receive there; where the value of life is described through variables like student centers, recreation centers, food courts, etc. If this perceived value of life is higher than the perceived value of life at other colleges, enrollment will increase. Many schools are using this approach to attract students. According to this article, schools are spending seven times more on value of life activities than they did 25 years ago, but only three times more on class instruction.

Despite the fact that students may be attracted to campuses that have nice dorms, classrooms and recreation centers, is this really a main motivation for choosing a college? Don’t other factors play a larger role than the value of life (class size, school reputation, cost of tuition)?

But if this argument is correct, do you think that this is a good thing? By focusing their resources on value of life items, doesn’t this diminish the amount of resources spent on academic improvements? Or can both happen simultaneously? My main concern is that this article seems to show that colleges are more concerned with attracting as many students as possible, than they are with educating them.

Apollo Diamond

Diamonds have always been a prized possession of those who could afford them. By wearing diamonds, a status of wealth was generated. Diamonds were a prized natural resource that couldn’t be duplicated; at least that is what people thought.

Recently, a company by the name of Apollo Diamond developed a way to “grow” diamonds. According to an article in USA Today, these new diamonds can be used to “make computers run at speeds that would melt the innards of today's computers. Manufactured diamonds could help make lasers of extreme power. The material could allow a cellphone to fit into a watch and iPods to store 10,000 movies, not just 10,000 songs. Diamonds could mean frictionless medical replacement joints. Or coatings — perhaps for cars — that never scratch or wear out (Maney).”

This type of technology would have a definite impact on the supply of diamonds in today’s economy. The supply would increase (shift to the right); causing the price of diamonds to fall and the quantity to increase.

The ultimate goal of Apollo Diamond is to promote innovation and sell these diamonds to producers of high tech products. However, to maximize profits and raise money for further research, they will sell the diamonds as gems in the short run. For those who mine for diamonds, this change in supply could be detrimental to their business. A competitor who can sell a diamond for 1/3 of the price is definitely something to worry about.

Do you think that the current suppliers of mined diamonds can compete in this environment? Will they be able to convince the buyers of diamonds that man made diamonds do not carry the same value as mined diamonds? Will diamonds lose their status among society? Only time will tell.

Hybrid cars! Do they really save money for consumers?

Hybrid cars certainly save gas, but it's debatable whether they save money for consumers. the question lies with how the price of gas will become in the future. Several people say that right now gas is not expencive enough compared to the money one would pay for a hybrid car. Do you think in years to come the price of gas will cause the demand for hybrid cars to rise? If the price of gas does rise will the price of hybrid cars fall?

We wont run out of oil...Or will we?

I found this article kind of interesting because I have often thought about if oil will run out. After reading this I thought about ceteris paribus..holding all else constant; if there is nothing traumatizing that happens with oil over the years, and oil stays fairly normal we should be fine. In time yes, oil will be preferred over gasoline because of the hybrid cars and who knows what will be invented next, where gasoline will not be needed, but oil will.

Your ticket to the major leagues? A major in economics!

A recent post by JC over at Sabernomics informs us (by way of MLB.com) that:

Texas Rangers owner Thomas O. Hicks announced on Tuesday that John Hart has resigned as executive vice president/general manager to become senior advisor/baseball operations and that assistant general manager Jon Daniels has been promoted to general manager.

Daniels, who becomes the youngest general manager in Major League Baseball history at 28 years, 41 days, becomes the eighth general manager in club history. He joined the Texas organization in 2002 as a baseball operations assistant before being promoted to director of baseball operations in October of 2003 and then again to assistant general manager in July of 2004.

A 1999 graduate of Cornell University in upstate New York, he earned his degree in applied economics and management. He is a native of New York City.

JC ruminates...

From now on, I’m going to be less timid: If you want to work in baseball, major in economics. Here’s a list of people working in baseball whom I know studied economics: Bill James, Paul DePodesta, Farhan Zaidi (PhD), Voros McCracken, and now Jon Daniels. The trend is quite clear. Economics certainly isn’t necessary, but it’s clear that people familiar with the economic way of thinking—maybe because they think that way naturally—are getting good jobs in baseball. Of course, there’s no substitute for making contacts within baseball, but I’m just offering course advice here.

Regarding Bill James, the guru of all-things-statistic regarding baseball, here's an insightful quote from MLB.com:

"I was never a particularly good student," said James. "I suppose I was capable of being a good student -- most everybody is -- but when I studied Micro Economics, for example, I would take what I learned there and figure out how to apply it to baseball. I would spend five minutes mastering the concept, 50 hours figuring out how it might apply to baseball. This was a drain on my potential to become an Economics professor. Even when I was in high school, teachers would tell me to put away those box scores and do my homework. Once I focused on writing about baseball, all of that energy was working for me, rather than working against me."

