Reactions to story from The New York Times

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  Is Fear Of Crisis Affecting Consumer Spending More Than The Crisis Itself?

  http://www.gracecheng.com/economy/2008/10/06/is-fear-of-cris...
  57 days ago in Financial Market News & Opinions, Forex, Stocks, Futures, Options | GraceCheng.com · Authority: 111

  While much of the recent focus has been on??constipated credit markets, crumbling share prices and grotesque machinations by the Washington-Wall Street nexus??to prevent white-shoed Ponzi-schemers er, friends and supporters from choking on their own
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  Links: October 2008

  http://lanekenworthy.net/2008/10/31/links-october-2008/
  32 days ago in Consider the Evidence · Authority: 54

  U.S. economy The next meltdown: credit-card debt, BusinessWeek Crisis? Not if we take a long view, by Michael Clemens (via Chris Blattman) Three trends and a train wreck, by Tyler Cowen Two big intellectual victories for Ben Bernanke, by Brad DeLong Everything you need to know about the financial crisis, by Doug Diamond and Anil Kashyap The stimulus plan we need now, by Martin Feldstein Complex finance contemplates a more fettered future, Financial Times Buy now: why Uncle Sam must put everything on sale, by Laurence Kotlikoff and Ed Leamer Gordon does good, by Paul Krugman Let’s get fiscal, by Paul Krugman To do, not to do, by Paul Krugman The cost of resolving financial crises, by Luc Laeven Lesson from a crisis: when trust vanishes, worry, by David Leonhardt How did it all happen?, by Megan McArdle Full of doubts, U.S. shoppers cut spending, New York Times Measuring regulatory swings, by Catherine Rampell Spending stalls and businesses slash U.S. jobs, by Louis Uchitelle U.S. politics Working for the working-class vote, by Matt Bai The irrational electorate, by Larry Bartels Why the economy fares much better under Democrats, by Larry Bartels The class war before Palin, by David Brooks Why is it likely that McCain will lose?, by Brad DeLong Presidential polls in the final weeks of the campaign, by Robert Erikson An authentic coalition, by Ezra Klein Can a president tame the business cycle?, New York Times One-party control, New York Times Campaign events vs. the fundamentals, by Brendan Nyhan The hardest vote, by George Packer Senate Democrats don’t need 60 seats to reach their magic number, by Bruce Reed Party loyalty is alive and well, by John Sides Democracy’s myopia problem, by Matthew Yglesias Here we go again — maybe, by Julian Zelizer Living standards, poverty, inequality, well-being Poverty reduction strategies for the next decade, Brookings Institution The national minimum wage: evidence of its impact on jobs and inequality, Centre for Economic Performance (via Shawn Fremstad) A safety net for the least fortunate, by Peter Edelman, Mark Greenberg, and Harry Holzer (via Mark Thoma) The good life, by Claude Fischer Wealth gap is focus even as it shrinks, by Robert Frank Measuring misery, by Phil Izzo Reinventing the American dream, by Christopher Jencks (via Matt Lewis) Reforming unemployment benefits, by Alan Krueger Next victim of turmoil may be your salary, by David Leonhardt Banks’ bailout unlikely to crimp executive pay, New York Times Infant deaths drop in U.S., but rate is still high, New York Times Keeping wary eye on crime as the economy sinks, New York Times Growing unequal? Income distribution and poverty in OECD countries, by the OECD Do Americans still hate welfare?, by R.M. Schneiderman Taxes Putting U.S. corporate taxes in perspective, Center on Budget and Policy Priorities FAQ on taxes, by Economists for Obama Share the wealth, by Howard Gleckman For incomes below $100,000, a better tax break in Obama’s plan, by Steven Greenhouse New life for the death tax, by Floyd Norris Tax-cut follies, by Uwe Reinhardt The public rejects conservative approach to taxes, by Ruy Teixeira Housing Bailing out homeowners: what does it mean?, by Dean Baker The trouble with a homeowner bailout, by David Leonhardt The goal of increasing home ownership, by Mark Thoma Abroad Think the U.S. housing bust is bad?, by Catherine Rampbell Urgent need for IMF action, by Dani Rodrik A shift from bumbling to sensible policy (UK), by Gillian Tett Miscellaneous Observations on the Milton Friedman Institute at the University of Chicago, by Gary Becker Exploding heads deathmatch, by Henry Farrell Incidents from my career, by Paul Krugman
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  ‘Coupon’ Codes Can Lead to Conversions

  http://hiringtheinternet.com/2008/10/29/coupon-codes-can-lea...
  34 days ago in Hiring The Internet · Authority: 29

