While the giant slept the world moved on to eradicate poverty...We just don't get what is happening in the rest of the world.




Source: CSM

  The world is changing rapidly and is becoming less dependent on the success of the US.  We are still very relevant but, in my opinion, the economic success of the rest/most of the world is eroding our status .  And, I fear, we are letting them.  1.4 Billion  Chinese, 1.3 Billion Indians, 190 million  Brazilians, AND the continent of Africa are rapidly developing middle-classes. These middle-classes are not to be confused with the US middle-class, which in dollar terms is way ahead of the aforementioned countries.  BUT the purchasing power of 100's of millions of people is increasing at an increasing rate.  Rising incomes around the world should not be seen as a problem for us, but an opportunity.  Instead of complaining about the "fairness" of trade with the rest of the world, I would prefer we as a nation welcome them out of poverty and ask if there is anything we can sell them (YES! We do make stuff!) that they would FREELY like to buy from us...THAT is what a competitive country does. 

Surging BRIC middle classes are eclipsing global poverty

The world will, for the first time in history, move from being mostly poor to mostly middle-class by 2022, the Organization for Economic Cooperation and Development projects. Asians, by some predictions, could constitute as much as two-thirds of the global middle class, shifting the balance of economic power from West to East. Already, some analyses of International Monetary Fund data suggest that the size of the Chinese economy could eclipse that of the United States in just five years.


By 2030, the global middle class is widely projected to at least double in size to as many as 5 billion – a surge unseen since the Industrial Revolution. This boom, however, is more global, more rapid, and is likely to have a far different – and perhaps far greater – impact in terms of global power, economics, and environment, say economists and sociologists.

But today's middle-class boom is unlike the Industrial Revolution, in which rising prosperity became a catalyst for increased individual and political freedom. Those in the emerging global middle classes – from an Indian acquiring a flush toilet at home to a Brazilian who can now afford private school to a Chinese lawyer with a new car in the driveway – are likely to redefine their traditional roles, and in doing so, redefine the world itself. 

 "I would expect that as the global middle class gets transformed by the entrance of hundreds of millions of Indian, Brazilian, and Chinese families, the concept of what we see as the middle-class values may change," says Sonalde Desai, a sociologist with the National Council of Applied Economic Research in Delhi (NCAER). "Historically, sociologists have defined 'middle class' as those with salaries…. I think 'middle class' is very much a state of mind."

What are the regrets that the latest college graduates have about their education? This may be of interest to those of you in college or about to start...

This is from a recent survey of college graduates. All of these graduates would have started college before the latest recession.  Interesting how the largest portion would have chosen different majors.  I am assuming this is mainly because of the difficulty in finding employment in the current economic climate.  Perhaps those of you on the journey now can take heed in this surveys findings....


Source: Economix



Train runs through a market!! Not what you expect. The people are ready for it...Amazing video.

HT: Carpe Diem

Electric Vehicles are NOT the answer to energy independence...Why does this have to be so hard???

Resources are not unlimited---this forms the foundation for the definition of economics.  Essential natural resources ("Rare Earth Minerals") used in the manufacture of electric cars come primarily from mines in China. The more electric vehicles we produce the more dependent we become on China for a critical element.  We move to these vehicles to escape dependency from one commodity (oil) and find ourselves captive to another...How come things cannot be easy...

The Rare-Earth Crisis

"...One argument I’ve heard is “national security,” the idea being that electric vehicles would make the United States less dependent on imported oil. Be careful what you wish for, however, because if electric cars become a mainstay, we may be trading one dependence for another that is even more troubling. Ninety-five percent of the world’s output of rare-earth metals today comes from one country: China. By some estimates, demand will outstrip supply within five years. At least with oil we know there are fifty years of oil reserves readily available. Moreover, oil is produced all over the world, limiting the monopoly power of any one country...." Source: Freakonomics

Thinking about majoring in Economics? NY Times columnist (Nicolas Kristoff) has nice words about the profession and how the the Economic Way of Thinking can help solve poverty...

A nice hommage to the Economics profession...The economic way of thinking can help solve a lot of problems.  Microeconomics is perhaps more effective in producing results that immediately help people but taking solutions to the macro-level is the challenge...