Well, I'm not sure a degree in economics will guarantee you a ticket to the major leagues, but as John Maynard Keynes has said "The ideas of economists . . .both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else."

Hat tip: Phil Miller at Marketpower.

Does IQ matter?

In this article, the writer questions if IQ matters. They weigh the marginal benefit if you try to pay attention and improve your IQ, then it is worth going to school. If a person is just going to school to make it look good and they are not learining anything from it, then is their money going to waste? IQ does matter according to the article, if you pay attention in your classes and interpret what you know than your IQ is improving. If you just study and take a test just to take it then you are not improving your IQ only memory, so is it really benefitting you? What do you think?

...and the Winners are

Robert Aumann (Hebrew University of Jerusalem) and Thomas Schelling (University of Maryland) "for having enhanced our understanding of conflict and cooperation through game-theory analysis."

Quoting again from the nobelprize.org:

Why do some groups of individuals, organizations and countries succeed in promoting cooperation while others suffer from conflict? The work of Robert Aumann and Thomas Schelling has established game theory – or interactive decision theory – as the dominant approach to this age-old question.

This is not the first Nobel award for work on game theory. In 1994 John C. Harsanyi, Reinhard Selten, and John F. Nash Jr. won "for their pioneering analysis of equilibria in the theory of non-cooperative games." John Nash might sound familiar to you as his life was portrayed by Russell Crowe in the Academy Award winning A Beautiful Mind.

By the way, no one submitted either of the 2005 winners as part of my forecasting game. Better luck next year.

Neil Barrett to monitor software giant’s compliance with antitrust ruling

BRUSSELS, Belgium - The European Commission appointed a British computer scientist Wednesday to oversee whether Microsoft Corp. is complying with a 2004 antitrust ruling that it had abused its near-monopoly in desktop computer systems to shut out rival software makers.

Although Microsoft has faced charges dealing with monopolies and anti-trust laws, are they still pushing the limits that are set in the 2004 anti-trust ruling? Could microsoft be hurting the market for OS (operating systems) or do people really just prefer microsoft over other brands of OS's?

The “Trade-Off” in Developing Countries

Compares to economic growth, environmental considerations in developing countries are usually receiving less priorities due to the lack of environmental legislations. Many countries such as China and India view economic growth as their central targets. They may hold some heavy industries that the highly industrialized countries have shifted out of borders and act as their raw material suppliers whereas buying final products from those developed countries. According to the linked article, besides the transfer of no-longer acceptable hazardous industries to the developing countries, “another problem is the rapid proliferation of informal small-scale enterprises in townships as well as in rural areas, which often create serious air and water pollution because of lack of sufficient knowledge and funds.” When pursuing material wealth, developing countries usually do not weight environmental health as much as it should be values. They ignore the impact on future generations that may cause serious problems such as global warming, water pollution, and sandstorms, which has already threatened people’s health in China. It is easy to pull out that there exist a “trade-off” between environment and economic growth; developing countries must consider the circumstance cautiously. However, it does not mean that no solution is possible. As indicated in this website, developing countries can prevent such problems from happening by environmental monitoring, epidemiological studies, launching bio-manipulation and so on.

Where will garbage from Katrina cleanup go?

The cleanup of Hurricane Katrina is the biggest waste-disposal job in U. S. history. Entire communities have been reduced to rubble and the largest dump site in southeastern Mississippi is already close to capacity. There is enough debris to fill the Atlanta's Georgia Dome 13 times. The cleanup from 9/11 took four months. This cleanup will take much more than 4 months. Mississippi will need several new landfills. Existing landfills will need to be expanded. Typically, approving sites for landfills takes months, however; under the extreme circumstances, environmental officials have sped up the process. The cleanup crews must have weighed out the costs and benefits of how to clean up the debris, recycling, and the issure of time.

'Urine trouble,' some states warn truckers

A common roadside litter problem today is "trucker bombs," plastic jugs full of urine thrown out of vehicles, mostly by truckers who refuse to stop at a rest area to relieve themselves. One county crew alone found 2,666 bottles of urine, 67 items covered in feces (not including diapers), and 18 syringes. Truckers blame this on the lack of convenient parking areas at rest stops and the fact that most drivers get paid by the miles driven. When they stop to use the rest room, they are losing valuable driving time. States are beginning to have stricter punishments for littering along the highways. For example, in Wyoming, the maximum penalty for littering bodily fluids is nine months in jail and a $1,000 fine. Posters are being put up along the highway warning drivers about the punishments for littering. There has been some decrease in the amount of litter found along the highways; however, there is still a lot of litter. How else can we decrease the amount of the litter found along the highway than by just hanging signs along the highway.

