It's Bernard, thank you. David Kestenbaum/NPR

 

Yesterday the three branches of government faced off against the fourth estate in the annual three mile footrace known as the Capitol Challenge.

I didn't see any Treasury or Fed folks. But Walter Lukken, a commissioner at the Commodity Futures Trading Commission ran seven-minute miles, not too shabby.

Come on Geithner! Bernanke! Let's see what you've got!

The other portable toilets were labeled "Yes You Can," "House," "Senate," "Executive Branch," Print Media (with job security)," "Print Media (without job security)," "Complaints" and "Tax Counseling while you wait."

The folks here at NPR have been mapping the reported swine flu cases.

The cases seem to be concentrated in high GDP countries. Is this some virus that prefers rich people? The U.S., Canada, Germany, the UK?

Why none in Guatemala, right over the border from Mexico?

Continue reading "Capitalist Pig Flu?" >

Mandy Dalton hard at work. Mandy Dalton

 

There's a whole group of people being affected by the swine flu that you probably haven't heard about -- clowns. Entertainer Mandy Dalton says several clients have warned her that they might cancel her gigs because they're scared the kids could get sick.

Being a clown isn't cheap. Dalton's handmade shoes cost about $200 to $300 a pair and her costumes run her close to $200, after the discount she gets from a designer friend. Add in stilts, liability insurance (yes, clowns have to carry that) juggling equipment, and unicycles and you have some some serious expenses. "Clowns are the blue collar workers of the entertainment industry," she says.

We'll aim to have more from her on the podcast next week.

Sarah writes:

I saw in the New York Times [Tuesday] that IBM is raising its dividend by 10%, and was reminded of something I heard on your podcast recently, something I'm admittedly not sure I have right: when a company raises its stock dividend to (possibly unrealistically) high levels, it may be a sign that the company is in trouble.

Didn't Lehman Bros. do this shortly before its troubles came to light? Should a company really be passing an increased amount of revenue to its shareholders at such an unstable economic time? Is this increase likely to indicate that a company may be trying to inspire confidence while hiding its problems, or is it more likely that IBM is simply doing well and wants its shareholders to know it?

Vinny Catalano answers Sarah's question after the jump.

Continue reading "Do High Dividends Mean Trouble? " >

With the news today that Chrysler will file for bankruptcy after all, I checked in with the automotive worker who walked us through the union's new agreement. He writes that he's trying to keep some distance from it all, after years of following every twist and turn in Detroit:

At first I couldn't get enough news about what's going on and that was all I would talk about. I thought knowing what was happening would give me some sort of control. After 9 years of doom and gloom and no possible job prospects out there for me, I will just keep showing up to do my job until the doors are padlocked shut. I have too many people around me now who look at me as one of the lucky ones. Considering they can't find work and the job market gets more flooded everyday with more people going for the same few jobs.

Continue reading "Bracing For Bad News At Chrysler" >

No one home. Jen Waller/Flickr

 

On my short bike ride to work every morning I pass at least four foreclosed homes. Out in the Seattle suburbs it definitely seems like every block has a house up for sale. But a Census Bureau report says fewer Americans are moving. There are empty homes, and people are not buying new homes, so where are they?

The Census 65% that did move are in the same county. Are people are crashing on couches? The Detroit News says a lot of people in trailer parks. The homeless count is up in Las Vegas. And tent cities are popping up all over. Empty homes are such a visible sign of the recession. But the people from homes are relatively hidden.

A cyclist works the impossible, with gusto. I love that they left in a few of his failures.

Bank of America's shareholders voted yesterday to remove Ken Lewis as chairman of the bank's board. According to reports, Lewis spent much of the four-hour meeting fighting to convince shareholders he is still capable of leading the bank and arguing that acquiring Merrill Lynch was the right thing to do. Lewis remains CEO for now, but many analysts say it's only a matter of time. Here is the take from John Gapper over at the Financial Times:

The omens are not propitious. When Michael Eisner gave up the chairmanship of Walt Disney in 2004 following a 43 per cent vote by shareholders against his re-election to the company board, he insisted he would stay on as chief executive until 2006. In fact, he left the company in 2005.

Ken Thompson of Wachovia did not last that long after the board gave the chairmanship of the bank to Lanty Smith a year ago. As John Carney notes, he departed as chief executive a month later.

Continue reading "Ken Lewis, Chairman No More " >

Only two stores remain inside the Totem Lake Mall in Kirkland, Washington. Seven_Null7/Planet Money Flickr pool

 

With incomes falling, Americans are spending less and saving more. The Commerce Department says consumer spending dropped 0.2 percent in March, following an increase of 0.1 percent in February. Incomes were down 0.3 percent last month, the fifth drop in six months. Meantime, savings are up. Americans socked away $455.3 billion in March -- that's about 4.2% of disposable personal income.

In my continuing quest to prove that economics must be about more than bond yield spreads, I come to this, from economist Russ Roberts. He's writing on Cafe Hayek, his blog, about the story of a Nepalese man who can do 1,001 handy things and yet earns in a lifetime what a "very unlazy, untalented American" might earn in a year.

Roberts writes:

Why can the American afford so much leisure? The answer is that he has more people to trade with, people who bring more capital and skill to the table. I know nothing about goats, thatched roofs, or alarm clocks. I know a reasonable amount about economics, a skill that is virtually worthless in Nepal. And yet I live like a king relative to the cook in Nepal. I live like a king relative to my great-grandfather who may have been smarter and may have been able to do many things I can never imagine doing. The fundamental reason that is so is because I benefit from the division of labor. By specializing in economics, I am able to leverage the skills of other people who are specializing. It is their specializing, and the opportunity to trade with them, that makes it rational and gloriously pleasant to specialize in economics.

It's not really about his particular specialty, of course. It's more that like many (most?) readers of this blog, Roberts lives in a developed economy, where the specialization of labor is the norm. It provides for a higher income and better housing and medical care, for instance, even if it means you likely don't know how to fix your own roof.

Continue reading "The Why Of Economics" >

NPR's Don Gonyea and Frank Langfitt have confirmed that Chrysler will file for bankruptcy. They're sourcing it to a senior administration official. Details to follow.

Langfitt writes:

The government had long hoped to stave off bankruptcy for Chrysler, but negotiations with hedge funds that hold its outstanding debt crumbled overnight.

President Obama is expected to address the nation about the matter at noon today. Meanwhile, the Detroit Free Press notes that the bankruptcy comes after workers agreed to concessions in benefits and pay. In the end, it appears that the parties who'd loaned Chrysler money weren't willing to accept an offer of $2 billion in cash to settle $6.9 billion in debt. Says the paper:

Of 46 firms, the three holdouts -- Oppenheimer Funds, Perella Weinberg Partners, and Stairway Capital -- had balked at the original $2-billion offer, as well as an increase of $250 million from Treasury on Wednesday evening.

Sending a message in Chicago. Patrick Hogan/Planet Money Facebook group

 

On today's Planet Money:

-- This week Nassim Taleb, the economist who lives by the Black Swan Theory, joined Ian Bremmer of Eurasia Group and The Fat Tail in our studios. Taleb's message to the world goes like this: Never mind math to manage risk. End the bond industry. And render Wall Street as we know it illegal.

-- Noel Paterson got laid off from the Microsoft games division in January. And then, miracle of miracles, Paterson got another gig, one he likes even better -- despite the small cut in pay.

Bonus: The card Paterson's kid made him, plus your ideas for naming the new Oliver Stone movie about Wall Street.

Download the podcast; or subscribe. Intro music: The New Pornographers's "The Laws Have Changed." Find us: Twitter/ Facebook/ Flickr

Continue reading "Hear: Nassim Taleb Checks In" >

The Fed's Open Market Committee wrapped up a two-day meeting in Washington today without changing the federal funds rate or increasing its purchases of Treasuries and mortgage securities. In a statement released this afternoon, the committee said the contraction of the economy appears to be slowing.

Household spending has shown signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Weak sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories, fixed investment, and staffing. Although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time. Nonetheless, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.

The Treasury Department just sent out this note:

The Treasury Department today announced the receipt of more than 100 unique applications from potential fund managers interested in participating in the Legacy Securities portion of the Public Private Investment Program (PPIP).

These fund managers are the private in the "public-private investment program" to buy up toxic assets. And Treasury has said it wants to partner with just 5 managers. 100 is greater than 5. So it looks like there are some investors willing to participate.

Now will the banks be willing to sell?

Continue reading "More Than Five" >

A new investing strategy in Germany. Aaron Hurd

 

Aaron sends this picture from a recent trip to Augsburg, Germany. The text says: "Financial Crisis! My tip: Invest immediately in Socks."

From Bloomberg, "Fed Is Said to Seek Capital for at Least Six Banks." The report cites sources who've been "briefed on the matter."

This comes as the Treasury's stress test results are approaching their due date next week. Bloomberg reports that the extra capital could come converting the preferred stock the U.S. already owns in banks into common shares. It's a strategy that economist Simon Johnson told us amounts to an accounting trick, since it doesn't actually create more money.

Converting preferred shares to common ones does shift the government's position, though, from that of a lender to that of an owner, and in some cases a majority owner. Common shares come with voting rights, for one thing. Also, the owners of common shares wait much further down the line of folks to be paid if the company (or bank) goes kaput.