  No matter what some might say to the contrary, we’re soooo not cheap. We’re, uh, frugal. Yeah, that’s it – frugal; thrifty; economical, even. OK, so perhaps we think two-ply tissue is for wimps, and when the dish detergent runs out we fill the bottle with water and shake it until extra suds squirt out the top. That doesn’t make us cheap; it makes us sensible – and, if we might add, environmentally friendly. Not like we feel the need to explain ourselves. We don’t. We just wish someone would get off our case already… Dad! [Breeeeath. Count to 10.] It’s only natural that while we’re in the midst of a global financial crisis that we’re more conscious of how much things costs. According to this recent article in the New York Times, most people are – cost conscious, that is – even if they intend to revisit their Trumpian ways during the holidays. Nonetheless, we’ve all been forced to become savvier spenders, scouring every nook and cranny of the Internet for the best possible deals. One of our favorite sites for this is RetailMeNot.com, which is comprised entirely of current online discounts to popular stores. Seeking free shipping codes to JCrew.com? Look no further. Want to scoop up a Bath & Body Works Signature Collection item with any $10 purchase? You got it. This site has a bounty of hidden bargains that reveal themselves in a quick but specific Google search, i.e. “J. Crew, free shipping code.” Before we purchase anything online – an-y-thing – we conduct a search for coupon codes to use at checkout. If RetailMeNot.com doesn’t have what we’re looking for, chances are a similar site, such as CouponChief.com, UltimateCoupons.net and CouponMountain.com, will. In addition to using these sites for ourselves, we’ve also put them into action for our clients. Whenever we create a retail e-mail campaign, we make it a priority to upload the promo code to these sites. Why? Because the list of people to whom we can legally send the deal is limited, but the Internet is not. By using these free resources, we’re introducing the promotion to even more potential customers. If all goes as planned, the amount of new people we attract via this method may make up for the attrition that the campaign inevitably experienced – which spells W-I-N for you and the client. Posted in BtoB, e-commerce, email, emarketing, Resources, site of the day, Uncategorized, Viral Marketing
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  Say It Soft and It's Almost Like Praying

  http://www.petertrachtenberg.com/2008/10/say-it-soft-and-its...
  36 days ago in A Nest of Thorns · Authority: 4