LayOff's In New Orleans

NEW ORLEANS - Mayor Ray Nagin said Tuesday the city is laying off as many as 3,000 employees — or about half the city’s workforce — because of the damage done to New Orleans’ finances by Hurricane Katrina.

Nagin announced with “great sadness” that he had been unable to find the money to keep the workers on the payroll.

He said only non-essential workers would be laid off and that no firefighters or police would be among those let go.


The recent effects of Katrina are causing the city of New Orleans to lay off the workers that are helping clean up the city. Workers keeping order and giving people hope. If the city can't afford it's clean up crew, how are they ever going to get back on their feet?

Down With Commercials!

This article by MSNBC's Newsweek discusses how companies that have 30 second advertisements on television are now competing for any potential customers to view them. Now with TiVo and Video On Demand, customers have the option of skipping through commercials altogether, which certainly doesn't help the advertising agencies get their message across. So now, advertising agencies need to be a little more creative in their approach to get consumers to view their product on the television... Some have moved towards Internet commercials, having commercials on hotel televisions, having live spots on television to promote the product (like 10-15 minute commercials) , and having interactive commercials. For example, in the article, it stated that approximately 85% of potential consumers who had interactive commercials on their screen actually stopped to check out the new commercial. The agencies need to keep their commercializing competitive enough to stand up to anti-commercial industries such as TiVo. The questions posed however are, will TiVo get rid of commercials altogether? How will advertising agencies operate if that happens? What will happen to the demand of goods on the market if there are no commercials in which to advertise new products with? Will this cause a surplus in some newly manufactured products (or even in some old products) because people don't know what the product is or where to find?

Currency Competition

The dollar may lose it's number one spot as far as currency is concerned. It is slowly depreciating, and in 2002 alone, fell by 28% against the euro. With our country's current deficit, foreign central banks apparently have decreased in their purchases of American treasuries. Critics of the dollar state that if America's deficit continues in the current state that it is in foreigners are going to be less confident in our dollar, which will in turn mean less foreigners will be willing to deal with our dollar.

It took the dollar many, many years to replace the British pound. Do you think that our dollar will be replaced by it's main competitor, the euro? If so, what factors do you believe will play into the dollar depreciating? And also, how (if at all) will this affect the way we live our lives?

Finally new refineries

President Bush is pushing congress to put a bill on his desk allowing new oil refineries to be built. The President says that the new refineries will end the tight supply of oil. Do you think the building of new refineries will lower the price of gas. I think that it will. If there are more places to buy the gas then there will be more competition to get peoples business and in turn companies will have to lower their prices.

If weed were legal

After the class discussion on Monday I spoke with some people i know from around town about the though of legalizing pot in the US. I really don't think the black market trade would fall much. I think that the economy would see a very positive reaction to first time users and users who want the convince of purchasing the drug at the local stores. But with the restrictions that would be placed on the product I think that people who have been smoking for longer would still look to their "dealer" to get them the "good stuff" the government isn't going to sell decent hydro or G13 there going to sell simple merch that they control the effects on. Cocaine is a similar story and any other hardcore drugs I don't think would be a good idea at all to try to legalize. Eventually when we have kids I won't be surprised if we have to be worried about them going down town to get a pack of marijuana smokes the companies that make cigarettes would love to market the new product. Eddy Lep grows pot for "medicinal purposes" and is under the investigation of law informant year round. He's won many awards for his herb but cannot seem to get the DEA off his ass. How can this be legalized if the DEA won't even let its medicinal growing be allowed??? The government has already seen how much money it can make medicinally but they can only imagine the millions of dollars that could be made selling for consumer needs and wants on a regular unprescribed basis

"Is the legalization of marijuana valid?
The debate over the legalization of Cannabis sativa, more commonly known as marijuana, has been one of the most controversial issues ever to occur in the United States. Its use as a medicine has existed for thousands of years in many countries worldwide and is documented as far back as 2700 BC in ancient Chinese writings. Marijuana should be legalized for several reasons. First, the government could earn money from taxes on its sale. Its value to the medical world outweighs its potential abuse, and because of its importance to the paper and clothing industries. Legalization should be considered despite efforts made by groups, which say marijuana is a harmful drug that will increase crime rates and lead users to other more dangerous substances. "

a website whose purpose is to inform the public about the pros and cons points out the tax benefits the government would face and some other useful facts involving this topic...