With Congress signaling that it's unlikely to fork over more millions for bank bailouts, troubled banks may have no choice but to seek new private investors and/or convert the government's shares. Once the government's in the position of common stockholder, one question will be whether it could afford to let a bank fail -- since the taxpayer would be at the same risk of losing money as any common stockholder in any bank.

Dan Hertz knows a lot about auditory neuroscience. Not so much about quantitative finance. But this email recently showed up in his in-box.

Hi Daniel,

I run the quant and development recruitment team at my firm, which I've been with for about 8 years. I'm working on a role for a quant research high frequency team at a major hedge fund client of mine.

My clients are the top funds and IB's in the world; it's my job to keep my finger on the pulse of the market and offer people like you an opportunity to progress within a healthy organization.

Would you be open to speaking with me about some of the opportunities I'm working on? I very much look forward to hearing from you!

Tim

Continue reading "Still Headhunting?" >

The American economy is still shrinking, and uncomfortably fast. U.S. GDP fell at an annualized rate of 6.1 percent in the first quarter, only a little better than the 6.3 percent decline from the quarter before and about a point more than most economists expected. Why the surprisingly bad number?

Companies pulled back from investing in equipment, buildings and software -- at an annualized pace of 37.9 percent. Exports fell 30 percent, the most since the 1970s.

The good news? Ordinary people spent money. Consumption had been falling by 4 percent, but it rose last quarter by 2.2 percent. That was enough to boost GDP by 1.5 percent.

Today the Attorney General of New York told the Supreme Court it should be allowed to make banks in his state follow its consumer protection laws. Federal bank regulators will tell the Supreme Court that's not their place. Here's the back story:

In 2005, then NY Attorney General Eliot Spitzer wanted banks in his state to follow his anti-discrimination laws. The banks did not want to. So they sued. Their regulator, the Office of Comptroller of the Currency, sued, too.

This isn't the first time states and federal authorities have faced off on who gets to regulate our banks. But it is a battle that states generally lose. Two years ago the Supreme Court blocked states from supervising mortgage subsidiaries owned by national banks.

These days, people aren't feeling great about our regulatory structure. The state attorneys general make that case in their brief, writing, "The recent (and continuing) fallout from the subprime lending debacle demonstrates the need for more oversight and consumer protection enforcement in the area of mortgage lending."

Chrysler's new deal with workers.

 

Got this from a Chrysler worker who'd taken a spin through today's UAW agreement with the automaker:

The thing that stands out to me is that we did not see a cut in pay or benefits. That is huge and considering what is going on around with job losses (and pending job losses). I consider myself very lucky. Our only losses are a couple holidays, forced vacation time used during layoffs, Christmas bonuses, performance bonuses like "profit sharing."

Another minor loss is overtime pay is now after we work 40 hours. It was set up where we were paid time-and-a-half for any time we work over 8 hours in a day and on Saturdays. The way it is set up now is if you miss a Tuesday and you work Saturday, Saturday will be at your normal hourly rate until you complete 40 hours.

Continue reading "What Workers Gave Chrysler" >

The Obama Administration has announced a new program to help homeowners lower payments on second mortgages. The AP reports:

The administration initiative, funded out of $50 billion in financial rescue money, relies on a series of payments to mortgage companies as an incentive to modify second loans at lower interest rates. Mortgage companies would get $500 upfront for each modified loan, plus $250 a year for three years as long as the borrower doesn't default.

Similarly, borrowers would get up to $1,000 over five years applied to the principal balance of their primary mortgage, and the government would pick up part of investors' costs as well. Lenders would also be given the ability to remove second mortgages entirely in exchange for larger government payouts.

Continue reading "More Help For Homeowners " >

Expecting inflation? (bigger). Alan Cordova/NPR

 

Today we had the amazing Nassim Taleb in for what I'm hoping will be the bulk of the Wednesday podcast. What can I tell you now? He takes milk with his tea, but he puts the milk in after the water. And he says inflation is coming, maybe even hyperinflation.

Hyperinflation is scary, but so is the specter of no inflation (or even deflation, where wages and prices go into a sustained fall). In the graph above, Alan Cordova tracked the difference in yields for Treasury bills of varying lengths. That "spread" shows how much higher a return investors demanded -- and Treasury provided -- on loans lasting longer than a month. For an investor, the risk of Treasuries has mainly to do with inflation. That is, you're generally not worried that the government won't pay you back, but rather that inflation will spike and the $100 you put in for won't buy as much as you expected when you finally get it.

The picture you're seeing here shows that investors expected inflation to fall back around 2006 and 2007, but now they're expecting inflation to rise, and not by a frightening amount. By demanding a somewhat higher yield on a one-year Treasury bond, for instance, they're just trying to build in a meaningful profit.

After the jump, two trading days -- one weird, one normal.

Continue reading "Chart: Inflation, Not The Flu" >

David G. writes from Rome:

Forgive me David Kestenbaum, for I have sinned. It has been 32 years since my last confession.

I am writing to you from Rome, Italy. The crisis is so bad I can't even afford to call in to your show. I hope you don't mind a confessional email.

Living only a few miles from the Vatican, I feel I should be brutally honest with my confession or be struck down by a renegade motorino. It turns out I have a lot of financial dirty laundry to air (and no oversized Maytag dryer to ease the burden).

I have lived and worked overseas for the past 9 years with my wife and three kids. After thinking a great deal about our role in the current financial crisis, I am now convinced that we single handedly caused the current economic depression faced by our great country.

Continue reading "'So Help Me God' " >

The other day my friend was saying she thought that the different ways our friends are responding to the recession is really telling.

I think about that idea a lot in terms of our large institutions. Some will just sit down through the squeeze but others will be permanently changed by the experience. Then I read that this recession has public colleges considering becoming something totally different -- private colleges. The Chronicle of Higher Ed reports that the last time state funds dwindled at public universities in Colorado, Massachusetts and Virginia, the schools took steps towards fiscal autonomy.

Basically they thought hey, forget begging the state capital for dough every year, if we go private we can watch the tuition roll in. This debate comes up every time states cut university budgets, and some argue privatization is a euphemism for "Let's charge more tuition."

Of course, it's not as if private colleges are sailing through the recession, either.

Masked fear. hmerinox/Flickr

 

People, people, let's not freak out over this swine flu thing, OK? Being prepared is one thing, but panic is just not helpful.

"Everyone is running around like a chicken without head," writes Carl Weinberg of High Frequency Economics. "The writing of economic analysts on bird flu bordered on science fiction. . . as does more recent analysis of a flu pandemic."

Weinberg cites a World Bank paper on the H1N1 that says a pandemic could kill 71 million people. But we're here for the money: The paper says a pandemic could pull $3 trillion from the global economy -- just under 5 percent. Weinberg writes: "The report astutely notes that losses of that magnitude would throw the economy into a depression. With advice like that from the World Bank, no wonder the financial markets have swooned at the first sign of the disease. (Emphasis his.)

To help you make sense of the outbreak, NPR has launched a blog called Flu Shots.

Continue reading "Flu Gives Globe Fever, Chills" >

Feeling it in Kansas City. JL Johnson

 

On today's Planet Money:

-- Ryan Avent had a great job, writing for the Economist's Free Exchange blog. Not quite two weeks ago, Ryan Avent got lured into another terrific opportunity: blogging for Portfolio. Which today announced that it was shutting down.

-- At least Ryan Avent's got good company in the rest of the media. Newspapers around the country are cutting their staffs and trying to figure out how to stay afloat. NPR's David Folkenflik checks the future with media entrepreneur Steve Brill and media thinker Jay Hamilton

-- Did you help break the global economy, or even the local one? Planet Money has a new call-in line for your confessions. It's (202) 371-1775.

Bonus: The Ben & Jerry's effect.

Download the podcast; or subscribe. Intro music: Kate Bush's "Running Up That Hill." Find us: Twitter/ Facebook/ Flickr

Continue reading "Hear: News Of Their Demise" >

Larry J. sent the White House this letter after hearing our interview with Priya Raghubir on Friday's podcast. He writes:

At the end of the interview, the professor theorizes that if the government issued government rebates as travelers checks that would be accepted by retailers, then there would be a greater likelihood the money would be pumped back into the economy rather than left in the bank where they go to deposit a standard government check. Says Priya Raghubir, "the minute [the tax stimulus] goes into the bank account it becomes savings, it becomes real money".

Continue reading "Dear Mr. President " >

Breaking now: Strategy discovered Wall Street Journal

 

All day, I've been looking around for something amazing to post about the news from Detroit. General Motors is axing 2,600 dealers, 21,000 workers and four brands (including Pontiac and Hummer) -- and leaving the U.S. in the position of owning at least half the company. Chrysler, meanwhile, says it has reached a deal with the United Auto Workers Union, with the terms for the rank-and-file vague enough that one guy on an assembly tells us he's guessing it means a pay cut, but who knows how big.

And then there's this banner headline that appeared on the Wall Street Journal's homepage around 2 p.m.:

"GM CEO says company needs to be run simpler, leaner in future."

Sure. Let's try that.

A few weeks ago we blogged about the change to Financial Accounting Standards Board's accounting rule 157. The new rule allows banks to value the assets they can't sell -- the ones that have been eating holes in their balance sheets -- using their own "judgment."

On Friday, officials at the Federal Reserve
announced that the new guess work won't cut it, at least not for considering what would happen to the banks in a deep and lasting recession.

[I]n order to reflect greater uncertainty about realizable losses in stressful conditions, supervisors did not incorporate the new FASB guidance.

