Parmesan Bailout

What do you do with 100,000 wheels of cheese? If you’re Italy, according to Morning Edition today, you buy them from cheese-makers and donate them to charity to help the struggling parmagiano industry. According to Malcolm Gladwell in his latest book Outliers (which I just read since I sneakily gave it to C for her birthday and she kindly loaned it back to me when she was done), one of the ways to measure intelligence that’s not captured in IQ tests is to see how many creative uses people can come up with for everyday objects. So I will try to suggest a few of my own:

• Build a bigger mousetrap
• Create a human maze (ala the Wooz), and if people can’t figure out how to get out, they can eat the walls for sustenance
• Use them as renewable-source tabletops
• Roll them down highways and track the patterns made by the gravel to see if you need to re-pave the road
• Stick them over very large bonfires and dip large pieces of toast into them after they melt into a creamy “fondue”
• Dye some of them red, green, and blue and then place them end to end for a giant game of twister

Feel free to help me out by adding some more!

NPR Fan Bailout

Okay, I’ve changed my mind. For the past couple weeks, I’ve been on the fence about whether we should bail out the Big Three car manufacturers, and I’d pretty much decided that we shouldn’t. Yes, they employ many people, and those people in turn keep many others in business. Yes, they’re a core American industry, etc etc. But really, I couldn’t imagine that lending them billions of dollars would actually accomplish anything. They need the money to “restructure” which really just means lay people off – that doesn’t seem like it will do much for the economy. And they don’t really seem to have a viable plan to get back to profitability. All that, and I didn’t appreciate (other than for its humor) the fact that they CEOs of Ford, GM, and Chrysler each flew their own private jet to go begging in Washington last week, and seemed shocked that they weren’t going to just get whatever they asked for.

But that’s all changed, because now I know that the CEOs of Ford and GM, at least, listen to NPR. Last week on Wait, Wait, Don’t Tell Me, they joked about the CEOs and their corporate jets, and Roxanne Roberts suggested that they should have just driven to Washington. Although Peter Sagel thought that would be a horrible idea because of they’d break down in Pittsburg, apparently the CEOs were listening! Last night on All Things Considered, in what I struck me as a very funny piece, Brian Naylor and Michele Norris reported not only that the CEOs of Ford and GM were driving to the new set of hearings in Washington this week, but also what type of cars they would be using – a Chevrolet Malibu hybrid sedan and some kind of Ford hybrid. The CEO of Chrysler may be driving to Washington, but Chrysler won’t say for sure, citing “security reasons”.

So there you go – if the car companies are run by NPR listeners, they must be in good shape. Bailout approved!

Belt Tightening

In regards to belts, there are some obvious things you’d think of when it comes to pregnancy, like needing to buy a bigger one, but one of the results they don’t warn you about is that you can’t actually see your belt when you’re putting it on. This makes belt tightening quite challenging and requires a mirror and some skill. Which is why I was especially entertained by a story on Marketplace last Wednesday about belt tightening – not the economic kind, but the actual belt type. Sean Cole did a hilarious job of interviewing people who make belts about what’s happening in the economy, and apparently belt tightening, specifically punching extra holes in existing belts, making shorter belts to use less material, and appreciating the new trend for skinny belts, is quite prevalent. In fact, given how many people talked about making their belts actually tighter since they’d lost weight you’d think we didn’t have an obesity crisis in this country. My favorite part was when he did his “man on the street” interview that went as follows:

Strangely, some people thought I was talking about money.
WOMAN 3: It's important to not completely retract. Confidence in the market has a lot to do with people's spending.
COLE: I think that's very wise and cogent. I am actually talking about your belt, your belt.
WOMAN 3: I think you need to expand your definition of belt tightening.
COLE: Really?
WOMAN 3: Yeah.

Pieces like this make me remember why, even in these depressing economic times, Marketplace is one of the most informative but also entertaining shows around.

