Archive Category: Money & Finance
More Gloomy Economic News: More and More Americans are Living Off Credit Cards
"Charge it!" That seems to be how more and more people in the United States are surviving (and as you can guess, a poor long-term strategy):
Government and agency statistics illustrate this troubling trend. The Federal Reserve reported Wednesday that Americans’ credit card debt jumped 6.7% in the first quarter of this year to $957.2 billion, This spike comes despite the fact that nearly one in three banks is tightening guidelines for credit cards.
In Atlanta, debtors calling the agency in the first quarter of this year had an average of $29,300 in unsecured debt, primarily on credit cards, up from $25,700 in 2007. They spent $335 on groceries and $242 on gas, on average, in April. A year earlier, those outlays averaged only $291 and $181, respectively.
For many people, racking up credit card debt is not a choice they want to make, experts say. Not too long ago, they could have tapped into the equity in their homes through loans or lines of credit or refinancing. But this debt, which usually carries lower interest rates, is no longer as widely available with the collapse of the housing market.
So, faced with soaring costs for food and fuel, people find they must charge more to make ends meet.
Beer-Loving, Porn-Watching, iPod-Listening Yacht Owners: California Wants to Tax You
Watch out beer-loving, porn-watching, iPod-listenin’, yacht owners! The big meanie State of California is out to tax you:
As state leaders hunt for politically palatable solutions to the swelling budget shortfall, some Democrats are proposing unorthodox ways to generate cash.
Strip clubs, six-packs, grocery bags and iTunes downloads are all in their sights as alternatives to broad income or sales tax hikes. So are gas guzzlers and yachts — and a tax loophole for criminals. [...]
Calderon said he was moved to push for levies on downloads such as iTunes because state sales tax laws do not reflect the high volume of purchasing that Californians do online. Consumers can download music from the Internet through Apple’s iTunes and other services tax-free, Calderon noted, while they pay sales tax for buying the same music on a compact disc at a store.
His proposal would empower state authorities to collect sales tax on the downloads, increasing the cost of a typical 99-cent song to roughly $1.07. Calderon projects that the bill (AB 1956), which could also apply to pornography downloads, cellphone ring-tones, online books and feature films distributed on the Internet, would raise about $500 million for the state budget.
The idea stalled in committee this month in the face of fierce industry opposition. But like the other proposals, it could be revived at any time, most likely when legislative leaders hammer out a budget agreement this summer.
Calderon said the resistance to his bill did not surprise him. But he is perplexed that he hasn’t been able to get more traction for another proposal: a 25% tax on sex toys, strip shows, pornographic magazines and videos and anything else sold in an "adult entertainment venue."
Assemblyman Charles Calderon’s bill, needless to say, are unpopular:
"Some people are e-mailing, threatening to come and slug me," said Assemblyman Jim Beall (D-San Jose), who hopes to see a $1.80 tax added to the price of every six-pack of beer sold in the state. "We’re getting some pretty nasty comments."
But at least, it’s bringing some people together:
A coalition of porn stars, strippers and others in adult entertainment roamed the halls of the Capitol recently to lobby against the Calderon bill (AB 2914).
Evan Halper of the Los Angeles Times has the story: Link
Is $120 Oil Actually Good For Us?
Sure the price of gas is hurting a lot of us right now, but there are some that say $120 oil is actually good for consumers in the long run:
"Nobody at Goldman Sachs wants to see a fuel truck pull up and say "Ok, here’s your 60,000 gallons of gasoline,’" said Michael Cosgrove, president of the commodities brokerage Amerex Brokers, which handles transactions for both banks and end users of oil like refineries. "Ultimately, it’s the consumer."
Which is one reason why $120 oil is necessary - to limit demand in a supply-constrained world.
"I think the market is working," said Joseph Stanislaw, an independent energy adviser at the consulting firm Deloitte & Touche. "It forces us to make decisions as individual consumers that will change our behavior. It needs to be done."
Chinese Companies are Finding US to be a Bargain!
