CURRENT AFFAIRS. OPINIONS. BUSINESS. ECONOMICS.
....everything you need to be the intellectual at the cocktail party.
A Blog Written by Ahren Brunow
Media is changing rapidly. Marketers have the ability to reach people at a much deeper level and can create much more interaction. The video below is a good overview of how the marketing landscape is changing.
Enjoy.
A.
P.S: I embedded this video from the Economist and due to that fact the video does not mesh with my layout. Classic Tradeoff.
Ahem. I will start with sorry for the nonexistence of posts over the summer. It seems that when I have more time I find it harder to write here. I think it may be a combination of summer weather and a need to relax.
Whatever the reason is it doesn’t matter. Now I am ready to get back to regular posting. I will keep my ear to the internet to keep you informed on developments in the business world and economics, but I will also post about humourous topics as well. I want this to be more fun.
Please feel free to email me if you ever have any questions or just want to shoot the ____. Also, comment posts and get some debates started. It makes this way more fun.
Hope all is well with everyone.
A.
Via Kempt:
“From time to time, a gentleman’s eyes may wander.
This is not to be taken as a sign of his character, but as a reflex of the eye resulting in a momentary suspension of the higher faculties. Neither priests, eunuchs nor husbands are entirely immune. And all things considered, the eye is one of the less dangerous organs.
So let’s not embarrass anyone whose wife might be watching.
—R.B.”
BM: This is too funny. I don’t think Obama is actually looking at that lady but it sure looks like it. We are all human though. This will probably be on CNN with the headline of “Obama and Michelle: relationship trouble”.
Via Carpe Diem
Most all the world pays a marginal cost for drugs, medical devices, and procedures that does not come close to repaying the development effort that went into those products. Further, most of the world has regimented medical systems that have very strong immune systems against any sort of innovation. As a result, almost all medical innovation occurs and is paid for in the United States, with the rest of the world acting as a free rider. Sure, some Swiss or Japanese firms still develop a few drugs, but most of those efforts are still justified by profits in the US market.
~Coyote Blog
The U.S. is still driving quite a bit of product innovation. Our messy, organic, wasteful, unfair, irrational system allows experimentation, and Europe cherry picks the best results. If we stopped doing this, their system would stop looking so good.
~Megan Mcardle
BM: I never thought of this at all, but this is so true. What a great example of a free rider problem.
I am completely uninformed on health care in the U.S., but I believe currently it is private. If Obama makes health care public, will this innovation slow due to a lack of monetary incentive? Then the rest of the world suffers as the newest innovations in medicine will dramatically slow as no one wants to sink a bunch of money into R&D and not even cover the cost. I never thought I would be somewhat happy about privatization in health care, but now I am a little more supportive although I still firmly believe everyone should have access to healthcare.
Via Carpe Diem:
“Arthur Laffer in the WSJ on June 11, “Get Ready for Inflation and Higher Interest Rates”:
As bad as the fiscal picture is, panic-driven monetary policies portend to have even more dire consequences. We can expect rapidly rising prices and much, much higher interest rates over the next four or five years, and a concomitant deleterious impact on output and employment not unlike the late 1970s.
The percentage increase in the monetary base is the largest increase in the past 50 years by a factor of 10. It is so far outside the realm of our prior experiential base that historical comparisons are rendered difficult if not meaningless.
Banks now have huge amounts of excess reserves, enabling them to make lots of net new loans. At present, banks are doing just what we would expect them to do. They are making new loans and increasing overall bank liabilities (i.e., money). The 12-month growth rate of M1 is now in the 15% range, and close to its highest level in the past half century.
Alan Blinder counters in today’s NY Time article “Why Inflation Isn’t the Danger:”
The mountain of reserves on banks’ balance sheets has, in turn, filled the inflation hawks with apprehension. But their concerns are misplaced. To understand why, start with the basic economics of banking, money and inflation. In normal times, banks don’t want excess reserves, which yield them no profit. So they quickly lend out any idle funds they receive. Under such conditions, Fed expansions of bank reserves lead to expansions of credit and the money supply and, if there is too much of that, to higher inflation.
In abnormal times like these, however, providing frightened banks with the reserves they demand will fuel neither money nor credit growth — and is therefore not inflationary.
MP: [There has been] significant growth in both the monetary base and excess reserves over the last year. According to Laffer, banks are lending out the excess reserves, which will be inflationary, and according to Blinder, banks are holding onto the excess reserves, which will not fuel inflation.
Who’s correct? Total Loans and Leases of all commercial banks suggests that Blinder is more correct, at least for now. Total bank loans peaked in late 2008 and have actually been gradually declining since last October, falling by almost $200 billion from the peak. And the graph above shows that excess reserves at banks have increased lately, which is consistent with the recent decline in bank loans. As the Fed has expanded the monetary base and bank reserves, banks have been holding a majority of those increased reserves as excess reserves, and they are NOT lending them out.”