The Really, Really Big M's

On All Things Considered last night, Adam Davidson talked about what would have happened if Fannie May and Freddie Mac had failed, and I was shocked to hear that the amount of debt that they’re in for is $5 trillion dollars, which puts them at a larger debt than any other country (aside from the credit-riding US of course). What that means is that if Japan or the UK went bankrupt, it would have a smaller financial impact on the world than the potential bankruptcy of Fannie and Freddie. This is pretty scary news and really gives a perspective on both how important and how crazy these two companies are. As someone who’s averse to any kind of debt, it seems to me to underscore a lot of what’s wrong with our American culture.
One thing to note is that I was surprised at how much debt Fanny and Freddie were carrying, but at least I know that they were private institutions. That’s more than I can say for Sarah Palin, who seems to think that they’re taxpayer funded but doesn’t see her complete ignorance of important issues (among many other things to be covered in an upcoming blog rant) as a problem.

Cardboard Economy

According to All Things Considered, we are all ignoring one of the best economic indicators - cardboard production. I love hearing stories like this that take a complex financial thing like the US economy and make a clear analogy with something we can all relate to. It makes good sense - if cardboard production is up (I guess it's not a commodity where the price really changes; it's just a question of how much is being made at a given time) then that means manufacturers are making, and therefore selling, more goods, and that the economy is therefore okay. This is a fun way of looking at things, but I did have a couple of thoughts while I was listening:

1. The fact that manufacturers are making more goods doesn't indicate where they're being sold, or to whom. If they're being sold in the US, it could indicate that US consumers are still spending like crazy even though their mortgages are falling apart - which doesn't make me, a solidly conservative "debt is always bad" sort of saver, feel all that encouraged. We could also be selling all those goods to countries outside the US which are taking advantage of our pathetically low dollar. Neither of these would necessarily indicate a strong economy.
2. I feel uncomfortable being happy that we're killing more trees to make more cardboard. Shouldn't we be using existing boxes, and making lighter-weight packaging that takes a lower toll on the environment? I guess on the scale of environmentally-friendly packing material, cardboard is pretty good, but still...Of course my friend M says that he buys non-recycled stuff because it encourages people to grow more trees and is actually more environmentally friendly. C and I had a long discussion about this and agreed that this might be true in places where it's all new trees being harvested, but in BC where older growth trees (read: 50++ years, when trees are in prime carbon reduction mode) are being chopped down, we don't really think that's the case.
3. As the president of President Container spoke about his operation, I once again had to note that there are a lot of people who work in jobs might as well be on a different planet from mine. I'm very glad that I don't have to think about how many yards of cardboard are going through and whether the cutter is going to get jammed, but I do have to keep reminding myself that there's a lot more people like that then people like me.

So cardboard. I guess it's the new gold standard.

Sushi Economy

On Marketplace today Kai Ryssdal interviewed Sasha Issenberg, author of "The Sushi Economy" in a fascinating story. First of all, it made me hungry because they did the interview while sitting down over what sounded like really tasty sushi. Secondly, it was interesting to hear the premise of the book, which is that sushi one of the unabashedly positive* products of globalization. Globalization has helped the fishermen who can catch their fish and get access through fax machines in remote villages to find out exactly how much fish is selling for so that they can get a good price. Quick travel (by plane) and fancy deep freeze machines have also meant that fishermen can expand their reach. On the flip side, globalization of culture has also meant that what was a strange Japanese roadside snack is now a luxury available worldwide, so the market for sushi has expanded tremendously. Overall, more people being happy eating wasabi around the globe (except they aren't actually, but that's a whole other story...). And that's a good thing.

*Of course, by eating more sushi we're also contributing to the over-fishing of the oceans and probably to the destruction of the planet et cetera...but let's stay positive today people, shall we?

Micro-loans

On Weekday yesterday, Steve Scher interviewed people who are involved with micro-loans. Micro-loans are great - everyone loves them because they seem like the perfect way of helping people pull themselves up by their own bootstraps rather than just giving charity. You feel good about yourself, the recipient feels good about themselves, and the world is a better place. The folks being interviewed were all very positive on micro-loans of course, and talked about how they actually work with local organizations in poor countries who can then give out loans themselves to local people whom they vet. They also talked about how micro-loans are working even in America - one of the women had been given a $500 micro-loan (yes, just $500) and managed to start a business that employs several people now, some of whom have gone off and started businesses of their own. In general the stats are great, especially for women. When women get out of poverty they tend to spend money on their children's education, which helps everyone in the long run.

