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The stimulus didn't work. The bank bailouts didn't work. Homeowner assistance and refinancing didn't work. So could the key to solving the US housing crisis be letting foreigners buy real estate for visas?
The bipartisan proposal, part of a package that also would make it easier for international tourists to visit the U.S., is similar to an existing program that puts foreigners on a fast track to a green card if they invest at least $500,000 in an American business that creates at least 10 jobs.
"Many people want to come and live in the United States," said Sen. Charles Schumer (D-N.Y.), who introduced the legislation Thursday along with Sen. Mike Lee (R-Utah). "They will be here spending money and paying taxes, and the most important thing is they'll sop up the extra supply of homes we have right now compared to demand, and that's what's dragging our economy down."
The legislation would create a new homeowner visa that would be renewable every three years, but the proposal would not put them on a path to citizenship. To be eligible, a person would have to buy a primary residence of at least $250,000 and spend a total of $500,000 on residential real estate. The other properties could be rented.
Jim Puzzanghera and Lauren Beale of The Los Angeles Times report: Link
If
he were alive, economist and political scientist Leopold
Kohr would probably say "I told you so" about the economic
crises that plagued both the United States and Europe.
The problem, he argued, wasn't that the economy didn't grow. It was because it grew too big. Actually, everything grew too big and bigness was the root of the problem:
Kohr was a modest, self-deprecating man, but this was not the reason his ideas have been ignored by movers and shakers in the half century since they were produced. They have been ignored because they do not flatter the egos of the power-hungry, be they revolutionaries or plutocrats. In fact, Kohr's message is a direct challenge to them. "Wherever something is wrong," he insisted, "something is too big." [...]
Settling in the US, Kohr began to write the book that would define his thinking. Published in 1957, The Breakdown of Nations laid out what at the time was a radical case: that small states, small nations and small economies are more peaceful, more prosperous and more creative than great powers or superstates. It was a claim that was as unfashionable as it was possible to make. This was the dawn of the space age – a time of high confidence in the progressive, gigantist, technology-fuelled destiny of humankind. Feted political thinkers were talking in all seriousness of creating a world government as the next step towards uniting humanity. Kohr was seriously at odds with the prevailing mood. He later commented, dryly, that his critics "dismissed my ideas by referring to me as a poet".
Kohr's claim was that society's problems were not caused by particular forms of social or economic organisation, but by their size. Socialism, anarchism, capitalism, democracy, monarchy – all could work well on what he called "the human scale": a scale at which people could play a part in the systems that governed their lives. But once scaled up to the level of modern states, all systems became oppressors. Changing the system, or the ideology that it claimed inspiration from, would not prevent that oppression – as any number of revolutions have shown – because "the problem is not the thing that is big, but bigness itself".
Paul Kingsnorth wrote this intriguing article over at The Guardian: Link
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Confused by the European Sovereign Debt Crisis? Michael Cembalest, the Chief Investment Officer of J.P. Morgan's private bank enlisted the help of his son Peter (age 9) to illustrate the crisis ... with LEGO minifigs!
Surely you can see that the pig is the crux of the problem (How do I
know? Cuz he's not even LEGO! Edit 9/7/11 - Hamm is a LEGO piece! Thanks TW George!)
What do we need to do to grow the US economy again? Fire the MBAs, and let engineers run the show.
That’s what Bob Lutz, the former Vice Chairman of General Motors, suggested. He noted that American companies started to lose its way when the MBAs took over from the engineers:
The auto industry is actually a terrific proxy for a trend toward short-term, myopically balance-sheet-driven management that has infected American business. In the first half of the 20th century, industrial giants like Ford, General Electric, AT&T and many others were extremely consumer-focused. They spent most of their time and money using new technologies to create the best possible products and services, regardless of development cost. The idea was, if you build it better, the customers will come. And they did.
The pendulum began to swing in the postwar era, when Harvard Business School grad Robert McNamara and his "whiz kids" became famous for using mathematical modeling, game theory and complex statistical analysis for the Army Air Corps, doing things like improving fuel-transport times and scheduling more-efficient bombing raids. McNamara, who later became president of Ford, brought extreme number crunching to the business world, and soon the idea that "if you can measure it, you can manage it" took hold — and no wonder. By the late 1970s, M.B.A.s were flourishing, and engineers were relegated to the geek back rooms.
