Video of the NON-GOAL--start and stop it starting around 35 seconds--Judge for yourself

Sleeping Late? What is the opportunity cost of that decision?

Nice example of opportunity costs---Yes, you can learn economics through comics too!! :) (HT: MV=PQ: A Resource for Economic Educators

Most ridiculous story of the year---8 year old's hat BANNED from school because it had tiny plastic army men attached. What would the Toy Story soldiers say about this?

Toy soldiers run afoul of school's weapons ban

Christan Morales said her son just wanted to honor American troops when he wore a hat to school decorated with an American flag and small plastic Army figures.
But the school banned the hat because it ran afoul of the district's zero-tolerance weapons policy. Why? The toy soldiers were carrying tiny guns.
"His teacher called and said it wasn't appropriate," Morales said.
Morales' 8-year-old son, David, had been assigned to make a hat for the day when his second-grade class would meet their pen pals from another school. She and her son came up with an idea to add patriotic decorations to a camouflage hat.
Earlier this week, after the hat was banned, the principal at the Tiogue School in Coventry told the family that the hat would be fine if David replaced the Army men holding weapons with ones that didn't have any, according to Superintendent Kenneth R. Di Pietro.

Obnoxious Food Item of the Month---Soft Pretzel Stuffed with Philly Cheese Steak---mmmmm....

The Latest From the Gross Foods Arms Race: Philly Pretzel Factory's New Cheesesteak Pretzel

""​Food chains across the country seem to have taken This is Why You're Fat to heart. First there was the Double Down, sandwiching bacon-and-cheese between fried chicken, and then IHOP's Stackers, smooshing together pancakes and cheesecake.
The latest in the greasy fast food arms race is being introduced today at Philly Pretzel Factory--a mash-up of pretzel and cheesesteak.
The cheesesteak pretzel looks like your average over-sized twisty treat, but it's stuffed with ground beef, onions, and cheese. Early adopters seem excited that it's easier to eat than a traditional cheesesteak--an innovation in easy delivery of meat and cheese to mouth, a/k/a the American dream.
The only Philly Pretzel Factory in the five boroughs is on Staten Island (1200 Hylan Boulevard), but there are also branches in Newark and Jersey City. The Staten Island store confirmed that they have the cheesesteak pretzels in stock, and they will give them away for free next Monday the 24th from 11 a.m. to 2 p.m.""

"It's a bird, It's a plane, It's..It's, ballons?"--In South Korea they scramble jets!

South Korea military alert over children's balloons

Balloons released by schoolchildren sparked a major security alert in South Korea, reports say, amid heightened tensions with North Korea.
A resident of Ansan, near Seoul, reported seeing 40-50 objects resembling parachutes falling on a mountainside. The military and police mobilised a special joint task force. Upon investigation, the objects turned out to be helium balloons released by a local school. Tensions between North and South Korea have been running high since the sinking of a South Korean warship earlier this year. Seoul said the ship was torpedoed by Northern forces. In another incident earlier this month, an alert was raised after an explosion was heard on Yeonpyeong island, near the sea border with North Korea, and a diving suit was found on a shoreline, the JoongAng newspaper reported. A joint military and police investigation found that the diving suit was abandoned by a fisherman and that the explosion had been caused by a South Korean mine, the paper said.

How do you say "supply-side economics" in Russian? Don't have to--A 0% Capital Gains Tax Rate is a Universal Language

Russia is ELIMINATING taxes on "capital gains".  Most simply, this means they will not tax the gains/profits from investments made in Russia.  The article does not say how narrowly they define a capital gain in this case. Traditionally, a capital gain is the profit made on a non-inventory investment such as stocks, bonds, etc.  For example if I buy a stock and it appreciates in value from $100 to $150 then my capital gain when I sell is $50 per share  which is taxed at the prevailing capital gain tax rate.  I am assuming the Russians are talking about the gains from physical capital such as land, equipment, buildings, factories, etc. Lowering the capital gains tax will decrease the cost of producing for a business.  This is a significant incentive for a business to move to Russia. However, capital gains tax is only one consideration when deciding to locate a business.  Private property rights, local/national governance and a suitable workforce are some of the other variables.

