Category: Economics & Business

GDP

Gross Domestic Product, the measurement of a nation’s economy, is most often calculated by adding Private Consumption, Investment, Government Spending and Net International Trade.

Consumption (food, gasoline, clothing, medical expenses, iPads) is about 68% of U.S. GDP, Investment 15% (in things like factories and equipment and houses, not financial investment), Government 20% (all levels of government) and Net Trade minus-3% (because we import more than we export, oil for example and all that stuff made in China).

If say, consumption decreases — perhaps because people no longer have enough equity in their home to finance a new boat — then GDP falls. If also, the boat factory no longer needs to expand because they can’t sell the boats they already make, then GDP falls. If teachers and firefighters get laid off because government doesn’t have the income from boat sales tax and boat factory workers’ income taxes, then GDP falls. If we don’t sell any boats overseas, but continue to import oil, or if oil costs more per barrel, net trade decreases, then GDP falls.

So, assuming that a growing population needs a growing GDP (it does), if you were the czar, what would you do today to increase C, I, G or T (and hence the GDP)?

Eight Six Seven Five Three Oh Nine

We find supermarkets a great place to feed our kids when we are out of town. Some supermarkets only give the sale price to people with a club card. Don’t bother signing up for a card or paying full price. Supermarkets can look you up by phone number: use Jenny’s! 867-5309 works every time. Invariably, someone has signed up with this number to avoid giving out their real phone number.

Save money in grocery stores while traveling; use “Jenny’s” number to get club discounts

But what was Jenny’s area code?

Stuff

A more thoughtful if critical look at Three Cups of Tea and Greg Mortenson: What Mortenson Got Wrong.

It’s just one side of the story, but once you read scores of them confirming your own experience, you figure with enough smoke there must be some fire: Customer Catches Best Buy Breaking Law, Gets Banned From Store.

Joe Posnanski takes a look at some ballplayers who appear to have played at Hall of Fame levels, but never even got a serious look: The Hall of Not Famous Enough.

Also, Joe wants to know which is the Greatest Rock Band In The World. If you aren’t familiar with Arcade Fire, Muse, Wilco and the Flaming Lips, this discussion is not for you.

Calm Man Successfully Buys TV and Denies Walmart Receipt Checkers

Receipt checking is a peeve of mine. I generally avoid it by walking by and not making eye contact. Occasionally I say, “No thank you.” At Costco, of course, I have to submit because it’s part of the membership agreement. But I often go with a friend (who would no doubt prefer I leave her name out of this), and we play games like showing one receipt when we each bought items (and we always get by). The whole thing is probably just supposed to be a deterrent. I find it a nuisance.

Anyway here is a good story from someone of like-mind in Virginia at Wal-Mart. And I find myself almost sympathetic with Wal-Mart in this case.

Worst lines of the day

“The long-predicted double-dip in housing has begun, with cities across the country falling to their lowest point in many years …”

New York Times

“[E]ight markets – Atlanta, Charlotte, Detroit, Las Vegas, Miami, Portland (OR), Seattle and Tampa – hit their lowest levels since home prices peaked in 2006 and 2007, meaning that average home prices in those markets have fallen even further than the lows set in the spring of 2009.”

Standard and Poor’s via Calculated Risk

Prices in Atlanta (-7.9), Chicago (-7.6%), Detroit (-7.1%), Portland OR (-7.0%) and Phoenix (-6.4%) did the worst November 2009-November 2010.

Across the 20 markets, prices in November were at late 2003 levels.

Well, duh, line of the day

“So the San Francisco Fed released a working paper in September in which three economists argue that the rich are happier than the less rich, that wealthy nations have higher levels of satisfaction than less wealthy ones, and that as national economies grow, citizens tend to become happier.”

Economix

Another paper found that the happiest places have the highest suicide rates. Possible reason: it hurts more to be unhappy in a happy place.

Quantitative easing

The Financial Page in this week’s New Yorker explains Quantitative Easing 2 far better than the cartoon video did. It’s not long and it’s well worth reading the whole thing, but here’s an excerpt:

The Fed’s job is to manage the country’s money supply, and it ordinarily does so by manipulating short-term interest rates, lowering rates when it wants to give the economy a push and raising rates when the economy seems to be overheating and needs to be cooled down. At the moment, though, short-term rates are already near zero and can’t be cut further. So instead the Fed is buying longer-term government bonds. The hope is that this will help keep long-term interest rates low, pump more money into the economy, and make investments other than government bonds (where investors have been parking their money) more appealing. The Fed used this tool during the worst of the financial crisis, and it helped arrest the economy’s precipitous decline. Now the Fed is using it once again because, though the economy has recovered, it’s still weak—unemployment is near ten per cent, and vast amounts of productive capacity are idling. In the circumstances, the Fed’s job is to use monetary policy to try to boost demand. And quantitative easing is how you do that when you can’t cut interest rates any more.

