ATTN Musicians: You MIGHT have an illegal instrument and the US Fish and Wildlife Service may be looking for you...

If you are a muscian this article will be of interest to you, especially if you use an instrument that MAY contain content that comes from endangered species of trees or animals (ivory, for example). I have not heard of this before, but Federal officials are apparently very aggressive in pursuing current producers of instruments (story below) containing banned content BUT also if you own a previously made instrument (even if it is an antique) it could be subject to confiscation. 

Guitar Frets: Environmental Enforcement Leaves Musicians in Fear

""Federal agents swooped in on Gibson Guitar Wednesday, raiding factories and offices in Memphis and Nashville, seizing several pallets of wood, electronic files and guitars. The Feds are keeping mum, but in a statement yesterday Gibson's chairman and CEO, Henry Juszkiewicz, defended his company's manufacturing policies, accusing the Justice Department of bullying the company. "The wood the government seized Wednesday is from a Forest Stewardship Council certified supplier," he said, suggesting the Feds are using the aggressive enforcement of overly broad laws to make the company cry uncle....""

Who would you rather see after a natural disaster---A FEMA official or a Walmart Associate?

  

I have seen many stories on TV this morning about communities preparing for potential disaster on the East coast.  Much of the focus is on how local, State and Federal governments are responding, as it should be at this point.

The story below from NPR is a reminder of how businesses (Walmart, Home Depot) are also busy preparing for post-hurricane scenarios to ensure that basic needs are met and there are minimal shortages of staple goods. Good logistics (HT: Mikeroeconomics) and coordination between the public and private sectors will hopefully create an outcome that limits human suffering and property damage. (HT: Carpe Diem)

Big-Box Stores' Hurricane Prep Starts Early

""Forecasters don't expect Hurricane Irene to make landfall until Saturday. But for nearly a week now, big-box retailers like Walmart and Home Depot have been getting ready.

They've deployed hundreds of trucks carrying everything from plywood to Pop-Tarts to stores in the storm's path. It's all possible because these retailers have turned hurricane preparation into a science — one that government emergency agencies have begun to embrace.""

A nice timeline/flow chart of Steve Jobs life and times at Apple and elsewhere. Fascinating story!

Click on image to make bigger or go to link below...

Source: The Big Picture Blog

Cartoon: Meeting of the Economics Optimist Club is now in session. Anyone? Anyone? Anyone?

Source: Christian Science Monitor

Timely validation of my lecture yesteday on Lefties teaming with Righties on the issue of Ethanol...Not so much patting myself on the back as affirming I am not crazy... :)

This is the second time in two days I get validation of my rants against ethanol subsidies.  This is one issue that elements on the Left AND Right can come together to lobby against a Federal policy.  They are doing it for different reasons, but the goal is common none-the-less.

A Budget Plan That Treehuggers and Tea Partiers Can Love

""There's not much that Friends of the Earth and The Heartland Institute agree on. Friends of the Earth is among the most liberal of the environmental groups in the US. Heartland thinks that climate change isn't a crisis at all—actually, it might even be a good thing—and is the host of an annual Green Scissors Report, which looks at environmentally problematic government spending.  It's heartening to know that while two groups might not be able to agree on the question of whether or not climate change is real, they can agree that subsidies for corn ethanol are dumb.""

Ethanol is not the only subsidy they are teaming up to lobby against. Here is a list:

$4 billion in "royalty relief" for oil and gas drilling
$6.7 billion in a manufacturing tax break for domestic oil and gas companies
$22 billion for nuclear and uranium enrichment loan guarantees
$56 billion in tax credits and market support for ethanol
$1.3 billion in support for the FutureGen "clean coal" project
$18 billion in subsidies for commodity crops like corn, wheat and soybeans
$30 billion for crop insurance
$2.2 billion in tax breaks for timber companies
$20.8 billion in funds for road and bridge projects that they deem unnecessary
$5.6 billion in Army Corps of Engineers projects that "serve little to no national interest."

Graphic showing the world largest employers...I think you will be as surprised by the names on this list as I was...

Walmart by far is the world's largest employer with a little over 2 million employees.  Look at the names and country of origin for the rest of the top countries...Are you as surprised as I was?

Source: The Economist

Note: TESCO is a British Grocery chain...

The cost of the Ethanol Mandate is not chicken feed....The Federal Government is bailing out chicken producers because the price of chicken feed is increasing---because of the Federal Ethanol Mandate. Does anyone else think this is kind of crazy???

How timely. Today in class I used the ethanol mandate as a way to illustrate Frederic Bastiat's "Seen and the Unseen" and the damaging effects of a policy gone awry, but not gone away.  While the article below is not about ethanol, there is a connection. See if you can find it...