From BBC: Russia to drop capital gains tax to attract investment

""Russia will scrap capital gains tax on long-term direct investment from 2011, President Dmitry Medvedev has said.
Mr Medvedev said that in terms of improving Russia's investment climate "we, I hope, are moving forward".
He also said the number of "strategic" firms, in which foreign investment is restricted and which cannot be privatised, would fall from 280 to 41. Mr Medvedev has been promoting the idea of "modernisation", including diversifying the Russian economy. Also, many investors have been wary of coming to Russia because of corruption and the dominant role the state plays in Russia's business life. Mr Medvedev told the St Petersburg International Economic Forum that long-term direct investment was "necessary for modernisation". He also said that he would ask the government to create a special investment public-private fund. "Such an idea should be implemented within a year," he said.

The Russian economy, heavily dependent on oil and gas revenues, was enjoying several years of robust growth in the middle of the 2000s. However, it was hit hard by the global economic crisis, and in 2009 the economy shrank by 7.9%. The economy is forecast to return to growth this year, expanding by about 4%. But Russia is also set to run a budget deficit for several years to come. Its oil revenues fund, which has been financing the deficit, is expected to end next year, and the government wants to attract more foreign investment to boost the economy. In an interview with Bloomberg Television earlier this week, Russia's First Deputy Prime Minister Igor Shuvalov said: "While Russian stocks may be undervalued, Russia is not seeking investors interested in quick and easy money." "I would welcome real investors who can build factories, something new in this country."

Which is more risky--flying through volcanic ash or driving to the store?

A very interesting article on risk and are we, as individuals, able to accurately assess risk especially if the consequences are not immediate or we don't associate one danger with another because they appear remotely connected.

From  BBC: Is driving more dangerous than flying through ash?

""The problem is that people are generally terrible at making rational decisions about risk.
To take just one of many examples, many Americans avoided planes after 9/11 and travelled by road instead. As a result, a team of researchers from Cornell University estimated there were at least 1,200 more deaths on America's roads than there would have been...Some 1,200 people died because they were avoiding what they perceived to be a riskier form of transport, 954 more than who died on the planes used for the terrorist attacks. 

An example of government not properly assessing risk...I don't have the source handy, but I understand that when the Federal Aviation Administration (FAA) mandated that people with small children buy an extra seat and use a car seat rather than hold children in their laps, deaths of small children actually increased! They did not increase in planes however (as far as I know, no child has been killed in-flight as a result of turbulence), but on the highways, as parents elected to not pay for the extra seat because of the expense and drove instead.  More families driving than flying, hence the incidents of car accidents increases. (Note: I am not saying it is the SAME kids getting killed in accidents as would be flying)...

Who spends a dollar more effectively--the Fed Govt or You?...Guess again!

     NewsFlash: We are/have been in a recession!  In this particular recession it is generally accepted by economists (relatively objective ones)  that it is because of sagging Aggregate Demand. This means our total demand for US made goods and services is LESS than our ability to supply US made goods and services (aka Aggregate Supply).  We don't necessarily have an excess supply of goods/services, but we have an excess supply of CAPACITY to produce goods/services---a gap between our actual production and our potential to produce good/services.   Because people are not buying "stuff" then businesses are not selling stuff and certainly not re-ordering stuff.  This in turn effects employment as employers shed employees as demand for their goods declines.  As more people become unemployed they buy less so businesses lay workers off or close entirely, so on and so forth.  It becomes an economic death spiral downward. 
    This means we need to get money into the hands of people/businesses so they can spend it to INCREASE or at least STABILIZE Aggregate Demand so businesses will sell/re-order more goods, and more people can keep there jobs, and hopefully more will be re-called as business picks up--Phew! That was hard work! How best to achieve this?  
     In general, we all think in terms of "bang for the buck" (hey, we are Americans, after all).  What transmission mechanism that originates from the Federal Govt is going most effective---Govt spends a dollar OR Individuals spend a dollar from a tax cut?  Oh, boy, here we go!
     Below is a chart that represents research into how much ONE DOLLAR spent (by govt or individuals) INCREASES GDP, which is the goal of congress/the President. This is called "The Multiplier Effect", or more specifically, "The Keynesian Multiplier Effect".

