Saturday, August 21, 2010

The Breakfast Club just got more expensive---That will not go over-easy with customers.

     With the recent egg crisis (salmonella) AND the increase in the cost of major inputs that go into making a large part of my favorite meal of the day, breakfast is likely to become a little more expensive in the near future. The graph below shows the price trend of 3 major commodities--wheat, orange juice and coffee. Food processors/producers/retailers are caught in a bind.  In a recession they find it very difficult to pass on the cost increases to customers which means profit margins get smaller.  Unless they can decrease some other variable cost of production (labor, utilities, insurance, etc) then some could go out of business.  This does not help the employment situation.  Commodity prices do not create much water cooler conversation but when the final goods we consume made from those commodities increase in price, that gets our attention.  So, now you will know the answer when someone asks why the price of breakfast at IHOP went up---Be "that guy" everyone goes to for the answer to all things about economics...
From The Economist:  The breakfast index:  The cost of breakfast rises
"SEVERE drought and wildfires in Russia, the world’s fourth largest wheat producer, have destroyed a fifth of the country’s crop and sent prices soaring. Since the end of June wheat prices have more than doubled. On Wednesday August 4th, the UN’s Food and Agriculture Organization cut its forecast for 2010 global wheat production by 5m tonnes, to 651m tonnes. Kazakhstan and Ukraine, both big wheat producers, have also been hit with dry weather. In Canada the problem is the reverse: unusually wet weather has prevented seeding and destroyed crops. But wheat is not alone. The price of orange juice has also risen recently, probably thanks to bets placed on the likelihood of tropical storms. Coffee prices, which hit a 13-year high, are a result of poor harvests. Taken together, the raw ingredients for breakfast in much of the rich world have increased in price by 25% since the beginning of June."

Friday, August 20, 2010

Ok, I hit a low point in finding examples of Complements for Microeconomics... :)

(HT: Division of Labour)...Complements---it is a dirty businesses...In economics we call two goods that are separate and distinct BUT primarily (or often) used together-- complements.  If the price of one of the goods INCREASES then the Demand  for the complement DECREASES and vice versa (the price of one good DECREASES then the Demand for the complement INCREASES).  There is an inverse relationship between price of one and the demand for the other.   Extra Credit: Which is the primary good and which is the complement??

Protesters---You have been warned!!

Pet Peeve alert: I am fed up with protesters! BUT not for the reason you might think...If you go to a protest and march with a pre-printed sign and tee-shirt I will automatically dismiss you as insincere and lazy, even if you are not.  I will consider you a "corporate" protester with no substance...Ok, you have been warned...Be a classy 1st Amendment exerciser---make your own sign and shirt!!!

Tuesday, August 17, 2010

College Class of 2014---A list of things you have and have not known in your lifetimes...It also reminds us oldtimers how time flys!!

The Beloit College Mindset List for the Class of 2014(HT: Carpe Diem)
Most students entering college for the first time this fall—the Class of 2014—were born in 1992.

For these students, Benny Hill, Sam Kinison, Sam Walton, Bert Parks and Tony Perkins have always been dead.