Translation: the Federal Reserve wants these stress tests to unearth what a loss would look like in the case of financial Armageddon. Officials want this number to be the bogey man who will scare bankers' in their beds at night. By comparison, FASB's rules are the equivalent of rose-tinted glasses.

Continue reading "Stressing Out Over FASB " >

Global stock markets are lower as more cases of swine flu are reported worldwide.

Mexico is already bracing itself for the economic fallout of swine flu. Since the outbreak became public, a number of countries are banning imports of Mexican meat and some countries are imposing travel restrictions to Mexico just as the summer tourist season gets into full swing.

Authorities in Mexico have requested that bars and movie theaters close during the outbreak. They are also urging people to stay home, which could lower demand and have a negative impact on GDP and financial assets.

Pharmaceutical companies may be the only winners in a pandemic, as demand for medicine to treat the virus would surge.

Continue reading "Swine Flu Hits The Markets" >

Portfolio magazine announced today that it's shutting down.

And man, talk about timing. Blogger Ryan Avent had just left the Economist's Free Exchange to take over (sometime Planet Money guest) Felix Salmon's Portfolio blog, Market Movers. Salmon moved over to blog at Reuters.

Avent announced he was posting online at Portfolio on April 15. The headline: "The End, For Now."

Salmon writes:

"I feel particularly bad for the amazing Ryan Avent, who's got off to a truly smashing start at Market Movers and who looks to have jumped ship from the Economist at exactly the wrong time."

Hats off to Avent, who's posted twice today despite the situation at Portfolio, including this cool take on the NYT's Tim Geithner feature.

We first talked to listener Daniel Cross back in January, right after he learned that he would be required to take a furlough from his job as a circuit designer. At the time, he said he wasn't sure whether it was a "prudent move to conserve cash to ride out the bad time or a last ditch effort to try to save something from total collapse." A few weeks ago we checked back in on Daniel, and he told us layoff rumors had taken over the office, making it difficult to get any work done. Daniel said he felt like he was working for a zombie company. Today he sends this update:

As I prepared to take my mandatory 1 week unpaid leave, I was approached by my management about whether I would be interested in a position out of state with the company that was acquiring my design organization. At that time, I expressed general interest, but after considerable discussion with my family and soul-searching, I elected not to accept the offer.

Continue reading "A Long Goodbye" >

It's all about the question marks. Calculated Risk

Just catching up to a great take on banks' balance sheet problems from Calculated Risk.

They take the next step with our simplified chart of a balance sheet, making room for toxic legacy assets on the left. And then there are the question marks:

These "??????" assets are either future retained earnings or additional money from the government. Although the bank is balance sheet insolvent, the bank will never be business insolvent because the government will continue to provide money to cover losses.

What Treasury Secretary Geithner is doing right now "is known as the 'Zombie' bank approach," the site says. And maybe that's okay, Calculated Risk argues, provided enough healthy banks remain to pull the economy along. But with Citigroup and Bank of America comprising 40 percent of the U.S. bank system, the zombie scenario is not so comfortable.

Bonus: Calculated Risk on Liquidity and Solvency, Part I

After our podcast segment about the psychology of spending dollars and coins, Mary Hoddinott writes:

I sometimes play poker at one of the mountain town casinos in Colorado. The gambling is limited stakes, with a $5 maximum bet. Although I could have sworn I didn't have a "tell" -- I did, a huge one. When I had a hand I felt good about, I would toss out a red $5 chip. If I didn't feel so good about my hand, I would put out five white $1 chips in order to save my red chips.

I was appalled when I realized what I was doing. I stopped, of course, and now I watch for the same behavior in others. I would bet the best poker players recognize this behavior intuitively. I didn't have a name for it until I heard about the Denomination Effect on your podcast.

Framed grafitti in Manhattan. Lindsay Collins

 

On today's Planet Money:

-- We dig a little deeper into the latest earnings reports from banks. Is it real or all a bunch of hocus pocus? Charles Peabody of Portales Partners tackles some of the real profits and says the good news is here to stay.

-- Mortgage backed securities have been blamed for causing this financial crisis. But have the current troubles been enough to kill off securitization all together? Joe Nadilo, managing editor of Asset Backed Alert, thinks not.

-- Listener Rick Alfaro has a serious problem. With help from Priya Raghubir, a marketing professor at NYU Stern School of Business, we try to help him solve it.

Bonus: An economic fable.

Download the podcast; or subscribe. Intro music: Howie Day's "Perfect Time of Day." Find us: Twitter/ Facebook/ Flickr

Continue reading "Hear: Shadow Banking" >

The Federal Reserve has released a paper describing the data and process it used to conduct stress tests on the country's biggest banks. The results of the tests won't be released until early May, but we already know none of the banks will fail the test. We haven't had time to dig into the report yet, but we'll definitely be talking about it next week. In the meantime, let us know what you think.

Flying the Mongolian Flag in Hakodate Bay, Japan. Click to enlarge. Photo by Joe Jones via Flickr

 

One of the things that was so surprising about the hijacking of the Maersk Alabama was that it was an American flagged ship. Pirates rarely hijack ships registered in the US and that is intentional. They prefer not to face off with Navy Seals. Also, shipping companies often don't register in the US. The taxes are too high and the regulation too strict.

Shipping companies, just like pirates, prefer to exist in a world of little regulation. They register their ships in countries like Liberia, Panama and the Bahamas that offer lax regulation and lower taxes. If you fly the Bahamian flag (even if you're a Danish company with a Russian crew) you follow Bahamian labor laws, inspection rules and pay Bahamian taxes. That is how ships wind up flying the Mongolian flag - a country that has no coastline!

Continue reading "It's All About The Flag " >

Steve Hanke, professor of economics at Johns Hopkins University, is getting in on the blame game. In an upcoming issue of Forbes, he points the finger at Federal Reserve Chairman Ben Bernanke and former chairman, Alan Greenspan. Hanke writes:

Now the Fed has opened the money floodgates again and its balance sheet has more than doubled in size since August. Investors watching the recent rally may think that the Fed has stabilized the markets and saved the day but its approach is fraught with danger.

As the self-regenerative powers of the market system kick in, the demand for money will fall and the velocity of money will correspondingly go up. Unless the Fed shrinks its balance sheet by selling bonds and mopping up excess dollars, inflation will roar back with a vengeance.

Continue reading "Steve Hanke Blames The Fed " >

Refilling the basements in Olathe, Kans. Brian Grantham/Planet Money Flickr pool

 

Brian writes:

After I dropped my step-son off at school, I noticed the basements, that were dug in the late last summer, were being re-filled. The outlines of the basements had matched the town-homes in this subdivision (Asbury), consisting of mainly retirees.

My wife (now pregnant with our second daughter) and I were very happy to see the basements dug last summer, as it meant that the sidewalk would be completed: we want the sidewalk to eliminate our need to walk in the street during our family walks.

Continue reading "'Burying Asbury'" >

Seen in California. harpy/Planet Money Flickr pool

 

New home sales fell in March, with the Northeast part of the country taking the biggest hit, a 32.1 percent drop from last month. Sales of single family homes in the Western part of the country actually increased 15 percent, but it wasn't enough to prevent an overall decline of 0.6 percent from February.

Meantime, the average price of a new home dropped 12.2 percent from the same time last year. The average price of a new home in March 2009 was $201, 400 -- in March 2008 the average price was $229, 300.

The Commerce Department says there were over 311,000 homes for sale at the end of March.

The Commerce Department says new orders for durable goods, manufactured products expected to last more than one year, fell last month by 0.8 percent. The drop was the seventh decrease in the last eight months and likely means that February's reported increase was just a blip. February's 3.4 percent increase was also revised downward to 2.1 percent. New orders for communications equipment took the biggest hit, falling 8.1 percent over last month followed by primary metals which fell 3.2 percent.

You might have missed it, because really it amounts to a local news story. But the U.S. Attorney for the Middle District of Tennessee this week filed (according to the press release) the "first charges in connection with a SIGTARP investigation" against one Gordon B. Grigg whom, it is alleged, embezzled more than $10,922,000.

Continue reading "TARP fRAUD (small f)" >

Yesterday we heard from Per Gullestrup, a shipowner, who had a ship hijacked last November. When he ironed out the ransom details with the pirates, he had 3 demands:

1. The pirates showed "proof of life" (that the crew was still alive)
2. That they could drop the money from the air (faster than getting it there in a tug)
3. That the pirates fill up the ship with fuel.

Looks like the Stolt Strength, a Philippine tanker that was just released 5 months after pirates seized the ship, is probably wishing it demanded number 3 too. Dr. J Peter Pham just sent me a note saying it is dead in the water.

Continue reading "Stranded Near Somalia " >

New York Attorney General Andrew Cuomo says former Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke pressured Bank of America CEO Ken Lewis to complete the bank's purchase of Merill Lynch. In a letter sent to members of Congress and federal regulators today, Cuomo says the government officials threated to get rid of the bank's management, including Lewis, if the deal did not go through. The Wall Street Journal reports:

Mr. Paulson told Mr. Cuomo's office that he made the threat to remove Bank of America's management and board at the request of Mr. Bernanke.

According to people present when Mr. Paulson was interviewed by Cuomo investigators, the then-Treasury chief said that the "threat to remove" was meant to convey a message to Mr. Lewis from the Fed.

