Loyal readers know how much Blawgconomics loves a good list, and Forbes happens to provide a lot of them. Last week, it released one of our personal favorites, its ranking of the values of all of the NFL franchises. It can be found here for your viewing pleasure.
Eastern teams lead the charge, with 6 of the 10 ten highest-valued teams hailing from the NFC and AFC East divisions respectively. On the trends front, one notable is the fact that all but 5 teams have either declined in value or remain unchanged over last year's numbers.
Though even the 'cheapest' franchise, Jacksonville, is still valued at nearly three quarters of a billion dollars, and while NFL owners are, by all accounts, still able to pay the bills, one wonders how much these declining values may play into the decision to go to an 18 game regular season. NFL Commissioner Roger Goodell wasn't necessarily available for comment today, but one could certainly speculate...
8.31.2010
DC Going Green...In Style
Washington DC, with its perfect storm of ecologically and socially conscious citizens who also happen to have the purses to be ecologically and socially conscious, is poised to be one of the epicenters of auto dealers' efforts to cater to the electric markets. Already the fourth-largest electric car market in the country, both Nissan and Chevy are planning to make DC the centerpiece of electric, and particularly plug-in, expansion efforts.
On a slightly sexier note, Tesla is also planning an expansion to the DC area. While the planet will likely smile when it learns that the Nissan Leaf and the Chevy Bolt will be increasingly be gracing the streets of the nation's capital, drivers will be the ones smiling if they have the opportunity to get behind the wheel of a Tesla electric. Though the ability to go 0-60 in less than four seconds without blowing a half a barrel of oil doesn't come cheap, performance numbers stack up well to some of the best sports cars in the business. And, if you are already used to driving a Porsche 911, the assumption is that paying in the neighborhood of $100,000 for a car, particularly in the name of mother earth, isn't exactly a stretch.
On a slightly sexier note, Tesla is also planning an expansion to the DC area. While the planet will likely smile when it learns that the Nissan Leaf and the Chevy Bolt will be increasingly be gracing the streets of the nation's capital, drivers will be the ones smiling if they have the opportunity to get behind the wheel of a Tesla electric. Though the ability to go 0-60 in less than four seconds without blowing a half a barrel of oil doesn't come cheap, performance numbers stack up well to some of the best sports cars in the business. And, if you are already used to driving a Porsche 911, the assumption is that paying in the neighborhood of $100,000 for a car, particularly in the name of mother earth, isn't exactly a stretch.
Check out a review of the Tesla Roadster above.
UPDATE: Maybe a little more work is needed...
The List: Washington's 50 Wealthiest Lawmakers
Regardless of whether you believe wealth makes politicians immune from corruption or simply out of touch with Real America, it is always interesting in a nation where keeping up with the Joneses is a national pastime to see which politicians head the rich list.
Luckily thehill.com indulged our stalker-esque tendencies and created a list of the 50 wealthiest legislators in the District. Former presidential hopeful John Kerry heads a list that is split roughly equally between D's and R's for anyone keeping count.
Luckily thehill.com indulged our stalker-esque tendencies and created a list of the 50 wealthiest legislators in the District. Former presidential hopeful John Kerry heads a list that is split roughly equally between D's and R's for anyone keeping count.
8.29.2010
The Lawmaking Process
After recently stumbling upon this interactive flowchart of the lawmaking process, I thought some of our loyal readers might find it useful.
Still others might prefer the tried and true classics:
Still others might prefer the tried and true classics:
Ponderings on the State of the 'Union'
As someone who is disinclined to bring a knife to a gun fight (ie debate hyper-educated, uber-competitive law students day after day about every topic under the sun without every fact, every morsel of information and every pre-formed opinion available to me) Blawgconomics tends to spend a lot of time consulting not only different news sources, but different media when exploring the topics du jour.
This might mean getting viewpoints from both the right- and left-wing Cable News Entertainment programs (no need to explain who I am talking about here), reading about a topic in both papers in town, or double checking a local paper when a national source reports on something. It also includes spending a lot of time watching and reading foreign news sources, which tend to have a 'slightly' different take on many topics than any American outlet does.
No matter how many sources I solicit however, one creamy theme continuously rises to the top; Americans are more divided than at any point in my memory, and perhaps more than at all but a few other points in our nation's history. Is this apparent due to the articles themselves? Is it the nightly hatchet jobs done by news commentators on both sides? Is it the vastly different coverage given to topics by different outlets?
Interestingly, it is not any of these, but rather the public itself which has led me to the conclusion that there are currently not just two Americas, but two Americas with venomous eyes set upon each other. Whether they are 'tweeting' into Wolf Blitzer, calling into C-Span's live guest spots, or most notably, commenting at the end of just about any article available online, the lack of intelligence, common sense and most disturbingly civility exhibited by the general public is nothing less than disheartening.
This might mean getting viewpoints from both the right- and left-wing Cable News Entertainment programs (no need to explain who I am talking about here), reading about a topic in both papers in town, or double checking a local paper when a national source reports on something. It also includes spending a lot of time watching and reading foreign news sources, which tend to have a 'slightly' different take on many topics than any American outlet does.
No matter how many sources I solicit however, one creamy theme continuously rises to the top; Americans are more divided than at any point in my memory, and perhaps more than at all but a few other points in our nation's history. Is this apparent due to the articles themselves? Is it the nightly hatchet jobs done by news commentators on both sides? Is it the vastly different coverage given to topics by different outlets?
Interestingly, it is not any of these, but rather the public itself which has led me to the conclusion that there are currently not just two Americas, but two Americas with venomous eyes set upon each other. Whether they are 'tweeting' into Wolf Blitzer, calling into C-Span's live guest spots, or most notably, commenting at the end of just about any article available online, the lack of intelligence, common sense and most disturbingly civility exhibited by the general public is nothing less than disheartening.