1. Few in the class know how to write in cursive.
2. Email is just too slow, and they seldom if ever use snail mail.
3. “Go West, Young College Grad” has always implied “and don’t stop until you get to Asia…and learn Chinese along the way.”
4. Al Gore has always been animated.
5. Los Angelenos have always been trying to get along.
6. Buffy has always been meeting her obligations to hunt down Lothos and the other blood-suckers at Hemery High.
7. “Caramel macchiato” and “venti half-caf vanilla latte” have always been street corner lingo.
8. With increasing numbers of ramps, Braille signs, and handicapped parking spaces, the world has always been trying harder to accommodate people with disabilities.
9. Had it remained operational, the villainous computer HAL could be their college classmate this fall, but they have a better chance of running into Miley Cyrus’s folks on Parents’ Weekend.
10. A quarter of the class has at least one immigrant parent, and the immigration debate is not a big priority…unless it involves “real” aliens from another planet.
11. John McEnroe has never played professional tennis.
12. Clint Eastwood is better known as a sensitive director than as Dirty Harry.
13. Parents and teachers feared that Beavis and Butt-head might be the voice of a lost generation.
14. Doctor Kevorkian has never been licensed to practice medicine.
15. Colorful lapel ribbons have always been worn to indicate support for a cause.
16. Korean cars have always been a staple on American highways.
17. Trading Chocolate the Moose for Patti the Platypus helped build their Beanie Baby collection.
18. Fergie is a pop singer, not a princess.
19. They never twisted the coiled handset wire aimlessly around their wrists while chatting on the phone.
20. DNA fingerprinting and maps of the human genome have always existed.
21. Woody Allen, whose heart has wanted what it wanted, has always been with Soon-Yi Previn.
22. Cross-burning has always been deemed protected speech.
23. Leasing has always allowed the folks to upgrade their tastes in cars.
24. “Cop Killer” by rapper Ice-T has never been available on a recording.
25. Leno and Letterman have always been trading insults on opposing networks.
26. Unless they found one in their grandparents’ closet, they have never seen a carousel of Kodachrome slides.
27. Computers have never lacked a CD-ROM disk drive.
28. They’ve never recognized that pointing to their wrists was a request for the time of day.
29. Reggie Jackson has always been enshrined in Cooperstown.
30. “Viewer Discretion” has always been an available warning on TV shows.
31. The first computer they probably touched was an Apple II; it is now in a museum.
32. Czechoslovakia has never existed.
33. Second-hand smoke has always been an official carcinogen.
34. “Assisted Living” has always been replacing nursing homes, while Hospice has always been an alternative to hospitals.
35. Once they got through security, going to the airport has always resembled going to the mall.
36. Adhesive strips have always been available in varying skin tones.
37. Whatever their parents may have thought about the year they were born, Queen Elizabeth declared it an “Annus Horribilis.”
38. Bud Selig has always been the Commissioner of Major League Baseball.
39. Pizza jockeys from Domino’s have never killed themselves to get your pizza there in under 30 minutes.
40. There have always been HIV positive athletes in the Olympics.
41. American companies have always done business in Vietnam.
42. Potato has always ended in an “e” in New Jersey per vice presidential edict.
43. Russians and Americans have always been living together in space.
44. The dominance of television news by the three networks passed while they were still in their cribs.
45. They have always had a chance to do community service with local and federal programs to earn money for college.
46. Nirvana is on the classic oldies station.
47. Children have always been trying to divorce their parents.
48. Someone has always gotten married in space.
49. While they were babbling in strollers, there was already a female Poet Laureate of the United States.
50. Toothpaste tubes have always stood up on their caps.
51. Food has always been irradiated.
52. There have always been women priests in the Anglican Church.
53. J.R. Ewing has always been dead and gone. Hasn’t he?
54. The historic bridge at Mostar in Bosnia has always been a copy.
55. Rock bands have always played at presidential inaugural parties.
56. They may have assumed that parents’ complaints about Black Monday had to do with punk rockers from L.A., not Wall Street.
57. A purple dinosaur has always supplanted Barney Google and Barney Fife.
58. Beethoven has always been a dog.
59. By the time their folks might have noticed Coca Cola’s new Tab Clear, it was gone.
60. Walmart has never sold handguns over the counter in the lower 48.
61. Presidential appointees have always been required to be more precise about paying their nannies’ withholding tax, or else.
62. Having hundreds of cable channels but nothing to watch has always been routine.
63. Their parents’ favorite TV sitcoms have always been showing up as movies.
64. The U.S, Canada, and Mexico have always agreed to trade freely.
65. They first met Michelangelo when he was just a computer virus.
66. Galileo is forgiven and welcome back into the Roman Catholic Church.
67. Ruth Bader Ginsburg has always sat on the Supreme Court.
68. They have never worried about a Russian missile strike on the U.S.
69. The Post Office has always been going broke.
70. The artist formerly known as Snoop Doggy Dogg has always been rapping.
71. The nation has never approved of the job Congress is doing.
72. One way or another, “It’s the economy, stupid” and always has been.
73. Silicone-gel breast implants have always been regulated.
74. They’ve always been able to blast off with the Sci-Fi Channel.
75. Honda has always been a major competitor on Memorial Day at Indianapolis.

Cost of component parts to the New Blackberry Torch---"I see variable costs of production"--NICE graphic!!

Piece by Piece: The Suppliers Behind the New BlackBerry Torch Smartphone

Click on image to make bigger or go to link above

From WSJ: ""...ISuppli estimated the total cost of the Torch's components at $171, plus $12 for manufacturing. The most expensive single part of the Torch, iSuppli said, is the display and touchscreen assembly, at an estimated cost of $34.85. The screen supplier was unknown. Memory chips, supplied by South Korea's Samsung Electronics Co., accounted for $34.25 of the Torch's component costs, the firm said.
The chip that serves as the electronic brains of the Torch--and also provides so-called "baseband" functions to manage communications--was supplied by Marvell Technology Group Ltd., a company in Santa Clara, Calif., that primarily uses manufacturing services in Taiwan to build chips it designs. ISuppli put the price of that chip at $15...."