This is not to say that the Whiz Kidding of American business yielded no positives; things like the hyperefficient FedEx logistical hubs and the entire consulting industry were born out of it. But ultimately, moving numbers around can do only so much. Over the long haul, you’ve got to invent or improve real products and services to grow.
Rana Foroohar of TIME Magazine has the article: Link (Illustration: Harry Campbell)
Could your friendly neighborhood Blockbuster be a relic of the past? Yes, according to Douglas A. McIntyre of 24/7 Wall St. In fact, Blockbuster is just one of 10 national brands that may disappear as soon as next year:
Blockbuster was the national leader in the video rental business for nearly two decades. Now it is contemplating Chapter 11 to eliminate debt. The company lost $65 million last quarter. Its revenue continues to fall rapidly as firms such as Redbox and NetFlix (Nasdaq: NFLX – News) siphon off its revenue. Blockbuster has more than 6,000 stores, so it is hard to imagine that the company could disappear. But, there is some precedent, even if it is on a smaller scale. Blockbuster rival Movie Gallery said in February that it would close all of its 2,400 U.S. stores. Blockbuster’s model of renting movies through physical locations has been destroyed by cable and satellite video on demand, DVDs via mail and dispensing machines. Blockbuster may still be around as a company that has movie kiosks and a small mail and Internet-delivered content business. But its brick and-mortar business is dead.
Link (Photo: TheTruthAbout [Flickr]) – via Yahoo!
Trivia for you: Back in 2000, when Netflix was young and losing money, Blockbuster had a chance to scoop the company for a mere $50 million. Instead, they decided to ink a 20-year deal with Enron on video-on-demand when the energy company was getting into telecom. Now, Netflix is a billion dollar company, and we all know how Enron ended!
When you’re going to squat, why not do it in style? That’s what some squatters just did in Seattle:
The 8,000-square-foot mansion was dark and in foreclosure for years. So last weekend when the for-sale signs came down and the lights lit up, neighbors were relieved.
"We were like — ‘finally, somebody’s going to make that place a home,’ " says one.
But then some new signs went up.
"No trespassing," the signs say. "Privately owned property. Not for sale."
That’s odd, neighbors thought. The West of Market neighborhood in Kirkland is friendly, easygoing. So one of them called the real-estate agent to ask what was up.
What he said floored them. The house is still for sale for $3.3 million. Whoever is living there had broken in. They’re squatters.
Danny Westneat of Seattle Times has the story: Link (Photo: Alan Berner/Seattle Times)
Psst! Want to live in your house without paying a dime in mortgage? Thanks to the US housing crisis, now you can – at least for a year or two.
More and more struggling homeowners are doing their own mortgage modification: they simply stop paying, and continue to live in their homes while the foreclosure process drags out for a long, long time:
“Instead of the house dragging us down, it’s become a life raft,” said Mr. Pemberton, who stopped paying the mortgage on their house here last summer. “It’s really been a blessing.”
A growing number of the people whose homes are in foreclosure are refusing to slink away in shame. They are fashioning a sort of homemade mortgage modification, one that brings their payments all the way down to zero. They use the money they save to get back on their feet or just get by.
This type of modification does not beg for a lender’s permission but is delivered as an ultimatum: Force me out if you can. Any moral qualms are overshadowed by a conviction that the banks created the crisis by snookering homeowners with loans that got them in over their heads.
David Streitfeld of The New York Times explains why some homeowners are in foreclosure, and loving it: Link
Here’s a rather unexpected result of mass layoffs and high unemployment: the stress causes pregnant women to spontaneously abort more males, thus contributing to future gender gap.
To our ancient ancestors, those signs would presumably be signals of impending drought or other natural disaster, which would indicate a coming food scarcity. [Ralph] Catalano and colleagues concluded the closest thing we have today is the announcement of mass layoffs at major employers, which impacts “the degree to which the larger population perceives a threat to its economic security.”
Such threats are bad news to small male fetuses because “a relatively large fraction” of them fall near “a critical rank below which gestations spontaneously end,” the researchers explain. If they are born, these small males are more likely to die than larger infants and females of equivalent size.
The researchers examined California’s ratio of male to female births from mid-1995 to the end of 2007 and compared it to the federal Labor Department’s monthly statistics on mass layoffs in the state. The government reports a mass layoff has taken place when 50 or more people file for unemployment insurance from a single company over five weeks.
After doing some complex calculations, they estimated that news of impending mass layoffs “predicted the loss of 3,090 males in utero” during the 61 months (out of the 141 they examined) in which unemployment claims exceeded the expected number.
