Saturday, April 7, 2012

There IS a bright-side to high gas prices. (I am just the messenger, but I understand if you want to shoot me)...Read why here...

The fuel efficiency of vehicles SOLD in the US has increased in the last few years (Chart below).  However, the change in the last couple of months has been rather dramatic. 

This is a nice illustration of how the marketplace responds to changes in prices without a law or regulation.  As people purchase new vehicles, they are taking into consideration the high price of gasoline and buying more fuel efficient cars and trucks:

""Replacing a used vehicle getting 20 mpg with a new vehicle getting 24 mpg would completely offset an increase in the price of gas going from $3.33 per gallon to $4 per gallon, on an annual basis.""---Mark Perry at Carpe Diem

As the price of gas increases consumers are substituting low gas mileage vehicles for high gas mileage vehicles.  The market works---if given time.  This helps reduce the demand for oil and at the margins helps to clean the air. Win-Win----WINNNING!!

 March U.S. Light Vehicles Raise Fuel-Efficiency Bar

Source: WardsAuto

Tide Detergent as a Currency. Sounds good but I think getting change back could be a little messy. Read about it here...

I posted about this a couple of weeks ago---Tide Detergent has become a currency within the drug trade in many parts of the country.  Below is a much better, extended analysis of Tide-as-a-Currency and how it has become a de facto currency--perhaps a lesson for policy-makers.  It represents everything a fiat currency represents: A medium of exchange, A unit of account, and A store of value. Worth a read to make you think about the value of our own currency. 

Tidequistadors In Search of Sound Money: A laundry soap has developed as much legitimacy as the dollar to serve as currency. What's going on? (Source: Reason Online)
Over the past few months, the police force in Prince George’s County, Maryland has been dealing with a strange rash of robberies. Thieves have been going into grocery stores and drug stores, loading their carts up with stacks of money, and then rushing out the door where they have a get-away car waiting. A sane man may ask why CVS and Wal-Mart are stocking piles of cash where the peanuts and greeting cards should be. But these thieves are not taking U.S. legal tender—they’re stealing Tide laundry soap.
It turns out that the detergent is not just good for making your clothes brighter than the imitation brand. It’s also street currency for buying pot and cocaine. Briefcases full of cash are being cast aside in favor of blaze-orange containers of laundry soap. Yes, there’s liquid gold in dem dar bottles
There is some debate over whether this is a new trend, and perhaps our more nefarious readers might enlighten us to the commonality of this practice. But reports suggest the Tide thefts are a nationwide phenomenon. And a former FBI agent explained to ABC why it might make a good commodity for barter: "Tide is highly recognizable," said Brad Garrett. "It's very difficult to trace and it's easily resold."
Tide, as the money gods would have it, carries nearly all thecharacteristics of sound money.
To start, it is widely used. Tide detergent is sold in every major city and most places in between. It can be found in the laundry room of both Upper East Side penthouses (the ones where residents don’t just throw away their dirty clothes to buy new ones) and “quaint” fixer-uppers of the South Bronx.

Friday, April 6, 2012

I found a bit of interesting news in today's job report that illustrates a continuing trend in inequality---however, it is something you can do something about.

I clipped this from todays jobs report because I thought it noteworthy for students.

The numbers in the Blue Box show the number of new private sector (not counting govt jobs) SERVICE jobs created last month (March). I see continuing "inequality" in the addition of new jobs. By that, I mean by education AND skill level. 

In general, there are large positive numbers in "Business/Professional, Education/Health Services, and Financial Activities".  Some of these jobs may NOT require advanced education but most will.  The exception to this is in "Leisure and Hospitality" but these presumably low wage/skill jogs are off-set by a large decline in "Retail" jobs.  This has been the trend and I don't see it reversing any time soon.

Service jobs in many sectors of  economy are the main destination for those without advanced education/skills. Those jobs are slowly(?) tapering off due to technology adoption and other efficiencies in business. 

Please stay in school and/or seek ways to upgrade your skills at all times. Your standard of living depends on it.