After decades of US investments in China, it seems that the pendulum is swinging back. Today, many Chinese firms are pleasantly surprised to find that land, energy, and operating costs are actually cheaper in the United States as compared to China!
Liu Keli couldn’t tell you much about South Carolina, not even where it is in the United States. It’s as obscure to him as his home region, Shanxi province, is to most Americans.
But Liu is investing $10 million in the Palmetto State, building a printing-plate factory that will open this fall and hire 120 workers. His main aim is to tap the large American market, but when his finance staff penciled out the costs, he was stunned to learn how they compared with those in China.
Liu spent about $500,000 for seven acres in Spartanburg — less than one-fourth what it would cost to buy the same amount of land in Dongguan, a city in southeast China where he runs three plants. U.S. electricity rates are about 75% lower, and in South Carolina, Liu doesn’t have to put up with frequent blackouts.
About the only major thing that’s more expensive in Spartanburg is labor. Liu is looking to offer $12 to $13 an hour there, versus about $2 an hour in Dongguan, not including room and board. But Liu expects to offset some of the higher labor costs with a payroll tax credit of $1,500 per employee from South Carolina.
"I was surprised," said the 63-year-old president of Shanxi Yuncheng Plate-Making Group. "The gap’s not as large as I thought."
(Photo: Don Lee / Los Angeles Times)
How I Spent My Stimulus
See how Americans report spending their economic stimulus checks, and submit your own report at the blog How I Spent My Stimulus. Doug in Ohio sent this picture in, saying:
“I bought 25 yards of mulch which included a back ache. Fun, Fun, Fun!”
Tron Canadian Dollar
Photo: What to do? [Flickr]
We posted about Flickr user Joe D’s "refacing" of Lincoln in the US $5 bill as a character from Tron - and now, look what happened: everyone’s doing Tron money!
Here’s a "Tronified" (Tronized?) Sir Wilfrid Laurier, Canada’s 7th Prime Minister as depicted in their $5 bill, from Flickr user What to do?
Link - via Super Punch
Man Wanted to Change Name to “In God We Trust”
School bus driver and amateur artist Steve Kreuscher of Zion, Chicago, wanted to change his name legally to "In God We Trust":
Kreuscher says the new name would symbolize the help God gave him through tough times.
Kreuscher also told the Daily Herald that he’s worried that atheists may be successful in having the phrase "In God We Trust" removed from U.S. currency.
Would his first name be In? Link
World’s Most Expensive Home: $2 Billion Skyscraper!
When the Ambani residence is finished next year, it will be the most expensive home in the world: a 27-story skyscraper in downtown Mumbai. The cost? $2 billion!
But the Ambani family can well afford it, because Mukesh Ambani, head of India’s petrochemical giant Reliance Industries, is the fifth richest man in the world and is worth $43 billion.
Forbes has the story:
The home will cost more than a hotel or high-rise of similar size because of its custom measurements and fittings: A hotel or condominium has a common layout, replicated on every floor, and uses the same materials throughout the building (such as door handles, floors, lamps and window treatments).
The Ambani home, called Antilla, differs in that no two floors are alike in either plans or materials used. At the request of Nita Ambani, say the designers, if a metal, wood or crystal is part of the ninth-floor design, it shouldn’t be used on the eleventh floor, for example. The idea is to blend styles and architectural elements so spaces give the feel of consistency, but without repetition.
Antilla’s shape is based on Vaastu, an Indian tradition much like Feng Shui that is said to move energy beneficially through the building by strategically placing materials, rooms and objects.
Link | Photo Gallery - via Growabrain
Get Ready: Oil May Hit $10 a Gallon in Just a Couple of Years!
Think that gas prices are high? According to Dan Dorfman of The New York Sun, we may be seeing much higher gas prices in just three years. How high? Try $10 a gallon.
The forecasts calling for a jump to between $7 and $10 a gallon are based on the view that the price of crude is on its way to $200 in two to three years. [...]