Link – Thanks Julia Monti!
After the one of the largest economic meltdowns of the century, thousands of people from America’s largest financial institutions were laid off. Where did they go?
DJ Patil of LinkedIn, the business-oriented social media website, has an inside look based on updates to LinkedIn member’s company titles:
Where did all these employees go? One hypothesis is that many of the employees left the financial industry. According to the LinkedIn data set, that just isn’t true. There are a handful of people that did transition to other industries and start new careers, but most stayed in the financial space. To be specific, other than two acquiring companies (Bank of America acquired Merrill Lynch and Nomura acquired Lehman Brothers’ franchise in the Asia Pacific region), Barclays was by far the biggest beneficiary, scooping up 10% of the laid off talent, followed by Credit Suisse at 1.5% and Citigroup at 1.1 %.
The name of the company changes, but I suspect the game is still on: Link – via TYWKIWDBI
A new survey by the Centre for Retail Research revealed that shopping shoplifting has increased at an astonishing rate:
They found that shoplifting in Britain has increased in the past year by nearly 20 per cent to almost £5 billion, £750 million more than in 2008, keeping Britain at the top of Europe’s shoplifting table. Clothing and fashion accessory shops were hardest hit, with branded designer goods high on thieves’ shopping lists, closely followed by DIY stores.
Neil Matthews, vice-president of Checkpoint Systems, said that he was astonished at the rise of middle-class shoplifters. “We are not simply looking at your traditional shoplifters here. We are seeing more instances of amateur thieves stealing goods for their own personal use rather than to sell on than before,” he said.
If you’re feeling a tad poor because of the economic meltdown, tell yourself that at least you’re not Nicolas Cage. The highest paid actor in Hollywood is broke:
How could one of Hollywood’s highest paid actors find himself owing $6.3 million in back taxes and deep in money troubles? The answer is, "Easy," if you believe Nicolas Cage.
In a lawsuit filed Oct. 16 in Los Angeles, the National Treasure star, 45, claims that his longtime business manager, Samuel J. Levin, "lined his [own] pockets with several million dollars in business management fees while sending Cage down a path toward financial ruin."
Out of a job? If you live in the Great State of California, you’re in good company: two out of five working-age Californians do not have a job!
“The current recession stands apart from prior downturns for both the depth and breadth of destruction in the job market,” the report says. “California has lost more jobs at a faster rate in the past two years than during any prior recession for which data are available, and employment has fallen in nearly every major sector of the economy.”
Because of the decline in the number of jobs coupled with growth in the labor force, the report finds that the percentage of working-age Californians who hold jobs has fallen to its lowest level in 32 years. Citing U.S. Bureau of Labor statistics, the report says just 57.5 percent of California adults are working.
The last time the percentage was that low was in 1977, a time when many women voluntarily chose not to work outside their homes. The percentage of employed adults peaked in 1989 at 64.9 percent.
Timm Herdt of Ventura County Star has the grim news: Link | California Budget Project Press Release [PDF]
Across many cities in the United States, hundreds of thousands of foreclosed and abandoned homes turned some neighborhoods into urban blight … but nowhere is the effect as acutely felt as in Detroit.
Sweet Juniper blog has an interesting post about how nature is now reclaiming some of those abandoned houses. They use the description "feral houses," which given the condition they are in, seem very appropriate:
I’ve seen "feral" used to describe dogs, cats, even goats. But I have wondered if it couldn’t also be used to describe certain houses in Detroit. Abandoned houses are really no big deal here. Some estimate that there are as many as 10,000 abandoned structures at any given time, and that seems conservative. But for a few beautiful months during the summer, some of these houses become "feral" in every sense: they disappear behind ivy or the untended shrubs and trees planted generations ago to decorate their yards. The wood that framed the rooms gets crushed by trees rooted still in the earth. The burnt lime, sand, gravel, and plaster slowly erode into dust, encouraged by ivy spreading tentacles in its endless search for more sunlight.
Previously on Neatorama: 100 Abandoned Houses (also in Detroit)
Predicting the economy is a lot like reading tea leaves – but a lot less certain. Indeed, economist Edgar Fiedler famously said "Ask five economists and you’ll get five different answers – six if one went to Harvard."
Still, the economists at the ECRI (Economic Cycles Research Institute) are darn smart and have a pretty good track record, so perhaps there’s truly something to their latest prediction: the economy is turning around and the recession will soon be over.