Hunting Season's Impact on Small Town Economies

Autumn allows outdoorsmen to practice one of their favorite hobbies, hunting. October 1 kicked off bow hunting season in Ohio and the woods of southeastern Ohio will be flooded with hunters. Many of those hunters will have migrated from other parts of the state to participate in the sport. This little known tourist attraction to southeastern Ohio could have positive ramifications to local businesses. Many of these travelers will stay in hotels and eat at the restaurants in town. For an area like this, an added boost to the economy is always helpful. Ultimately, do small towns, or small businesses, need outside help to aid their economy? Are there any negative effects to the influx of new business into the area?

U.S. Economy on the downhill?

This article talks about how other states' economies are growing and really taking off compared to the united States' economy. The United States is seeing lots of spending but not a lot of saving. Companies are really being relied upon by their employees to have retirement really for them once they are done working. Nothing is really being done and many people don't even know this is occurring in the United States because everyone just assumes we have the best economy in the world. What do you think companies should be responsible for and what do you think the population should do in order to make sure they are set after they are done working?

Bush calls for more refineries

In a recent White House news conference, President Bush called on to Congress to send a bill that will allow the expansion of present refineries and the construction of new refineries to be built. According to President Bush, building new oil refineries will help alleviate the record high oil prices.

Bush pointed out that a new refinery has not been built in this country since the 1970s. This fact, should help aid his current energy plan he has been working on for the last few months. Driven by the belief that all the extractible oil reserves have reached their peak level, oil prices have continued to reach record highs over the past few months.

The refined products directly affected are gasoline and heating oil Due to the recent hurricanes we have become all too familar with, have in large part destroyed many of our key oil refineries. I feel this is a subject that Congress must turn some of its focus to.

Google and Sun want Office users

Microsoft, the once all powerful software company in the world is now starting to feel some competition from its competitors. Google and Sun Microsystems are teaming up to create the equivalent of Word processing and spread sheet, for free. This is could cause some huge problems for Microsoft since customers have to buy these products separatley. People are always looking for a free or cheaper version of the real McCoy. If this collaboration between Google and Sun Microsystems becomes a hit, Microsoft will have to come up with newer, cheaper ideas. How do you think Microsoft will handle this new competition? How much will it really affect them? Do they need to worry at all?

Economist Foresees Modest Impact from Storms

Many economists believed that Katrina would dramatically point off economic activity in the second half of this year. One important economist that believed in this statement is Ben Bernanke, the presidents Economic Adviser. During the speech of Institute of International Finance that was given this past Sunday, Ben Bernanke said, " So far, the effects appear to be relatively modest on growth." Bernanke and other private economists expect jobs to take a hit in the short term. Job losses for the month of September could be very heavy and the unemployment rate, now at a four-year low of 4.9 percent, would rise. The congressional Budget Office estimated that job losses from Katrina through the rest of the year would total around 400,000. There are many different estimations on what is going to happen to the economy in the next few months and years. Due to the dramatic outcomes of these natural disasters, we will definitely struggle to find a way to keep jobs available. Do you think the economy will suffer this major unemployment rate? How do you think we can help make this not come a reality, is there anything we can do?

-Jessica Hutchison

Construction Spending Climbs to and All Time High

Recently construction in the USA has increased greatly and is expected to climb even higher. The biggest factor of the recent increase is the rebuliding after hurricanes Katrina and Rita. Construction is up by 0.4 percent in august and that was before the hurricanes even struck so you can expect it to raise even higher. It is at an all time high of $1.11 trillion. But do you think construction rates will rise, considering the fact that mortgage rates are also rising and the fact that the construction companies hit by th hurricane may have also had to delay their jobs?

Consumer confidence

According to this article consumer confidence has had one of it's biggest drops in the past several years. Even though economists and companies were ready for this drop what effect will it have on the national economy, and with the hurricanes being one of the causes of this drop what sort of effect will this have on the economy of the areas effected by the storms.
~Jennifer O'Dell

HydroGen 3

I have just read an article from GM's Fuel Cell Marathon. General Motors has just finished a test on their new HydroGen 3. The car traveled nearly 10,000 km across Europe without a drop of gasoline. Proving that the hydrogen fuel cell is reliable for a long trip. The harmful emissions from the gasoline engine are no longer a factor. The HydroGen 3 is environment friendly. Do you think this new source of energy will put the gasoline engines out of business? Will the government demand less pollution from gasoline engines, if the HydroGen 3 engine enters the market?

