Category: Economics

All the Devils are Here: The Hidden History of the Financial Crisis

John Stewart interviews the authors of  a new book about the subprime and derivatives-driven financial crisis.  Caveat:  Stewart manages to work in one f-bomb.  The authors claim that the bank regulators required state attorney generals to role back rules that regulated predatory lending and that Wall Street blames the whole mess on the stupid consumers that bought houses they couldn’t afford.  Ironically, we are being encouraged to both save and borrow to save the economy.

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Will the Bush Tax Cuts be Reinstated?

The problem:  how to tackle the deficit.    Not extending the cuts immediately raises taxes on everyone.  Spending cuts are difficult since Medicare, Social Security, and Medicaid represent 50% of our budget by 2015 (  Peter Orzag ).  The other half of our budget is split 50/50 between interest payments on US debt and discretionary spending.  The discretionary spending is 50% defense and 50% non-defense.

Here’s an opportunity  for you to try your hand at balancing the budget.  Especially pay attention to the revenue options:  you’ll find many of the tax effects you may face in 2010.

Get a Pencil.  You’re Tackling the Deficit.

PACT (Prevent All Cigarette Trafficking) Law Now in Effect

A bit of legislative trivia.  Note that Cigars are exempt.

The legislation titled “Prevent All Cigarette Trafficking (PACT) Act,” was passed by Congress and signed into law by President Obama on March 31, 2010.

Effective immediately, the U.S. Postal Service® cannot accept or transmit any package that it knows, or has reasonable cause to believe, contains nonmailable smokeless tobacco or cigarettes.

Cigarettes, including roll-your-own tobacco, and smokeless tobacco are considered “nonmailable” matter, unless the shipment falls within certain exceptions. The acceptance and transport of packages containing cigars is not prohibited under the Act.

Read More USPS.com.

Texas-The World’s 11th Largest Economy

Comptroller’s Economic Outlook

“The Texas economy, the world’s 11th-largest, continues to fare better than those of many other states. But Texas felt the effects of the worldwide recession during 2009. Despite the state’s economy contracting in 2009, Texas’ relative economic advantage should continue as the state and U.S. economies turn around and expand again in 2010. The Comptroller’s office estimates that Texas’ gross state product will grow by 2.6 percent during calendar 2010. The U.S. economy should grow at a slower rate of 2.0 percent during the year.”

Read more of Susan Comb’s remarks.

In support of Entrepreneurs and Small Business

David Brooks column in the NY Times, An Economy of Grinds, emphasises that the economy will continue to creep along until the business climate for “the country’s loners, its contrarians and its narrow, ambitious outsiders”  is “wide-open” with an “atmosphere of general confidence”.  Brooks calls these outsiders The Grinds.

Here’s a link to the article:  An Economy of Grinds.

The Great Recession

The jobless recovery was discussed on the March 5, 2010, broadcast of The Takeaway.   Lakshan Achuthan, managing director of Economic Cycle Research Institute , a market analysis company,   tells a tale of two economic Americas. Contrary to popular belief, the current recession has not been all that bad for many Americans. Unfortunately, the other 40 percent of unemployed fall into what Lakshman calls the “long term unemployed;” and he adds that their plight may not be over any time soon.

Achuthan comments that the Jobs Package which offers a payroll tax reduction incentive to employers will not address the problem of the long term unemployed as employers will only accelerate hiring that is already on the table.


Debit or Credit?

How Visa, Using Card Fees, Dominates a Market
By ANDREW MARTIN

Visa says it does not care how consumers use their debit card, as long as it is a Visa. But for now at least, the company says the only way to ensure that a purchase is routed over the Visa network is to sign.

“When you use your Visa card, you have a chance to win a trip to the Olympic Winter Games,” a new Visa commercial promises.

The commercial does not explain the rules, but the fine print on Visa’s Web site does: nearly all Visa purchases are eligible — as long as the cardholder does not enter a PIN.

Read the whole article from the New York Times, January 5, 2010.