Two days later, Mr. Paulson said in his testimony, Mr. Bernanke called Mr. Lewis. Mr. Bernanke then called Mr. Paulson and told him that Mr. Lewis had gotten the message, according to people present during the interview.

Continue reading "BOA Pressured By Feds? " >

Like just about every other media company, NPR is asking its employees to make some significant cuts.

The company appears to have avoided widespread layoffs, for the moment, after reaching agreement with key unions for significant cuts in compensation. Managers and executives are taking similar, and at times, greater, reductions, all of which are geared to close a projected $8 million budget gap for this fiscal year and a projected $7 million budget gap for next year. Revenues from corporate underwriting have plunged from past levels during the current recession.

The cuts involve an elimination of contributions toward retirement accounts called 403(b)s (that's the non-profit equivalent of a 401(k) ) through the end of the fiscal year on Sept. 30, and a halving of the benefit for the next fiscal year; five furlough days for most employees through the end of the fiscal year; the elimination of a cash subsidy toward health care insurance; and the elimination of most raises next year.

Continue reading "NPR Takes A Cut" >

subprime from beeple on Vimeo.

Thanks to @Gordoneats for the link.

I'm on the road today, in San Francisco, where I opened the newspaper to find a very, very active economy. Foreclosures in the Bay Area have fallen off, but defaults just hit a record.

"People are hoping that Obama's house saver plan will kick in and abort the new wave of foreclosures," one real estate tracker told the Chronicle. "There is just no way. There is a pig the size of Godzilla in the foreclosure python."

But hey, rents are falling.

Continue reading "Breakfast In California" >

As we reported earlier today, Chicago Tribune "Recession Diarist" Lou Carlozo was told Wednesday he was among those being laid off in the newspaper's latest round of cuts. Carlozo says when he learned the news editors forced him to remove an entry telling readers that he was out of work too.

The entire "Recession Diaries" blog was removed from the paper's web site. But Carlozo agreed to share his spiked posting for "Recession Diaries" with Planet Money so others could learn what it was like for him to confront the economy, first hand.

Continue reading "Update: Spiked 'Recession Diary'" >

President Obama is set to meet with top executives from the country's major credit card issuers today at the White House. The House Financial Services Committee approved a Credit Cardholders' Bill of Rights yesterday, and the Senate is considering similar legislation. The Washington Post reports that the House measure "would prevent such practices as arbitrarily raising interest rates on existing balances, assessing late fees if not enough time was given to pay, and charging interest on debts already paid." What else do you think it should include? What should be done to protect credit cardholders?

Lou Carlozo thought he was being pretty nimble at a time the economy was wreaking havoc on his employer and the larger world. The veteran Chicago Tribune arts reporter was asked by editors to chronicle how the recession affected families in his region. In recent months, he blogged under "The Recession Diaries" about his own family's pocketbook concerns.

On Wednesday, the Tribune laid him off. And, according to a piece he wrote for a blog called True/Slant to which he contributes, the Trib told him to pull an account he had put online of the firing, part of wider job losses there. I heard about it from a friend who saw a Facebook posting yesterday -- so the news was already out.

Continue reading "'Recession Diarist' Laid Off" >

Chris B writes:

I am a computer consultant, my specialty is installing hospital computer systems, in particular Emergency Department Systems, as an independent consultant for one of the big three Hospital Information systems.

I am a nurse with 10 years clinical experience and have been working with this system for 18 years. I have been in IT full time for 10 years.I travel to a hospital each week for 6 months to a year, helping to get the physicians and nurses to understand the potential of the system, to reconcile their expectations of the system with what can actually be achieved. The final product is an Electronic Medical Record (EMR).

Continue reading "The Stimulus Package At Work " >

General Motors is likely to close most of its U.S. factories for up to nine weeks this summer. The automaker typically closes its plants for two weeks during the summer months. This time NPR reporter Frank Langfitt says the long break has to do with overwhelming inventory. "They don't want to keep pumping out products people aren't buying and...filling up those dealer parking lots," Langfitt told Morning Edition.

While GM has not said which plants will shut down, the Detroit Free Press reports that workers at a plant in Orion, Michigan ,which makes the Pontiac G6 and Chevy Malibu, have been told the factory will closed for May and half of June. As for what will happen to GM workers, the Free Press says UAW workers will receive state unemployment benefits and "company supplemental pay that roughly equals about 70% of their gross pay."

A pirate in the Gulf of Aden. ecpad/AFP/Getty Images

 

On today's Planet Money:

-- U.S. Treasury Secretary Tim Geithner trekked back up to Capitol Hill this week, this time for a hearing with Elizabeth Warren's Congressional Oversight Panel.

-- Even pirates need a business plan. J. Peter Pham, an analyst of African affairs at the James Madison University, looks at the economics of guns, captains, and $2 million dropped into the sea in waterproof containers. Plus, Per Gullestrup, CEO of Danish shipping company Clipper Group, has dealt with pirates first-hand -- he says they're tough negotiators.

Bonus: An IMF chart challenge.

Download the podcast; or subscribe. Intro music: A Tribe Called Quest's "Da Booty." Find us: Twitter/ Facebook/ Flickr

Continue reading "Hear: Pirates Have Timesheets" >

Steven Brill generates business plans like a furnace throws off heat -- with force and gusto. Now Brill has unveiled what he says may be the cure for ailing newspaper industry. It's called Journalism Online LLC, a venture undertaken along with former Wall Street Journal publisher Gordon Crovitz, and Leo Hindery Jr., a former telecommunications executive and former CEO of the nation's largest regional sports cable channel. The trio think they can convince you to pay to read articles you can already get for free. It may sound like a tough sell, but hear Brill out.

"Newspaper publishers and magazine publishers have been engaged in group suicide," Brill says. "They all decided, for reasons I can't figure out, that they were going to give their stuff away for free online, at the same time that they sell it on newsstands.... They're now seeing the consequences of it."

So sure, publishers would love to make money online from paying readers -- it's expensive taking time to pin down elusive things like. But why would readers pay?

Continue reading "Converting "Should" to "Will"" >

Formally called "Bail Out Night", this restaurant offers half off food during dinner. Seth Flynn Barkan

 

Realty Trac, a website that tracks foreclosures, reports today that Las Vegas has the highest rate of foreclosure filings of any U.S. city. The rate of households receiving a default or auction notice or being seized by a lender is 4.5 percent, seven times the national average. See the full list of cities here.

Count Dean Miller -- a self-described "red-blooded American capitalist" -- among those who think newspapers will be around and making money for a long time. Miller was until recently the editor of the Idaho Falls Post-Register, a job he had held for about 14 years until he locked horns one too many times with the head of his company. (Disclosure: I met Miller at a professional conference at the Poynter Institute in St. Petersburg and have kept in friendly contact since.)

I spoke with Miller because of a fact that often gets overlooked: While most of the ink, blood and tears spilled over newspapers involves big-city dailies, smaller papers have tended to fare better. He says many of the most influential regional papers in the country have forgotten to focus carefully enough on their local readers and advertisers and are weighed down by major debt.

But he offers lessons for the bigger names in the newspaper industry, culled in no small part from his experiences in eastern Idaho.

Continue reading "Home Delivery On The Range" >

Here's a new report from S&P on the state of residential mortgage-backed securities. It says that of the $3.7 trillion issued since 2004, what's left is now valued at just $1.7 trillion. And that there could be another $375 billion to come.

Mike Thompson, whom we've had on the podcast, worked on the report. He told the Wall Street Journal:

"There are going to be more defaults, but the worst of the big downward lurches are probably over and the systemic threat from the residential mortgage market is diminished."

The International Monetary Fund yesterday estimated total losses on all kinds of toxic assets globally. It put the number at $4.1 trillion.

Click to enlarge (and understand perfectly, of course). IMF

 

Man, I do not envy whoever gets the job of regulating systemic risk. This chart is from the IMF's just released Global Financial Stability Report and it's an attempt to show (yes, those numbers mean something) how all these institutions were linked by credit default swaps.

Press summary here, and the full report.

Some days, it's hard telling whether you're being more responsible by looking at the news or away from it. Police say David Kellermann, the 41-year-old chief financial officer of Freddie Mac, killed himself in the basement of his Virginia home this morning. And investigators in Maryland now say the strain of debt and foreclosure may have played a role in a father's killing of himself, his wife and their three children last week.

If you prefer the news in numbers, take two: The IMF estimates that banks and other financial institutions worldwide will lose a total of $ 4.1 trillion in the financial crisis, against the $1.1 trillion the G20 pledged for the recovery.

Or, you could consider the opportunities a little farther afield.

Continue reading "The Search For Hope" >

I've been spending time with a father and daughter in southwest Washingon state who both lost their jobs last January. Gary and Rachel Peterson both worked at a Weyerhaeuser sawmill Aberdeen. They didn't just lose their jobs, they also lost their trade. Aberdeen used to be a big timber town is now almost completely empty of industry. The mills are gone. And thanks to that fact, the Petersons qualify for what is, according to one local career counselor, the "Cadillac of all unemployment benefits."

The Trade Adjustment Assistance program is for people who worked in farm or manufacturing jobs that are being displaced by global trade. The Petersons now qualify for extra help with their job searches, relocation allowance, training and extra income support.

Continue reading "The 'Cadillac of Unemployment'" >

Alex and Adam put on a live show at KCRW this Sunday with help from Irwin Chen and Ryan Lauer of Redub.