Early last year, with a barrel of oil trading in the low $50s and gasoline nationally selling in a range of $2.30 to $2.50 a gallon, Mr. Gaines — in an impressive display of crystal ball gazing — accurately predicted oil was $100-bound and that gasoline would follow suit by reaching $4 a gallon.
His latest prediction of $200 oil is open to question, since it would undoubtedly create considerable global economic distress. Further, just about every energy expert I talk to cautions me to expect a sizable pullback in oil prices, maybe to between $50 and $70 a barrel, especially if there’s a global economic slowdown.
While Mr. Gaines thinks there could be a temporary decline in the oil price, he’s convinced an overall uptrend is unstoppable. In fact, he thinks his $200 forecast could be conservative, and that perhaps $250 could be reached. His reasoning: a combination of shrinking supply and increasing demand, especially from China, India, and America.
Link - via Boing Boing
Why Food Prices Are Skyrocketing
What’s going on with food? Rice price has skyrocketed around the world, leading to riots in third world countries like Bangladesh, Haiti, Egypt, and the Philippines. Two large warehouse chains in the US (Costco and Sam’s Club) have gone so far as to put a quota on how many bags of rice and flours you can buy.
Overall, the price of grocery has jumped tremendously (if you’re the grocery shopper of the family, then you’d know what I’m talking about):
Many analysts expect consumers to keep paying more for food. Wholesale food prices, an indicator of where supermarket prices are headed, rose last month at the fastest rate since 2003, with egg prices jumping 60 percent from a year ago, pasta products 30 percent, and fruits and vegetables 20 percent, according to the Labor Department.
The culprit? The skyrocketing price of oil (obvious) and corn (now not a lot of people actually know about it):
Several factors contribute to higher food prices, analysts say, but none more than record prices for oil, which last week closed above $105 a barrel. Oil is not only driving up production and transportation costs, but also adding to demand for corn and soybeans, used to make alternative fuels such as ethanol and biodiesel.
As a result, corn prices have more than doubled in commodity markets over two years, and soybeans nearly tripled, according to DTN, a commodities analysis firm in Omaha. Meanwhile, with poor harvests in major wheat-producing regions, wheat prices have more than tripled.
These crops have a profound impact on food prices because they form foundations for many products, including oils, sweeteners, and flour. Corn, for example, is a key ingredient in livestock feed. When the price of corn rises, so does the price of feed, and ultimately, so do the prices of meat, poultry, and eggs.
Robert Gavin of The Boston Globe has more: Link
Captain Capitalism on Why Saving is Bad for America
In this Flash comic "Piggy Bank Pinko", Captain Capitalism explains why it’s bad - heck, down right communistic - to save money.
Kid: Captain Capitalism! Wow! What are you doing here?
Captain Capitalism: I think the better question, son, is just what do you think you’re doing here?
Kid: Putting money in my piggybank …
CC: Cripping our nation by stagnating the economy and throwing us into another recession is more like it, commie!
Link | Check out more Captain Capitalism by Brad Graeber | Captain Capitalism Blog - Thanks Mangesh!
Tron Lincoln
This is Flickr user Joe D!’s idea of art: "refacing" legal tender … and he didn’t limit himself to small bills. Link [Flickr photoset] - via Super Punch
From Blackjack to Wall Street: Old Pros Talk about the Bond Market
The Wall Street Journal has a very interesting interview with Edward Thorp and Bill Gross. When he was a young math professor, Thorp developed a (famous) system for wagering on blackjack that maximized winnings. He then applied his system to the biggest casino in the world: Wall Street.
Wall Street Journal: How did you get interested in blackjack?
Edward Thorp: I went to Las Vegas in 1958. I’d learned a strategy that would let you play just about even, so I decided to play with $10. My $10 lasted a lot longer than anyone else’s at the table. I thought there had to be a mathematical way to beat the game, and that would be interesting mathematics. I figured it out and a few years later I wrote "Beat the Dealer."
WSJ: What about you, Bill?