Texas Holiday Facts

TXHolidayFacts-300x450

During the holiday season, people across our state will gather together and celebrate with friends and family to exchange gifts, offer thanks and reflect on the past year. Many Texans are also expected to buy Christmas trees, bake holiday treats or hit the roads to travel. To commemorate this special time of year, Texas Comptroller Susan Combs has compiled some festive holiday facts about our state and its economy related to the season.
• Texas has approximately 150 Christmas tree farms across the state producing 200,000 trees annually on 2,500 acres. Texas Christmas tree growers contribute $12 million each year to the state’s economy. Christmas trees have been grown commercially in Texas since 1977. Virginia and Afghan pines are the most common Christmas trees grown in Texas.
• In Houston, the city saved $185,000 in landfill costs by recycling 5,800 tons of tree waste from 47,000 homes from October 2007 to September 2008. Seventy-nine tons of this tree waste was from Christmas tree recycling.
• In 2007, Texas producers contributed 75 million pounds of pecans toward the record United States total crop of more than 385 million pounds.
• The Neiman Marcus Christmas Book was first published in 1926. Neiman Marcus is headquartered in Dallas.
• The Collin Street Bakery in Corsicana has been baking the world-famous DeLuxe fruitcake since 1896, the recipe for which was brought over from Wiesbaden, Germany. The bakery ships its Texas fruitcakes, pecan cakes and other delicious pastries to 196 countries.
• In 2008, 5 million Texans traveled during the Christmas and New Year’s season, with 4.5 million traveling by car. Only California had more holiday travelers.
• According to the U.S. Census Bureau, three places in the country are named after the main course of Christmas dinner: Turkey, Texas, was the most populous in 2008, with 456 residents, followed by Turkey Creek, La. (361) and Turkey, N.C. (272).
• According to climate data gathered over the years, Abilene, Lubbock and Wichita Falls have a 3 percent chance of having a white Christmas, and Amarillo has a 7 percent chance of having snow on Dec. 25. The other major cities in Texas have nearly zero chance of a white Christmas.
• More than half of Texas consumers (55 percent) hope to spend more or the same on the holidays this year, an improvement from 43 percent last year. Texas consumers anticipate spending $1,380 over the holiday season, or 21 percent higher than the national average of $1,145.
• Three in four Texas consumers plan to use cash, checks or debit cards to pay for their gifts, compared to 65 percent nationwide. Only 23 percent of Texans expect to use credit cards.
• More than 60 percent of Texans expect to shop at discount/value department stores and 50 percent plan to shop via the Internet.
• Gift cards are expected to be the top gift for the sixth year in a row, with 67 percent of Texas consumers planning to buy an average of six gift cards for presents this year.

During the holiday season, people across our state will gather together and celebrate with friends and family to exchange gifts, offer thanks and reflect on the past year. Many Texans are also expected to buy Christmas trees, bake holiday treats or hit the roads to travel. To commemorate this special time of year, Texas Comptroller Susan Combs has compiled some festive holiday facts about our state and its economy related to the season.

• Texas has approximately 150 Christmas tree farms across the state producing 200,000 trees annually on 2,500 acres. Texas Christmas tree growers contribute $12 million each year to the state’s economy. Christmas trees have been grown commercially in Texas since 1977. Virginia and Afghan pines are the most common Christmas trees grown in Texas.

• In Houston, the city saved $185,000 in landfill costs by recycling 5,800 tons of tree waste from 47,000 homes from October 2007 to September 2008. Seventy-nine tons of this tree waste was from Christmas tree recycling.

• In 2007, Texas producers contributed 75 million pounds of pecans toward the record United States total crop of more than 385 million pounds.

• The Neiman Marcus Christmas Book was first published in 1926. Neiman Marcus is headquartered in Dallas.

• The Collin Street Bakery in Corsicana has been baking the world-famous DeLuxe fruitcake since 1896, the recipe for which was brought over from Wiesbaden, Germany. The bakery ships its Texas fruitcakes, pecan cakes and other delicious pastries to 196 countries.

• In 2008, 5 million Texans traveled during the Christmas and New Year’s season, with 4.5 million traveling by car. Only California had more holiday travelers.

• According to the U.S. Census Bureau, three places in the country are named after the main course of Christmas dinner: Turkey, Texas, was the most populous in 2008, with 456 residents, followed by Turkey Creek, La. (361) and Turkey, N.C. (272).

• According to climate data gathered over the years, Abilene, Lubbock and Wichita Falls have a 3 percent chance of having a white Christmas, and Amarillo has a 7 percent chance of having snow on Dec. 25. The other major cities in Texas have nearly zero chance of a white Christmas.

• More than half of Texas consumers (55 percent) hope to spend more or the same on the holidays this year, an improvement from 43 percent last year. Texas consumers anticipate spending $1,380 over the holiday season, or 21 percent higher than the national average of $1,145.

• Three in four Texas consumers plan to use cash, checks or debit cards to pay for their gifts, compared to 65 percent nationwide. Only 23 percent of Texans expect to use credit cards.

• More than 60 percent of Texans expect to shop at discount/value department stores and 50 percent plan to shop via the Internet.

• Gift cards are expected to be the top gift for the sixth year in a row, with 67 percent of Texas consumers planning to buy an average of six gift cards for presents this year.

Christmas Bargains

NY Times, December 7, 2009:

The private-sale sites — a misnomer because most of these so-called exclusive sites are open to anyone who signs up — have become a thriving corner of online commerce. Sites using the same “while supplies last” approach have sprung up recently to sell home furnishings, beauty products and travel packages.

Private-sale sites are attracting brand-name investors. Kleiner Perkins Caufield & Byers, the venture capital firm that backed Google and Amazon.com, invested on Wednesday in One Kings Lane, which sells home décor. Gilt Groupe raised $55 million from Matrix Partners and General Atlantic, and Rue La La’s parent company was recently acquired byGSI Commerce for $180 million.

It works for the fashion industry, too, because as the economy slumped, stores deeply cut inventory, which left some designers with excess stock, depending on their production calendars. Some high-end brands view the sites as a place to unload inventory without sullying their image by having their merchandise appear on Overstock.com or on the racks at Filene’s Basement. The members-only Web sites also ensure that search engines will not locate and list the discounted products.