NPR’s All Things Considered has the scoop:
"The reason we’re so convinced — and we are quite convinced — that the recession is drawing to a close is because of leading indicators," Lakshman Achuthan, managing director at the institute, tells NPR’s Guy Raz.
The ECRI categorizes indicators, like unemployment rates and productivity, as leading, lagging or coinciding with the business cycle. A lagging indicator would be the unemployment rate. Leading indicators include "drivers of the economy," such as housing activity, productivity, money growth and credit.
Different sequences of indicators point to different types of events. Achuthan says the ECRI sees a robust sequence of events that happen at the beginning and end of recessions, and indicators are showing it is likely that there will be a recovery soon.
"The key is that there is no one piece that we’re hanging our hat on. It is a pervasive upturn in these leading indicators, and that is the hallmark of something that is going to persist for a few quarters, a year at least," Achuthan says. "And it is going to be pronounced."
Achuthan says that when you add up all the indicators without bias into a leading index, the picture becomes clear: These indexes are shooting up. And that says a lot. In the time that these indicators have been in existence, they have not made a mistake on a recession or a recovery poll, he says.
What do you think? Will the economy recover soon or are you pessimistic?
Image: New York Times analysis of Congressional Budget Office data
Imagine you’re the world’s biggest shopaholic – say, you spend $1,000 a second. Who’d spend more in a decade: you or the government? If you do the math, you’d only spend $0.3 trillion. The government has got you beat by a long margin.
David Leonhardt of The New York Times has an analysis of how the US Government managed to turn a projected $800 billion budget surplus into a $1.2 trillion deficit – a swing of $2 trillion – in a mere decade:
You can think of that roughly $2 trillion swing as coming from four broad categories: the business cycle, President George W. Bush’s policies, policies from the Bush years that are scheduled to expire but that Mr. Obama has chosen to extend, and new policies proposed by Mr. Obama.
The first category — the business cycle — accounts for 37 percent of the $2 trillion swing. It’s a reflection of the fact that both the 2001 recession and the current one reduced tax revenue, required more spending on safety-net programs and changed economists’ assumptions about how much in taxes the government would collect in future years.
About 33 percent of the swing stems from new legislation signed by Mr. Bush. That legislation, like his tax cuts and the Medicare prescription drug benefit, not only continue to cost the government but have also increased interest payments on the national debt.
Mr. Obama’s main contribution to the deficit is his extension of several Bush policies, like the Iraq war and tax cuts for households making less than $250,000. Such policies — together with the Wall Street bailout, which was signed by Mr. Bush and supported by Mr. Obama — account for 20 percent of the swing.
About 7 percent comes from the stimulus bill that Mr. Obama signed in February. And only 3 percent comes from Mr. Obama’s agenda on health care, education, energy and other areas.
Previously on Neatorama: The $700 Billion T-Shirt
Being out of a job usually ranks in the top 3 nightmares of life for most adults, but not for some young folks. Instead of looking for work, these people, usually singles in their 20s and 30s, prefer to stay with "funemployment" and enjoy life a bit.
Kimi Yoshino of the Los Angeles Times has more on the story:
What most people would call unemployment, Van Gorkom embraced as "funemployment."
While millions of Americans struggle to find work as they face foreclosures and bankruptcy, others have found a silver lining in the economic meltdown. These happily jobless tend to be single and in their 20s and 30s. Some were laid off. Some quit voluntarily, lured by generous buyouts.
Buoyed by severance, savings, unemployment checks or their parents, the funemployed do not spend their days poring over job listings. They travel on the cheap for weeks. They head back to school or volunteer at the neighborhood soup kitchen. And at least till the bank account dries up, they’re content living for today.
"I feel like I’ve been given a gift of time and clarity," said Aubrey Howell, 29, of Franklin, Tenn., who was laid off from her job as a tea shop manager in April. After sleeping in late and visiting family in Florida, she recently mused on Twitter: "Unemployment or funemployment?"
Link (Photo: Genaro Molina / LA Times)
Digital Inspiration features a map illustrating the countires least affected by the global recession, as ranked according to a survey conducted by Servcorp for the Herald Sun.
Australia takes the top spot followed by China with India and Singapore in equal third place. Qatar is the only gulf nation that figures in this “relatively” recession-proof list.
The data is based on the results of a business confidence survey that was done on international business people of 24 nations to identify which countries they believe are surviving the crisis the best.