India's Ambitious Solar Plan
For those interested in solar topics, some recent news out of India is sure to pique the curiousity. Earlier this month, the Prime Minister's Council on Climate Change announced a plan to increase solar energy production in a massive way. By way of example, the hope is that solar installations will produce about 20 gigawatts of electricity by 2020. Worldwide solar production is currently less than that.
Though the upfront costs will predictably be tremendous ($20 billion and change), the plan calls for foreign investment to bridge the gap. In addition, the Council hopes that the changes to infrastructure will lead to solar-generated energy reaching price parity with fossil fuels in about a decade, making the plan cost effective sometime after that.
In the article linked above, V. Subramanian, former secretary of the Ministry of New and Renewable Energy and CEO of the Indian Wind Energy Association, notes that the success of the plan will depend not on massive government or international funding, but on changes to national and state energy laws and "the appropriate institutional structures to facilitate implementation at the state level".
Though India is far more ambitious in its solar plans that the US is right now, it seems as if the two nations at least have one thing in common...legal regimes that are not currently disposed toward solar innovation. This is just a guess, but it would not be surprising to see these barriers eliminated in India before they are taken down in the US. Though unfortunate, this just may be one more area where the US will have to follow the leader on solar development.
Though the upfront costs will predictably be tremendous ($20 billion and change), the plan calls for foreign investment to bridge the gap. In addition, the Council hopes that the changes to infrastructure will lead to solar-generated energy reaching price parity with fossil fuels in about a decade, making the plan cost effective sometime after that.
In the article linked above, V. Subramanian, former secretary of the Ministry of New and Renewable Energy and CEO of the Indian Wind Energy Association, notes that the success of the plan will depend not on massive government or international funding, but on changes to national and state energy laws and "the appropriate institutional structures to facilitate implementation at the state level".
Though India is far more ambitious in its solar plans that the US is right now, it seems as if the two nations at least have one thing in common...legal regimes that are not currently disposed toward solar innovation. This is just a guess, but it would not be surprising to see these barriers eliminated in India before they are taken down in the US. Though unfortunate, this just may be one more area where the US will have to follow the leader on solar development.
8.28.2010
Snippets...
Welcome to Snippets, Blawgconomics' semi-regular attempt at covering a lot of topics in a little time. Some would call this lazy; economists prefer the term 'efficient.
- Lets kick things off this edition with a little bit of election intrigue in a season which promises to be full of it. Democratic gubernatorial candidate Doug Racine requested a recount after losing in the Vermont primary by less than 200 votes. This will be the second recount after a tally this week by the Office of the Secretary of the State failed to ensure a great enough margin of victory for Peter Shumlin to avoid the legal challenge.
- Japan's justice minister, apparently unhappy that her country stands with the US as the only two Group of Eight nations which allow capital punishment, has opened Tokyo's gallows up to the prying eyes of journalists. Yes, gallows, as in hanging, the execution method the country continues to utilize. Keiko Chiba did so to stir debate over the practice, which enjoys over 80% approval ratings, but which has drawn the scorn of the international community particularly after a few instances of wrongful convictions.
- The juror who essentially gave disgraced ex-Illinois governor Rod Blagojevich a free pass in his recent anti-corruption trial explained her reasons for not convicting him on all but one of 24 charges. Kind of.
- Apparently the poor economy has done more than slow down the job market; it has impacted the birth rate as well with births in the US falling 2.6% last year. Some experts believe that this is directly related to the recession which presumably caused people to put off familial expansion until signs of economic expansion become more apparent. Some additional fun facts released by the National Center for Health Statistics: the birth rate in 2009 was the lowest in a century; there were about 4.1 million births in the US in 2009; and there was a rise in births to women over 40. Interestingly, the population in Britain took its biggest jump in almost half a century last year and France’s birth rate also has been rising.
- If he weren't so dangerous, oppressive and a communist, one could almost be excused for finding the eccentricities of Kim Jong Il a bit humorous. Our guess is that President Carter isn't quite there after the events of this week.
- Lets kick things off this edition with a little bit of election intrigue in a season which promises to be full of it. Democratic gubernatorial candidate Doug Racine requested a recount after losing in the Vermont primary by less than 200 votes. This will be the second recount after a tally this week by the Office of the Secretary of the State failed to ensure a great enough margin of victory for Peter Shumlin to avoid the legal challenge.
- Japan's justice minister, apparently unhappy that her country stands with the US as the only two Group of Eight nations which allow capital punishment, has opened Tokyo's gallows up to the prying eyes of journalists. Yes, gallows, as in hanging, the execution method the country continues to utilize. Keiko Chiba did so to stir debate over the practice, which enjoys over 80% approval ratings, but which has drawn the scorn of the international community particularly after a few instances of wrongful convictions.
- The juror who essentially gave disgraced ex-Illinois governor Rod Blagojevich a free pass in his recent anti-corruption trial explained her reasons for not convicting him on all but one of 24 charges. Kind of.
- Apparently the poor economy has done more than slow down the job market; it has impacted the birth rate as well with births in the US falling 2.6% last year. Some experts believe that this is directly related to the recession which presumably caused people to put off familial expansion until signs of economic expansion become more apparent. Some additional fun facts released by the National Center for Health Statistics: the birth rate in 2009 was the lowest in a century; there were about 4.1 million births in the US in 2009; and there was a rise in births to women over 40. Interestingly, the population in Britain took its biggest jump in almost half a century last year and France’s birth rate also has been rising.
- If he weren't so dangerous, oppressive and a communist, one could almost be excused for finding the eccentricities of Kim Jong Il a bit humorous. Our guess is that President Carter isn't quite there after the events of this week.