Bill Gross: I picked up Ed’s book in early 1966. I got in an automobile accident and had to go into the hospital and had time to practice the card-counting technique he discovered. And it worked! I had $200, so I headed out to Las Vegas. I turned my $200 into $10,000. I didn’t care about the money. I wanted to prove that you could beat the system. Then I thought about what I could do that takes the same skills. I realized it was investing.
Mr. Thorp: He started out with $200 and now he manages nearly $1 trillion.
Ten Thousand Cents, A Mechanical Turk Art
Ten Thousand Cents by Aaron Koblin and Takashi Kawashima uses Amazon’s Mechanical Turk (previously on Neatorama), where thousands of individuals working in isolation from one another painted a tiny part of a bill without knowing what the overall project is all about.
Then the duo captured the painting process and put all 10,000 being drawn simultaneously into one video clip.
6 Quirks of Ownership: How Possessions Bend Our Perceptions
People who want to sell something tend to set the price far above what others think it’s worth. That’s human nature, but it isn’t just greed. The sheer fact that we own something affects our judgement as to its worth. PsyBlog details six reasons buyers and sellers (or owners and non-owners) don’t see eye-to-eye, and how some use these psychological quirks to increase business. Link
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+SUHappy Seward’s Day!
The $7.2 million check used to pay for Alaska (Source: Wikipedia)
In March 1867, the Russian Empire sold Russian America, the territory that would later become the State of Alaska, to the US Government for $7.2 million or about 1.9¢ per acre.
Tsar Alexander II was fearful that he was going to lose the Alaskan territory (including the Aleutian islands) to the British in a future conflict. The colony was never profitable anyway, so he told the Russian minister to the United States to negotiate the sale.
Secretary of State William Seward sealed the deal and was promptly derided for spending so much money on a land so far away. Newspapers labelled the deal "Seward’s folly", "Seward’s icebox", "Andrew Johnson’s polar bear garden", and our favorite: "icebergia."
In 1890s, gold was discovered in Alaska, and in 1968, oil, so Seward
had the last laugh. Today, the last monday of March is celebrated in Alaska as "Seward’s Day."
25 Most Valuable Blogs: They’re Worth How Much?!
Douglas A. McIntyre of 24/7 Wall St., a blog about stocks and other Wall Streets preoccupations, wrote an interesting post titled the Twenty Five Most Valuable Blogs.
The post attempts to attach value to the listed blogs by guessing their traffic and ad sales. From private conversations with other bloggers and Neatorama’s internal traffic statistics, he’s underestimating many of the blogs’ traffic. But he’s making it up in the valuations - they are stratospheric! ($48 million for PerezHilton? LOL!) Now I know why Wall St. gets in trouble with dot com bubble, subprime mortgage mess, etc.
Lo and behold, Neatorama’s on it! While I’m not sure why this lil’ blog is valued at $1.5 million (where do I cash out?), it’s still nice to see that we’re being talked about alongside some of the most famous names in blogs. 
Link - via Weblog Tools Collection
The Subprime Mortgage Crisis Explained with Cartoons
If you don’t understand a whit about what’s happening with the credit crisis and the whole subprime mortgage mess, here’s a primer - in cartoon form - at Joey deVilla’s Accordion Guy blog: Link
Or, if you’re literary and like readin’ words, the New York Times has a nice write up.
Raise your hand if you don’t quite understand this whole
financial crisis.It has been going on for seven months now, and many people probably feel as if they should understand it. But they don’t, not really. The part about the housing crash seems simple enough. With banks whispering sweet encouragement, people bought homes they couldn’t afford, and now they are falling behind on their mortgages.
But the overwhelming majority of homeowners are doing just fine. So how is it that a mess concentrated in one part of the mortgage business — subprime loans — has frozen the credit markets, sent stock
markets gyrating, caused the collapse of Bear Stearns, left the economy on the brink of the worst recession in a generation and forced the Federal Reserve to take its boldest action since the Depression?
Dealer Reneged on Deal Saying eBay Auction Was a “Mistake”: Does Complaining on the Net Work?
For me, buying a car is about as enjoyable as a root canal. And a story like this one just reinforces the low opinion I have of dealerships in general.
