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The Industries That Won’t Come Back

Tuesday, April 5th, 2011

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(photo credit: gruntzooki) For all your after hours tuxedo rental needs.

The recession has caused a lot of problems for our economy, no doubt. But some industries look like they’re just not going to pull through. Specifically, these ten:

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(from The Wall Street Journal)

Good old supply and demand at work. Why buy a newspaper when you can get your news online for free? Why pay for photofinishing when most of your snapshots don’t make it past Facebook?

Are YOU still spending money in any of these industries?

(Bonus points if you can find an industry on this list that wasn’t at least partially laid to rest by the Internet!)

Americans are Spending More (yay!)… But Not Necessarily Getting More (boo)

Saturday, April 2nd, 2011

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(photo credit:  Eggybird)

Every month for the past eight months, dutiful Americans have been pulling out their wallets and handing their money to other Americans in exchange for goods and services. In other words, they’ve been lubricating the wheels of our creaky economic machine.

Why? Well, part of it is that they’re more confident now that the recession is over and there are real signs of a recovery. But the other, more significant part is that the cost of living increased. That’s right: inflation.

Food and gas prices went up, which means that more of Joe American’s dollars went to feeding his family and driving to work than to buying a new television or a trampoline for the kids.

Ben Bernanke from the Fed says that nobody should be worrying about out-of-control inflation – food and gas prices will come down again. But if he’s wrong, it’s the Fed’s job to take action to make sure Joe still has a few dollars left to pay for his morning coffee after feeding the kids and driving to work.

And by the way… while inflation sounds like a bad thing, it’s really not as bad as its evil twin, deflation.

Have you been spending more money since last summer? Why?

Capital is…

Tuesday, March 29th, 2011

Capital is the stuff capitalism is made of. It usually refers to money, but it can be any kind of asset that’s used for economic purposes, like starting a business or investing.

Venture capital firms, for example, are in the business of providing capital (money) to start up companies to help them get going.

Learn the Lyrics To Success: Metro Lyrics’ Founder Talks with TILE

Monday, March 21st, 2011

TILE showed up for part of the Global Student Entrepreneur Awards at the New York Stock Exchange this October, and we met some young folks who made us feel bad about sleeping through college.

Take Milun Tesovic, for example. He wanted a better way to find song lyrics online, so he messed around on his computer for a few hours and – next thing you know – he’s a CEO and winner of the Global Student Entrepreneur Awards. Check him out.

Watch the oh-ficial GSEA 2010 recap video here. To see all our GSEA interviews, click here.

How the Stock Market Reacts to a Natural Disaster

Friday, March 18th, 2011


(photo credit: ehnmark)

After so much media coverage devoted to videos of water swallowing up cities, we were interested to see this Reuters article from Monday about the financial implications of Japan’s bad luck.

The stock market is operating under very rare conditions, and some of the news was really surprising. For example, this is the worst hit the market has taken in two years… but it’s the worst natural disaster the country has ever seen. Why didn’t the markets totally crash?

As a matter of fact, some stocks and sectors were actually doing very well on Monday. Here are some interesting facts from the report:

  • - The construction industry was booming, probably because demand for rebuilding will soon be enormous.
  • - Stock in the company that owns one of the nuclear power plants in danger of meltdown – Tokyo Electric Power – dropped 24% almost immediately.
  • - The technology sector, once one of Japan’s strongest, took a nosedive.
  • - Investors were selling off their long-term bonds* (20 years or more), which means that they’re not confident Japan will be able to repay their bond debts in the future.
  • - The earthquake happened on Friday. By Monday, the Bank of Japan was ready to announce that it would inject 15 trillion yen (about $187 billion) into the economy to support it during the crisis. (Kind of like the U.S. Treasury has been doing here to keep the economy afloat during the recession.)
  • - This vote of confidence inspired investors to purchase more short-term bonds (10 years or less).

This just goes to show you that changes in the stock market are all about what investors predict. These predictions can be rational or irrational, but the speculation never ends – no matter what happens.

* A bond is a kind of debt sold by governments and corporations to raise money. Basically, when you buy a bond, you’re buying the seller’s promise to pay you back (usually with a fixed interest rate) on a predetermined date.