From the Upcoming 
ueue, submitted by mrsmojorisin.
The funeral industry is usually recession proof. After all, as Arvin Starrett, spokesman for the National Funeral Directors Association, said "The honest-to-goodness truth of the matter is that everybody does die."
So it goes to show how bad the current economic situation has become: a cemetery on Highway 86 in Imperial, California, is in foreclosure!
Annika Mengisen of Freakonomics Blog has the answer to the question I’m sure you’re all thinking of: will the …, um, occupants be evicted? Link
The real estate market may be bad everywhere, but it is particularly bad in Victorville, California, where the real estate crash has turned quite literal. There, failed developments are being torn down because the cost of demolishing the houses are cheaper than completing and selling them.
Peter Y. Hong of the Los Angeles Times has more:
The Victorville demolition is one of the most dramatic ends to a bad bet made during the housing boom, but abandoned developments have become an all-too-common sight in California. Nearly 250 residential developments totaling 9,389 homes have been halted across the state, according to one research firm.
The developer of the Victorville project had hoped to sell the houses for more than $300,000 as they were being built last year, Forrester said. But reality quickly diverged from that vision. Home prices have tanked faster in San Bernardino County than any other Southern California county during the downturn. In March, the median home sale price for the county was $160,000, down 43% in a year, according to the San Diego-based research firm MDA DataQuick.
Officials of Guaranty Bank of Austin, Texas, which took over the development last year, were unavailable for comment. But Victorville city spokeswoman Yvonne Hester said the bank decided not to throw good money after bad.
"It just didn’t pencil out for them," she said. "They’d have to spend a lot of money to turn around and sell the houses. They just made a financial decision to just demolish them."
Link (Photo: Christina House / LA Times)
Flickr user Enjoy Banking posted a series of photos where derelict shops and other urban decays in New York are tagged with giant "Enjoy Subprime Lending," "Enjoy Stimulus Package" and other cheeky stickers.
Y’know what’ll go great with this? Neatorama’s $700 Billion T-Shirt
There’s no question that in today’s tough economic climate, many worthy causes are facing trouble.
After it was broken into by a drunk man, the country’s only cage-free, no-kill animal shelter, The Saint Francis Animal Rescue Center, has gone into tailspin and needs your help:
Now, with almost no volunteers and two staff members, the shelter might have to consider permanently closing its bashed-in doors.
"It’s just been horrible," said shelter director Charlene Rodriguez. "My assistant and I have been using our own funds, and I don’t mean trust funds, but as in paycheck to paycheck.
"It’s been extremely difficult."
According to Amy Lieberman of ZooToo Pet News, you can donate to the Saint Francis Animal Rescue Center through their paypal email of StFrancisAnimalRescue@yahoo.com.
Billboard advertisements. Holding signs on busy street. Making online videos. These are just some of the unconventional methods used by job seekers in these trying economic times.
Now, add cosmetic surgery to the list. Job seekers are now turning to plastic surgery in order to turn back the clock and appear more youthful and ‘fresh’ for job interviews.
Mr Grabow’s surgeon, Payman Simoni, performs what he calls a “wide awake facelift” using only local anaesthesia, which he says slashes the recovery time as well as the cost of the procedure, making it popular among job seekers.
“Before the economy turned down, people would come in because they wanted to have more fun and enjoyment out of life,” Dr Simoni said.
“But now plastic surgery has become a necessity for some. People cannot only rely on their skills in this market. They want to look refreshed and youthful so they can compete for jobs,” he said.
From the Upcoming ueue, submitted by Geekazoid.
In the ongoing saga of the economic crisis, AIG has been squarely portrayed as the villains. Everybody piled on the bandwagon of villifying the greed and brazenness of their multi-million dollar bonuses (yes, including this blog).
But is that the full and true story? Here’s a letter published in the Opinion section of The New York Times – it’s a resignation letter, actually, sent by Jake DeSantis, an executive VP of the AIG’s much maligned Financial Products unit, explaining why he quit:
I am proud of everything I have done for the commodity and equity divisions of A.I.G.-F.P. I was in no way involved in — or responsible for — the credit default swap transactions that have hamstrung A.I.G. Nor were more than a handful of the 400 current employees of A.I.G.-F.P. Most of those responsible have left the company and have conspicuously escaped the public outrage.