In a nut shell, a guy bid on eBay auction for a brand new BMW. The auction had no reserve and a minimum bid for $60k. The guy bid at that price, and the auction closed with a single winning bid: his at $60k. Later, the dealer called him and reneged on the deal, saying that the auction was “a mistake”. The guy countered that they had entered into a legal contract through eBay, that the dealership had adjusted their Buy It Now price twice (meaning they were watching the auction), that this wasn’t their first auction (they’re not novices), and that they’ve reneged before (a different car in a prior auction).
The guy, obviously, felt cheated. He posted on in a car forum, and his thread got picked up by autoblog (with 300+ diggs, but no front page yet … hmmm …) and reddit (and I suppose, now on Neatorama).
While I’m not big on Net vendettas, I can’t help but wonder at the new megaphone consumers now have. Big blogs like The Consumerist are filled with irate consumers with damning stories. Even the little guys can have their say (see the story of nissan.com and starbucked.com)
Obviously, there are two sides to the story and we haven’t (and probably won’t) hear from the dealership. So I’ll let you guys decide on who’s at fault and so on.
But what I’d like to ask you is this: what’s the thinking of big corporations on PR disasters like this one? Do they even care about Net protests? Or do they think Net protests will blow over in a matter of days and then it’s back to business as usual? If you work in a large company, I’d love to hear what you think.
Links: the original thread at M3Post (long)
Update 3/25/08: Apparently complaining on the Net worked this time around. Here’s the update of the dealership agreeing to sell the car at the bid price: Link
Euro, the Currency of Choice for Drug Traffickers
Here’s an unexpected outcome of the weakening dollar: more and more drug traffickers are going to Europe!
Even as the dea has made it more bothersome to bring coke into the United States, the sliding dollar has made importing it less profitable. Both the UN and dea note that a kilo of coke brings in two times as much in Europe as it does in America.
As with any commodity, producers look to maximize earnings by selling in markets with the strongest currencies. But unlike oil, for instance, the value of which is measured in dollars, the cocaine market is more fluid. "The euro has become the preferred currency for drug traffickers," declared then-dea administrator Karen Tandy at an anti-drug conference last May. "We’re seeing a glut of euro notes throughout South America," she said, adding that "9 of 10 travelers who carried the $1.7 billion euros that came into the United States during 2005 did not come from Europe…They came from Latin America."
Credit Card Companies Jack Up Interest For No Reason: Welcome to the World of Universal Default!
Consider this: you have a balance on your credit card and you’ve been diligent in paying the statements on time. Then BAM! Your credit card company double or even triple your interest rate for no apparent reason.
Welcome to the world of universal default:
When Ed Schwebel was whittling down his mound of credit card debt at an interest rate of 9.2 percent, the MBNA Corporation had a happy and profitable customer. But this summer, when MBNA suddenly doubled the rate on his account, Mr. Schwebel joined the growing ranks of irate cardholders stunned by lenders’ harsh tactics. [...]
"I paid the bills the minute the envelope hit the desk," said Mr. Schwebel, who had accumulated $69,000 in debt over five years before the rate increase. "All of a sudden in July, they swapped it to 18 percent. No warning. No reason. It was like I was blindsided."
The practice, called universal default, started after a rash of bankruptcy filings in the mid-to-late 1990’s and has increasingly become standard in the industry. While MBNA declined to comment on any specific customer’s account, its general counsel, Louis J. Freeh, the former F.B.I. director, said in a statement that it was being prudent by raising rates when it had reason to think the risk of not being repaid had increased.
Lenders decided they needed to watch for signs of trouble elsewhere, like missed car payments, he said. In those cases, he added, there are only two logical responses: "We’re not going to let you have this credit card loan anymore and we’re going to say, ‘Pay it off,’ or we can say, ‘You’re now more risky; we’re going to raise your rate.’ "
If you think that the Fed lowering interest rates would bring down your credit card’s interest, think again. Here’s an interesting article by Patrick McGeehan about how regular people get squeezed by crazy high credit card rates: Link
See also Frontline’s Secret History of the Credit Card - Thanks MoonCake!