  I don’t want to write about Sarah Palin any more, I don’t even want to talk about her, but I can’t stop. Palin may be a small-town Mean Girl plucked into a position of incongruous power – and now feverishly trying to vamp and bully her way into one of even greater power—but she turns the rest of us into Mean Girls, too, or Mean Guys. And if you’re a nice person, a good person, or just like to think you’re not the sneering little shit you were in high school, you don’t want to go there. But I can’t help myself. Who can resist imitating her chirping hate speech, the cheerful hiccups with which she sets up her talking points? Who can keep from snickering as she bumps down the hallway, thrusting her assets in front of her? (Who could resist snickering at the way her decrepit running mate kept ogling her at the Republican Convention, like a dirty-minded high school principal eyeing the slutty valedictorian?) The six colleges, the beauty pageant, the imported witch doctor, the $150,000 wardrobe bought for her by her new bee-yotches in the Republican party? I'm sorry, not me. Last week I was talking about Palin with my wife, who’s been writing a campaign journal for the French newspaper Liberation. An obstacle to this is the fact that she’s been in Europe since the middle of September. In the accelerated time-scheme of this election season, that makes her a long-time expat trying to keep up with trends back home. “Is it Buchanan who called her a cancer on the Republican party or is it Brooks? And why are those assholes waving toilet plungers?” It gives me opportunities to update her. “You want to know who Sarah Palin is?” I said. We were Skyping. “She’s the False Maria in Metropolis! That’s who she is.” My wife hadn’t seen the movie, so I had to explain. Metropolis was made by Fritz Lang in 1926 and is set 100 years in the future, in a city of colossal Art Deco ziggurats rearing above an underworld of insatiable, smoking machines. The upper city is the domain of serene technocrats; the lower city is a lightless proletarian hive. In my summary of the plot, a saintly beauty named Maria moves among the workers, urging them to rise up against their masters. Alarmed, the chief technocrat has her replaced by a robot Maria built by a mad scientist. The false Maria is a debased, sexualized version of the real one, and she, or it, beguiles the masses back into their trance, a trance of ceaseless, unthinking motion. But, as my wife later pointed out, I had the plot wrong. The good Maria doesn’t preach revolution. She tells the workers they have to wait for a “Mediator” who will be a conduit between them, the “hands” of the city, and the masters who are its “head.” It’s the false Maria who whips them into a destructive fury in which they tear apart the machines they serve. This precipitates a flood that nearly drowns the workers’ children. Of course Metropolis’s vision of the future—which seems too close to be called the future any more—is misapprehended. Part of the charm of old science fiction is the way it gets the future wrong. We’re not ruled by technocrats; we’re ruled by oil-men and hedge-fund managers, and the machines are all in China. Our underworld is more of an outerworld of big box stores where underpaid clerks pass merchandise through beeping scanners and hand it to customers who earn as little as they do. And, actually, that future is already racing into the past, to be replaced by a present in which the stores are closing. I hold by my argument that Sarah Palin is the false Maria. The salient question is whether she’s tranquilizing her audience or goading them to rise. In the latter case, the workers won’t be rising against their masters, but against the infuriating pipsqueaks that they and Palin insist on calling the elite. (It hardly needs to be noted that Palin is an evangelical Christian, and that Lang’s “Mediator” suggests nothing so much as a post-Marxist Jesus—though some of the more besotted pipsqueaks might identify him with Barack Obama.) Some of the answer depends on what suits the masters’ plans. Some of it has to do with what suits Palin’s. More and more, she seems to be going rogue. What remains true is that in the scene in which the evil Rotwang activates the false Maria, the svelte robot turns into a woman. She slinks up to the chief technocrat and listens impassively as he orders her down into the underworld to undo what her human original has started. Then slowly, deliberately, obscenely . . . she winks.
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  Attention E-tailers: You’re in for a Bumpy Sleigh Ride

  http://hiringtheinternet.com/2008/10/23/attention-e-tailers-...
  40 days ago in Hiring The Internet · Authority: 29

  Do you hear what we hear? It’s the sound of cash registers closing as more consumers click their way into holiday debt. Whether or not we’re in a recession is still the subject of controversy, but one thing’s for sure – though the dollar is comparatively weak, Americans are starved to spend it. To be fair, as a nation we’re not eager to bequeath our Benjamins as “generously” – we’re going with that term since “absentmindedly” may be unsettling for some – as in the past (or so say industry analysts), but eMarketer’s Online Holiday Sales Forecast suggests that retail e-commerce sales will continue to grow. Take a look. Do you see what we see? According to the longest red bar at the bottom, online holiday sales are expected to increase by $3 billion over last year. Curious. Very curious. Because the doom and gloom of the dominating headlines had us convinced that ol’ Kris Kringle had all but closed up shop. Wasn’t there word of a massive elf layoff? Magical toy-makers aside, eMarketer’s prediction just goes to show that even when the economic-going gets tough, Americans pitch in the best way we know how: Lying around in our jammies – cheese curls in one hand, credit cards in another. And if you can believe it, that’s the glass half full. Now, if you’ll kindly drink more of the Kool-Aid so that the glass shows signs of pessimism, you’ll find that the rate by which sales will grow this year (10.1%) sharply declines from percentages in the low-to-mid 20ish range over the past few years. Jeffrey Grau, senior analyst at eMarketer, admits that the blunt of this stunted growth burden falls squarely on our weakened economy, but it also has much to do with the maturation of the online shopping channel - that is, the number of new people turning to the Internet to make purchases is less than those already there. This trend is also evident in a spending-shift survey conducted by the e-tailing group and sponsored by ATG: For the first time ever, online spending among U.S. Internet users will be greater than in-store sales – 49% versus 44%, respectively. These numbers account for a 27% increase in online sales over last year, nearly balanced by a 26% decrease in store sales during the same period. We’re not mathematicians, but if our calculations are correct, your Christmas, Hanukkah or Kwanzaa lists should be slightly longer than last year’s. If only the stock market could see us now. We’re tooootally sticking our tongues out. Posted in e-commerce, emarketing, In The News, Uncategorized, Viral Marketing
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  The New Paradigm for Financial Markets, by George Soros

  http://www.everydaycitizen.com/2008/10/the_new_paradigm_for_...
  51 days ago in Everyday Citizen · Authority: 63