U.S. places $40 million chicken order

""The United States is stepping in to help bail out another American industry -- chicken farmers and meat processors.

The nation's chicken industry is having a difficult year. Chicken producers are struggling with higher costs of running their business at the same time that consumers are buying less meat.

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This has created a glut of chicken products in the market.

The Department of Agriculture, keenly aware of these issues, announced Monday that it will make a special purchase of up to $40 million of chicken products, which the government will then donate to federal food assistance programs such as soup kitchens and its national Feeding America programs.

"At a time when the industry is under great stress due to the high cost of feed ingredients and the general economic slowdown, we appreciate USDA's willingness to step forward," the group said in a statement...."

Keeping in mind the focus of my lecture today I have to ask: WHY is chicken feed increasing in price? Anyone? Anyone? Anyone?

Here are 5 Money Tips for College Freshman---so simple, yet so difficult to achieve--BUT TRY!!

Five Money Tips for Every College Freshman (Wall Street Journal)

Freshman year of college can mean countless adjustments -- from sharing a room to hours of free time between classes. It's also some young adults' first taste of relative financial independence.

With that in mind, we've asked financial advisers to give freshmen five money rules to remember:

1. Live like a student.

Not like a rock star. Before heading off to school, create a budget for the semester using a free online personal-finance site such as Mint.com or start tracking your cash flow using software such as Quicken, says Jeremy Portnoff, a certified financial planner at Portnoff Financial in Westfield, N.J.

 Mr. Portnoff says setting a budget for both big-ticket items such as books and incidentals such as Friday night pizza will help ensure that you don't run out of money by Thanksgiving. Also, consider switching to a bank with an ATM on or near campus to avoid unnecessary fees, he says.

Mark Kantrowitz, publisher of financial-aid site FinAid.org, says your total debt at graduation should be less than your expected starting salary. "If you borrow more, you may still be repaying student loans when your children enroll in college," he says.

2. Show your ID.

You can get discounts with your school ID on everything from Broadway tickets to off-campus restaurants. If you don't already own a computer, you might find a cheaper deal by checking the discounts your school offers, says Matt Dobbie, a MassMutual financial adviser in Camp Hill, Pa.

You also can save with the $20 Student Advantage card, which provides 20% off standard Greyhound fares, 15% off Amtrak and discounts at online retailers such as BarnesandNoble.com and Target.com. Taking advantage of student discounts with friends can help avoid some of the peer pressure to spend above your means, says Mr. Dobbie.

3. Get a job.

The tab for spring break and dinners out with friends can add up quickly. Getting a job can help fill in a budgeting shortfall or, ideally, reduce how much you need to borrow, says June Walbert, a San Antonio-based certified financial planner at USAA, a financial-services company for people with military ties.

Look for work on-campus or at local restaurants or clothing stores. Even baby-sitting, house sitting or starting up a business -- provided it doesn't become all consuming -- shouldn't be ruled out.

4. Protect yourself.

Even with no or little assets, identity theft can be an expensive and nasty headache. "Guard your Social Security number with your life," says Steve Curley, an Orlando-based certified financial planner at Water Oak Advisors. Be especially wary of signing up for multiple "free" credit cards since infrequent use can increase the likelihood of identity theft going undetected. Shred old credit-card statements and bills, avoid using shared campus computers to conduct online banking, and take caution when using mobile devices to access bank records, Mr. Curley says. Also, get in the habit of checking your monthly bank and credit card statements for suspicious activity and reviewing your credit report annually. You can get a free report each year at AnnualCreditReport.com.

5. Start saving.

It's never too soon to start saving, says Bruce Barton, a San Jose, Calif.-based certified financial planner at Parkworth Wealth Management. "Even saving a modest amount like $25 a month helps you learn good saving and investing habits," he says. Mr. Barton recommends students open a Roth individual retirement account with extra cash from their summer job, tax refund or birthday money they may receive from family.

And when he gives financial-literacy workshops to clients' college-bound children, Mr. Barton is sure to point out the "magic of compounding," which shows students how saving a seemingly small amount today can add up years down the road.

If we taxed the "Super Rich" at 100% of their income, would that close our budget deficit? An interesting look at those numbers here...

There has been a lot of talk about putting an additional tax on millionaires to increase revenues to the Federal Government.  Let me be more radical. Let's take ALL their taxable income for one year!

Below are data from the IRS (year 2009). Look at the incomes for "$1,000 under $1,500" on down to "$10,000,000 or more". The data are in "thousands", so add 3 zeroes to the end of the numbers to get millions.  The third column shows "Income Tax Paid" and the fourth column shows "After Tax Income (What is left)" for each of the benchmark levels of income. 