Getting Smart on Aid

""...But, first, a digression: a paean to economists.

When I was in college, I majored in political science. But if I were going through college today, I’d major in economics. It possesses a rigor that other fields in the social sciences don’t — and often greater relevance as well. That’s why economists are shaping national debates about everything from health care to poverty, while political scientists often seem increasingly theoretical and irrelevant.

Economists are successful imperialists of other disciplines because they have better tools. Educators know far more about schools, but economists have used rigorous statistical methods to answer basic questions: Does having a graduate degree make one a better teacher? (Probably not.) Is money better spent on smaller classes or on better teachers? (Probably better teachers.) ""...

Read the whole article below...
 

Correlation vs Causation: Want to be a college graduate AND earn more income? Then you might have to change your religion..Interesting graphic here



Source: AidWatchers



Which vehicles are in the shortest supply right now? With $4.00+ gasoline, that is too easy a question...

Many pundits in the economics  blogosphere have pegged $4.00 a gallon as the breaking point for people to seriously start changing their level of gasoline consumption.  It seems as though it has begun in the car market.  Fuel efficient vehicles are in short supply because of increased demand. Below are the cars that are in the shortest supply.  Next to the name of the vehicle is the "time to turn" or the number of days on average the car sits on the lot before it is sold.  In many cases the cars are sold before hitting the lots. The first number is from April of this year. The second number is what the churn time was last April. What a difference a year makes...

BMW X5 16 ,39

Ford Explorer 19, 48

Hyundai Elantra 12, 79

Toyota Prius 20, 36

Porsche Cayenne 18, 91

BMW X3 14, 32

Audi Q7 14, 18

Chevy Equinox 19 14

Audi Q5 16, 16

Chevrolet Volt 18, N/A

GMC Terrain 19, 14

Fiat 500 11, N/A

Nissan Leaf 5, N/A

Lexus CT 200h 11, N/A

Mini Countryman 16, N/A

       ""Which new cars and trucks are most in demand?

One good measure is to see how fast they are flying off sales lots into the hands of buyers. In the auto industry, it's known as "days to turn." Interesting, though, when you look at the Edmunds.com list for April. You'd think the list would be dominated by Japanese models whose production was stopped or reduced because of the March earthquake. And, sure, some are on the list. But it's actually a pretty mixed bag.

If there anything in common, it is that gas savers prevail. A year ago, more SUVs were in short supply.

As for the vehicle in shortest supply, Edmunds.com says it's Nissan's all-electric Leaf. Since all were preordered, all are claimed as soon as they land. The days-to-turn was only five days. Next is Lexus' sharp CT 200h, a small Prius-like hybrid that just went on sale as the Japanese earthquake hit, causing huge production problems and limited supply for the car. It had only an 11-day wait. So, too, did Chrysler Group's new Fiat 500.

Hyundai's new 40-miles-per-gallon (on the highway, anyway) compact Elantra is down to only a 12-day supply, compared with a 79-day supply for the version it replaced last year. BMW's small, hot X3 and Audi's big Q7 crossover SUV tie at 14 days.

While the list includes models that would have been affected by the shortages arising from the earthquake, they don't necessarily dominate the list."" (USA TODAY)

Graphs to help explain the MAIN reasons we will have higher oil and gasoline prices well into the future...





Can you name this "Artwork"???

Go HERE to find out...

HT: Chris Blattman

Panera Bread experiments with "Pay What You Want" pricing...Is this a good idea??

Some restaurants are experimenting with a voluntary payment system for its food---YOU decide how much you want to pay for your meal. Panera Bread is one such chain trying this at select locations. (HT: Carpe Diem)  It is an interesting experiment in behavioral economics.  They find that 80% of customers pay either the "suggested price" for a meal or actually pay more than the suggested price. Only 20% pay less than the suggested prices.

 I think the strategy is interesting. I wonder how the results would change if payment was completely anonymous.  No face to face contact with an employee to make change or process the credit card payment.  I think Panera is well aware that MOST people who visit their stores would not want to appear to be cheap or dishonest in front of another person.  What do you think? Would people, on average, be just as honest or would those percentages flip---only 20% would pay the suggested prices and 80% would pay less?