  In explaining why we had the tremendous rise in housing prices and then the plummeting of housing prices, George Soros, the respected economist, puts the responsibility on the financial industry for the bubble, both the rise and fall of prices. He explains, "Banks give you credit based on the value of the houses. But they don't seem to somehow understand that the value of the houses can be affected by the amount of credit they are willing to give." George doesn't believe that economies will self-adjust. Nor does he think the financial industry should police itself. He points out that "...this belief that everybody pursuing his self-interests will maximize the common interests or will take care of the common interests is a false idea. It's a suitable idea for those who are rich, who are successful, who are powerful. It suits them to justify you know, enjoying the fruits without paying taxes." Most commentators agree that the freezing of credit, tied to a lack of confidence in the economy — among banks, investors and consumers alike — are key problems threatening to push the world into a recession. The near-daily, sweeping interventions improvised by governments in the United States and across the globe are attempts to halt the break-down of the financial system and restore the faith needed for credit to start moving again. In this book, George Soros explains the credit crisis through the lens of his conception of financial markets and human affairs.
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  Notes on the Bank Bailout Bill, Economy & Other News

  http://mlnmm.com/notes-on-the-bank-bailout-bill-economy-othe...
  53 days ago in My Last Name Means Money · Authority: 9

  Last Friday the House of Representatives went against my advice and not only did they pass a bank bailout bill, they did so from a trickle down perspective, which has been proven over and over to be a faulty money distribution system. Instead of providing homeowners relief from the massive tide of foreclosures, the federal government instead chose to hand over hundreds of billions of taxpayer dollars to the very banks responsible for causing this credit freeze. Do not worry though, faithful taxpayer. President Bush reassured everyone that the bailout will work, though it will take time to re-grease the gears of the economy, going so far as to emphasize “that the program must be effectively designed and not rushed into action.” Keep in mind, this is the same President Bush who just last week urged swift action to push the bailout through. Apparently, we now have more time. Meanwhile Barney Frank, head comrade in charge of the bailout bill, continues the double speak of comrade Bush and rails against the free market. He believes the free market is to blame, unfortunately for Frank, that is only half true. Sure, the greed of the market helped create this credit crisis, however the marketplace was enabled by the government’s push for homeownership, and the lax eye of the SEC and its loosening of existing regulations. If anything, Frank should be lambasting the SEC for allowing firms to provide oversight on themselves. If left to their own devices, of course firms will take ever exceedingly dangerous risks to pursue profit, it is literally their life goal to do so. To blame firms for pursuing profit is like blaming a child for going after candy. It is irresponsible and shows Frank’s poor understanding of our economy. Increasingly, Mr Money believes the global credit crisis is being purposely manipulated by the government to decrease bank values in order to allow the federal government cheaper acquisition prices and make consolidating economic power under the federal government easier. The Boston Globe reports: The Treasury Department is considering taking ownership stakes in many United States banks after emergency interest rate cuts by the Federal Reserve and central banks around the world yesterday failed to end a global panic in financial markets. Pretty soon the U.S. economy will resemble the one in Iceland, where every bank is now under government control. The unfortunate truth is that more banks will fail. Despite the bailout, or perhaps more correctly put, inspired by the bailout more banks will fail next year. We’ve created an economy where banks are rewarded for failing and we should thus expect more banks to fail. The bailout simply delays failure and magnifies its effect on the economy via hyper-inflation. Mr. Money can’t wait until President Obama is blaming the huge crisis to come on Bush and company, even though Obama was at the same table as Bush and McCain and promoted this bailout as much as any other corrupt politician. Allison describes the Federal Reserve as the Third Bank of the United States, however unlike previous central banks, this one does not use sound money to back its currency, thus leading to our over-inflated and under capitalized economy. The first step of righting this ship is to promote sound monetary policy and to reign in the excess of our current fiat currency. The refusal of Bush, Obama, McCain and their comrades in congress to end the Federal Reserve and set our country’s currency right shows their true colors. We have not seen the credit markets become unclogged, as the politicians promised they would, rather banks continue to hoard cash and assets as they’re still afraid of market valuations. The Federal Reserve is now sending out $900 billion in loans to the petrified banks in an attempt to open up the credit lines. Our consumer credit based economy is literally fading away as the credit dries up. Why the government does not simply begin sidestepping the banks and loaning out money on its own is anyone’s guess. Perhaps it’s just too logical of a move for this cowboy government. Faithful readers of my personal blog will know I’m no fan of President Bush and his unique brand of economics, but I’m optimistic that