Irwin responded to a tweet we sent out looking for graphic designers and in just a week, he and Ryan helped Adam and Alex visualize their presentation. We will put up a link to that project soon -- in the meantime check out Irwin's visualization of our Bad Bank episode with This American Life.

Despite the government's best efforts, many banks still aren't lending to consumers. Why? Some say they're scared that borrowers won't be able to pay them back or they're already too strapped to hand out any more cash. Douglas Diamond and Raghuram Rajan from The University of Chicago Booth School of Finance have another idea. They say it's "the fear of being short of funds if investment opportunities get even better." They write:

Take, for example, the possibility that a large indebted financial institution becomes distressed in the future and starts dumping assets in the market.

Not only will the price of those assets fall if there are only a few entities with the liquid funds to buy them, the absorption of market liquidity by the distressed institution will ensure that it will be very hard for any institution that does not already have liquid funds to borrow at that time. If financial institutions expect that those with liquidity could make a killing in the future (by buying financial assets or banks at fire sale prices), they will restrict their lending or investment today to very short maturities or liquid securities and not lock up liquidity in term loans.

Continue reading "Why Banks Won't Lend " >

Amid the annual festival of self-celebration that is the Pulitzer Prize process is the hulking brute of a business story.

The New York Times won five -- five! -- Pulitzers, but the parent Times Co. reported a brutal plunge in its first quarter earnings. (Others are faring even worse: The McClatchy Newspaper company has been warned its stock price has fallen so sharply that it may be dropped from the New York Stock Exchange listing.)

As the Boston Globe appears to be the greatest financial drag on the Times Co., media critic Adam Reilly of the Boston Phoenix has called on it to use the Globe as a lab to test out innovations that executives hope will work for the New York Times itself.

Another Pulitzer-winning publication appears to have done just that: the Las Vegas Sun. In just four years, it appears to have reinvented itself from a trailing paper in a two-daily town into a multi-media power.

Continue reading "Eyes On The Prize" >

The American Sterling Bank in Sugar Creek, Missouri, was seized by the FDIC on April 17, 2009. User47 /Planet Money Flickr pool

 

Jesse writes:

As a bit of a history nut, I went out today and pictures of some of the failed (and troubled) banks in my area. As I'm sure you know last Friday the FDIC seized American Sterling Bank which was headquartered in Sugar Creek, MO, just a stones throw from Lee's Summit. I've taken pictures of one of the branches as well as their HQ. Also included in the set are pics of an old Columbian Bank & Trust branch (seized by the FDIC in 2008), and the now abandoned construction site of what was to be a new Columbian bank branch. Finally I have pictures of a bank which was built in a hurry but now sits empty with no signage.

Continue reading "A Tour Of Failed Banks " >

We've been talking a lot about mark-to-market accounting lately -- the rule that gives banks and businesses leeway in estimating future profits and taking credit for them right away.

Now comes this musical message for the Financial Accounting Standards Board by country singer Merle Hazard (a.k.a. Jon Shayne).

Lyrics, etc., after the jump.

Continue reading "Mark-To-Market, Country Style" >

Red Hook, Brooklyn Christopher DeWan

 

Today's populist rage is brought to you by Andrew Ross Sorkin, in his NYT column headlined "Bank Profits Appear Out of Thin Air":

Why can't anybody read the room here? After all the financial wizardry that got the country -- actually, the world -- into trouble, why don't these bankers give their audience what it seems to crave? Perhaps a bit of simple math that could fit on the back of an envelope, with no asterisks and no fine print, might win cheers instead of jeers from the market.

On yesterday's podcast we spoke with Steve Jakubowski of the Bankruptcy Litigation Blog about the feasibility of a "surgical" bankruptcy to save GM. He wasn't so hot on the idea, and he has company.

Mark Phelan of Detroit Free Press points out in today's paper that surgery always hurts and sometimes doesn't cure:

"It sounds, if not pleasant, at least quick, precise and scientific. A drastic treatment for General Motors Corp.'s many ills. The amputation of diseased limbs to create a stronger, healthier automaker.

Except this is experimental surgery. It's never been done before. There's no procedure, no prognosis, no track record to predict the survival rate.

While GM has tried to avoid filing for bankruptcy, new Chief Executive Officer Fritz Henderson has acknowledged that the possibility that it may be forced to seek protection has become more probable.

One thing's fairly clear: Anyone who promotes it as a quick, painless cure is wrong."

We profiled Neil Barofsky here the other week. He's the Special Inspector General charged with overseeing the $700 billion being used in TARP.

And Barofsky's office (SIGTARP) has just released its second report to congress.

He talked about it on Morning Edition today:

"Sadly, it's almost limitless the type of opportunities for fraud when you have $3 trillion going out the door."

Continue reading "SIGTARP's Second Report" >

You are a responsible parent or grandparent and you're planning for your kid's future. You hope it includes college, so you prepay. You get today's prices for tuition and fees instead of the higher costs later. Those payments that are put into a state-managed investment fund. When the child is ready to attend a state college, the tuition and fees are paid from the fund...or not.

Nineteen states that offer tuition prepay programs are worried they may not be able to afford the tuition, thanks to severe stock market losses. Stateline reports that while none of the states has failed to pay tuition for plan participants in the current school year, some are promising to bail out programs in the future. Even if it means they have to take funds from somewhere else, freeze enrollment and raise fees.

I live in Seattle, where every other person you meet works for a startup. Usually that means they're a computer person with an idea. After a while you stop asking about the ideas (there are just too many!).

All those people with ideas need money to get going from venture capitalists or "angel investors." But the idea money is just not flowing like it used to.

According to data from the National Venture Capital Association this is the first time in years that there were two consecutive quarters without an IPO by a venture-backed company.

The Center for Venture Research says the amount invested by angels (very early-stage investors for startups) fell by 26 percent last year. That said, the number of investments fell overall by only 2.9 percent. So there is still a bunch of early-stage investing, but those angels are less willing to take risk.

Protesting a sales tax increase, maybe, in Bothell, Wash. /Seven_Null7 Planet Money Flickr pool

 

On today's Planet Money:

-- The Obama Administration plans to convert its preferred stock in bailed-out banks to common stock. Simon Johnson, of Baseline Scenario (and now The Hearing, on the Washington Post's site), says it's mostly an accounting game, but one that signals the government's thinking about the health of banks.

-- General Motors announced 1,600 layoffs today, part of its efforts to stave off bankruptcy. But with the White House setting a deadline of June 1, says Steve Jakubowski of the Bankruptcy Litigation Blog, GM is not exactly in the driver's seat.

-- Ali Velshi's Gimme My Money Back: Your Guide to Beating the Financial Markets showed up at the office recently. Mike Pesca reviews it, with gusto.

Bonus: What the heck is glabrous?

Download the podcast; or subscribe. Intro music: Lily Allen's "The Fear." Find us: Twitter/ Facebook/ Flickr

Continue reading "Hear: Who's Driving This?" >

No straight roads Andrew Wardlaw

 

The news that General Growth had gone bankrupt was a bit close for Andrew Wardlaw. That's because his hometown was designed by one of the mall owner's acquisitions, before the smaller real estate company became a really expensive part of the giant one's ledger. Andrew writes:

I grew up in Columbia, MD, a city that was planned and developed by the Rouse Corporation. Columbia is quirky place. None of the roads are straight so you don't feel like you're a spot on a grid. There are strict rules on what you can do to your house, power lines and cable lines must be underground. Most neighborhoods had a community swimming pool within walking distance. Neighborhoods are clustered around shopping centers, which were initially designed keep the store fronts facing away from the streets. Businesses weren't allowed to have signs above a certain size, and neon was forbidden. As a teenager I hated the restrictions, but now that I'm living in CA, I'd appreciate knowing that the person who's about to move next-door can't park a junky RV on the curb next to my house.

Continue reading "'They Sold Off My Hometown'" >

NPR's Robert Benincasa sends this bulletin:

First craigslist, now this. Cutting millions in newspaper advertising fees is among the measures the Obama Administration's cabinet agencies are undertaking to slash $100 million in agency spending over the next 90 days.

In a White House statement released in advance of President Obama's first cabinet meeting today, this item appeared under the heading "Going Paperless": "The U.S. Attorneys and the U.S. Marshals Offices' Asset Forfeiture program is converting publication of judicial forfeiture notices from newspapers to the Internet. This change is expected to save $6.7 million over the first 5 years."

Continue reading "The Paperless White House" >

Even before the recession hit, there was a lot of angst -- and a lot of layoffs -- inside the news business as journalists fretted about how we will be able to afford to report the news. Now it's outright panic. Los Angeles Times publisher Eddy Hartenstein reportedly defended putting an advertisement on the front page of his paper by saying, "I'm just trying to keep the lights on here, folks."

And yet, out of tumult comes opportunity. And as the traditional newspaper model cracks apart, we're seeing a profusion of new proposals from actors old and new. We've heard from a few Planet Money regulars that you'd like to learn more about them.

Continue reading "Who'll Pay For News --- And How?" >

The government is planning to convert the loans it gave to troubled financial institutions to common stock. This would transform the government's position from a lender to a majority owner of some of the world's biggest banks.

The downside of this deal is that the government will take on more risk when it converts the original preferred shares to common equity. The government can only retrieve taxpayer money if stock prices go up. Also, preferred shares have a superior claim to a firm's assets if it files for bankruptcy. With common shares, you're much further down in the pecking order.