Music Sales

I have read an article recently in the USA Today that states that the music industry as a whole has decline in total profit. They have decreased from 13.2 billion in 2004 to 12.4 billion in 2005. The article also says that this is due to the increased use of computer software to download music. These include iTunes, Napster, Limewrie Pro, and other such programs that people choose to use instead of buying albums. While these computer based products continue to grow in revenue and gross profit, they are decreasing the profits of the music industry. My question is, do you feel that with the increased use in these programs, should music artists, who also suffer due to a lack of album sales, start getting a share of these profits made by the computer softwares? Also, do you think that the music industry will come up their own sort of programs for their own benefit, instead of letting these softwares make profits off of their artists?

Katrina Evacuees Search for Any Work, Anywhere

Hurricane Katrina and Hurricane Rita put many people out of work, more than 400,000. These people are looking for new jobs in different cities and suddenly raising the unemployment and displacement of so many people. These people are moving all around looking for temporary or permanent work. To help these people out, non-profit organizations and numerous job fairs are making the search for a job a little easier. There is an online job bank for hurricane survivors that lists over 80,000 jobs. But does this mean that the job bank online is exclusively for hurricane survivors to use? Why is there suddenly a concern about unemployed workers when they are everywhere? Some of the businesses in the south are hiring hurricane survivors just to be able to help out and provide a paycheck. A couple of workers have walked off and went back home, and the employers were fine with just being able to help a little. Isn't this hurting the economy? These displaced people are moving to cities that already have an unemployment problem.

Toilet Paper Corp. Cuts Jobs

Georgia-Pacific Corportation is planning to cut approximately 1,000 jobs as of today. The purpose is to save the Corportation $100 million a year. Georgia-Pacific produces Brawny paper towels, Angel Soft, Quilted Northern toilet papers, and also Mardi Gras Napkins.
Another paper company went through a similar stage of eliminating jobs in order to save money. They blamed the market for its declining demand and weak prices.
Georgia-Pacific said that higher raw materials and energy costs are also attributing to their loss in revenue. They are shutting down other production facilities in order to help solve this problem.
Will the price of toilet paper increase? Will other competing companies face similar problems of supply and demand?

XM Satellite Radio Surpasses 5 Million Subscribers

XM Satellite Radio on September 27th surpassed 5 million subscibers . They even expect another million by the end of this year. This industry is growing so quickly. There are only a few companies out there right now who offer satellite radio but its booming either way. XM being the leading company is offering more and more new channels every year to accommodate all listeners. Sirius Satellite Radio, the next largest company is offering a Howard Stern channel this fall. Both companies offer tons of sport choices and Sirius even has every pro football game on a channel. There are even over 100 channels of commercial music to choose from. Both companies also offer channels for women, comedy channels, cooking channels, car channels, and the list goes on and on. My question is; what's going to happen to good old fashion radio. If this industry continues to boom like it is now will we even listen to regular radio. There is talk about major automobile companies making deals with these companies so cars come with XM already built into the car. Why would you even listen to the radio when you have satellite? How much is this going to hurt our FM or AM radio stations.

Bush calls for more refineries

President Bush called Tuesday for the construction of new refineries to help alleviate the recent record high gas prices, and said any person he chooses as the next head of the Federal Reserve will be independent from politics. He noted that a new refinery hasn't been built in the country since the 1970s. He also will be replacing Alan Greenspan at the end of his term in January. Do you think Bush is correct with promoting someone outside of the political situation and what is your opinion on him building more oil refineries with are little amount of oil?

opportunity cost of allstar vs. your everyday ballplayers

Roger Clemens or a group of everyday ballplayers; who are you going to take when faced with this decision? The most common answer would probably be Roger Clemens because he is one of the best players in the game, and everyone knows him. However, did you ever think about the economic decisions teams have to make when deciding what player personnel they will keep? Each choice has a cost and benefit. In the case of paying a superstar millions of dollars you have to factor in that those millions of dollars get you to fill one position on the field. A benefit of filling only one position is the fact that a roster spot is a limited resource. On the other hand, with the same millions of dollars you could possible get 5 players instead of just one. Granted these five players are not going to be superstars, but they could be solid players which help your team win. Also, you could use these lower salaries to bring up minor league players to your roster and get them some very valuable experience which in the longrun could help progress your program. So, now that you know major league baseball teams have to weigh economic advantages and disadvantages just like the rest of the world, what would you do as the general manager of a team? Would you just go straight for the superstar, or take you money and spread it around?