there is hope yet for this economy. Why is that? Well, the very corporations who so desperately needed a bailout to stay afloat are now having second thoughts. That’s right, the corrupt corporations may save us all from the corrupt congressmen, for once. Apparently, many bank CEOs are scared to accept the newly approved bailout because they do not want to forego their massive bonuses and restrict their salaries. James Doran of The Observer writes: Sources close to Goldman Sachs and Merrill Lynch indicated the banks might choose not to participate in the bail-out as there is a growing view on Wall Street that the market may be bottoming out. Two weeks ago we were on the brink of economic apocalypse but everything is OK now! Mr. Money does not like these shenanigans and considers it further proof that CEOs should never earn as much as they do, for they simply cannot have a big enough positive impact on their firms to justify their extravagant salaries. Popular sentiment amongst Fortune 500 CEO’s might ride against Mr. Money, but academia and common sense is on his side. Most of the time, removing leaders from the equation will only serve to strengthen the group and improve the quality of work! In other Federal Reserve news, the pseudo government agency is now planning on buying up unsecured short-term debt in order to prod companies into lending commercial paper again. Mr. Money mentioned last week that the bailout bill was a slippery slope and we’re already tumbling down that slope as the Fed tries to buy anything and everything in sight in order to squeeze a little bit of credit out of the economy. Again, why not supply the credit directly? Many economists now think we’re already in a recession or will be in one by year end. Mr. Money is on the side that believes we’re already in a recession, as he’s seen steady decreases in consumer confidence and spending over the past months, which is bad news for a U.S. economy heavily dependent on consumption. Even amongst my friends and family, the tightening wallets are in plain sight. Overall, a decrease in consumption, if accompanied by an increase in savings (which is not certain due to the risk of hyper-inflation), will lead to a stronger economy than the one we’re presently mucking about in. Speaking of getting stronger, it seems the American public is now taking matters into their own hands. Numerous sources are reporting that former Lehman Brothers CEO Richard Fuld was punched in the face while working out at a Lehman Brothers gym after the bankruptcy news broke. Apparently Fuld was on a treadmill when an individual put down his weights, walked over and knocked Fuld out cold. Speaking of getting knocked out (are you loving these segues?), over the weekend our national debt grew to such epic proportions that the national debt clock in New York City could no longer handle the massive number. Two digits are being added to the clock to accommodate the ever expanding federal debt. As I said Friday, bailouts beget bailouts and AIG is racing to prove me correct, as it already spent $61 billion of its $85 billion federal loan, without selling a single distressed asset. AIG will no doubt soon be back before the federal government asking for another dose of taxpayer funded handouts. While we’re talking about AIG, did you hear top executives at the failing firm went on a week long company paid retreat. The Business Sheet tries to justify the luxurious paid vacation by pointing out these executives need a break from their bruised and battered business. Worse yet, AIG plans another getaway at a $400 a night hotel and instead of cutting back on spending actually considered running an ad campaign to explain why they were having these lavish retreats. No, I’m not kidding, AZcentral writes: AIG considered buying advertisements to explain its position, only to be told by its public-relations consultant, George Sard, that it would be “a really bad idea.” See how incompetent some of these top executives are and why their companies would run smoother without them? The idea of Michael from the TV show The Office immediately springs to mind. The good news is that AIG decided to cancel the second retreat, though only through fear of the huge public outlash that would have occurred, not because it made financial sense (which it did). In completely unrelated news, it’s time to “tone things down”, according to the Boston Globe. For financial executives who are used to casually shopping for “$18,000 watches and $90,000 BMWs”, a return to conservative money practices will be needed. Let’s all feel bad for the super-rich for just a moment. Moving on. The Boston Globe also reports businesses are spending less and saying no to new purchases. Mr Money believes it’s about time everyone, consumers and businesses took a look at their spending habits and realized that credit consumption is dangerous. Unfortunately, we live in a debt based economy, where saving is not rewarded either. CNN reports that 80% of Americans are reporting stress due to the economy. Who would have known that economic apocalypse could be so stressful? Oddly enough that leaves 20% of Americans who are not stressed out. I imagine these are the top and bottom 10% in terms of income. If you’re already at rock bottom, nothing seems worse than your current spot, and if you’re literally swimming in dollars, you probably could care less that hyper-inflation is right around the corner. Perhaps we should stop stressing and learn to embrace these gloomy economic times, as the New York Times found out that our health actually improves during economic downturns. Apparently, as economies decline more and more citizens spend time doing healthy things like cooking their own food, exercising, and taking their kids to the doctor instead of working and eating out. So not working so hard can be good for your health and Ron Paul argues, Congress doing nothing