Continue reading "U.S. Banks, Literally...." >

When a big manufacturing plant closes, the lucky employees are the ones who can find work elsewhere. But in this economy elsewhere is often far away. The Atlanta Journal Constitution reports that workers from the closed GM plant in Doraville, Ga., took jobs in places as varied as Texas, Louisiana, Tennessee, Kentucky, Ohio, Iowa, Delaware, Missouri, Colorado and even the company's ancestral homeland -- Michigan. For many, that dislocation is jarring but not new.

"I never wanted to be a GM gypsy. I just ended up being one," Brian Kieckbusch, a 35-year-old autoworker, told the AJC. "I gave up my family in Wisconsin, my [foreclosed] house in Georgia, and if it tanks here, I'm lost."

Seen in Baltimore, Maryland. Zach Stednick

 

Zach writes:

I live in Baltimore, MD and I recently saw this sign in my neighborhood. I can understand having to sell your jet ski or wine collection to help make ends meet but having to sell your fishing equipment is just plain sad. The neighborhood I live in is a mix of long-term residents who primarily worked blue collar jobs and a group of younger residents drawn to the sense of community the neighborhood offers. Its difficult to say how the recession is affecting Baltimore, mostly because Baltimore was pretty bad off before the recession started.

Continue reading "'Just Plain Sad' In Baltimore" >

Lisa Fleisher writes:

man, you guys need to get some branded gear into the NPR shop. I'm sure you could come up with some really clever ideas.

Calculators, mugs, ted spread blankets (get it?), or maybe ted spread jams (tee hee). Dollhouse "piggy" banks. Adam Davidson bobbleheads. OK not really that last one.

But I'd totally buy a PM coffee tumbler.

I've been wanting a darn t-shirt for months now. Hopefully we can organize soon. What would you all like to see?

Lisa's note prompted some emails among the staff here:

Continue reading "Planet Money Mugs?" >

In case of emergency. @morebikes

The news this morning is all about the banks: U.S. may convert banks' bailouts to equity share (plus: What this might mean)/ Bank lending keeps dropping/ Bank of America posts profit

After Friday's podcast on bank profits -- on which I asked a rather populist question about AIG boss Edward Liddy's $3 million stake in Goldman Sachs -- we got this from Erik Martin:

I have to say that all the "populist rage" confuses me. Laura, why does it make you angry that Edward Liddy is rich? Seriously. He's only been CEO of AIG since September. He's the guy they brought in to try to fix things, not the guy responsible for running AIG into the ground.

The only thing I can come up with is that it's a general rage against rich people. And that truly scares me. You can't have a vibrant economy with making people rich. To the degree that a nation becomes intolerant of rich people it becomes impoverished.

Continue reading "Populist Rage, Pitchfork Media" >

When the Seattle Post-Intelligencer printed its last newspaper and went online, my wife and I resolved to actually go and see where the Baltimore Sun where she works is printed.

You can see why printing a paper is an expensive undertaking.

Continue reading "Newspaper, Yes Paper" >

Tax Day Tea Party, San Francisco Steve Rhodes/Planet Money Flickr pool

 

(Note: If you're having trouble with the player above, try the direct link.)

On today's Planet Money:

-- Major American banks have begun reporting, of all things, profits! Doug Elliot, former investment banker at JP Morgan and now banking expert with the Brookings Institute, reveals what you should make of those numbers. Hint: We're all still looking at a world of pain, but at least the decline seems to be leveling out.

-- Daniel Cross designs circuits for a struggling business that feels to him like a zombie company. Waiting for word of their fate hasn't been easy, he says, and the situation wasn't improved by a recent e-scolding from the supervisors.

Bonus: Y'all seeing what she's seeing?

Download the podcast; or subscribe. Intro music: Keane's "Spiralling." Find us: Twitter/ Facebook/ Flickr

Continue reading "Hear: Listening To Profits" >

Unemployment by state. Indiana Business Bulletin

 

Today, the Bureau of Labor and Statistics reported that unemployment rates in more than a dozen states are significantly higher than the national figure of 8.5 percent.

The states feeling the most pain are:

1. Michigan, 12.6 percent
2. Oregon, 12.1 percent
3. South Carolina, 11.4 percent
4. California, 11.2 percent
5. North Carolina, 10.8 percent

BONUS: Indiana Business Bulletin graphs compare individual state unemployment rates with the national average.

State unemployment rates rose in 46 states in March. Which ones fared better or worse over the month?

Continue reading "Where It's Worse Than 8.5" >

Managed risk in Port au Prince CJ Hendrix

 

CJ Hendrix asks whether he's seeing the future of American banking in Port au Prince, Haiti, where he lives:

On virtually every street you will find these small shacks called Banks: Titi Bank, Chez Bank, and all sorts of religiously named banks: Thanks to God Bank, Hope from God Bank, etc. This one is not even close to the least-confidence inspiring. Some of them remind me of the tin shacks that used to sell fireworks on some empty lot in my hometown before the 4th of July. In fact, they aren't banks at all, but loto shops.

That's loto as in lotto, to those of us playing along in the U.S.

Welcome to the Twitterverse, Oprah.

 

Oprah just started twittering today, and I would lying if I said we weren't a bit jealous that after just 3 tweets she had already amassed 79, 507 followers. Over at Planet Money, we have tweeted 1,762 times, but we've got just 12, 269 followers -- not that we don't love you all. Hmmm... maybe Planet Money needs to be on the Oprah show next.

This is why we need print newspapers. On page one of the New York Times business section today, Floyd Norris swims around in the question of why the good-hearted bankers of Goldman Sachs feel so unloved -- might have something to do with that $1.8 billion profit they just posted after receiving $10 billion in TARP money and another $28 billion borrowed with a guarantee from the FDIC, he writes.

Not to mention the $13 billion the firm got from AIG, out of the insurer's bailout funds.

I let my eye wander over to the lower right of the page, for this headline: "AIG Chief Has Millions in Goldman." Edward M. Liddy holds $3 million in Goldman stock, which the paper says he got for serving on the bank's board and audit committee until he took the AIG job in September. His press person told the Times that the stake represents:

"a small percentage of his total net worth."

I think that's supposed to make the public feel better about it. I think.

David Kestenbaum's on Morning Edition Friday, talking more about Gary Stern and Ron Feldman's 2004 book, "Too Big To Fail: The Hazards of Bank Bailouts." We've posted an excerpt for you.

Bonus: The story includes gem of a quote from Federal Reserve Chairman Alan Greenspan about the concept of "too big to fail."

"I always took the position when I ended up on the Hill that Fannie and Freddie were not too big to fail. Needless to say, my fingers were crossed behind my back."

Anita LittleWolf with her horses in Castle Rock, Colo. NPR 100 Days via Flickr

 

One of the neat things about this "100 Days" road trip has been the steady stream of ideas flowing in from NPR's audience. It was a listener's email that guided me to Kentucky houseboat country and to Orlando.

Then came an e-mail from a horse enthusiast, who insisted a visit to Colorado horse country would open my eyes to another facet of the recession.

She was right.

Continue reading "Trying To Save The Horses " >

ING

 

This letter and screengrab from Gordon Wilson have stuck with me for days and days now. Wilson says he's happy to show us why people aren't saving. Yes, he says, some people just aren't used to putting money aside -- but look what happens lately when you do. Exhibit A: The interest rates on certificates of deposit. He writes:

People should save. But there needs to be more of an incentive to do it. These saving rates don't even cover the cost of inflation.

One of the unfortunate side effects of having the fed rate at such a low level [0 to .25 percent] is that people who want to save are effectively punished for doing so. A 5-year CD at 1.75 percent?! That is outrageous.

Since 2000, annual inflation has generally ranged between 2 and 4 percent. If your money isn't growing faster than that, its purchasing power is shrinking. The bank will hand it back to you, with interest, but you can't do as much with it as you could have done today.

Hello, synchronous recession. The International Monetary Fund gives a preview of its semiannual World Economic Outlook today. It's grim:

The duration of a synchronous recession is, on average, nearly 1.5 times as long as the duration of the typical recession. Recoveries are usually sluggish, owing to weak external demand, especially if the United States is also in recession: during the 1975 and 1980 recessions, sharp falls in U.S. imports contributed to a significant contraction in world trade.

Continue reading "IMF Sees Long Recession" >

Cheryl writes:

I live in Las Vegas, the poster child for the housing bubble, foreclosures, and failed projects. Last year when the economy took its downward plunge, I saw communities stop building as developers went bankrupt. My boyfriend's community is one in particular where one day they were laying foundation and putting up walls, and the next day the builders were gone, leaving a 60% completed community surrounded by ghosts of the houses that could have been.

Continue reading "'A Small Glimmer Of Light' " >

Our podcast yesterday talked about how hard it was to get a handle on the really large numbers. Lawmakers have to deal with these things all the times, a million dollar line in the budget, billion dollar bank bailouts, a trillion dollar federal deficit.

Sometimes government has to deal with long timescales too. In fact there is one regulation that would extend a million years into the future.

(In that story we take a time machine back one million years. And I have to say, before I did the story I wasn't quite sure what would be there.)

Housing starts hit their second-lowest mark in March, falling 10.8 percent. The government has been keeping records on home-building for half a century. We know developers built too many houses, so we can expect they'll hold off for a while before breaking out the bulldozers again.

Here's my question: Where are we in that cycle? Are we looking, as the NYT says, at "more evidence that the steep slump in housing . . . has yet to run its course"? Or, as Ian Shepherdson of High Frequency Economics writes this morning, are we perhaps "levelling off after a calamitous plunge"?