After 12 months of hard work dismantling the company — during which A.I.G. reassured us many times we would be rewarded in March 2009 — we in the financial products unit have been betrayed by A.I.G. and are being unfairly persecuted by elected officials. In response to this, I will now leave the company and donate my entire post-tax retention payment to those suffering from the global economic downturn. My intent is to keep none of the money myself.
I take this action after 11 years of dedicated, honorable service to A.I.G. I can no longer effectively perform my duties in this dysfunctional environment, nor am I being paid to do so. Like you, I was asked to work for an annual salary of $1, and I agreed out of a sense of duty to the company and to the public officials who have come to its aid. Having now been let down by both, I can no longer justify spending 10, 12, 14 hours a day away from my family for the benefit of those who have let me down.
(Photo: jdiggans [Flickr])
When the going gets tough, the tough gets … snipped? It may be economic doom and gloom for you and me, but not for doctors performing vasectomies: they see a little boom in business!
They looked at their statistics and realized the uptick started around November as the economic crisis deepened. October went down in the history books as one of Wall Street’s worst months.
Since then, the Cleveland Clinic has seen a 50 percent increase in vasectomies, an outpatient surgery that is the cheapest form of permanent birth control. Vasectomies are less invasive and cheaper than tubal ligation, which involves blocking, tieing or cutting a woman’s fallopian tubes to prevent pregnancy.
"It’s unlikely that some guy read the Dow Jones numbers that day and said, ‘Why don’t we have a vasectomy?’ " Jones said. "More likely, people have already been considering it and typically a guy and his wife have spoken a year or two about this."
Jones was told by patients that they were getting vasectomies because they were losing their jobs and health insurance, or concerned about being out of work soon.
"They realize they don’t have the financial security long-term with what’s going on," Jones said. "Several of them have mentioned, ‘We can’t afford to have any more children in this economy.’ My perception is that it’s more of the concept of raising children in an uncertain economic future."
Madison Park of CNN has the rest of the story: Link – Thanks Tiff!
Is this the beginning of the end of the dominance of the US dollar as the world’s preferred currency? The global economic crisis and the erosion in the value of the dollar has led China of all countries to call for a new "international reserve currency":
[People's Bank of China] Gov. Zhou Xiaochuan’s essay did not mention the dollar by name but said the crisis showed the dangers of relying on one nation’s currency for international payments. In an unusual step, the essay was published in both Chinese and English, making clear it was meant for an international audience.
"The crisis called again for creative reform of the existing international monetary system towards an international reserve currency," Zhou wrote.
A reserve currency is the unit in which a government holds its reserves. But Zhou said the proposed new currency also should be used for trade, investment, pricing commodities and corporate bookkeeping.
Beijing has long been uneasy about relying on the dollar for the bulk of its trade and to store foreign reserves. Premier Wen Jiabao publicly appealed to Washington this month to avoid any steps in response to the crisis that might erode the value of the dollar and Beijing’s estimated $1 trillion holdings in treasuries and other U.S. government debt.
Link (Photo: World Economic Forum [Flickr])
An
Insatiable Greed: Bonus Time! - $9.95
First they engaged in risky business practices - including insuring trillions in risky derivatives, then their meltdown helped trigger the global economic crisis, then they asked for and got hundreds of billions in taxpayer's money in a government bailout. So, what do they do next for a job well done? Why, it's Bonus Time, of course!
What can you do? Get mad, and then get this T-shirt from Neatorama's Online Store: Link
Other T-shirts about The Economy:
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Ever since the advents of the Internet, online publishing, and now blogs, people have tooted (is that the right verb? anyhoo … ) the clarion calls of the immiment demise of print media.
And now, the economic crisis have finally pushed one large newspaper to go 100% "web only":
The Seattle Post-Intelligencer will roll off the presses for the last time Tuesday, ending a 146-year run.
The Hearst Corp. announced Monday that it would stop publishing the newspaper, Seattle’s oldest business, and cease delivery to more than 117,600 weekday readers.
The company, however, said it will maintain seattlepi.com, making it the nation’s largest daily newspaper to shift to an entirely digital news product.
"Tonight we’ll be putting the paper to bed for the last time," Editor and Publisher Roger Oglesby told a silent newsroom Monday morning. "But the bloodline will live on."
In a news release, Hearst CEO Frank Bennack Jr. said, "Our goal now is to turn seattlepi.com into the leading news and information portal in the region."