would have been great for our economy too. In his weekly column, Dr. Paul, states that: Sometimes doing nothing is much better than thrashing about aimlessly. When one is caught in quicksand, for example, or when one doesn’t understand economics and finds oneself in the position Congress was in for the past two weeks, with decades of irresponsible monetary policy coming to a head. Why should we trust the same people who said just a few months ago that the economy was perfectly sound? Thank you congressmen Paul for being a voice of reason during this chaotic time. If only our government listened to the great economic mind we have working for us we’d be multitudes better off than we are now. On the other side of the spectrum, we have the bumbling, clue-less Barney Frank running around coercing his fellow congressmen into the fleecing of America. Not satisfied with throwing $810 billion at the banks in an attempt to coerce them to lend money, Frank looks forward to see if there are any other places he can throw billions of dollars and tons of regulations in an attempt to fix problems. At issue here is that the federal government encouraged banks to violate sound business practice and lend money to risky people. Of course a lot of those loans were going to fail, and regulations actually created the issue. Sure, regulations could be used in other parts of the industry to ensure we are not over leveraging assets, as we currently are but regulations and money are not the catch all solutions that Frank believes they are. Though home prices are dropping in nearly all parts of the United States of America, here in Boston they’re still sky high and don’t seem to be dropping anytime soon. Boston is slightly unique though, in that it is a tiny city physically with a large population and very well educated workforce. Our specialties in technology, health care, and education seem well primed to ride the city through most economic downturns, though a severe depression would obviously impact everyone negatively. Ira Jackson of the Boston Globe sums up this notion nicely: Or maybe Boston is best explained as motive combined with opportunity: the need to constantly innovate, invent, and reinvent has long been tied in Boston to resources (both intellectual and financial) and a community that exists largely to nurture and protect that powerful combination. Peter Drucker, the father of modern management, was the first to understand that we live in a knowledge economy. Drucker might have seen Boston today as the equivalent of a factory of the future, where smart people use their minds, fueled by investors who match ideas with market needs, producing green, clean, and sustainable products for the world. Hopefully Boston can lead the way into an economy of the future, where we rely on local, environmentally friendly energy to power our homes, cites and transportation. Now, after passing an $810 billion bailout bill, Congress decides to hold hearings on the financial crisis. It seems odd for Congress to even waste time holding these hearings, after already passing the bill. Perhaps they’ll decide that the overwhelming majority of Americans are right after all and this bill should be rescinded. Doubtful put certainly possible. As the mainstream media continues to be outed for their sheer incompetence by those they once mocked, take a look at this article by The Register, in which Cade Metz writes about Overstock.com CEO Patrick Byrne who we repeatedly tried to warn us that naked short selling, amongst other over-leveraged stock schemes would lead us to economic ruin. As I’ve written about on my personal blog, AIG is a corrupt corporation. Congress is now looking into AIG’s part in the the global credit crisis. It truly boggles the rational non-conspiracy focused mind as to why we’re holding these hearings and investigations after lending these corporations billions of taxpayer dollars. A great article on how the federal government essentially encouraged the current credit crisis to occur. Essentially the government forced Fannie Mae and Freddie Mac to give out ever increasing percentages of their mortgages to low income individuals with doubtful payment potential. As Fannie Mae and Freddie Mac pawned these mortgages off on other banks, we ended up in our current crisis where a ton of banks hold liabilities with little chance of payment. Next up on the crisis plate will be overwhelming energy demand taxing our aging infrastructure. It’d be great if our government invested in reducing our demand on foreign energy while taking the heat of the environment, but instead we throw the big banks a bone. As the BBC writes, our environment and the heavy damage it is taking right now makes this economic crisis seems insignificant. According to a study paid for by the European Union, the loss of forests worldwide is costing us between $2 to $5 trillion a year. The number is derived via economists who studied how much it would cost to implement the good benefits of forests on our own. The number is startling and further shows why we need to stop wasting money supporting failing businesses. At least the bailout bill did take a small step towards righting our economy and environment, by including a $20 monthly tax credit for employers per each employee who rides a bicycle to work. It’s not a big credit, and it certainly isn’t going to motivate employees nor employers to switch their whole workforce to bicycle transportation, but it’s a step in the right direction. We need to snap our oil dependence and find new or, as is the case here, old ways of moving ourselves that does not involve fossil fuels. Next week we’ll discuss a few tips on what items to buy now before hyper-inflation sets in. Enjoy the weekend everyone and please do not panic, Mr. Money will help you ride out these tough economic times so remember to subscribe to the Money feed to stay updated.
• 