Calculated Risk expects the market to hit bottom sometime this year.

Continue reading "Housing Starts Near Record Low" >

After months of trying to get extensions on its loans, the #2 mall owner in the country, General Growth Properties, has filed for bankruptcy.

You can hear our story explaining GGP's troubles here. GGP really was a victim of the credit crisis. It owned plenty of profitable malls. But it had borrowed billions to buy some of those malls, and the way these things work is that these big real-estate loans come due in say five years with a huge balloon payment. In normal times the company simply refinances before that happens. But with the credit crisis, GGP couldn't do that.

Some of the banks that had lent GGP money were on shaky ground. So I wonder what this means for them.

Continue reading "Mall Giant Falls" >

'Cheap furniture gets a bailout.' brokenbulb/Planet Money Flickr pool

 

On today's Planet Money:

-- China's foreign reserves dropped by $32.6 billion in January. The New York Times suggests that because America's biggest creditor was selling off its bonds. Economist Brad Setser sees another explanation (and adds more).

-- Millions, billions, trillions, godzillions. There's a reason you can't keep it all straight. With help from Wisconsin school teacher Bob Peterson, the Planet Money Players calculate their way, in dollars per second, to the AIG bonuses.

Bonus: Find your NPR name, plus a listener calculates $1.7 trillion.

Download the podcast; or subscribe. Intro music: Kool G Rap and DJ Polo's "Road to the Riches." Find us: Twitter/ Facebook/ Flickr

Continue reading "Hear: Godzillions On Parade" >

We're looking to revive the Economist House Calls segment on our podcast. We haven't done one for a while, but we loved hearing from you.

The House Calls are where we call you up and you tell us (and an economist) where you are in life today. Maybe you lost a job, took a job, are moving, are retiring, can't retire, vacationing, can't vacation, whatever is true for you right now. Then the economist places your personal story in a global economic context.

This isn't financial advice we're talking about, but more like a way to connect the personal with the macroeconomic.

We'd love to hear your rough outline of your economic situation -- your job, your concerns. Something brief. Hit us up by e-mail, in the comments or on Twitter.

Whither wheat: Click for chart back to 1989.Alan Cordova/NPR

 

Inflation is falling at the fastest pace in more than half a century, the Labor Department reported today. The Consumer Price Index has fallen .4 percent over the past 12 months. If you're worried about deflation, consider that core inflation -- which excludes food and energy -- chimes in at 1.8 percent over that same period, .2 in the last month. Which is better than zero.

Led by a steep decline in dairy, food prices fell .1 percent last month. This has been a lousy time to be selling much of what's grown on farms. Alan Cordova has tracked the drop in agricultural prices, with a particular eye to the effects on our daily bread. After the jump, his own "bread/wheat multiple" and what the heck it means.

Continue reading "The Price Of Bread" >

Virginia Beach Tea Party formatted_dad/Flickr

 

As the last of the paper filers crunches numbers and races to the Post Office, Tea Party protests are taking place around the nation. President Obama promised today to rewrite the "monstrous" tax code (may I suggest starting with the child-tax credit part?), but it's more the various bailouts that have the Tea Partiers in the streets.

For more on those, try Pro Publica's new bailout page. It's so clickable.

Listener Dan Ross has an interesting point to add to our story last week about the FDIC raising fees on banks:

I am on the board of a very small bank. Our FDIC charges will go up so high that we may have to eliminate one employee in order to pay the assessment, while the banks that caused the bulk of the problem will pay their additional assessment with TARP funds. Perhaps this additional information would have added to your report.

It is true that the Treasury money doesn't come with any restrictions that prevent banks from spending TARP money on FDIC fees. It's not a matter of the size of the bank -- if the biggies that got TARP funds can use them for the fees, then so can the small ones that got help, too.

Laura C. writes:

My father lives in Florida and has worked in boat construction since the early 80's. In January, all new construction on personal watercrafts stopped. The only work to be had was finishing up pre-existing orders, and once that was done, the furlough started. He's been on furlough for two months and word has started to spread one of the big manufacturers is going to close their doors.

This is also bad news because Florida has been hit hard by the housing crisis. My dad has been putting in job applications everywhere he can, but no one has any type of construction jobs available.

Continue reading "Rough Sailing In Florida " >

Doing math for the podcast on my tray-table Chana Joffe-Walt

 

The Toxic Asset Relief Program was $700 billion. The AIG execs are grabbing $165 million in bonuses. The Fed plans to inject $1.2 trillion into the financial system.

Come on, be honest now, do you really know what these numbers mean? Nothing in our regular lives is measured in millions or billions, and certainly not in trillions. These numbers are so huge and they all rhyme. Today on the podcast we're going to follow the advice of a neuroscientist friend who says we need to measure impossibly large numbers against something we know.

The Internet has already figured that one out. Perhaps you'd like to think about a trillion in terms of tomatoes? Or grocery bags and palettes, or doormats, and pennies.

Source: Brown Brothers Harriman

 

The U.S. Treasury today posted its latest figures on China's holdings of American government debt. Those holdings went up again in February, by not quite $5 billion.

And as you can see from the chart after the jump, China's overall foreign reserves -- meaning the assets it holds from other countries, whether in the form of cash or bonds -- have stopped growing nearly as fast as it once did. The New York Times' Keith Bradsher reported this week that in the first quarter of 2009, the reserves rose by $7.7 billion, compared with a "record increase of $153.9 billion in the same quarter last year."

Here's the rub: The Times also reported that the Chinese government "sold bonds heavily in January and February before resuming purchases in March." The idea that China would suddenly sell off its U.S. bonds has been a nightmare scenario, one with catastrophic implications for both nations. The currency folks at Brown Brothers Harriman have fired off a couple of notes this week refuting that Times article.

Continue reading "Chart War: China's U.S. Holdings" >

With the stress tests of the nation's banks nearly complete, the Obama administration is struggling with just how much information it should disclose. All banks are expected to pass the test, but revealing too much or too little about specific institutions' balance sheets could scare off investors. The Wall Street Journal reports:

It isn't clear precisely what information the government might disclose. It remains possible the data won't be specific to individual banks. But some within the administration believe a certain amount of information needs to be released in order to provide assurance about the validity and rigor of the assessments. In addition, these people also are concerned that the tests won't be able to fulfill their basic function of shoring up confidence unless investors are able to see data for themselves.

Continue reading "Remember The Stress Tests? " >

I am so over this. NineInchNachosV/Planet Money Flickr pool

 

Adults aren't the only ones worried about the economic crisis. 17-year-old listener Chris H. says lots of his friends, aged 13-18 years old, are concerned about this "economic thing." He writes:

A friend of mine (age 16) was talking about budget cuts in his school district, all of athletics was gone, maintenance was drastically cut, classes would get much larger, and so on. He was concerned that eventually he would end up with what he called "a totally ghetto school, where the teachers don't even show up." I have heard quite a few variations on this budget cut concern.

Continue reading "What About The Kids? " >

Gerald Herbert/AP Photo

 

This part of President Barack Obama's speech at Georgetown University struck me. As the New York Times quoted him, the president envisions:

"a future where sustained economic growth creates good jobs and rising incomes; a future where prosperity is fueled not by excessive debt, reckless speculation and fleeing profit, but is instead built by skilled, productive workers; by sound investments that will spread opportunity at home and allow this nation to lead the world in the technologies, innovations and discoveries that will shape the 21st century."

Only not right away, see?

A few weeks ago we heard from Peter Tirschwell, editor of the Journal of Commerce, about the creepy quiet at the ports of Los Angeles and Long Beach. Today the Wall Street Journal has the numbers: "container volume at Los Angeles was down 6% in 2008 and fell 32% in February from a year earlier." Why the slowdown? It isn't just that people are buying fewer lime green coats. The Journal reports that the ports are facing some new competition:

This drop in volume comes just as ports from Portland, Ore., to British Columbia are rolling out new infrastructure in a bid to grab more of the container business. Some offer quicker transport times from Asia, or fewer environmental restrictions on trucks -- pitches that are increasingly compelling in the global trade slowdown.

It isn't likely that the ports of Los Angeles and Long Beach will lose their title as the country's largest port complex by volume, but the slowdown in shipments is certainly not good for the state's longshoremen.

Retail sales (click for previous month) U.S. Census Bureau

 

We've been on the lookout for "green shoots" lately, and U.S. retail sales -- up 0.3 percent in January and 1.9 percent in February -- seemed to fit the bill.

But today the Commerce Department reported retail sales decreased by 1.1 percent in March, defying many economists' expectations.

Continue reading "Retail Sales Shrink In March" >

The Economist reports on a new study that shows stressed-out human beings, maybe even Wall Street human beings, tend to take bigger risks than calm ones:

What is worrying is that today's traders are in truly uncharted (and very cold) waters, and under such conditions, experience is little help; split-second decisions have to be taken that have never been encountered before.

Quick: What's the name for a real-life get together of Twitter users (or, tweeters?) who meet up to tweet? A tweet-up!

Tech-savvy business leaders are beginning to see the benefits of Twitter. So NASDAQ invited social media strategist and author David Meerman Scott -- and 30 of his Twitter friends -- to tweet-up at the market.

We were there, and yes, we're on Twitter.

