Archive for the ‘Version 2’ Category

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

Saturday, April 2nd, 2011

tiny-egg.jpg
(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?

Putting Energy (and Investment) to Good Use

Friday, April 1st, 2011


(photo credit: Evan Prodromou)

We all know that carbo-loading is essential for running a marathon (or staying up all night writing papers/ playing video games). So why expect lasting social change to run on a cookie here, a handful of peanuts there?

“45% of the population of rural India live in villages with no electricity.” So it was only a matter of time before capitalist do-gooders found an opportunity to profit from lighting up the countryside. Providing affordable clean energy solutions is potentially a $2 billion industry in India alone. And it’s not just the entrepreneurs who profit: locals suddenly have light to study and work by, cleaner air and water, and a new job market for selling and repairing solar lanterns and other green gadgets.

Sounds like a pretty neat social venture to us. What do you think?

When it comes to supporting causes you care about, are you more likely to fund emergency projects, like disease and hunger relief, or longer-term strategies for change, like electricity?

How one manufacturer in Japan tripped up the Apple machine

Friday, April 1st, 2011

Do you know what makes your iPod go?

Here’s a hint: It rhymes with phithium pholymer.

No?

It’s made in Japan.

Still not getting it?

The shutdown of the Japanese factory that makes it is disrupting Apple’s production line.

…

If you guessed “a very specific and rare polymer used to hold together the lithium ion batteries used in iPods and a variety of other gadgets,” you’re right!! Ding!

This story is crazy. Who knew that one chemical made by one small company halfway across the world could affect iPod buyers in the U.S.? This is a good example of outsourcing in action.

For now, the company (Kureha) is scrambling to get back into action, but in the meantime, will the price of an iPod go up? Should we start stockpiling them in our panic rooms? Can we order iPods with the soothing voice of Justin Beiber pre-installed on them??

Seriously, though. Do you know where your favorite products are made?

The Dutch Sandwich & The Double Irish: How Google Saved $3 Billion in Taxes

Thursday, March 31st, 2011

We’d never heard of a Dutch Sandwich (mmm… sandwich) or a Double Irish before reading this article about how multinational corporations avoid paying U.S. taxes.

But then, we don’t have hundreds of highly-paid tax experts and lawyers working day in and day out to help us find and exploit loopholes in the tax code.

But guess who does? That’s right. The Googles, the Facebooks, the Pfizers, and the Microsofts of the world. General Electric alone currently has 975 people on staff to ensure it pays the least amount of tax possible while still not technically breaking the law.

They must be doing a pretty good job, because last year, G.E.’s U.S. tax bill was $0.00.

It pays to have smart people helping you make decisions.


(photo courtesy of Google)

How are you when it comes to saving money? Time to revisit that budget?

Click here to learn more about the wild and wonderful world of taxes!

The Dutch Sandwich & The Double Irish: How Google Saved $3 Billion in Taxes

Tuesday, March 29th, 2011

We’d never heard of a Dutch Sandwich (mmm… sandwich) or a Double Irish before reading this article about how multinational corporations avoid paying U.S. taxes.

But then, we don’t have hundreds of highly-paid tax experts and lawyers working day in and day out to help us find and exploit loopholes in the tax code.

But guess who does? That’s right. The Googles, the Facebooks, the Pfizers, and the Microsofts of the world. General Electric alone currently has 975 people on staff to ensure it pays the least amount of tax possible while still not technically breaking the law.

They must be doing a pretty good job, because last year, G.E.’s U.S. tax bill was $0.00.

It pays to have smart people helping you make decisions.


(photo courtesy of Google)

How are you when it comes to saving money? Do you have some kind of smartypants financial advisor? Are you your own smartypants?

You were there for one of the “biggest box office bombs of all time!”

Friday, March 25th, 2011


(AP Photo/Walt Disney Studios)

Congratulations – you’re witnessing history in the making! “Mars Needs Moms” – the 3-D animated Disney disaster that came out last weekend – has had one of the worst opening weekends… ever.