Ford cuts suppliers

In a recent news article by the Plain Dealer, it states that the Ford motor company has decided to use fewer suppliers in an attempt to be a more successful company in the future. Ford will give money up front for engineering and development, and will make the contracts longer, which allows suppliers not to worry as much that Ford will switch suppliers. Ford will probably cut their suppliers for their most expensive parts by at least 100 next year. The strategy could be bad for companies that are not large enough or do not have the latest technology. If I were to draw a supply and demand curve for this situation you would clearly be able to see that Ford is attempting to shift the supply curve to the right. This shift would make their product cheaper and the quantity demanded increase.

Do you believe that Ford is making the right decision?

Bush calls for more refineries

In a recent press conference, President Bush called for new refineries to be constructed in hopes that more refineries would lower gas prices. Bush said that a new refinery has not been built since the 1970's because of strict regulations. As part of Bush's energy plan, he expects to lower construction regulation in order to encourage more construction of refineries. Is it really safe that Bush "ease regulations" for building refineries? Think about what it may do to our land and other available natural resources. And do you think that by having more oil refineries that gas prices will actually lower?


http://money.cnn.com/2005/10/04/news/economy/bush_refinery/index.htm

Will Americans Turn a Little More towards Hybrids?

Energy Secretary Samuel Bodman recently said that consumers can expect to see atleast six more months of high gasoline prices until energy production recovers from the damage of the hurricanes. Even when they return to "pre-Katrina" level prices, the price of gasoline will still be pretty high. People who have SUV's are trying to get rid of them and get a car with better gas mileage and people are not driving as much because of the ridiculous prices of gas. With all of this in mind, do you think that Americans will look more towards hybrids? A lot of people say they will never think of buying one of those and that they will never be the "big" thing. With these gas prices do you think people will start to change their mind and look towards these hybrids knowing that gas prices will be high for a long time?

Firms to forge partnership that will offer alternative to Microsoft products.

It was announced today that Google and Sun systems will join forces. This announcement was made today at a press conference called by the two companies. This merger will allow the google toolbar to be downloaded at the same time as Sun's Java software. This will add new users to both companies, increasing revenue and "hits" for both companies.

The larger story is that this merger opens the door for new software that will challenge Microsoft's domination of the market. Both of the companies said that they had plans to promote Sun's Open Office Productivity software. The major implication of this merger is that software can be promoted through Java-based programs such as openoffice instead of the traditional method which was through Microsoft.

Do you think that Microsoft will suffer due to either this or other mergers in the future?
Do you think that free web-based programs will take control of the software market in the future?
Can these companies find a was to make revenue on their free programs?

Could Lawsuits Bankrupt the Insurance Industry?

Today a Mississippi couple filed a lawsuit against their insurance company for their refusal to reimburse them for the damage done to their home by Hurricane Katrina. The family is arguing that their home was damaged by the 145 mph winds before the flooding occurred. Most home owners policies don't contain flood insurance, they must by purchased separately from the government. The couple was upset last week when the insurance company didn't come to inspect their home and they just received a letter that stated that they weren't receiving any money due to the flood damage.

If this couple wins their case, you can expect to see several thousand other lawsuits filed, shortly there after. This could very well ruin the insurance companies and at very least change the insurance policy structure forever.

Since thousands of home were damaged by flood waters I think that it would be fair to say that the demand for flood insurance is going to go through the roof, once people start to rebuild. This means that the price for flood insurance to drastically raise from it's already high price. Do you think that the government would ever turn over the sale of flood insurance to a private company, and if so do you think their would be a reduction in the rate of flood insurance?

GM Employee Discounts

Recent vehicle sales received a stir from auto-manufacturers after having issued employee discount rates for regular buyers. Numerous marketing advertisements have displayed that costumers can buy vehicles for prices equal to the employee rates leading to double the sales from non-GM buyers and greater buyer interest in general. The effectiveness of their ad’s also improved from 21% to 30%. All of these incentives have lead to higher sales; however, prices which have not seen heavy increases since 1995 are now likely to creep upward. The industry which has held back on major price increases will likely raise prices to help restore income to the manufactures.
Has this Ad campaign really helped auto-manufactures or hurt them? Do you think that prices will rise or should they be left the same? What good has the current pricing done for the industry? What Harm?

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

National Listing of Fish Advisories Released for 2004

"States, tribes and territories issued 3,221 fish advisories in 2004, according to data just released by the Environmental Protection Agency. The advisories alert residents to the potential health risks of eating contaminated fish caught locally in lakes, rivers and coastal waters. They do not pertain to commercial fishing."