8.27.2010
Using the REIT Structure to Stimulate Solar Development: The Solar REIT
8.19.2010
Honor Among Thieves: The Bernie Madoff Story
Sometimes a story tickles both the legal and economic sensibilities of Blawgconomics to such an extent that it is simply impossible to ignore. For obvious reasons, these stories are not generally positive for their subjects, and the present is no exception; apparently, and probably unsurprisingly, financier turned lifer Bernie Madoff has much more honor among thieves than the people whose fortunes he squandered in the world's largest Ponzi scheme. Placed on the same lofty perch by inmates as mob bosses and former spies, Madoff is seemingly a bit of a celeb in his new home.
Detailed in this New York Magazine story are his contempt for the regulators whose ignorance allowed him to continue his scheme for so long, his frequent and profanity-laced dismissals of his former clients and jokes about the auctioning of his watch collection. Apparently he shows no remorse, but then maybe that is viewed as an admirable trait among his new lifelong roommates.
Madoff may be a symbol of all that was wrong with Wall St. over the past decade or so. He had a very successful and legitimate business and was well respected among the financial, social and political elite. However, despite living the good life, he wanted more and this greed eventually led to his downfall. As Bud Fox might have said, 'How much is enough?'
That greed was a contributing factor is evident; the lesson to be learned is less so. Indeed, it is often greed that drives inventors to innovate and entrepreneurs to succeed. Maybe the lesson is that it is often a finer line, or perhaps more fittingly a shorter step, than people like to admit between working hard and taking shortcuts. Maybe not. However, in a world where history often repeats one thing that is fairly certain is that even if lessons aren't learned, the Madoff story itself will not soon be forgotten.
Detailed in this New York Magazine story are his contempt for the regulators whose ignorance allowed him to continue his scheme for so long, his frequent and profanity-laced dismissals of his former clients and jokes about the auctioning of his watch collection. Apparently he shows no remorse, but then maybe that is viewed as an admirable trait among his new lifelong roommates.
Madoff may be a symbol of all that was wrong with Wall St. over the past decade or so. He had a very successful and legitimate business and was well respected among the financial, social and political elite. However, despite living the good life, he wanted more and this greed eventually led to his downfall. As Bud Fox might have said, 'How much is enough?'
That greed was a contributing factor is evident; the lesson to be learned is less so. Indeed, it is often greed that drives inventors to innovate and entrepreneurs to succeed. Maybe the lesson is that it is often a finer line, or perhaps more fittingly a shorter step, than people like to admit between working hard and taking shortcuts. Maybe not. However, in a world where history often repeats one thing that is fairly certain is that even if lessons aren't learned, the Madoff story itself will not soon be forgotten.
8.17.2010
The Problem with Pirates...
The Golden Age of Piracy has been romanticized through novels, the naming of sports teams, Johnny Depp and Legos among other things. If one is to do some research into the scourges of the seas, however, it becomes obvious fairly quickly that citizens of the 21st century look upon the buccaneers of old with fonder eyes than their 17th century contemporaries did. Yet despite this latter day pirate afficionados' liberal usage of rose-colored glasses, and despite the grossly euphemistic use of the label 'privateers' even during piracy's heyday, it is likely that the average person of both today and yesteryear could agree on at least one thing about the original pirates; who the original pirates were.
Not so with today's version of swashbucklers apparently as the poor penning of laws has produced a current international legal regime lacking a formal definition of pirate. Though this might not seem to be the most pressing issue with the global economy in a meltdown and as the US is going on nearly a decade of military engagements far from home, the seas of the world are currently facing the highest level of pirate activity perhaps since America was an English colony. And, as that fact has implications for both the aforementioned commercial and military interests of the US, solving the pirate problem has taken on greater urgency of late.
Piracy is well established as one of the crimes which the courts of all nations have jurisdiction; in legal terms it is a crime of 'universal jurisdiction.' When the US wrote its anti-piracy laws, this typically meant a universal right to hang pirates on sight (as well as on site). This had the benefit of certainty for both would be pirates and those who were able to capture them. However as time progressed, many nations came to define the crime differently, leading to a situation where universal jurisdiction and universal definition don't always meet to form a coherent legal regime.
Two factors have made this problematic. First is simply the proliferation of piracy as technology and improved armaments have made this particular criminal endeavor easier and more profitable. As a result, piracy cases, and therefore definitions, are appearing more frequently in courts than they have in nearly two centuries. Secondly, at least from a US perspective, is current US law on the subject. Developed in the earlier half of the 19th century, it merely refers to the 'law of nations' when defining piracy. Though this wasn't such a problem when the law of nations meant death to pirates whenever and wherever you found them, it has led to uncertainty in the present as various legal and political regimes (ie the law of nations) have come to treat piracy in vastly different ways.
Not so with today's version of swashbucklers apparently as the poor penning of laws has produced a current international legal regime lacking a formal definition of pirate. Though this might not seem to be the most pressing issue with the global economy in a meltdown and as the US is going on nearly a decade of military engagements far from home, the seas of the world are currently facing the highest level of pirate activity perhaps since America was an English colony. And, as that fact has implications for both the aforementioned commercial and military interests of the US, solving the pirate problem has taken on greater urgency of late.
Piracy is well established as one of the crimes which the courts of all nations have jurisdiction; in legal terms it is a crime of 'universal jurisdiction.' When the US wrote its anti-piracy laws, this typically meant a universal right to hang pirates on sight (as well as on site). This had the benefit of certainty for both would be pirates and those who were able to capture them. However as time progressed, many nations came to define the crime differently, leading to a situation where universal jurisdiction and universal definition don't always meet to form a coherent legal regime.
