Image: Robert Burns/LA Times

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

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!)

Link - via GeekDad

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)

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!

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)

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

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

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.

Link

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."

Link

“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]

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.

Link – via NOTCOT

Previously on Neatorama: 100 Abandoned Houses (also in Detroit)

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.

Link

What do you think? Will the economy recover soon or are you pessimistic?

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.

Link

Previously on Neatorama: The $700 Billion T-Shirt

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.

Link – via google

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

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.

Link – via CultCase

Y’know what’ll go great with this? Neatorama’s $700 Billion T-Shirt

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."

Link – Thanks Jill!

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.

Link

From the Upcoming ueue, submitted by Geekazoid.

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.

Link

(Photo: jdiggans [Flickr])

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!

[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:

Stock Market, The Ride	The $700 Billion Shirt	Good Marx, Bad Marx

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)

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.

Link

(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:

(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:

• 10 American Financial Meltdowns in the Past Century
• 9 Most Brazen Ponzi Schemes in History
• Past Neatolicious Fun Facts Articles: Apple, Beer, Chess
• From the Neatorama Online Store: Stock Market, The Ride

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)

Link

From the Upcoming ueue, submitted by Geekazoid.

1. Houses produce lousy returns, while stocks produce good ones
2. House prices have further to fall
3.Many houses for sale today seem designed to waste money
4. Big houses are targets for future taxes
5. Neighborhoods are changing in unpredictable ways

As a renter and a former buyer (twice), I tend to agree with him.  What do you all think?

Link

From the Upcoming ueue, submitted by Geekazoid.

(Links open in a new browser window/tab)

	Excessive Ping Pong Score Celebration Footballers do it, soccer players do it, so why not celebrate your score in ping pong? Here's Adam Bobrow's take on how to excessively celebrate in ping pong (don't miss the score at the end of the clip) Link
	Metal Grandma Think that heavy metal is only for the young? This grandma is waaay more metal than anyone else in this concert. Go Nana! Link
	What Happens to Stuff Left in a Foreclosed House? Someone has to clean up after homeowners were evicted from their foreclosed houses... and given the current economic situation, business is booming for the "trash out crew." Link
	Is this the Face of the Young Leonardo da Vinci? When Italian science journalist Piero Angela was looking through da Vinci's work, he noticed an image of a nose - upon closer look, it may just be the face of a young Leonardo. Link
	How many camels fit in a Subaru? The answer, apparently, is at least two! Count for yourself: Link

For more the web's most interesting videos, check out: VideoSift.

Berkshire Hathaway reported today that its net worth fell in 2008 by $11.5 billion, a decline reducing its per-share book value by 9.6%. That was Berkshire’s worst result in the 44 years that Chairman Warren Buffett has run the company and, in fact, only the second decline in that period. The other drop was 6.2% in 2001, a year hurt by 9/11 and other problems in Berkshire’s insurance operations. [...]

In his chairman’s letter, Buffett states that 2008 had good points mixed in with the bad. But in an unusual admission for the opening pages of the letter (a point easily recognizable by this writer because she has edited Buffett’s letter for 32 years) he says bluntly, "During 2008 I did some dumb things in investments."

The dumbest, he said, was buying a large amount of Conoco Phillips stock when oil prices were near their peak and in no way anticipating the dramatic drop in prices that subsequently occurred. Buffett said he still thinks the odds are good that oil will sell in the future at much higher prices than the $40 to $50 per barrel now prevailing. But even if prices should rise, he said, "the terrible timing" of the Conoco purchase has cost Berkshire several billion dollars.

Unlike you or me, however, Warren Buffett can drown his sorrow by counting his remaining bazillion dollars. Carol Loomis of Fortune has more: Link

On Monday, Donald Crabtree opened Grand View Topless Coffee Shop in Vassalboro, Maine, where the waiters and waitresses serve their customers topless.

In a town with fewer than 4,500 residents, the topless coffee shop is booming with business. Paul Crabtree, the owner’s brother, describes business so far as "fantastic."

"It’s just been crowds mobbing in," he said.

Laurie Segall of CNN has the story: Link (Photo: WGME)

In a world filled with headlines about CEO’s and executives running their companies to the ground, and holding lavish parties and getaways on taxpayer funded bailouts, here is a refreshingly touching story of one very different individual. 