BM: In regard to inflation, I don’t know where I stand. The banks do need to pay back this bailout money and therefore it won’t all be lent out so inflation won’t be as pronounced as the negative Nancies think it will be. But once times get better banks will lend some of this money out which will create more money and therefore inflation. Will inflation be out of control? I have no clue. Quantitative easing is known to causes inflation, but these are irregular times. Hold on to your seat!
Given my lack of time this summer, I will reblog more than in the past. I can’t find the time to write my own pieces, but I will try to get a few original items up every once in awhile. I don’t like only reblogging but if I keep it pretty interesting I won’t be too unhappy with myself. I hope everyone is enjoying their summer (or winter if you are in Australia).
Via Mankiw
former Federal Reserve chief Alan Greenspan is a fan of men’s underwear sales as an important economic indicator.
BM: Who isn’t? We need more exciting economic indicators.
I have been completely swamped lately and unfortunately I have been poor at managing my time outside of work. With the NHL and NBA playoffs plus summer and work, I have had little time to blog on BusinessMinded.ca. That doesn’t make me happy.
This Sunday I am going to reorganize myself and get posting regularly again. So please stick around and read and comment and make this site fun.
Here is a great little story (unfortunately I don’t know the author, but if someone does please message me and I will be sure to link to him):
“CREDIT CRUNCH… WHAT CREDIT CRUNCH ??!!
It is the month of August, on the shores of the Black Sea . It is raining,and the little town looks totally deserted. It is tough times, everybodyis in debt, and everybody lives on credit.
Suddenly, a rich tourist comes to town.
He enters the only hotel, lays a 100 Euro note on the reception counter,and goes to inspect the rooms upstairs in order to pick one.
The hotel proprietor takes the 100 Euro note and runs to pay his debt tothe butcher.
The butcher takes the 100 Euro note, and runs to pay his debt to the piggrower.
The pig grower takes the 100 Euro note, and runs to pay his debt to thesupplier of his feed and fuel.
The supplier of feed and fuel takes the 100 Euro note and runs to pay hisdebt to the town’s prostitute that in these hard times, gave her “services”on credit.
The hooker runs to the hotel, and pays off her debt with the 100 Euro noteto the hotel proprietor to pay for the rooms that she rented when she broughther clients there.
The hotel proprietor then lays the 100 Euro note back on the counter so thatthe rich tourist will not suspect anything.
At that moment, the rich tourist comes down after inspecting the rooms, andtakes his 100 Euro note, after saying that he did not like any of the rooms, andleaves town.
No one earned anything. However, the whole town is now without debt, andlooks to the future with a lot of optimism..
And that, ladies and gentlemen, is exactly how the World is doing businessand barely surviving today.”
BM: This is truly how the world works. Money is debt. It is built into our economy.
P.S. GO PENS GO!
Via Greg Mankiw:
“According to new research from Justin Wolfers and Betsey Stevenson:
The Paradox of Declining Female Happiness
By many objective measures the lives of women in the United States have improved over the past 35 years, yet we show that measures of subjective well-being indicate that women’s happiness has declined both absolutely and relative to men. The paradox of women’s declining relative well-being is found across various datasets, measures of subjective well-being, and is pervasive across demographic groups and industrialized countries. Relative declines in female happiness have eroded a gender gap in happiness in which women in the 1970s typically reported higher subjective well-being than did men. These declines have continued and a new gender gap is emerging — one with higher subjective well-being for men.
I am not at all sure how to interpret this finding. It sounds like either the women’s movement was a mistake or subjective happiness is not the right objective.”
BusinessMinded: This further adds to my inability to understand women. This is a very interesting finding. Whenever you dig into anything a little further you may find out that things are exactly as they seem. Many people would probably assume that if the well-being of women is increasing that happiness would be increasing as well, but apparently this is not the case.
This is what is amazing about economics. It doesn’t JUST deal with money. It looks to explain relationships and tries to find causality. Economists, especially Steven Levitt, can sometimes show that society’s way of thinking is quite backward and flawed.
Below is an exert from NY Times (via Carpe Diem). Credit card companies make most of their revenues from charging late accounts, but now congress is stepping in to limit the amount of fees they can charge. Uh-oh. Now credit card companies will need to make up for this slack (They can’t make less money. How will they support their affluent life styles?). How will they do that? Read below:
“Credit cards have long been a very good deal for people who pay their bills on time and in full. Even as card companies imposed punitive fees and penalties on those late with their payments, the best customers racked up cash-back rewards, frequent-flier miles and other perks in recent years. Now Congress is moving to limit the penalties on riskier borrowers, who have become a prime source of billions of dollars in fee revenue for the industry. And to make up for lost income, the card companies are going after those people with sterling credit.
Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups.
“It will be a different business,” said Edward L. Yingling, the chief executive of the American Bankers Association, which has been lobbying Congress for more lenient legislation on behalf of the nation’s biggest banks. “Those that manage their credit well will in some degree subsidize those that have credit problems.” (Bold added via Carpe Diem.)”
BusinessMinded: Awesome!
By: Greg Morton (via EclectEcon)
This was a great way to start my day. I hope it kick starts your day too!
Ahren