Two factors have made this problematic. First is simply the proliferation of piracy as technology and improved armaments have made this particular criminal endeavor easier and more profitable. As a result, piracy cases, and therefore definitions, are appearing more frequently in courts than they have in nearly two centuries. Secondly, at least from a US perspective, is current US law on the subject. Developed in the earlier half of the 19th century, it merely refers to the 'law of nations' when defining piracy. Though this wasn't such a problem when the law of nations meant death to pirates whenever and wherever you found them, it has led to uncertainty in the present as various legal and political regimes (ie the law of nations) have come to treat piracy in vastly different ways.
The List: The Best Countries in the World
Those who are fans of this site know that we are big fans of lists. However, despite our best efforts at posting lists of great social, political and moral relevance, we have never quite stumbled into something so grand and beneficial to society as we have today; Newsweek has created a list of the Best Countries in the World. The fact that it is so interactive is merely icing on the cake...
8.14.2010
Could Junk Bond Issuance High Presage a Low?
High yield, or junk, bond issuance is at record highs this year as low yields on government-issued bonds have made it easier for companies with questionable credit ratings to get financing on the cheap. While this is good for the companies in question, particularly those who are trying to refinance even higher priced debt, it is also a bit alarming as the very reason these companies need to issue higher yield debt is their less than stellar financial situations. Particularly as the economy is in a less than stellar situation itself, this could lead to trouble in the future, and at least provides one more bit of uncertainty in an already murky economic picture.
Well, at least one thing is for sure; regulators won't be able to blame Mike Milken this time...
Well, at least one thing is for sure; regulators won't be able to blame Mike Milken this time...
Fun with Charts: The Hindenburg Omen
Loyal readers are likely familiar with the 'Economics for Dummies (aka Lawyers)' series that Blawgconomics has sporadically kept up with. For everyone else, that series represents a perhaps futile attempt at getting a certain population of predominantly 'word people' to understand 'number people' stuff. While we don't anticipate that 'Fun with Charts' is destined for the same type of run, we thought that this week was a promising one for such a one-off, particularly as the fun in question goes far beyond your average death cross or moving average. That's right, the blogosphere and message boards were alight with week with chatter about the ominous-sounding Hindenburg Omen technical indicator.
Your author may be a few years removed from daily chart watching, but would define technical trading as a method of trading securities that is dependent on the analysis of pricing and volume patterns. This analysis leads to trading strategies based on whether the patterns in the charts signal the analyst/trader to buy, sell or hold, and contrasts with analysis based on company fundamentals. Indeed, technical analysis and trading is independent of analysis and trading based on a company's 'numbers' and it is probably not an oversimplification to say that these two groups of investors are often entirely at odds over a particular stock or even category of securities.
While many chart patterns are easy to identify and could be as simple as two lines crossing over each other in a moving average pattern, some are much more complex and may include several variables or prerequisites. The Hindenburg Omen (in addition to sounding like a future Dan Brown novel) is an example of the latter. Though the particulars are probably better left to the real experts, suffice to say that, in a nod to its namesake, the Hidenburg Omen portends a disaster for the markets.
Experts disagree over how effective the Omen actually is as a predictor of markets. However, at the very least, it could point to some choppy trading next week as highly derivative investors often trade based purely on what they think other investors will do. And those investors, are of course, trading based on their own expectations, which should rationally include their idea of what other investors are doing. Therefore, at some level, just the fact that the Hindenburg Omen was in the news is news in and of itself. And that, my friends, is Fun with Charts.
UPDATE: After the Omen reared its ugly head for a second time in as many weeks, the founder of the signal has exited the market completely.
Your author may be a few years removed from daily chart watching, but would define technical trading as a method of trading securities that is dependent on the analysis of pricing and volume patterns. This analysis leads to trading strategies based on whether the patterns in the charts signal the analyst/trader to buy, sell or hold, and contrasts with analysis based on company fundamentals. Indeed, technical analysis and trading is independent of analysis and trading based on a company's 'numbers' and it is probably not an oversimplification to say that these two groups of investors are often entirely at odds over a particular stock or even category of securities.
While many chart patterns are easy to identify and could be as simple as two lines crossing over each other in a moving average pattern, some are much more complex and may include several variables or prerequisites. The Hindenburg Omen (in addition to sounding like a future Dan Brown novel) is an example of the latter. Though the particulars are probably better left to the real experts, suffice to say that, in a nod to its namesake, the Hidenburg Omen portends a disaster for the markets.
Experts disagree over how effective the Omen actually is as a predictor of markets. However, at the very least, it could point to some choppy trading next week as highly derivative investors often trade based purely on what they think other investors will do. And those investors, are of course, trading based on their own expectations, which should rationally include their idea of what other investors are doing. Therefore, at some level, just the fact that the Hindenburg Omen was in the news is news in and of itself. And that, my friends, is Fun with Charts.
UPDATE: After the Omen reared its ugly head for a second time in as many weeks, the founder of the signal has exited the market completely.
8.12.2010
Even in Death Geronimo Can't Rest in Peace
A federal judge in Washington, DC dismissed a case by the descendants of Apache warrior Geronimo against the Skull and Bones society of Yale in a bid to reclaim his stolen remains. Apparently a Bonesman (rumored to have been the patriarch of the Bush political dynasty) stole the remains from Oklahoma's Fort Still during a ceremony in 1918.
The dismissal hinged on Judge Roberts' holding that the Native American Graves Protection and Repatriation Act only applies to grave robberies that took place after its enactment in 1990.
The judge was likely technically correct as a read of the statute reveals no retroactivity clause, something that would typically be required to reach back to an act committed in 1918. Additionally, the statute specifically states that it applies to 'The ownership or control of Native American cultural items which are excavated or discovered on Federal or tribal lands after the date of enactment of this Act' (emphasis added).