: USA Today

""USA Today -- "A Pay-what-you-want Panera in Clayton, MO is being called a success. The menu board lists "suggested funding levels," not prices. Payments go into a donation box, though the cashiers provide change and handle credit card payments.


The majority of patrons pay the "suggested funding level" or more. Statistics provided by Panera indicate that roughly 60% leave the suggested amount; 20% leave more; and 20% less. One person paid $500 for a meal, the largest single payment." Source:

Gas taxes levied by various European countries compared to the US. YIKES!!

Below, in dollars, are the amounts levied on a gallon of gasoline in various European countries. The US by far has the smallest level of taxation...This is why the price of gas in Europe is more expensive, not because the gasoline itself is more costly...The US figure is an average. The Federal gas tax is $.20 and each state adds their own amount. 

Belgium             $4.26

France               $4.12

Germany            $4.37

Italy                    $3.95 

Japan                  $2.81 

Netherlands         $4.79 

United Kingdom   $4.47 

United States        $.39 

Data from HERE (HT: Carpe Diem)

The current legal Federal debt ceiling has been reached today...The credit card is maxed out. Will the further credit be extended?

Yes, it will. Congress sets its own credit limit and they will eventually increase the borrowing capacity. As noted in the graphic below, accounting measures are available to officially fund the government at least through August/Sept. 

Source: Wall Street Journal

Informative Graphic on Rising Food Prices around the World...We need to do better...

Source: World Food Progarmme

"Do you want fries with that?" will soon be a phrase of the past...Is this a good thing???

McDonald's is adopting point of sale technology in it's European restaurants that will reduce the need for labor, at the margin.  Touchscreens for ordering and swipe card technology for payment will be installed.  It is inevitable that in the near future we will order our fast food in this manner.  The writing (or source code) is on the wall for low-skilled labor in this country.  The nature of work is changing and I am not sure as a nation we fully get that yet...

McDonald’s to shake up food ordering system

""McDonald’s is to change the way customers order its meals in Europe, partly replacing cashiers and the use of banknotes at its 7,000 fast-food restaurants in the region with touchscreen terminals and swipe cards.

Mr Easterbrook said that the changes would make life easier for consumers as well as improve efficiency, with average transactions three to four seconds shorter for each customer. McDonald’s European stores serve 2m customers a day.

Weiky Filho, a student enjoying a burger at McDonald’s in Wimbledon, London, was in favour of the changes. “You don’t need to communicate with staff and it would be much quicker,” he said.

But Joe Surkitz, 21, was less convinced. “I’m looking for work and if there’s more machines doing jobs I’ll find it harder. Plus you won’t get service with a smile.”

Disney Trademarks "Seal Team 6"---I CANNOT wait for THAT interactive exhibit at DisneyWorld!!

Disney Trademarks “Seal Team 6″

""In a perfect example of a big media company looking to capitalize on current events, The Walt Disney Company has trademarked “Seal Team 6,” which also happens to be the name of the elite special forces team that killed Osama Bin Laden. The trademark applications came on May 3rd, two days after the operation that killed Bin Laden… and two days after “Seal Team 6″ was included in thousands of news articles and TV programs focusing on the operation. Disney’s trademark applications for “Seal Team 6″ cover clothing, footwear, headwear, toys, games and “entertainment and education services,” among other things.""

Manufacturing jobs DOWN, Manufacturing Output UP! How can THAT happen?



Source: LA TIMES

 The above graphic shows the decline in manufacturing jobs in the US. This is only half the story.  True,  employment in this sector is decreasing, but our actual manufacturing output per person is INCREASING:


Souce: Carpe Diem

This is production domestically in the US, not including "off-shored" production.  How can we have more output with fewer workers?  The use of technology in just about all phases of production is the primary culprit. Have you ever watched an episode of "How It Is Made" on The Science Channel? View some of the clips at the site and look to see how many workers there are (relatively few) and at the technology/processes that are used to perform tasks that only a few years ago required many workers to do.  The jobs lost in American manufacturing in many cases were good paying jobs that allowed for a middle-class level standard of living for millions of Americans.   

Watch these two short videos and count the number of production workers...It won't take long.

Perhaps we should not judge Bin Laden...

Source: Signe Wilkinson