Link (Photo: Joshua Trujillo/P-I)
If you think that getting $170 billion in taxpayer bailout money would embarass the AIG from giving millions in bonuses, think again: the beleagured financial company is going forward with plans for $165 million of bonuses and employee retention pays … with the government’s grudging approval:
A.I.G. had set up a special bonus pool for the financial products unit early in 2008, before the company’s near collapse, when problems stemming from the mortgage crisis were becoming clear and there were concerns that some of the best-informed derivatives specialists might leave. It locked in a total amount, $450 million, for the financial products unit and prepared to pay it in a series of installments, to encourage people to stay.
Only part of the payments had been made by last fall, when A.I.G. nearly collapsed. In documents provided to the Treasury, A.I.G. said it was required to pay about $165 million in bonuses on or before Sunday. That is in addition to $55 million in December.
(Photo: threecee [Flickr])
Previously on Neatorama: Posts tagged Economic Crisis
Broker: what you become after investing
in stocks
-
Wall Street joke
Continuing our quest to unearth fun facts from A to Z, here's the latest Neatolicious Fun Facts article. "D" is for the Dow Jones Industrial Average. Given the current economic crisis, here are some timely fun facts about the granddaddy of stock market indices:
1. Origins: Charles Dow
The
Dow
Jones Industrial Average (the DJIA or The Dow) is a stock market index.
It comprises of stocks of select large companies and is used to gauge
the performance of the whole stock market.
The Dow was created by American journalist Charles Henry Dow on May 26, 1896, as part of his research into market movements. That explains the "Dow" in Dow Jones, but what about the "Jones" part? That was named after Dow's business partner Edward Davis Jones, a statistician (not related, as far as I could tell, with the current Edward Jones company). Interestingly, Jones didn't have anything to do with creating the stock index, other than being Dow's business partner in their company Dow Jones & Co.
Dow and Jones didn't set out to be in the business of keeping track of the stock market. They were journalists who had been working for a newspaper before they decided to go into the financial news business for themselves in 1882 (with another business partner named Charles Bergstresser). The trio opened shop in the basement of a lower Manhattan candy store that later became the New York Stock Exchange. (Source)
The Dow, Jones & Company (they later dropped the comma) published daily hand-written news bulletins called "flimsies" delivered by messengers to subscribers. A year later, they came out with the "Customers' Afternoon Letter," which contained the Dow Jones Industrial Average.
You may not have heard of the Customers' Afternoon Letter, but I'm sure you know what the newspaper later became: The Wall Street Journal (the first edition of which was just 4 pages long and sold for 2 cents).
2. Was the Dow Jones Industrial Average the oldest stock index?
Nope - on July 3, 1884, Charles Dow created the first one: the Dow Jones Transportation Average. It consisted of 11 transportation-related companies (most of which were railroads).
3. The first 12 stocks listed and what happened to them
The first 12 stocks listed in the Dow Jones Industrial Average, published on May 26, 1896 were industrial (or so called "smokestack" companies). Of these 12, only 1 (General Electric) is still doing business under the same name:
| Company | What happened to it |
| American Cotton Oil | Became Bestfoods |
| American Sugar | Evolved into Amstar Holdings |
| American Tobacco | Broken up in 1991 antitrust action, part of which became Fortune Brands and R.J. Reynolds Tobacco Co. |
| Chicago Gas | Absorbed by Peoples Gas |
| Distilling & Cattle Feeding | Evolved into Millennium Chemical |
| General Electric | Still General Electric |
| Laclede Gas | Still Laclede Gas, but no longer listed in the Dow |
| National Lead | Becomes NL Industries, now manufactures titanium dioxide pigments |
| North American | This holding company for public utilities was broken up in 1940s |
| Tennessee Coal & Iron | Absorbed by U.S. Steel |
| U.S. Leather (preferred stock - a hybrid between a stock and a bond) | Dissolved in 1952. |
| U.S. Rubber | Became Uniroyal, then part of Michelin |
(Source: Dow Jones FAQ)
Oh, and the first day's closing is 40.94. If you had invested $1 then, you'd have $169 today, a return of 16,828%.
4. A "Blue Chip" Index
If
you're financially savvy, you'd already know this: the Dow Jones Industrial
Average is a "blue chip" index, meaning it is comprised of just
30 of the largest companies in the United States.