So, it seems that Native objects and remains in the hands of individuals before the law was passed were meant to remain there. This was undoubtedly intentional, otherwise the law's author would not have included the 'after the date of enactment' bit. Additionally, there were provisions for museums and government entities to repatriate existing collections, lending further contextual proof that not including such provisions for individuals was intentional and not merely an oversight.
However, whatever the intent of the law's author was, there is something about this case that rubs the conscience the wrong way; almost that the letter of the law wasn't clever enough to keep up with its spirit, almost a sense that the good guys lost. Perhaps this will be one of those situations where what would seem to be a morally wrong result arrived at by a judge's otherwise correct reading of a statute will lead to a reevaluation of the law. If not, Geronimo's descendants won't be the only losers.
The dismissal hinged on Judge Roberts' holding that the Native American Graves Protection and Repatriation Act only applies to grave robberies that took place after its enactment in 1990.
The judge was likely technically correct as a read of the statute reveals no retroactivity clause, something that would typically be required to reach back to an act committed in 1918. Additionally, the statute specifically states that it applies to 'The ownership or control of Native American cultural items which are excavated or discovered on Federal or tribal lands after the date of enactment of this Act' (emphasis added).
So, it seems that Native objects and remains in the hands of individuals before the law was passed were meant to remain there. This was undoubtedly intentional, otherwise the law's author would not have included the 'after the date of enactment' bit. Additionally, there were provisions for museums and government entities to repatriate existing collections, lending further contextual proof that not including such provisions for individuals was intentional and not merely an oversight.
However, whatever the intent of the law's author was, there is something about this case that rubs the conscience the wrong way; almost that the letter of the law wasn't clever enough to keep up with its spirit, almost a sense that the good guys lost. Perhaps this will be one of those situations where what would seem to be a morally wrong result arrived at by a judge's otherwise correct reading of a statute will lead to a reevaluation of the law. If not, Geronimo's descendants won't be the only losers.
8.08.2010
Snippets...
Welcome to Snippets, Blawgconomics' semi-regular attempt at covering a lot of topics in a little time. Some would call this lazy; economists prefer the term 'efficient.'
- We will kick off this edition on a slightly sad note with a story out of The Wall St. Journal which describes the pain some families experience after the pain; apparently student loans from private companies aren't forgiven in the event of death. Luckily for the otherwise unfortunate families, there is some legislation on the way which could provide a measure of relief, at least financially.
- The Journal also provides us with a list of ways to beat deflation in its investor section this weekend. If the article is to be believed, there may even be some profit opportunities lurking in this otherwise economically dangerous scenario.
- For the investor who seemingly has everthing...Frontier Markets!!! If the excitement of investing in emerging markets, commodities and futures contracts just isn't doing it for you anymore, the latest and greatest investment trend is exposure to markets 'at the farthest reaches of the investment world.' In a nod at avoiding irrational exuberance, the article helpfully includes the byline 'tread lightly' for over-eager readers.
- On a similar note. The New York Times has a piece this weekend on investing in Indonesia, a strategy with slightly less risk than frontier markets...but still not likely as much safety as say, government bonds. Then again...
- Also in The Times, an interesting piece on how union activism in the US might actually be beneficial to the green movement. Apparently steel workers don't take too kindly to windmills being built overseas...
- Speaking of unions, Messrs. Posner and Becker have some interesting thoughts on how the administration's relationship with the protectors of labor might be impacting economic recovery.
- Despite all of the blustering of investor protection advocates after the Supreme Court's ruling in Citizen's United, it appears that the solution to any problems created by allowing corporations to make almost unlimited contributions to political campaigns can be found in the market. Target is one of the first corporations to learn this lesson, but is far from likely to be the last.
- In a slightly bizarro twist on Stockholm Syndrome (maybe Stolichnaya Syndrome? is it too soon?), one of the 'Russian 12' believes that he is actually who he says he was...Mikhail Vasenkov, aka Juan Lazaro, apparently prefers his pseudonym as well as his pseudostate of Peru, which is where he is trying to go and live a quiet life after recently being part of the biggest spy swap since the Cold War.
- Let's wrap up this edition with a slightly sour story that reminds one of the phrase 'letter and spirit of the law.' Health inspectors in Oregon protected an unwitting public from almost assured illness this week, shutting down an unlicensed lemonade stand at an art fair in Portland. The perp (7 year old Julie Murphy) provided her recipe for those who were saved but who still want to take the risk into their own hands. It can be found reprinted in the article, but I can let you know ahead of time that it is full of questionable substances such as ice and lemonade mix...
- We will kick off this edition on a slightly sad note with a story out of The Wall St. Journal which describes the pain some families experience after the pain; apparently student loans from private companies aren't forgiven in the event of death. Luckily for the otherwise unfortunate families, there is some legislation on the way which could provide a measure of relief, at least financially.
- The Journal also provides us with a list of ways to beat deflation in its investor section this weekend. If the article is to be believed, there may even be some profit opportunities lurking in this otherwise economically dangerous scenario.
- For the investor who seemingly has everthing...Frontier Markets!!! If the excitement of investing in emerging markets, commodities and futures contracts just isn't doing it for you anymore, the latest and greatest investment trend is exposure to markets 'at the farthest reaches of the investment world.' In a nod at avoiding irrational exuberance, the article helpfully includes the byline 'tread lightly' for over-eager readers.
- On a similar note. The New York Times has a piece this weekend on investing in Indonesia, a strategy with slightly less risk than frontier markets...but still not likely as much safety as say, government bonds. Then again...
- Also in The Times, an interesting piece on how union activism in the US might actually be beneficial to the green movement. Apparently steel workers don't take too kindly to windmills being built overseas...