And why are these credit card companies able to charge usury-level interest rates? Because they’re incorporated in states that have repealed or don’t have usury rates (From an old sister site of Neatorama)
Clarke and Dawe on the Mortgage Crisis
John Clarke and Bryan Dawe of the Australian Broadcasting Corporation explain the subprime mortgage meltdown in a manner even I can understand.
People who don’t know what they’re doing will buy anything, Bryan.
Link -via Boing Boing
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this +digg +del.icio.us +reddit +SUStop Junk Mail? That’ll cost you!
The Consumerist reports that a customer who requested Comcast cable to stop sending direct mailers found a $1.99 “change of service” fee on his bill.
I had in fact called Comcast a few weeks earlier and asked them to stop sending me anything except a monthly bill. They were happy to do so, but had not told me that they would try and stick me for $2.
Fortunately, he was able to get this charge removed via an online chat with customer service. But how many people would never notice the extra fee? Link - via J-Walk Blog
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this +digg +del.icio.us +reddit +SUAbe Lincoln in Pennies
Jeff Haber had been collecting pennies for 30 years, and this year, he decided to do something about his collection: he and his son Danny made a portrait of Lincoln out of 2,400 pennies (that’s just $24!):
Danny Haber, a 15-year-old sophomore at the high school, said it was "common sense" to use the pennies for a Lincoln picture because of the obvious connection and because it was more practical than using nickels, dimes or quarters.
His father said pennies are the only coins that have different color shades - mostly because of age and usage. There was no coloring or shining those coins, Haber said.
"It’s the only coin that has dark and light," he said. "We didn’t do anything to the coins. None of the pennies are altered."
Link - via Unique Daily
How Do You Count Your Cash?
(Metacafe link)
This is something I never thought about before, but there are many ways to count cash. People in different parts of the world use somewhat different styles. How do YOU count your cash? -via the Presurfer
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this +digg +del.icio.us +reddit +SUThe Hundred Grand Dollar Bill
That’s the highest denomination dollar bill ever printed. Well, actually it’s a not a dollar bill, it’s a gold certificate:
What’s a gold certificate? Well a gold certificate is money that the government prints that only they can own and use. It is intended for only the use in Fiscal Channels. They were never issued or used for general circulation. This specific gold certificate was printed in 1934 and has the 28th president, Woodrow Wilson’s portrait on it. There were only 42,000 $100,000 dollar bills printed and the only ones around today are not for sale and are used for educational purposes only. The few remaining undestroyed $100,000 bills are institutionalized today and may be seen only in some museums.
More at the fascinating The Biggest Dollar Bills in United States History article at Purple Slinky blog : Link - Thanks Jon Jason!
Quote: J. Paul Getty on the Formula for Success
"My formula for success is rise early, work late, and strike oil."
- J. Paul Getty, oil tycoon (1892 - 1976)
Urbana Money
According to a City of Urbana (IL) website, in 1933
When Illinois [closed] its banks in the depths of the Great Depression,
the Urbana Association of Commerce [issued] "Urbana money," which [was] used
for a month and [kept] the local economy alive.
Apparently local merchants guaranteed that when the banks reopened, the "Urbana" money could be exchanged for the real thing. My daughter learned about this in school. As she says, the money was orange and "looked like Monopoly money."
Image from DepressionScrip.com, a site chock-full of the wonderfully cheesy funny-money that kept many a community afloat during those dark days, with thanks to Jonathan for the research.
Trivia: There’s Cocaine in Almost All Dollar Bills
Trace amounts of cocaine are found in 4 out of every 5 dollar bills in circulation.
The average amount of cocaine found is 16 micrograms (0.000016 gram)
My Currency’s Better Than Yours.
“MY CURRENCY’S BETTER THAN YOURS”, this tee-shirt is a collaboration between Fahrenheit Prod and Bastard Graphics. A fun tee-shirt for Europeans, Canadians and all those with a strong currency. Photos by Rémi Ferrante.
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