The Invisible Economy

Friday, March 11th, 2011

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(photo credit: mi55er)

How much is an hour of bathroom cleaning worth? What about 24 hours of child care? How much would you be paid to do these things in another person’s home?

How about in your own home?

According to a new international study, the “unpaid economy” - jobs like food shopping, washing up, and getting the kids to bed – would represent about a third of a nation’s total economy if it were paid.

The Organisation for Economic Cooperation and Development looked for signs of gender equality in this unpaid work, which was traditionally done only by women.

They found that even though men have come a long way toward helping out with these tasks, they’re still not likely to spend as much time on them as women do… even if they’re unemployed.

Bring THAT to your next macroeconomics class.

Who Gets Paid for Libyan Oil?

Wednesday, March 9th, 2011

“Oil markets have been spooked by fighting that has tended to play out near oil facilities such as the Ras Lanuf oil terminal, in eastern Libya. The complex is currently in the hands of rebels, although Libyan warplanes have launched air strikes near rebel positions on the outskirts of the town, according to witnesses.

The fact that many of Libya’s key oil installations are in the hands of rebels creates a headache for oil companies already hit by the U.S. trade sanctions adopted last month against Libya. The violence is deterring tankers from loading cargoes in Libyan ports, and even when they succeed, it is unclear who they should be paying for the crude—the opposition forces or the Gadhafi regime.”

What do you think?

Is the fall of a violent dictator in the Middle East worth more expensive gas prices in the U.S.?

What to Do When Your Business Model Depends Entirely on Google’s Search Results

Wednesday, March 9th, 2011

“In a recent e-mail to employees, company founder and CEO Jason Calacanis and Mahalo President Jason Rapp said the start-up trimmed a tenth of its workforce due to a reduction in traffic caused by Google’s change to its search algorithm, according to the blog CenterNetworks.

The Google changes were meant to push down low-quality sites in search results, but some unexpected websites such as Mahalo lost their ranking as well, the report said. With less traffic visiting Mahalo, revenue took a hit, the e-mail said, according to CenterNetworks.”

What do you think?

How can online businesses protect themselves against rapid changes in the technology industry? Does this news make you think twice about investing in web-based companies?

Where your tax dollars are going in 2012…

Tuesday, March 8th, 2011


The United States Budget Proposal for 2012

Click on the image to see the whole thing.

What would YOUR budget look like if it were stuck into a sweet infographic?

The Economics of Piracy

Friday, March 4th, 2011

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(photo credit: paulhami)

Sometimes it’s true: the best way to deal with a bully is to ignore him. But everyone’s got to have a back-up plan, and it looks like the U.S. is getting fed up with the Somali pirate industry.

  • Back in 1801, when pirates still wore stockings, Thomas Jefferson decided to end America’s policy of paying off pirates for safe passage through the Mediterranean. The Tripoli-based scoundrels demanded bigger fees, but all they got was a war with the U.S.
  • Today may be another turning point; Somalian pirates have been a menace to shipping companies for years, but never before have they been so violent. The recent murder of four vacationing Americans raises the question of just how much the U.S. is willing to take to avoid a major conflict with an ugly enemy.
  • The U.S. is hesitant to take military action against the pirates because it’s just too big a job for an army that’s already stretched thin. The ocean is immense, piracy has roots throughout the “failed state” of Somalia, and there is no other viable economy to replace piracy with once it’s eliminated.

Facts & Figures

  • The average ransom for a captured ship is $5 million
  • The average amount of time hostages spend in captivity is 6 months
  • The “red zone” occupied by predatory Somalian ships is bigger than 1 million square miles of ocean

Best Quote

“Of course, I do not know what the U.S. will do in response to this latest atrocity. But Jefferson advocated an armed response and eventually war against Tripoli for far less provocation.” – Frank Lambert, professor at Purdue and an expert on the Barbary pirates

What do you think?

What company could come up with a profitable pirate-control product?

Get to it!

Check out the damage done as of the end of February 2011 in this New York Times infographic. The red numbers show number of vessels currently occupied by Somali pirates, and the white numbers show the number of civilians held hostage on each.

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(credit: Bill Marsh and Scott Garapolo/The New York Times)

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