- Speaking of unions, Messrs. Posner and Becker have some interesting thoughts on how the administration's relationship with the protectors of labor might be impacting economic recovery.
- Despite all of the blustering of investor protection advocates after the Supreme Court's ruling in Citizen's United, it appears that the solution to any problems created by allowing corporations to make almost unlimited contributions to political campaigns can be found in the market. Target is one of the first corporations to learn this lesson, but is far from likely to be the last.
- In a slightly bizarro twist on Stockholm Syndrome (maybe Stolichnaya Syndrome? is it too soon?), one of the 'Russian 12' believes that he is actually who he says he was...Mikhail Vasenkov, aka Juan Lazaro, apparently prefers his pseudonym as well as his pseudostate of Peru, which is where he is trying to go and live a quiet life after recently being part of the biggest spy swap since the Cold War.
- Let's wrap up this edition with a slightly sour story that reminds one of the phrase 'letter and spirit of the law.' Health inspectors in Oregon protected an unwitting public from almost assured illness this week, shutting down an unlicensed lemonade stand at an art fair in Portland. The perp (7 year old Julie Murphy) provided her recipe for those who were saved but who still want to take the risk into their own hands. It can be found reprinted in the article, but I can let you know ahead of time that it is full of questionable substances such as ice and lemonade mix...
8.06.2010
Economics for Lawyers (aka Dummies): Supply and Demand
Supply and demand. Most people probably understand the concepts intuitively. For example, people know that hurricanes or frosts which destroy orange crops and therefore hurt the harvest are bad news for orange juice prices. Indeed, even if the terms themselves aren't used, the concepts come up constantly, whether a politician is discussing global trade or the general manager of your favorite baseball team is trying to explain the lack of activity during this year's trade window. However, though the concepts might feel intuitive for many, their importance to economic thought and their ability to explain anything from great white shark sightings off of the coast of Massachusetts to unemployment during a recession make a thorough understanding of them invaluable (also, if web traffic to previous installments of the Economics for Lawyers series serve as any indication, even loyal readers who understood the concepts in undergraduate microeconomics may find a refresher helpful).
Let's start by defining the terms, which are so intertwined that Wikipedia.com actually combines them in a single entry on the topic. In this entry, authors on the site define the terms by saying that 'Supply and demand is an economic model of price determination in a market. It concludes that in a competitive market, price will function to equalize the quantity demanded by consumers, and the quantity supplied by producers, resulting in an economic equilibrium of price and quantity.' Investopedia.com, whose authors call the supply and demand concept 'the backbone of a market economy,' explain the concept in slightly different terms,
So, what does this mean in its simplest terms? Supply is the amount of a thing in an economy, whether that thing be a commodity like oil or a commodity like labor. Demand is the requirement that economy has for the thing, driven by factors like production and growth. Price is a function of how these two factors play off of each other. So, when supply remains the same, and demand rises, price rises. Likewise, when demand remains constant and supply rises, prices fall. The relationships work in reverse as well. A few simple examples might help to illustrate the point.
Say a baseball card collector is a fan of the Boston Red Sox and is missing only a Ted Williams card to complete his otherwise impeccable collection of Sox players in the Hall of Fame. Because there are relatively few Ted Williams cards on the market (low supply), and because it is a highly sought after item (high demand), the price will be much higher than one might expect for what is otherwise a smallish piece of thin card stock. Fans of programs such as Antiques Roadshow are similarly able to observe these forces at play on a daily basis when people dig out the rare and highly sought tea set that they thought was ugly trash in the attic. On the flip side, and back to the baseball card example, a card currently in mass production and easy to obtain (high supply) representing a shall we say less-than-perennial-All Star-caliber-player (low demand) might only be worth a few pennies.
To summarize, both the supply of, and demand for, a good are important factors in the pricing equation. They play off of each other and are constantly changing for any given good. If supply and demand and how they impact pricing are clear, the next important factor to discuss in the supply/demand relationship is elasticity.
Elasticity is very simply the extent that the aforementioned changes in pricing impact consumer behavior. The demand for elastic goods can vary widely at different price levels. The demand for inelastic goods changes less as price does. Let's take another example to illustrate. One that is griped about quite often in a situation that the government is able to effectively exploit for tax revenues is cigarettes. Cigarettes qualify as a classic inelastic good because even when the price goes up, people who are addicted still buy them. Gasoline, medicine and butter are all similarly good examples. Of course there is always a breaking point. Indeed, in some cases, consumers will seek out alternatives, or substitutes, even for inelastic goods when things become severe enough. One example is the increase in smaller and/or electric vehicles when gas prices increased in the US over a protracted time period. However, in general terms when price increases occur, demand will remain fairly static for such goods.
As one might imagine, the opposite of inelastic goods are elastic goods, or those which, when price shifts occur, behaviors rapidly adjust accordingly. These items are not typically 'necessaries' and often have substitutes more readily available than inelastic goods as well, further facilitating behavioral adjustments. Some examples would include expensive hotel rooms during a recession (one could substitute a cheaper room, or even a day trip, rather than a resort vacation). Another example could be generic rather than brand name goods, or used cars rather than brand new models.
So supply and demand shifts and interplay impact the pricing of goods, and elasticities reflect how consumer react to those price changes. Let's take a look at how all of this comes together in an example that has relevance to a lot of my fellow law students; the current job market.
In a boom economy, things are easy. There is a lot of corporate activity (the good kind, not bankruptcies), and firms hire both more summer associates and lateral employees. There is plenty of work and profits, so job seekers might receive a number of bids. In other words, their labor (supply) is in high demand, so the price (wages) goes up. This is all fairly intuitive and easy to follow. The cliche 'a rising tide lifts all ships' is certainly appropriate in these situations.