The film earned $6.8 million in its opening weekend… but it cost about $150 million to make. Most movies break even within a few weeks of release and then – ideally – start to turn a profit. Not so for this tribute to the power of moms. Though it brought in some revenue, it wasn’t enough to cover the cost of producing the flick.

Disney distribution president Chuck Viane says the problem is simple: “Not enough people came to see the movie.” (Um, duh.) One possible reason is that there were a lot of other animated movies in theaters this weekend, and Earth moms weren’t about to shell out $20 for 3D tickets to all of them.

So were the dismal box office numbers a product of poor timing or a cruel twist of fate?

Perhaps the movie’s budget directors should have taken Budgeting 101?

What’s up with 3-D movies anyway? Are you paying to see them? Tell us.

Do you know where the wealth is?

Friday, March 25th, 2011

According to new research from Harvard Business School, most Americans have no idea how wealth is distributed in this country.

Here’s a handy chart from the study that pretty clearly illustrates how Americans think wealth is distributed, how they wish it was distributed, and how it’s actually distributed:

wealth-actual-and-perceived.gif
(click chart to download a pdf of the study)

Did you know that there was such a huge difference between the very top and the very bottom of the wealth scale?

  • - The top 1% (about 3 million people out of 300 million) holds 50% of the nation’s total wealth, and the top 20% owns 85%.
  • – The bottom 20% of Americans (about 62 million people) owns less than 5%.

There’s an interesting discussion on the New York Times about why this might be the case, why Americans underestimate income inequality, and whether we should even care.

Are you surprised? What would you have guessed?

Guess what? You’re probably committing tax fraud on a regular basis! Yes, you!

Wednesday, March 23rd, 2011


(photo credit: swanksalot)

Did you know that New York State requires residents to pay sales tax on items they order from Amazon.com?

Not at the time of purchase, because Amazon doesn’t calculate state taxes. But when you file your state tax return every year, you’re supposed to tell the state exactly how much unpaid sales tax you owe on everything you’ve purchased from out-of-state retailers (i.e., almost everything you buy online). And at the end of the year, you’re supposed to write a check for that amount.

Which, of course, nobody does. So states have been trying to pass laws requiring online retailers like Amazon, FatWallet, and Overstock to collect sales tax at the time of purchase.

Why all the sudden fuss? Well, most states are facing multi-billion-dollar budget deficits these days, and unpaid sales tax on online purchases could add up to more than $10 billion this year. Aside from selling the local park to a private company, taxes and traffic tickets are really the only ways a state can hope to raise the money it needs.

When you’re low on cash, don’t you suddenly start thinking about all the money that’s owed to you?

Click here to learn about hidden taxes, tax evasion in Switzerland, and tax breaks for do-gooders.

Why are gas prices so wildly different around the world?

Tuesday, March 22nd, 2011


(photo credit: Drew__)

If you’ve been in Europe recently, you’ve probably noticed all those extra digits in the price of “petrol.” In the U.S., we’re horrified at the idea of paying $4 a gallon for gas, but in Norway they’ve already blown past the equivalent of $9.

But… why? Is it harder to pump oil in to Norwegian gas stations? Is greater demand among the Norse driving prices up? Not even.

There are a few reasons, but according to Aaron Smith at CNN, it’s pretty much all about the government. Governments can either charge their citizens extra to buy gas (by taxing it) or the pay them to buy gas (by handing out subsidies, which lower the price per gallon).

Taxing gas is useful because the money pays for government programs. And handing out subsidies is useful if you want to keep your population happy. (You see this a lot in oil-producing nations like Saudi Arabia. It’s hard to be angry at the super-wealthy ruling elite when they’re basically paying for your gasoline.)

The moral of the story: Stuff is only worth what someone says it’s worth. $3 or $10, you still need it to make your Hummer go.

How much do you think you should pay to fill up your gas tank?

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.

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