The article goes on to explain the backlash from the German and Chinese governments, Republican congressmen, the liberal economist Joseph Stiglitz, and Sarah Palin. Hint: It’s mostly political.

Axis of Depression

From today’s column in general agreement with the Fed’s Quantitative Easing by Paul Krugman:

Core inflation — a measure that excludes volatile food and energy prices, and is widely considered a better gauge of underlying trends than the headline number — is running at just 0.6 percent, the lowest level ever recorded. Meanwhile, unemployment is almost 10 percent, and long-term unemployment is worse than it has been since the Great Depression.

So the case for Fed action is overwhelming. In fact, the main concern reasonable people have about the Fed’s plans — a concern that I share — is that they are likely to prove too weak, too ineffective.

But there are reasonable people — and then there’s the China-Germany-G.O.P. axis of depression.

China and Germany don’t want a more competitive American dollar. Republicans, of course, don’t want the economy to improve before November 6, 2012.

I wrote briefly why deflation is bad two years ago today — No happy endings.

I didn’t mean

. . . to sell Taibbi’s style short in my previous post. It’s there in Griftopia.

“The basic scan in the Internet age is pretty easy even for the financially illiterate to grasp. It was as if banks like Goldman were wrapping ribbons around watermelons, tossing them out fiftieth-story windows, and opening the phones for bids. In this game you were a winner only if you took your money out before the melon hit the pavement.”

Best line of the day

“We live in an economy that is immensely complex and we are completely at the mercy of the small group of people who understand it—who incidentally often happen to be the same people who built these wildly complex economic systems. We have to trust these people to do the right thing, but we can’t, because, well, they’re scum.”

Matt Taibbi in Griftopia: Bubble Machines, Vampire Squids, and the Long Con That Is Breaking America

Taibbi’s latest book is very informative—eye-opening—though not written in his usual over-the-top, profane style. Or at least, written in a tamer version of it. If you’re interested in what is going on in our economy and how little politics matters, I recommend the book. The chapter on commodities futures, from which the above quotation is taken, is worth the price of the book by itself.

Did you know BTW, that all the parking meters in Chicago are owned by a consortium that includes the United Arab Emirates? Or that so are parking meters in Nashville, Pittsburgh, Los Angeles and other cities? Or that Pennsylvania Governor Rendell tried to sell the Pennsylvania Turnpike?

When you’re trying to sell a highway that was once considered one of your nation’s great engineering marvels—532 miles of hard-built road that required tons of dynamite, wood, and steel and the labor of thousands to bore seven mighty tunnels through the Allegheny Mountains—when you’re offering that up to petro-despots just so you can keep the lights on in the state house into the next fiscal year, you’ve entered a new stage in your societal development.

Bank scoreboard

It’s been a while since I’ve reported on bank failures.

As of last Friday, the FDIC had closed 143 banks this year.

There were 140 bank failures in all of 2009. There were 25 in 2008. There were 3 in 2007. There were none in 2005 and 2006.

Clearly this is Obama’s fault.

Just shaking my head

I closed on refinancing my mortgage yesterday and, while in the end it went fine and I’m saving a lot of money, I have to say that every single person I dealt with was cordial, but just about every single one of them provided incorrect information, or forgot a document, or promised a deadline they didn’t meet.

Brave new world

Once you are in the app, you tap on “deposits,” which activates your iPhone’s camera and brings up a viewscreen with some guides and commands. Line up the check with the guidelines on your screen, hold the iPhone steady and push an onscreen button. You then do the same for the back of the check. (The endearing Chase TV ads with newlyweds in bed also show how.)
. . .

So that’s pretty amazing. I came home last night, opened some mail and found a reimbursement check from my dental insurer. About two minutes later, I had deposited the check. From my dining room.

Depositing Checks, Right From Your Phone — Gadgetwise

Chase and USAA are the leaders with this. C’mon the rest of you.

Not that I get any checks.