However, economies around the globe are currently in a bust cycle. Not only is this worse for job seekers for supply and demand reasons, it is even a bit more complicated due to factors such as minimum wages, seniority, etc. If in a boom, the rising tide lifts the ships, in a bust a falling tide creates muddy puddles and confusion. Though one could intuit that bad economies lead to lower wages and that young lawyers would benefit due to a willingness to work for less, they would not be correct in reality. Indeed, it is the restriction of supply and demand forces that is leaving many young lawyers jobless currently.
For example, if the price of labor were allowed to fluctuate naturally, employers would simply depress wages and those who were willing to work would accept them. This might actually be good for young lawyers as those who were nearing retirement might be stimulated to do so a bit earlier, or maybe as senior associates decided to embark on alternate career paths. However, cultural norms dictate that wages aren't allowed to fluctuate on the downside to the extent that they otherwise might, keeping many currently employed lawyers right where they are and saddling newly minted ones with loans and a lack of prospects. In other words, demand is artificially restricted to keep prices high, and therefore there is an excess supply of labor, or unemployment (another topic for another day perhaps) which is all quite depressing.
On second thought, maybe it isn't so helpful to understand supply and demand after all...
Let's start by defining the terms, which are so intertwined that Wikipedia.com actually combines them in a single entry on the topic. In this entry, authors on the site define the terms by saying that 'Supply and demand is an economic model of price determination in a market. It concludes that in a competitive market, price will function to equalize the quantity demanded by consumers, and the quantity supplied by producers, resulting in an economic equilibrium of price and quantity.' Investopedia.com, whose authors call the supply and demand concept 'the backbone of a market economy,' explain the concept in slightly different terms,
Demand refers to how much (quantity) of a product or service is desired by buyers. The quantity demanded is the amount of a product people are willing to buy at a certain price; the relationship between price and quantity demanded is known as the demand relationship. Supply represents how much the market can offer. The quantity supplied refers to the amount of a certain good producers are willing to supply when receiving a certain price. The correlation between price and how much of a good or service is supplied to the market is known as the supply relationship.
So, what does this mean in its simplest terms? Supply is the amount of a thing in an economy, whether that thing be a commodity like oil or a commodity like labor. Demand is the requirement that economy has for the thing, driven by factors like production and growth. Price is a function of how these two factors play off of each other. So, when supply remains the same, and demand rises, price rises. Likewise, when demand remains constant and supply rises, prices fall. The relationships work in reverse as well. A few simple examples might help to illustrate the point.
Say a baseball card collector is a fan of the Boston Red Sox and is missing only a Ted Williams card to complete his otherwise impeccable collection of Sox players in the Hall of Fame. Because there are relatively few Ted Williams cards on the market (low supply), and because it is a highly sought after item (high demand), the price will be much higher than one might expect for what is otherwise a smallish piece of thin card stock. Fans of programs such as Antiques Roadshow are similarly able to observe these forces at play on a daily basis when people dig out the rare and highly sought tea set that they thought was ugly trash in the attic. On the flip side, and back to the baseball card example, a card currently in mass production and easy to obtain (high supply) representing a shall we say less-than-perennial-All Star-caliber-player (low demand) might only be worth a few pennies.
To summarize, both the supply of, and demand for, a good are important factors in the pricing equation. They play off of each other and are constantly changing for any given good. If supply and demand and how they impact pricing are clear, the next important factor to discuss in the supply/demand relationship is elasticity.
Elasticity is very simply the extent that the aforementioned changes in pricing impact consumer behavior. The demand for elastic goods can vary widely at different price levels. The demand for inelastic goods changes less as price does. Let's take another example to illustrate. One that is griped about quite often in a situation that the government is able to effectively exploit for tax revenues is cigarettes. Cigarettes qualify as a classic inelastic good because even when the price goes up, people who are addicted still buy them. Gasoline, medicine and butter are all similarly good examples. Of course there is always a breaking point. Indeed, in some cases, consumers will seek out alternatives, or substitutes, even for inelastic goods when things become severe enough. One example is the increase in smaller and/or electric vehicles when gas prices increased in the US over a protracted time period. However, in general terms when price increases occur, demand will remain fairly static for such goods.
As one might imagine, the opposite of inelastic goods are elastic goods, or those which, when price shifts occur, behaviors rapidly adjust accordingly. These items are not typically 'necessaries' and often have substitutes more readily available than inelastic goods as well, further facilitating behavioral adjustments. Some examples would include expensive hotel rooms during a recession (one could substitute a cheaper room, or even a day trip, rather than a resort vacation). Another example could be generic rather than brand name goods, or used cars rather than brand new models.
So supply and demand shifts and interplay impact the pricing of goods, and elasticities reflect how consumer react to those price changes. Let's take a look at how all of this comes together in an example that has relevance to a lot of my fellow law students; the current job market.
In a boom economy, things are easy. There is a lot of corporate activity (the good kind, not bankruptcies), and firms hire both more summer associates and lateral employees. There is plenty of work and profits, so job seekers might receive a number of bids. In other words, their labor (supply) is in high demand, so the price (wages) goes up. This is all fairly intuitive and easy to follow. The cliche 'a rising tide lifts all ships' is certainly appropriate in these situations.
However, economies around the globe are currently in a bust cycle. Not only is this worse for job seekers for supply and demand reasons, it is even a bit more complicated due to factors such as minimum wages, seniority, etc. If in a boom, the rising tide lifts the ships, in a bust a falling tide creates muddy puddles and confusion. Though one could intuit that bad economies lead to lower wages and that young lawyers would benefit due to a willingness to work for less, they would not be correct in reality. Indeed, it is the restriction of supply and demand forces that is leaving many young lawyers jobless currently.