Monday, August 16, 2010

It's official: China is second largest economy in the world...however Per Capita GDP is about equal to El Salvador...So is China rich or not???

The graphs below represent two perspectives on the recent news that China, in terms of GDP, has become the 2nd largest economy in the world (surpassing Japan, second to the US).  It is impressive considering it made no appreciable increase until 1990-1995. 
     The first graph represents a dollar value of national output ("output method").  It shows the move into second place. 

      This second graph shows GDP per capita.  Per capita GDP is found by taking the GDP number for any time period above and dividing it by the population of a country.  By this measure, we get a different perspective on GDP.  Per capita GDP represents in dollar terms how much of the production/national income is attributed to each person.  By this measure, we can see China is WAY behind the US and Japan (many relatively poor countries as well).  Obviously, China's population is very large, so this low per capita figure is somewhat a distortion.  GDP per capita does not tell us anything about how this income is spead among members of the country.  The income gains have not been uniform across the Chinese population, BUT the gains are significant and concentrated in an extraordinary number of people who are starting to excercise consumption power. 

From Robert Reich on this subject:
""...Don’t be misled by these numbers. The important thing isn’t China’s ranking, nor the total value of China’s production, nor even the extraordinary speed by which China has reached #2.
What’s most important is the share China’s production received and consumed by the Chinese themselves. The problem is it continues to drop.
China has dozens of billionaires but the vast majority of the Chinese are still extremely poor. The typical Chinese lives off the equivalent of about $3,600 a year. That puts him behind workers in 126 other countries. (The typical Japanese earns the equivalent of about $39,000; the typical American, $46,400.)...""

Sunday, August 15, 2010

Who creates the MOST jobs by far in the US? Must see these charts!!!

Startups Or Behemoths: Which Are We Going To Bet On?

""...Kauffman Foundation has done extensive research on job creation. Kauffman Senior Fellow Tim Kane analyzed a new data set from the U.S. government, called Business Dynamics Statistics, which provides details about the age and employment of businesses started in the U.S. since 1977. What this showed was that startups aren’t just an important contributor to job growth: they’re the only thing. Without startups, there would be no net job growth in the U.S. economy. From 1977 to 2005, existing companies were net job destroyers, losing 1 million net jobs per year. In contrast, new businesses in their first year added an average of 3 million jobs annually.
When analyzed by company age, the data are even more startling. Gross job creation at startups averaged more than 3 million jobs per year during 1992–2005, four times as high as any other yearly age group. Existing firms in all year groups have gross job losses that are larger than gross job gains...""

Happy Birthday Social Security!! 75 years young. I hope you have many more????

Happy Birthday, Social Security: Now Here's 22 Scary Facts About America's Pension Crisis

1. 6 out of every 10 non-retirees in the United States believe that the Social Security system will not be able to pay them benefits when they stop working.

2.  35% of Americans over the age of 65 rely almost entirely on Social Security payments alone.

3. 56 percent of current retirees believe that the U.S. government will eventually cut their Social Security benefits.
4. There will be two workers for each retiree in 2025

5.  Social Security paid out more in benefits than it received in payroll taxes this year

6. Approximately 57 percent of Obama's budget consists of direct payments to individual Americans

7.  America's 100 largest corporate pension plans were underfunded by $217 billion at the end of 2008.

8. Approximately half of all workers in the United States have less than $2000 saved up for retirement.

9.  36 percent of Americans say that they don't contribute anything at all to retirement savings.

10.  The number of pensions at risk inside failing companies more than tripled during the recession.

11.  24% of U.S. workers admit that they have postponed their planned retirement age at least once during the past year.

12.  California has $22,000 per working adult in unfunded pension liabilities

13.  California's three biggest pension funds are as much as $500 billion short of meeting future retiree benefit obligations.

14.  In New Jersey, the governor has proposed not making the state's entire $3 billion contribution to its pension funds because of the state's $11 billion budget deficit.

15.  It has been reported that the $33.7 billion Illinois Teachers Retirement System is 61% underfunded and is on the verge of total collapse

16.  The state of Illinois recently raised its retirement age to 67 and capped the salary on which public pensions are figured.

17.  The state of Virginia is requiring employees to pay into the state pension fund for the first time ever.

18.  In New York City, annual pension contributions have increased sixfold in the past decade alone and are now so large that they would be able to finance entire new police and fire departments.

19.  For all states, unfunded pension liabilities equal up to $3.2 trillion

20.  Entitlement programs have a $46 trillion shortfall over the next 75 years

21.  Debt plus entitlement spending may absorb 92 cents of every dollar of federal revenue by 2019

22.  By 2080, debt and entitlement spending will eat up 50 percent of GDP
View My Stats