2004 National Listing of Fish Advisories database also shows that because the increasing of moniting activies in states, the number of safe-eating guidelines issued by states continues to rise rapidly.

there are different kinds of advisories which all concentrated on limiting or avoidding eating certain fish species caught from specific bodies of water. Advisories may be issued for the general population or for such groups as pregnant women, nursing mothers, and children later.

Will the advisories effect the fish market and the trend of supply and demand of the fish market? What do you think ?

EPA Preserves Program to Minimize Emissions of Nitrogen Oxides

Recently EPA made an evaluation of a current program. ("The program, known as Prevention of Significant Deterioration (PSD), addresses the need to allow growth while maintaining air quality in areas that are already clean.") They found the program is working to minimize the impact of nitrogen oxides (NOx) emissions.

As the article stated, "Significant deterioration" is defined as the maximum allowable pollutant concentration increase - also known as an "increment" - above an existing baseline concentration for an area. An increment is established for areas (e.g., counties) that states designate as attaining national air quality standards. Emissions increases that cause the increment to be exceeded for a given pollutant are not permitted.

NOx emissions is a dangerous factor which influced enviroments greatly. Except PSD, is there any other better approach to deal with and solve the problem? Do you think states should concentrated on one significant program and put all money, time, or human resources on this one or sperate the cost on different programs? Which one will benefit more to the whole society?

Are People Going to Drive Less Because of High Gas Prices?

For the past 3 weeks gas prices have increased due to hurricane Katrina.

Do you think that American drivers will drive less to save money or not? Why or why not? Who do you think will be able to drive less if they can in fact do so?
Also, do you feel that businesses that use gas as a major component to their services will suffer or increase their profit due to the rise in gas prices?
For example, pizza shops that depend on gas for their business (delivering, customers driving to the shop), will these shops gain more business due to people not willing to drive to get pizza, and as a result more people will buy pizza that has to be delivered. Or will these shops suffer, due to a lack of customers coming to eat, and the fuel for their delivery cars costing more money.

Visteon Factories Taken Over By Ford Motor Company

Recently, the Ford Motor Company took over 23 Visteon factories. Visteon is a producer of automotive parts that sells many of it's parts to Ford. Ford plans to cut jobs within the factories by reorganizing. The facilities will continue to produce parts and provide them to Ford. The reorganizing will lower hourly wages from $38 to $17 and will cut employees from 17,400 to 5,000.

How do you think this restructuring will effect our economy? Do you think Ford made a good decision in purchasing these businesses given the recent automotive industry market? Do you think this purchase will increase Ford's profits or hurt them?

New $100 Laptop Invention to Hit Market

According to an article on CNN.Com, researchers at the MIT Media Lab are designing a durable labtop computer that will only cost $100. Project leader Nicholas Negroponte decided that kids around the world, especially in poverty areas, need this type of techonlogy in their lives. In order to cut costs on the computer, inventors created a hand crank to power it when there is no electricity availiable, used the AC adaptor as a carrying strap, and cased it with rubber so that it would be "virtually indestructable." It also has a 500-megahertz processer, a flash memory instead of a hard drive, and a WI-FI wireless connection in which each laptop would relay data to and from other devices, reducing the need for expensive base stations. The product is expected to be unveiled in November.

How will this new low-cost technology mesh with the U.S. economy? Global economy? How will big-time laptop producers like Dell and IBM react to this? How will they keep their customers happy?

Free gas - the new incentive

Mitsubishi is now offering free gas fill ups for a year to whoever buys a 2005 vehicle through October. Mitsubishi isn't the only company using free gas as incentive. VW, Kum & Go, motor raceways, and web hosting companies have also realized the appeal of gasoline cards above rebates and employee discounts, due to the ever rising prices of gas. Do you think the incentive of free fill ups for a year will persuade more people to buy Mitsubishi vehicles in the coming month?

Pollution

New Report Shows Progress Reducing Air Pollution in Eastern United States according to the news showed in the internet link abouve,, the pollution in Eastern United States has been reduced a little bit in year of 2004. Air pollution, in a world-wide, is one of the four main pollutions (Air, Water, Garbage, and Noise). it is a cumulative, global pollution which has non-point source and could be continues in the future. Along with the development of industry in most countries in the world, the pollution could be more seriously if we don't pay attention to it. Rather than put a huge amount money in solving the problem after it occured, we can we do from now on? doing little things to protect environment from now on may save a lot of money for our countries in the future.....

Wal-Mart's Hurricane Recovery

According to the article "Wal-Mart Bounces Back From Hurricanes," Hurricanes Katrina and Rita caused a total of 281 Wal-Marts to be closed. As of today, only 15 of the stores have yet to reopen. These numbers show that Wal-Mart and probably some other businesses are getting back to how things were before these two storms disrupted life along the Gulf Coast.