In addition to to what they have already paid in the third column, let's go ahead and take the amount in the fourth column too (the amount the rich have left over after paying taxes).

That total is $549,411,208,000 (billions).


Look at the data below, specifically the "Deficit (-) or Surplus (+)" line of numbers. If, in 2009, we took what rich taxpayers already pay in taxes PLUS what they have left over (in others words tax them at 100%), it would still not come close to closing the budget deficit for the fiscal year 2010 (or 2011 or 2012). Add the $549 billion number to the negative number--it becomes LESS negative.

The budget deficit would be very small in 2013, and indeed, it be gone by 2014... BUT that assumes there would be ANY millionaires around anymore to tax.

Far be it from me to defend the rich. Not one and never will be.  My goal here is to show the scale and scope of our budget issues at the Federal level. If taking all money from the rich does not come close to solving the problem, then what IS the problem? (Art--I DO already know the answer :) )

Do the Super Rich need to be subjected to higher taxes? That is a political question. It might make people feel better, but it is not the solution to our long term budget problems.  Can't we have a better class of politicians (Dem/Reps) working on our behalf? Rhetorical question, needs no answer....

A short opinion piece in Newsweek written in 1995 on how implausible it will be for the internet to change much. The perils of trying to predict the future when it comes to technology.

The following is from a Newsweek magazine opinion piece in 1995 on the viability of the intenet--around the time most of my students were one or two years old.  Some of the things he is defending as absolutes have gone by the wayside or soon will be.  Quite amazing how far we have come in a relatively short period of time.

The Internet? Bah! (HT: The Agitator)

""I’m uneasy about this most trendy and oversold community. Visionaries see a future of telecommuting workers, interactive libraries and multimedia classrooms. They speak of electronic town meetings and virtual communities. Commerce and business will shift from offices and malls to networks and modems. And the freedom of digital networks will make government more democratic.
Baloney. Do our computer pundits lack all common sense? The truth in no online database will replace your daily newspaper, no CD-ROM can take the place of a competent teacher and no computer network will change the way government works. . . .

Every voice can be heard cheaply and instantly. The result? Every voice is heard. The cacophany more closely resembles citizens band radio, complete with handles, harrasment, and anonymous threats. When most everyone shouts, few listen. How about electronic publishing? Try reading a book on disc. At best, it’s an unpleasant chore: the myopic glow of a clunky computer replaces the friendly pages of a book. And you can’t tote that laptop to the beach. Yet Nicholas Negroponte, director of the MIT Media Lab, predicts that we’ll soon buy books and newspapers straight over the Intenet. Uh, sure . . .

Then there’s cyberbusiness. We’re promised instant catalog shopping—just point and click for great deals. We’ll order airline tickets over the network, make restaurant reservations and negotiate sales contracts. Stores will become obselete. So how come my local mall does more business in an afternoon than the entire Internet handles in a month? Even if there were a trustworthy way to send money over the Internet—which there isn’t—the network is missing a most essential ingredient of capitalism: salespeople.""

How wrong one person can be!!

Results of a Gallup Poll on how people view their childs school relative to other schools around them.

Is this a case of cognitive dissonance?  People surveyed tend to rate their own childs school highly while the other schools in their area are viewed as a cut below (or many cuts below).  I think it is because we are more aware of what goes on in our schools and tend to take ownership of it because it is more personal.  Or is it simply more of a comfort thing---it HAS to be good/fine/ok because I trust them with my child. 

How can the public simultaneously like their own school, but not have a positive view of everone elses school?  This is similar to our views on politicians---everyone loves their own, but thinks Congress as a whole is broken.  How do we reconcile the two?  Maybe we ARE crazy....

Source: Gallup Poll

As an aside: Why did the percentage of people expressing a positive view of their childs school spike from 2007 to 2008? That is a 58% increase!  It was the first year of the recession.  I cannot think of a good reason, can you?

Fact of the Day---Over 50% of the plastic bottles we "recycle" go to (mostly) China for processing...Think about that when you fill up your little recycling bin...How does THAT help the environment?

Bottle Recycling Plan Is Left at the Curb: For Coke, Supply of Used Plastic From Neighborhood Programs Falls Short as Demand Climbs in China

""A bit more than half of the PET bottles recovered for recycling in the U.S. since 2006 have been shipped to other countries—mostly China, which refashions them into fiber for clothing and furniture. It often costs less to transport PET bales on empty ships returning to China than to transport them across the U.S., according to industry officials.""