Leonard Abess Jr., CEO of City National Bank in Florida, sold 83% of his stake in the bank to a Spanish company, and then used the proceeds to reward his very own employees.

At a time when bankers are being pilloried on Capitol Hill as heartless and greedy, Leonard Abess Jr. stands apart.

After selling his bank for a fortune last fall, he quietly handed out $60 million in bonuses from his own pocket — and not just to top executives. In all, 471 employees and retirees, including tellers, clerks and secretaries, were rewarded, receiving an average of about $127,000 each.

“I think everybody was surprised. But knowing Leonard, the type of person he is, I can believe him giving it away,” said retiree William Perry, who spent 43 years at City National Bank of Florida, rising from janitor to vice president. Perry, 78, got $50,000, which he is using to help his son pay for law school.

For his generosity and humility, Abess was singled out for praise by President Barack Obama in his congressional address Tuesday. Abess attended as Obama’s guest.

Link

From the Upcoming ueue, submitted by Geekazoid.

Chris Hoyer, a Tampa, Florida, lawyer told homeowners that there are three simple words that they can say to stop the foreclosure process, or at least delay it for a while: produce the note.

Kathy Lovelace lost her job and was about to lose her house, too. But then she made a seemingly simple request of the bank: Show me the original mortgage paperwork.

And just like that, the foreclosure proceedings came to a standstill.

Lovelace and other homeowners around the country are managing to stave off foreclosure by employing a strategy that goes to the heart of the whole nationwide mess.

During the real estate frenzy of the past decade, mortgages were sold and resold, bundled into securities and peddled to investors. In many cases, the original note signed by the homeowner was lost, stored away in a distant warehouse or destroyed.

Persuading a judge to compel production of hard-to-find or nonexistent documents can, at the very least, delay foreclosure, buying the homeowner some time and turning up the pressure on the lender to renegotiate the mortgage.

Link

(Photo: Chris O’Meara/AP)

Five months after being laid off from his job as a mechanical maintenance engineer,  39-year-old Jason Fruen had tried almost everything to find another job.  Finally he made a sandwich board sign advertising himself and his phone number, and spent two days standing near a major intersection in Manchester, England.

 Surprisingly enough, the ploy worked, and Fruen landed an interview and the company offered him a position.  After the interview, he got some other offers as well, and he’ll decide this week which one he’ll take. 

BBC News video here.

“I think we’re going to see a lot more people adopting this way of looking for work. I’ve still got a mortgage to pay, and that’s why I was out there doing it.”

Link

From the Upcoming ueue, submitted by Marilyn Terrell.

Graphic artist Jonathan Jarvis has produced a short animated film describing the roots of our current economic crisis today.  There have been numerous websites and cartoons attempting to explain the crisis, but this is one of the very best.  To the point and easy to understand, there comes a point in the presentation when the reality of what will happen and what has happened will hit you.  Comes in two parts (shown above).

Links: Crisis of Credit Visualized website

– via jonnyj

From the Upcoming ueue, submitted by Geekazoid.

The historian Scott Reynolds Nelson has noted that in some respects, today’s crisis most closely resembles the “Long Depression,” which stretched, by one definition, from 1873 to 1896. It began as a banking crisis brought on by insolvent mortgages and complex financial instruments, and quickly spread to the real economy, leading to mass unemployment that reached 25 percent in New York.

During that crisis, rising industries like railroads, petroleum, and steel were consolidated, old ones failed, and the way was paved for a period of remarkable innovation and industrial growth. In 1870, New England mill towns like Lowell, Lawrence, Manchester, and Springfield were among the country’s most productive industrial cities, and America’s population overwhelmingly lived in the countryside. By 1900, the economic geography had been transformed from a patchwork of farm plots and small mercantile towns to a landscape increasingly dominated by giant factory cities like Chicago, Cleveland, Pittsburgh, Detroit, and Buffalo.

How might various cities and regions fare as the crash of 2008 reverberates into 2009, 2010, and beyond? Which places will be spared the worst pain, and which left permanently scarred?

Will Detroit – currently the 11th largest city in the US – become a ghost town? Will homeownership continue its role as the keystone of the US economy? Read the rest here: Link – via 3 Quarks Daily (Illustration: Sean McCabe)

The national wave of auto dealership closures has come crashing down on thousands of people who are on the hook for used-car loans that dealers were supposed to absolve.