Mark Zandi via  Ezra Klein 

     Notice that one dollar spent can either yield a change in GDP of more than one dollar or less than one dollar.  How can this happen? 

     To simplify, lets assume we ALL behave the exact same way.  If I get a dollar in the form of a tax cut, research shows that I will save some portion of that dollar and spend the rest.  So if we all save 10% ($.10) of our dollar then we will spend the other 90% ($.90), thereby increasing GDP by $.90.   Economists would say we are acting "rationally" by saving some of our bounty.  However, government does not save ANY of that dollar because, well, why would they? So, on the face of it, which entity, the  individual OR the government, is going to have the BIGGEST impact on the purchase of GDP in that FIRST round of spending?  Why the government, of course (I just proved it to you mathematically!!).  Govt is going to buy $1.00 worth of "stuff" and I am going to buy only $.90. 

    However, as you look at the graph you will notice as you start from the top and move down you will see a transition from Tax Cuts/Rebates to more direct spending by the government then back to spending by individuals.  Does this not go against what I just said about government spending being king? Sort of...

    There IS going to be "leakage" from that federal dollar spent and not all of it will be spent directly on goods/services.  Some of that dollar will be subjected to what I call "WTF"---no it is not what you are thinking, but  it could be, I suppose.  For me, WTF is "Waste, Theft, Fraud".  Ultimately we want to look at who, an individual, business, or government entity is going to spend MORE of that initial dollar when it is received, hence affecting Aggregate Demand in the most impactful way.

   Looking at the graph, we see the group with the highest tendency to spend an additional dollar they receive is the unemployed and others receiving direct government transfers. This makes sense, doesn't it? These are people living at the margin, as economist put it. Or more simply, people who have little immediate need to save but the most incentive to spend right away.  They spend on necessities, one would suppose. Necessities, like food, rent, utilities and other basic staples, that are made in the US (mostly).  This allows businesses to stay open to sell stuff and re-order more stuff AND keep/hire employees.  Now Aggregate Demand is STABILIZED! Perhaps it inches forward to close the recessionary gap?

    This is important to understand because there is A LOT of politics that takes place between the gaps of all the groups in the above graph.  Who should get a tax cut, if anyone? Who should spend money in a recession:? The Federal Govt directly, or people who are most likely to spend it to get the economy stabilized?  What do YOU think????

 

"And then, And then, I threw a puppy at the Hells Angels and Escaped on a Bulldozer--yeah, yeah, that's what I did!"--no, this was not Will Ferrell!

I spit milk through my nose after reading this...Close your eyes and envision this scenario from start to finish...The Onion could not do any better...

German student attacks Hell's Angels with puppy

A German student created a major traffic jam in Bavaria after making a rude gesture at a group of Hell's Angels motorcycle gang members, hurling a puppy at them and then escaping on a stolen bulldozer.
German police said on Monday that after making his getaway from the Hell's Angels club, the 26-year-old dumped the bulldozer, causing a 5 km (3 miles) traffic jam near the southern town of Allershausen, local police said. He then fled to his home nearby where he was apprehended by the police.  "What motivated him to throw a puppy at the Hell's Angels is currently unclear," said a spokesman for local police, adding that the student had lately been suffering from depression.  The puppy was now in safe hands, the spokesman added.

Arizona has done some squirrely things lately, but this the most squirrely---No, really, it is literally Squirrely

Good use of tax money?? I report, you decide...:)

Arizona Spends $1.25M to Save 250 Squirrels

""Arizona is spending $1.25 million to build bridges for endangered squirrels over a mountain road so they don't become roadkill and then monitor their health.
The money is being spent, officials said, because cars kill about five of these squirrels each year.
While most suburbanites may be baffled why anyone would protect a pesky squirrel, these are Mount Graham red squirrels, a breed once thought to be extinct. Only 250 of them are known to live near the top of Mount Graham. The Federal Highway Administration grant will be used to build rope bridges over the lone road through the squirrels' habitat, according to Arizona Department of Transportation Community Relations Director Timothy Tait. The DOT plans to install 41 of the "canopy tunnel crossings" at a cost of $400,000.
Another $160,000 will be spent on cameras to monitor the bridges, and the rest of the money will fund a project to monitor the rodents.


That works out to about $5,000 per squirrel.""