Notice is says it "costs less"..I am guessing they are only counting direct, accounting costs.  How about the cost of the pollution and non-renewable resources consumed in transporting the plastic to China AND BACK! Should we just bury it in the ground and be done with it??

This graphic below was a part of the article. I was somewhat surprised to see how much recycling of plastic bottles is actually done compared to the number of plastic bottles produced, roughly a 1 to 4 ratio.

Source: Wall Street Journal

Nice graphs/charts showing the relationship between food prices and social unrest. Invariably it is the consequence of bad economic policy...

I often tell students the genesis of many/most incidences of civil unrest are for economic reasons, not  for "freedom" or "liberty"---these attributes usually come along later. The graph below shows the correlation between the spike in food prices and riots in various countries. The relationship is pretty strong wouldn't you say? The second chart shows why.

Source: Conversable Economist

In all poor and developing countries food is a much larger percentage of a families budget. They are more sensitive to changes in food prices and it can plunge people into crisis relatively quickly.

SOURCE: CIVIL EATS

Economics is about the allocation of scarce resources to meet needs and wants. If basic needs are not met by the powers that be, then they can expect social problems and unrest. 

A nice graphic showing the perils of making only the minimun payment on your credit card. DO NOT fall into this trap. It will be the most expensive mistake of your life...

If you purchase something on a credit card, here is, literally, a graphic reminder of the importance of paying MORE than the minimum required. Paying the minimum is a fools game. I don't have to tell you who the fool is...

Source: Visualizing Economics

More evidence that the good ol' days were not so great. The earninig power of the minimum wage in 1952 and Today...When would YOU have preferred to live?

With much hostility lately towards Capitalism and Free Markets in general (with justification) it is sometimes difficult to see the forest for the trees.  It has been the greatest force in history towards advancing the standards of living for a vast majority of the worlds people.  The good ol' days were not so great...I know this because I was there...

This is also a good lessson in purchasing power.  Money has value because of what it can purchase.  It is not how much you have, but what you can get in exchange for it. The choices today are amazing.

The following, in its entirety, is from Carpe Diem:

""To demonstrate how free market capitalism generates increased prosperity over time for average (or even low-income) Americans, economist W. Michael Cox of the Dallas Federal Reserve has compared the purchases at different points in time from the income earned by high school graduates or entering college freshmen working at a full-time, minimum-wage summer job (ignoring taxes). Here's a summary of his article "Capitalism's Many Benefits Create 'Luckiest Generation,'" which appeared in Investor's Business Daily in October 2000.  Several years ago, I presented an updated comparison of the purchases from summers jobs in 1949 and 2009 in this CD post. Here's another update:

In 1952, the minimum wage was $0.75 per hour (equivalent to $6.39 in today's dollars), and a full-time summer job at 40 hours per week for 12 weeks would have generated $360 in total summer earnings (ignoring taxes). Using retail prices from a 1952 Sears Christmas Catalog, I found that a teenager then would have only been able to purchase the following 3 items with his or her entire pre-tax summer earnings of $360 working at the minimum wage (with $15 borrowed from the parents to cover the full $375 cost):

Source: Carpe Diem

Now compare that that to the items in the table below that could be purchased by a teenager or college student this year with his or her summer earnings of $3,480 (ignoring taxes) at the current minimum wage of $7.25 per hour:

Source: Carpe Diem

According to Cox: "Add it all up. When it comes to their economic prospects, today’s young Americans are the Luckiest Generation in history—at least until their children grow up and forge an even luckier one. And even if real wages are flat, the explosion of new products over time at lower and lower prices translates into a rising standard of living for all income groups, even minimum wage workers." 

MP: Teenagers today can afford products today like laptop or notebook computers, Kindles, digital cameras, GPS systems, iPads, iPhones, and iPods that even a billionaire couldn't have purchased 20 years ago.  The comparison above illustrates that we've made a lot economic progress over the last 60 years since 1952 that has increased our national prosperity - and that's happened in spite of ten recessions, the stagflation of the 1970s with 18.5% mortgage rates and a 20% prime rate, the S&L crisis with almost 3,000 bank failures, several major stock market corrections, the Great Recession, etc. 

Even though the economy is still struggling to recover from the 2008-2009 recession, and we've had sub-par economic growth and sluggish job creation this year, economic progress and a rising standard of living will continue to move forward.  The economic challenges of the past haven't stopped innovation and prosperity in the long run, and the current challenges might slow progress in the short run, but won't in the long run.  Just like today's teenagers are infinitely more abundant than their counterparts in 1952 and can afford items not available to billionaires of past eras, the teenagers in 2070 will be infinitely more abundant than today's teens and will be able to afford products that today's billionaires can't even imagine, much less afford.  ""