For example, if the price of labor were allowed to fluctuate naturally, employers would simply depress wages and those who were willing to work would accept them. This might actually be good for young lawyers as those who were nearing retirement might be stimulated to do so a bit earlier, or maybe as senior associates decided to embark on alternate career paths. However, cultural norms dictate that wages aren't allowed to fluctuate on the downside to the extent that they otherwise might, keeping many currently employed lawyers right where they are and saddling newly minted ones with loans and a lack of prospects. In other words, demand is artificially restricted to keep prices high, and therefore there is an excess supply of labor, or unemployment (another topic for another day perhaps) which is all quite depressing.
On second thought, maybe it isn't so helpful to understand supply and demand after all...
8.04.2010
The List: State Debt Levels
Much like yesterday's mini-post on the health care system, today's effort is not necessarily a 'list,' but its highly digestible format nonetheless renders it 'List' worthy. Today, we look at the per capita debt bills in individual states. For clarity, this is entirely separate from each citizen's share of the federal debt.
UPDATE: Based on our site traffic statistics, it appears that state debt levels are a very hot topic among internet surfers. Therefore, we thought it might be helpful to provide a few more good links for those who stumble across this post. Also found above, here is a CNN Money page with an interactive map which allows users to see per capita debt levels, while readers can visit the article which linked to the map here.
Meanwhile, this Forbes map, while a bit more dated, provides slightly more information out of the same format. Here is an interesting page with statistics as well as functionality allowing users to make their own charts. Finally, for those with an economist's dismal sense of humor, we stumbled across this Boston Fed report from 1997 with summaries of the economic status of each the states of the New England region. The real laughs come on pages 5, 6 and 7 where readers can read about budget surpluses in places like Massachusetts and Connecticut.
UPDATE: Based on our site traffic statistics, it appears that state debt levels are a very hot topic among internet surfers. Therefore, we thought it might be helpful to provide a few more good links for those who stumble across this post. Also found above, here is a CNN Money page with an interactive map which allows users to see per capita debt levels, while readers can visit the article which linked to the map here.
Meanwhile, this Forbes map, while a bit more dated, provides slightly more information out of the same format. Here is an interesting page with statistics as well as functionality allowing users to make their own charts. Finally, for those with an economist's dismal sense of humor, we stumbled across this Boston Fed report from 1997 with summaries of the economic status of each the states of the New England region. The real laughs come on pages 5, 6 and 7 where readers can read about budget surpluses in places like Massachusetts and Connecticut.
8.03.2010
The Most Successful Ad Campaign in the World
Here at Blawgconomics, we believe that it is never too early to beef up our obituaries and like to think that our readers hang on every word, even the prepositions. We also happen to hold superlatives in high regard. Therefore it should be no surprise that we are big fans of Dos Equis and its Most Interesting Man in the World ad campaign. By extension, we relish any opportunity to discuss it in a way that doesn't also betray our staid economic sensabilities.
Therefore we greatly appreciate that the folks at Dos Equis have managed to ride the campaign to the tune of a 26% increase in sales this year. In fact, since the introduction of the campaign in 2006, sales have shot up so significantly that the brand is the fastest growing beer import in the country.
While we don't necessarily have the psychological chops to determine why, exactly, this marketing campaign has been so effective, it is really nice to see sales of anything going up in the current economic environment. In that spirit, and as the Most Interesting Man himself would say, Stay Thirsty My Friends...
Therefore we greatly appreciate that the folks at Dos Equis have managed to ride the campaign to the tune of a 26% increase in sales this year. In fact, since the introduction of the campaign in 2006, sales have shot up so significantly that the brand is the fastest growing beer import in the country.
While we don't necessarily have the psychological chops to determine why, exactly, this marketing campaign has been so effective, it is really nice to see sales of anything going up in the current economic environment. In that spirit, and as the Most Interesting Man himself would say, Stay Thirsty My Friends...
The List: Mapping the New Health Care System
Well, maybe it isn't so much of a list, but this chart does do a great job of explaining the complexities of the new health care legislation (or at least a great job of fitting all of its numerous facets onto a one-pager).
It is often said that pictures speak a thousand words. I wonder what the first orator who spoke those words would say about a chart with a thousand pictures. Most likely the poets of the past never anticipated such a scenario...
It is often said that pictures speak a thousand words. I wonder what the first orator who spoke those words would say about a chart with a thousand pictures. Most likely the poets of the past never anticipated such a scenario...
8.02.2010
Supply and Demand in Nature
Evidence from the popular book Jaws and the movies it spawned notwithstanding, Massachusetts is not particularly known as a hotbed for great white shark activity. While any fisherman from New England can vouch for the fact that there are several species of shark within a few miles of the coastline (and could probably share a few stories about dogfish), the Cape is not necessarily featured in heavy rotation alongside SoCal, Australia and South Africa during Shark Week either.
However, nature has given us a great example of the impact of supply and demand forces on otherwise static situations recently as booming seal populations have led to an increase in great white activity off the Massachusetts coast. In economic terms, an increasing supply has shifted the curve over, allowing for increased demand in the area. In everyday terms, seal are currently on sale in aisle three.
Quite logical and easy enough to follow; it is just unfortunate that the government, despite its best efforts, has not been able to replicate such supply-side magic when it comes to the job market...
However, nature has given us a great example of the impact of supply and demand forces on otherwise static situations recently as booming seal populations have led to an increase in great white activity off the Massachusetts coast. In economic terms, an increasing supply has shifted the curve over, allowing for increased demand in the area. In everyday terms, seal are currently on sale in aisle three.
Quite logical and easy enough to follow; it is just unfortunate that the government, despite its best efforts, has not been able to replicate such supply-side magic when it comes to the job market...
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