NEVER have to think again about buying "the lastest and greatest"---this Chart does it for you!!

Have you ever wondered how long does it take overseas to make the equivalent of US minimum wage?

Click the image to Enlarge

Source: FixR

"Bond, James Bond"...er, I mean "Bond, Japanese Bond"--Click HERE to see the NEW Bond Girls!!

Well, not in the traditional sense of a Bond Girl...The Japanese Government is trying lure younger men to buy Government Bonds (Government Debt)...Gives new meaning to the name "Bond Girls"...

Bloomberg: Women Prefer Men Holding State Bonds, Japan Ad Says

""Japanese women are seeking men who invest in government bonds, according to an advertisement being run by the Ministry of Finance.
“I want my future husband to be diligent about money,” a 27-year-old woman says in an ad being run in free magazines promoting a fixed-rate, three-year note that Japan started selling last week. “Playboys are no good.” She’s one of five women featured in the page, which says “Men who hold JGBs are popular with women!!”
The ministry commissioned the ads to appeal to citizens for money at a time when record government borrowing threatens to outstrip demand. Prime Minister Naoto Kan, who took office yesterday, said he doesn’t have an instant fix to rein in the world’s largest public debt.
The government’s plan to attract marrying-age men comes after a campaign aimed at retirees started last August. That push featured Junko Kubo, a former anchor on Japan’s public broadcaster NHK, in ads placed in the backs of taxi cabs. Kubo followed Koyuki, an actress and model who in 2003 appeared in “The Last Samurai” with Tom Cruise as well as posters for government bonds.
“It strikes of desperation,” Christian Carrillo, a senior interest-rate strategist in Tokyo at Societe Generale SA said about the ad campaign. “I doubt this will be a successful strategy to attract retail investors.”"

"Oooohhhh, Ahhhhhh, Only at Mattress Giant!"...umm, no, not this $33,000 mattress!!!

From WSJ: A Mattress at $33,000?

""How much would you spend for a good night's sleep?

Some people might say $33,000. That's the price of E.S. Kluft & Co.'s hand-tufted, king-size Palais Royale mattress and box spring, currently the most expensive American-made mattress set on the market. The company says it has sold about 100 since introducing it in 2008.  Or maybe it's $44,000—the price tag on Kluft's Sublime model, which the company has teed up for a launch later this year""...read rest of story HERE and Click on picture to see how it is made!

Oil is THE Green Energy source we have been looking for all along....Say What?

Opportunity cost(s) is/are the most under-appreciated concept in economics, but is perhaps the most powerful when synthesized into critical thinking.  Broadly defined,  it means what you give up to get more of something else, but specifically it is the next best alternative forgone when one makes a choice.   Maybe because economists think in terms of opportunity cost is why people get so frustrated with economic analysis.  Laymen see it as not being able to make a decision ("analysis paralysis"). Economists see it as making sure you think of as many ramifications (positive and negative) when making a decision or fashioning a public/private policy.  As defined this way, you have to give weight to as many things you may have to do without as well as the things you may gain in the course of making a decision. Two examples are provided by Professor Mark Perry at Carpe Diem. You have to count the benefits as well as the costs, it is only honest to do so...

1. “Oil may be the single most flexible substance ever discovered. More than any other substance, oil helped to shrink the world. Indeed, thanks to its high energy density, oil is a nearly perfect fuel for use in all types of vehicles, from boats and planes to cars and motorcycles. Whether measured by weight or by volume, refined oil products provide more energy than practically any other commonly available substance, and they provide it in a form that’s easy to handle, relatively cheap, and relatively clean.’’

~Manhattan Institute’s Robert Bryce in “Power Hungry."

2. "Fossil fuels have been one of the great boons both to humanity and the environment, allowing forests to regrow (now that we don't use wood for heating fuel or grow fuel for horses anymore) and liberating billions from backbreaking toil. The great and permanent shortage is usable surface land and fresh water. The more land we use to produce energy, the less we have for vulnerable species, watersheds, agriculture, recreation, etc. As counterintuitive as it may be to say so, oil is a green fuel, while "green" fuels aren't. And this spill doesn't change that fact." 

~Jonah Goldberg, "Oil: The Real Green Fuel"