But why "blue chip"? The term comes from casinos, where blue chips have the highest values. Its first use to describe stocks was coined by Dow Jones staff Oliver Gingold in the early 1920s:
That term apparently got its start in 1923 or 1924 when Gingold was standing by the stock ticker at the brokerage firm that later became Merrill Lynch. Noticing several trades at $200 or $250 a share or more, he said to Lucien Hooper of W.E. Hutton & Co., that he intended to return to the office to "write about these blue-chip stocks." Thus the phrase was born. It has been in use ever since, originally in reference to high-priced stocks, more commonly used to day to refer to high-quality stocks.
5. How Now, Dow Jones
Marlyn Mason, Tony Roberts and Brenda Vaccaro in How Now, Dow Jones
(Photo and more on the musical by Skip Card of Playbill: Link)
In 1967, lyricist Carolyn Leigh came up with the idea of a Broadway musical comedy based on the stock market. She collaborated with Elmer Bernstein (music), Max Shulman (libretto) and David Merrick (producer) to create the musical How Now, Dow Jones. (Source)
Though How Now, Dow Jones was considered a Broadway failure, one song titled "Step to the Rear" became quite popular and was later adapted into The Fighting Gamecocks Lead the Way, the fight song of the University of South Carolina.
6. The best and worst days in the history of the Dow
Given the current economic crisis, it seems that every day brings us bad economic news and even lower stock prices. Indeed, we have seen an incredibly volatile stock market and record-setting daily point gains and losses.
The largest daily point loss was recorded on Sept 29, 2008, when the DJIA lost 778 points (7%). The largest point gain happened about two week later (gain of 936 points or 11% on October 13, 2008) only to be followed with another big drop (733 points or 7.9%). You know what happened next: right now, the Dow Jones Industrial Average has fallen by about 45% from last year.
Riding
the Dow T-shirt at Crazy Dog T-shirts
The largest percentage loss occurred in Black Monday of 1987, when the stock markets around the world crashed. The Dow lost 508 points or a drop of 22.6%. Even today economists and financial analysts couldn't come to an agreement as to the reason behind such a crash (some blamed program tradings, others blamed market psychology).
7. Dowism
I
can't bear to close on such a DOWn note (get it? it's
a double pun), so let's end with this pun: dowism. It's a play on the
words Taoism, a Chinese philosophy, and Dow Jones, used to represent the
philosophy of consumerism.
Columnist and radio personality Steve Bhaerman, under pseudonym Swami
Beyondananda wrote in Duck
Soup for the Soul
That day, the Swami swore off sects completely. Spirit was immaterial, he decided, and he now sought fulfillment by filling himself full of all the material goodies life could provide. He moved to New York to study with the renowned guru of the stock market, Yuan Tibet, who instructed him in the Dowist path. Swami became more and more dependent on the stock market prophet, buying soybean futures like there was no tamari. Suddenly, the price of soybeans plummeted (due, it was later revealed, to a rumor planted by unscrupulous dairy- heir that tofu actually came from between the toes of Himalayan hikers). Swami frantically tried to call Yuan Tibet for his sage advice, but he could not be found. Tragically, there had been some prophet-taking on Wall Street, somebody took him, and he was never heard from again.
(Source)
"Prophet-taking?" Oh hohoho! (by the way, "tamari" is a kind of soy sauce. Clever guy, that Steve Bhaerman).
Next up: "E" (which I haven't decided yet) - in the meantime, check out these articles on Neatorama:
The current economic crisis has altered the behavioral patterns of everday consumers, but some people really take it to the extremes. Meet the ultra-tightwads:
Amy VanDeventer has always been a cheapskate. The recession is taking her to new extremes.
Before the economy tanked, she was still wearing maternity clothes from her last pregnancy, clipping coupons and using hand-me-downs to dress her daughters, ages 2 and 3. Now, she’s salvaging bagel scraps left on their plates for pizza toppings and cutting lotion bottles in half so she can scrape out the last drops.
“I was already cheap,” said VanDeventer, a 36-year-old mortgage loan underwriter from Broomfield, Colo. “Now I am neurotic about it.” [...]
What surprises frugality bloggers is that many cheapskates such as VanDeventer haven’t lost their jobs and are not in danger of losing their homes. Many have stashed a good chunk of cash away. But the economic uncertainty is catapulting them to new levels of thriftiness.
“I do it out of fear because I would rather put that money in the bank or purchase something we really need,” said VanDeventer, who now saves about 50 percent of her take-home pay, up from 25 percent before the recession began more than a year ago.
(Photo: Ed Andrieski/AP)
From the Upcoming ueue, submitted by Geekazoid.