Here is concise explanation how the unemployment rate is calculated and some of its pitfalls. Also links to todays report and analysis.

Below is an easy to read summary from the WSJ of how the unemployment rate is calculated and some of the "myths" associated with its calculation. Here is a link to the report released today.  HERE is a link to a website that gives nice, short, objective summary of various economic reports and releases.
All the statistics the government collects on macroeconmic activity (i.e. GDP, Inflation, Unemployment, etc) are subject to constant revision and interpretation. In laymens terms, they have literal and figurative holes in them big enough to drive  Mac Trucks through.
To get a better understanding of the economic situation you MUST go beyond the "headline" number touted by the media and look closer at the compostion of the actual published reports.  There IS gold in them thar' reports. 
Economists and non-experts alike pore over the government’s jobs numbers each month for hints about where the economy is headed. But confusion about how the statistics are calculated has led to some myths about the report and what it shows.


First, the basics: Every month, the government conducts surveys of households and employers, which form the basis of the main employment statistics. Under government definitions, which date back to the Great Depression, people count as employed if they’re doing any work for pay at all, and as unemployed if they aren’t working but are trying to find a job. People who aren’t working but also aren’t trying to find work aren’t considered part of the labor force at all.
Four common unemployment myths:
I don’t receive unemployment benefits, so the government doesn’t count me as “unemployed.” The official unemployment rate is based on a survey of about 60,000 households, not on unemployment benefits, which are administered by the states. The unemployment rate includes people who aren’t eligible for benefits, such as people who quit their jobs voluntarily, people who are entering or re-entering the work force (after graduating from high school or college, for example, or after taking time off to raise a child), and people whose benefits have expired. But it also might not include some people who do qualify for benefits: Someone doing odd jobs while collecting unemployment benefits will qualify as “employed” in government statistics.

Wednesday, April 4, 2012

More comfort for those of you pursuing Non-Technical degrees...YOU are in BIG Demand!! Learn here how to take advantage of it.

I encourage you to read the whole article below.  Not everyone can be (or wants to be) an engineer, scientist, or mathetician OR business major.  Commerce is increasingly becoming competitive and global.  Businesses need people who can look at scarce resources in new and innovative ways.  They need people who can connect with people across borders, cultures, religions, etc.  I think a well rounded education in Economics does this best but there are many other Social Science and/or Liberal Arts majors that can do the same thing. 
Pursue your degree agressively but keep your head up and look for opportunities.  Do not say NO to any opportunity to network or to learn something new.  You never know how that contact or new knowledge might help you down the road in the near or far future.
"...Companies say they need flexible thinkers with innovative ideas and a broad knowledge base derived from exposure to multiple disciplines. And while most recruiters don't outright avoid business majors, companies in consulting, technology and even finance say they're looking for candidates with a broader academic background....

...Such changes should appease recruiters, who have been seeking well-rounded candidates from other disciplines, such as English, economics and engineering. Even financial companies say those students often have sharp critical-thinking skills and problem-solving techniques that business majors sometimes lack...."

Sunday, April 1, 2012

Nice Graphic showing the Continent of Europe at night in 1992 and 2010. People see lights. Economics students see Opportunity Costs!

A map of the continent of Europe at Night (HT: Carpe Diem).  Watch carefully. The image transitions from 1992 to 2010. It is interesting to note the areas that have much more light (by light I mean produced by electricity). The spead to the former Soviet Block countries after the fall of the Berlin Wall is pretty obvious.  Also, if you look at some of the central cities like Paris and Madrid.  There is definitely a pattern of "Urban-to Suburban Sprawl".

This suggests two things---(1) Europe got much richer over  the last 20 years in order for infrastructure to be built (and paid for) to support new economic activity. (2) They consume much more energy, in total, from fossil fuels (and Nuclear) which contributes to environmental problems that concern most Europeans...Can anyone say Opportunity Costs?  Hate those opportunity costs--they always get in the way and make you think!

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