In the aftermath of the two storms, the quantity demand of certain products, such as cleaning supplies and nonperishable food items, would have increased. However, the closure of stores, such as Wal-Mart, would have decreased the quantity supplied of the product that was available to the consumers in the time of need. Merchants that were open for business could have charged people higher prices to get goods, such as food and water, because people were desperate. In other words the scarcity of certain products would have caused people to pay higher prices in order to get the product that they wanted.

Delta- Running Low on Gas?

Recently Delta Air Lines has filed for Chapter 11 bankruptcy amidst higher fuel prices, and lower demand. Competition from other carriers with lower labor and operating costs has force Delta to make a number of moves to stay in business. Current negotiations will allow for Delta to remain operational after bankruptcy filings. Other measures such as worker layoffs, contract changes, reduced incomes, and cut or reduced pensions and health care benefits will also likely follow suite. A number of workers are likely to strike out against these cut backs, but in the end Delta will end up being much leaner than before and hopefully more apt at protecting it income from future problems. If there is a good note, Frequent Flier Miles and other passenger services are to remain untouched and will not be changed. Delta is now one of several other major air carriers which has recently filed bankruptcy including United Airlines, US Airways, and ATA Airlines.

What kind of impacts will this and other closings and cases have on business and the industry? Are major lines doomed to the modern economy, will they become more efficient, or will smaller carriers fill in the gaps?

Consumer's Choice: Money Today OR Environment Tomorrow?

Recycling is a fairly simple way for a consumer to help prevent waste. All it requires is a separate bag for the disposal of recyclable products. But when it comes to manufacturing facilities, recycling can be a bit more costly.

In the EU, many companies are starting to realize that they are eventually going to be held accountable for the amount of harm that they cause to their environment. Regulation of Hazardous Substances (RoHS) and Waste electrical and electronic equipment (WEEE) are two regulations that the EU will be implementing in the near future to require companies to take into account the damage that they are causing to the environment. With regulations like RoHS and WEEE just waiting to be put into effect, the EU is sending a clear message that producing products at the lowest cost to firms, is not what is best for society as a whole.

In this article, Jacquelyn Ottman applauds these regulations and encourages companies to realize the importance of preserving today’s environment. She wants companies to be creative in their thoughts and actions; not only by encouraging recycling, but by encouraging innovation. She believes that companies are already seeing the benefits of “green production” and that is why even US companies that will not be under the constraints of these new regulations are taking them into consideration.

I think that the idea of green innovation is great in theory. It would be wonderful if everyone took into consideration the damage that was being done to the environment before they acted, but this simply isn’t reality. Even today, with as simple as it is to recycle, how many people actually do it?

People may desire to live in a cleaner world, they may want their children and grandchildren to live in a healthy environment, but when pushed I don’t think that they are willing to pay money to achieve this. Until people are willing to pay higher prices to clean the environment, change will be difficult.

No matter how environmentally friendly a company wants to be, I don’t think that they would be willing to take a loss in profits to achieve it. And as of now, consumers are not demanding it. They do not see their own personal actions as making that big of a difference in environmental quality (as seen by the level of recycling and littering), so I do not see them willing to pay higher prices for an environmentally friendly item when they can get a not so environmentally friendly item at a lower cost.

Maybe I am wrong… In fact I hope that I am. But in my opinion, this is reality.

Goodyear to Cut Costs up to $1 Billion

Goodyear Tire & Rubber Co. announced Friday, September 23, 2005 that they would be cutting their costs by about $1 billion. They plan to do this by closing plants and importing more materials from Asia to avoid the cost of raw materials in the United States. Due to the high oil prices, the cost of synthetic rubber, steal, and natural rubber have increased. After having rough years in 2002 and 2003, Goodyear is trying to avoid the high costs of the American economy. Goodyear's Chief Executive Robert Keegan stated, "Our turnaround is on track and will continue to evolve." Is the uncertainness of companies in the United States going to cause a large amount of these companies to begin importing from other countries? Do you think other businesses will follow Goodyear’s role or not? How do you think this is going to affect the United States economy? How will the economy survive if businesses begin relying on other countries to be profitable?

250 Billion dollars for katrina relief

According to CNBC, Louisiana is asking the federal government for a quarter of a trillion dollars to help rebuild the city. An important question many people are asking is, "where is this money coming from?"

How do you think the economy will react if 225 billion dollars is used to help rebuild Louisiana? More importantly, where is this money coming from, and is it worth it, economically, to rebuild an entire city that poses the risk to be washed to ruins in the future?