When a car buyer still owes money on a vehicle he is trading in, the dealer promises to pay off the outstanding loan, then resells the vehicle. But as more dealers go out of business, some are sticking consumers with the bill. Lenders can then go after the previous owner who thought the debt was paid, or repossess the car from the new owner who assumed it came with clear title.

"It’s devastating for people when it happens because they have two car payments and they can’t afford them," said Rosemary Shahan, president of Consumers for Auto Reliability and Safety, a Sacramento-based nonprofit that lobbies on behalf of vehicle owners. "Their credit is destroyed for no fault of their own because the dealer defaulted."

Link

Yahoo! Finance has a somber article about 15 companies that are in such
precarious financial conditions that they might not survive 2009. For example:

Sbarro. (Privately owned; about 5,500 employees). It’s not the pizza that’s the problem. Many of this chain’s 1,100 storefronts are in malls, which is a double whammy: Traffic is down, since consumers have put away their wallets. Sbarro can’t really boost revenue by adding a breakfast or late-night menu, like other chains have done. And competitors like Domino’s and Pizza Hut have less debt and stronger cash flow, which could intensify pressure on Sbarro as key debt payments come due in 2009.

Krispy Kreme. (KKD; about 4,000 employees; stock down 50%). The donuts might be good, but Krispy Kreme overestimated Americans’ appetite – and that’s saying something. This chain overexpanded during the donut heyday of the 1990s – taking on a lot of debt – and now requires high volumes to meet expenses and interest payments. The company has cut costs and closed underperforming stores, but still hasn’t earned an operating profit in three years. And now that consumers are cutting back on everything, such improvements may fail to offset top-line declines, leading Krispy Kreme to seek some kind of relief from lenders over the next year.

Link

At the lowest point in his life, Michael walked into a Starbucks store while it was holding a jobs fair. On a whim he applied for a position.

Starbucks may be $4 cup of coffee to you and me, but to Michael, it was a lifesaver:

After 26 years at J. Walter Thompson, a leading advertising agency, the then 63-year-old Gill was invited to an early breakfast and was told that he was getting the boot. He made too much money. Someone younger would work for less, he was told.

"Never go out to breakfast," he warns before bursting into laughter. "It’s like the Mafia. You will never return."

He can joke about it now, but Gill says he was devastated by his firing. "I remember walking outside and bursting into tears," he says over a steaming cup of coffee at his current place of employment, a Starbucks in Bronxville, New York. "I was stunned. I knew that that part of my life was over."

That was just the start of a terrible reversal of fortune. In a few short years, Gill, the Yale-educated son of the famed New Yorker writer Brendan Gill, closed the consulting business he started after he was laid off, got divorced and was diagnosed with a brain tumor. He had hit both the rock and the bottom and was continuing to fall.

A trip to Starbucks would irrevocably change his life, he says. Unbeknownst to him, the coffee shop was holding a hiring fair the morning he walked in for his daily dose of caffeine. A manager approached him and asked if he would like to apply for a job. Without thinking, he said yes.

Link

Last week, the folks at the US watched as big companies cut more than 100,000 jobs (with over 70,000 jobs lost on Monday alone), the stock market tumbled, and home prices continued its freefall. Congress played politics over the stimulus package (it passed the House strictly on party line votes) and – surprise – Wall Street continued giving billions in bonuses and perks ($87,784 for a rug, anyone?)

And you know the economy is bad when more people are searching Google for coupons than Britney Spears (via Bo Cowgill).

How’s 2009 been treating you? Did you lose your job? Have trouble making ends meet? What do you think needs to be done to fix the economy? Can the economy be fixed? I’d love to hear from you.

An angry U.S. senator introduced legislation Friday to cap compensation for employees of any company that accepts federal bailout money.

Under the terms of a bill introduced by Sen. Claire McCaskill, D-Missouri, no employee would be allowed to make more than the president of the United States. Obama’s current annual salary is $400,000.

"We have a bunch of idiots on Wall Street that are kicking sand in the face of the American taxpayer," an enraged McCaskill said on the floor of the Senate. "They don’t get it. These people are idiots. You can’t use taxpayer money to pay out $18 billion in bonuses."

McCaskill’s proposed compensation limit would cover salaries, bonuses and stock options.