So what's not to love? Well, the fact that it's not all jolly in the world of micro-loans. Time did a great story on them back in April, and while they included several success stories, they also talked about the darker side - namely that many people are using their micro-loans to pay off debt rather than start a business, or even worse, to buy consumer goods. By the time they're done they're even more in debt than when they started. As micro-loans become more popular, for-profit companies are getting into the game, and their screening process to make sure that the money will be used wisely is much less strict because ultimately they just want to loan the money out (and get up to 60% interest because the borrowers are so high risk!) Also, all the charity money going into micro-loans means that much less is going towards developing infrastructure and other necessities in these countries.

While I like the idea of giving directly and potentially seeing immediate results, I think if people really want to help, they should sponsor a child's education through one of the many programs available - long term that will help raise a generation who can support themselves.

In which the BBC sounds a bit silly

On Tuesday as I was driving home listening to All Things Considered, David Folkenflik (seriously, what is it with these reporters and their funny names?) did a great report on Rupert Murdoch's offer to buy Dow Jones and acquire the Wall Street Journal for a very large sum of cash. He immediately started by explaining that the Bancroft family, which controls restricted shares (or some kind of special shares that give them an outsize influence) of Dow Jones has turned down the offer, which is likely to mean that the board of Dow Jones will also turn down the offer. He then described the offer, the fact that it made Dow Jones' stock rise, why Murdoch would want to buy it, and what it would mean to consumer. Most interestingly, he interviewed a gentleman from T. Rowe Price who explained that if Dow Jones turned down such a generous offer, there would be a potentially huge backlash from shareholders who might even sue the company for acting against it's own financial interest, which could cause a long-term sharp drop in the stock price.

A couple of hours later as I was driving to C's house for TNFN, I overheard the BBC News doing an in depth story on the Dow Jones offer as well. However, in a story that seemed equally long, they only covered the offer and why Mr. Murdoch was interested in Dow Jones, leaving the listener (if they hadn't heard David Folkenflik earlier in the afternoon) convinced that the offer must be on the verge of going through. It was an interesting case where you could clearly see the difference in quality between the two stories. I have to admit, given the BBC's biased coverage of almost all stories regarding Israel, that I wasn't too sad to see them look a bit silly.

Housing slump/woes/gains/speculation

Marketplace yesterday featured yet another story about the supposed housing market slump. This time the take was - yes, the housing market is in trouble, but actually prices haven't fallen enough and really should fall further.

We all know the reasons for the slump - because they keep repeating them in the news - the wide availability of subprime mortgages allowed more people to buy more houses that were more expensive than they could afford. This made lots of people raise the prices on their houses and made lots of builders continue to build one McMansion after another. Now mortgage companies are realizing that subprime loans aren't so great and are not giving them out as much, plus people are defaulting on the ones they already have, with the result of too many houses on the market. Blah blah blah...

Okay, fair enough. But why is this such a hot topic of discussion on so many different news shows? The only people who will really be affected on a large scale are investors who own stock in housing-related companies, builders and/or mortgage people, and crazy people who have bought into the trend and decided to flip houses for a living. (About I week ago I heard a typical profile of an older woman who took advantage of adjustable-rate mortgages to buy several homes that she re-did but now can't sell, and in the meantime she had to refinance her mortgage on her main home to pay for the other homes and now it's shot up and she may lose her house.) For the rest of us, though, it's interesting because we own a house, but surely it shouldn't impact whether we buy or sell our house today!

I think instead what these stories do is just contribute to the craziness. They encourage people to go through "seller's delusion" and think their house is worth much more than it actually is. They encourage them to make poor decisions like trying to become a flipper. Instead of educating us, they just try to up the hype and hysteria. I guess in that way they're not much different from all other news items.