  What's happening in the financial markets?

  http://www.discussiondivas.com/divas/2008/10/whats_happening...
  53 days ago in DiscussionDIVAS · Authority: 1

  Sitting at dinner Wednesday night we noticed fewer people at our favorite go-to restaurant in San Francisco. Was it just a dead Wednesday? Were people at home enjoying the new fall TV season? Or, is the economy getting to people? Tough to say. Last Friday we splurged at a more upscale restaurant and it was packed. Of course that was before Monday's wild ride on Wall Street, before Iceland announced it may go bankrupt, and before the Dow plunged 700 points on Thursday and kept falling on Friday. What a difference a few days can make. Feeling overwhelmed? The headlines keep flying and they are ugly. If you're like us, you're probably feeling a little overwhelmed by all of it—that it's tough to grasp the gravity of the situation. So, focus on the basics to help keep it in perspective: The stock market is down around 40% from last October. In one year the Dow Jones Industrial Average has lost about $8 trillion. In the last six years it's gone from 7,500 points to 14,164 back to about 8,500 points. If the Dow drops another 1,000 points, it will have wiped out six years of gains in the stock market. Since July of last year, retirement plans—such as 401(k)s—have lost $2 trillion. Some estimates show individual accounts are down about 20% on average. Unfortunately, 401(k)s are the main source of retirement savings for Americans, whose personal savings usually amount to 1% of income or less. (The median U.S. household income is $50,000.) Consumers are already spending less and likely to keep reining it in, even as we head into the holiday season, which is typically a big boom time for retailers. This doesn’t bode well for the economy. As we've been explaining, the credit markets are still stuck, meaning businesses can't get loans, which means some companies won't be able to make payroll. Many companies take out small loans to pay their employees. If they can't get the loan and can't make payroll AND consumers aren't buying their products, people will lose jobs. When people lose jobs, they can’t buy things, meaning the economy doesn't grow. If it doesn't grow for two consecutive quarters, technically it's a recession. It's a vicious cycle. The big picture The million dollar question is when will this scary time end? Most economists say the U.S. is already in a recession. The moves the Federal government has made (cutting interest rates, buying up those bad mortgages), are meant to stop the economy from slipping into full-blown depression. Some economists now think we’ll need another stimulus plan (we already got a check from the government this year) to get the economy moving again. The presidential candidates are offering up their ideas, as we saw in the last debate. In fact we wanted to get into the various economic policies being proposed by John McCain and Barack Obama, but we need more space than we allow ourselves in these weekly posts! We’ll break that down next week. We’re going to live blog the debate on Wednesday and hope you’ll chime in with your thoughts on www.discussiondivas.com.

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