Link

Who thinks it’s a darned good idea?

4. Insurance and building codes. Every year, insurance rates soar from mounting "natural" catastrophes, obscuring the fact that the planet’s coasts are increasingly uninsurable.

Insurance underlies the building and construction trades. If those rates skyrocket, that system must keel over. Once people lose faith in the institution of insurance?—?because insurance can’t be made to pay in climate-crisis conditions?—?we’ll find ourselves living in a Planet of Slums.

Most people in this world have no insurance and ignore building codes. They live in "informal architecture," i.e., slum structures. Barrios. Favelas. Squats. Overcrowded districts of this world that look like a post-Katrina situation all the time. When people are thrown out of their too-expensive, too-coded homes, this is where they will go.

Unless they’re American, in which case they’ll live in their cars.

But how can dispossessed Americans pay for their car insurance when they have no fixed address? Besides, car companies are coming apart with the sudden savage ease of Enron’s collapse. Indeed, the year 2009 is shaping up as a planetary Enron. Enron was always the Banquo’s ghost at the banquet of Bushonomics. The moguls of Enron really were the princes of contemporary business innovation, and the harbingers of the present day.

Link – via BuzzFeed

Buyers for the U.S. Capital visitors center are in a bit of hot water today. They were warned not to buy goods made outside the US, but did it anyway. Now $100,000 worth of souvenirs are sitting in storage, blocked from being sold, and will  probably have to be returned to the manufacturer in China.

Will the Chinese manufacturer take the goods back or will the government be out $100,00? Your guess is as good as mine. I'm all for US made products being sold, but in these finacial times is it really a good idea for the government to waste $100,000 worth of goods, that it is probably already stuck with, because of ideals?      

Washington souvenirs worth $100,000 -- including images of the Capitol dome and printings of the U.S. Constitution -- are locked in storage, blocked from sale in the new U.S. Capitol Visitors Center because the items are made in China.

Link

From the Upcoming Queue, submitted by Tiffany.

They shared their sad stories the other night at an informal gathering of Dating a Banker Anonymous, a support group founded in November to help women cope with the inevitable relationship fallout from, say, the collapse of Lehman Brothers or the Dow’s shedding 777 points in a single day, as it did on Sept. 29.

In addition to meeting once or twice weekly for brunch or drinks at a bar or restaurant, the group has a blog, billed as “free from the scrutiny of feminists,” that invites women to join “if your monthly Bergdorf’s allowance has been halved and bottle service has all but disappeared from your life.”

Ravi Somaiya of The New York Times has the story: Link

(Photo: Rob Bennett / NY Times)

What happens to all those cars that go unsold?  Check out this collection of photographs illustrating the growing stockpile of unsold autos world wide.

Pictured is a Nissan test track being used to store thousands of unsold cars.

Carmakers around the world are cutting production as inventories build up to unprecedented levels. Storage areas and docksides are now packed with vast expanses of unsold cars as demand slumps

Link

Walter Russell Mead of The New Republic explains:

Setting aside the flaws in both these overarching theories of capitalism, this analysis of economic crises is fundamentally sound–and especially relevant to the current meltdown. Cataloguing the early losses from the financial crisis, it’s hard not to conclude that the central capitalist nations will weather the storm far better than those not so central. Emerging markets have been hit harder by the financial crisis than developed ones as investors around the world seek the safe haven provided by U.S. Treasury bills, and commodity-producing economies have suffered extraordinary shocks as commodity prices crashed from their record, boom-time highs. Countries like Russia, Venezuela, and Iran, which hoped to use oil revenue to mount a serious political challenge to American power and the existing world order, face serious new constraints. Vladimir Putin, Hugo Chavez, and Mahmoud Ahmadinejad must now spend less time planning big international moves and think a little bit harder about domestic stability. Far from being the last nail in America’s coffin, the financial crisis may actually resuscitate U.S. power relative to its rivals.

Link – Thanks Daniel Belkin!

Hyundai has begun to promote a new program that claims that “if you cannot make your payment because of a life changing event, we’ll allow you to return your vehicle and walk away from your loan obligation – and in most cases, we will cover most, if not all of the difference”. This program is good up to one year, post purchase, and at least two payments must be made in order for it to become effective. But is it a good deal?

20SomethingFinance blog has more: Link | Article at CNN