"Two Beanie Babies Sittin' in a Tree" Extra Medium/Flickr

 

I love this comment from a listener, Brian Lalonde, about our podcast last night on mark-to-market accounting:

So if I have 12 metric tons of Beanie Babies and no one wants to buy them, it's because the *market* is broken!

Where were you when we were writing the podcast script yesterday?

If you're really stuck with 12 metric tons of Beanie Babies, you might check out ArtLoan, which I think would lend you a pile of cash if you put the stuffed animals down as collateral.

I talked with one of the folks there a few weeks back who said the company accepts high-end art, but you can also bring them your Swatch watch collection. Apparently really fanatical collectors would rather give up food than lose their snow globes or whatever. So they usually pay back the loan.

Where'd the economy go? Bob Barsanti

 

On today's Planet Money:

-- The last time we talked about mark-to-market accounting, a whole bunch of you wrote back, "Enron." And you were right. Bloomberg columnist and former WSJ reporter Jonathan Weil reported in 2000 on how Enron used market-to-market to create mammoth earnings. Now Weil tells you why he thinks banks should have to stick with the system now.

-- Everything you want to know about a community, you can find out from its newspaper -- especially its classified ads. Bob Barsanti, a teacher, has been tracking the ads on Nantucket island with his classes. If you're looking to rent, he says, you're in luck.

-- A couple of execs from the Minnesota Federal Reserve wrote a book five years ahead of its time. Gary Stern and Ron Feldman's Too Big to Fail: The Hazards of Bank Bailouts hit the world in 2004. It's growing more relevant by the day.

Bonus: Tips from the SEC.

Download the podcast; or subscribe. Intro music: Wolf Parade's "Shine a Light." Find us: Twitter/ Facebook/ Flickr

Continue reading "Hear: Too Big For That" >

Japan's economy has been hit badly by the recession, partly because the yen, Japan's currency, has risen steeply since the start of the financial crisis. A stronger yen makes Japanese exports more expensive, which is bad news for that country's economic growth.

To get the economy moving again, there is some talk that the government could try to depress the yen's value by encouraging a return of the carry trade.

Continue reading "A Comeback For The Carry Trade? " >

You may have noticed that in its story this morning about a possible "surgical" bankruptcy for GM, the NYT reported that this surgery wouldn't come for free.

The U.S. government might have to loan the automaker as much as $77 billion. That's right. GM has gotten $13.4 billion so far, but bankruptcy could require much more aid.

The additional loans are called "bridge loans" or Debtor In Posession (DIP) loans. And the idea is that the company, even in bankruptcy, needs extra gas in the tank so it can keep going long enough to become profitable again.

I just had a conversation with Jack Williams, the resident scholar at the American Bankruptcy Institute, and a professor at Georgia State University. Here's a quick Q&A.

Continue reading "GM's Expensive 'Surgery'" >

There is something so strangely undramatic about this and past piracy dramas. There are no eye patches, drinking grog or really anything very exciting going on here. Most of the time Navy Seals don't snipe pirates. And a lot of time, the whole thing just sounds like a mundane business deal: the pirates negotiate price, they have a spokesman, and they document the inventory for the "customer." This video is from a hijacking last year. The source tells Wired they make videos like this to show the owners the ship is still in good condition.

Sweet, marshmallowy revenge, as imagined by Heather Kelly, Scott Fay and Michael Mavretic. WashingtonPost.com

 

Worth the ad: the Washington Post's Peeps Diorama contest. My heart's with the Madoff scene above. You can still vote in the people's choice poll.

I saw this "Stimulus Savings" sign in a computer repair store in Overland Park, Kansas. What will happen to the salaries of the employees if their work is only worth 80% of what it once was? Don't worry - the pay-day loans place a couple doors down is hiring. Oh boy...

GM is getting closer to filing for bankruptcy, according to this article in the New York Times. The bankruptcy filing could come as early as June 1 unless GM can come to an agreement with their bond holders and re-negotiate their loan terms. According to the report:

The preparations are aimed at assuring a G.M. bankruptcy filing is ready should the company be unable to reach agreement with bondholders to exchange roughly $28 billion in debt into equity in G.M. and with the United Automobile Workers union, which has balked at granting concessions without sacrifices from bondholders.

One way to deal with a bankrupt GM is to borrow the model used by the Treasury in their bank recovery plan. GM would create a "good" company and "bad" company. The "good" GM would reemerge from bankruptcy as a leaner, meaner machine that might stand a chance of competing in the global market. The "bad" GM would be lumbered with the "toxic" parts of GM including health care costs, bondholder debt and the loss-making factories and brands. The cost to the federal government of the "good" GM is estimated to be $7 billion.

Continue reading "GM Bankruptcy June 1? " >

This one landed in our inbox as a Green Shoots item, and maybe it qualifies -- in the subcategory of Hope Springs Eternal. Alison Holmes writes:

Having never bought an individual stock in my life, we just bought about 200 shares of Citigroup and 100 of B of A about 2 weeks ago. Figure they can't nationalize them both at once.

For what two weeks' time is ever worth, her bet's looking good.

Economists are debating, still, whether it's better for companies in trouble to lay off workers or put them on furloughs. Meanwhile, you're living it. And the news keeps on. From the Wall Street Journal:

Many [employers] also are experimenting with furloughs, hoping that by sharing the pain of the downturn more broadly among staffers, they will keep talented employees, win additional loyalty and better position themselves for the recovery. Of 245 U.S. companies surveyed in February by consulting firm Watson Wyatt Worldwide Inc., 17% said they are ordering mandatory furloughs, while 19% said they are offering workers voluntary furloughs. A much larger group, 65%, said they had cut jobs or plan to cut jobs.

Just back from watching our guys on NBC's Meet The Press with David Gregory. (Yes, we always dress like that.)

And check out the "Take Two" video there where Alex and Adam explain the "don't ask, don't tell" approach to saving the banks.

Folks, we're not podcasting today. We'll be back Monday, hopefully with the most amazing conversation ever about mark-to-market accounting (word to everyone who asked about Enron: yes!).

This weekend, our own Alex Blumberg and Adam Davidson will be zooming around the screens of America. They're slated for Rachel Maddow Friday night and Meet the Press on Sunday.

Meet the Press has a handy Web form for sending questions for Adam and Alex. I don't know whether Rachel Maddow would use a question from Twitter, but you could always try through @maddow.

We were wondering last month why the Treasury Department's central website for its efforts to fix the economy still read, "This Site Coming Soon."

Sometime since then it got spruced up.

FinancialStability.gov makes a stab at answering the question "Is this working?" -- though the charts don't seem current.

Today's indicator: 10,000 people in two hours. Mark V. shares the story of a New Hampshire job fair that drew so many applicants it paralyzed most of the main thoroughfares. The Nashua Telegraph reports:

"It was a crazy madhouse in there," said 28-year-old Amy Girard, of Weare, referring to the gymnasium where 140 employers had gathered to offer 1,000 positions.

Back at the mall, job seekers waited for up to two hours to board buses. Organizers had booked 12, each holding about 50 people. When it became apparent that shipping 600 people per hour was not going to cut it, organizers called in five more buses -- including two to operate in the downtown Manchester area.

"We called every (local) school bus driver to see if they can take a shift," said Evan Rosset, assistant executive director of the Manchester Transit Authority.

Green takes over the empty lots in Aimee Ennis' neighborhood. aimeesblog/Planet Money Flickr pool

 

Rheanna writes:

I just wanted to say that there are some good things about the recession. I'm 26 and live in Bend, Oregon. During the real estate boom, home prices were incredibly high here. Average working class people in Bend could not afford to buy a home. My husband and I thought we would never be able to buy a house. Last month, we closed on our first home!

Continue reading "Excited In Oregon" >

If you find plunges in our stock market dizzying, check out what happened to the Chinese contemporary art market. NPR story and photo's here. Today Gady Epstein at Forbes has another autopsy:

"By a year ago, both signature and lesser-known works were selling for 10 times higher than two or three years earlier, which was another 10 times higher than two or three years before that."

Here's an earlier story explaining the bubble. Reminds me of some other art.

A research paper in the Journal of Monetary economics argues that long-term corporate bonds have been a terrific predictor of changes in the economy. The economists tracked the yields of low- and moderate-risk corporate bonds against the performance of U.S. Treasury bills. When the spread widens between the corporate bonds and the Treasuries, look out world.

The Wall Street Journal (subscription requ'd.) takes a fairly plain-language view of the study:

With the massive widening in corporate-bond spreads last fall, the economists' model predicts industrial production will fall another 17% by the end of the year, and the economy will lose another 7.8 million jobs on top of the 5.1 million it has shed since the recession began.

Calculated Risk sounds less than convinced, posting a chart of bond spreads that should have predicted "a few extra recessions."

The lunch crowd at Izola's Family Dining in Chicago. David Greene/NPR 100 Days

 

Yes, traveling across the country means seeing and tasting new things. But once in a while you've got to go with an old standby -- like the scrumptious soul food served up by Izola White.

I interviewed the 85-year-old last year at her diner on Chicago's South Side and got my first taste of her salt pork and greens. This week, I went back for lunch and to check in.

Continue reading "Salt Pork & Politics " >

Under the subject line of "Only a Fool Would Talk About Good News," Joe Chellman writes:

Okay, that's not true.

But talking about good news in this economy makes me very superstitious.

I'm a freelance web developer in Chicago, and so far I'm continuing to do okay. That is to say, my workload has not lightened, and I even got a bit busier starting late last fall. I don't think there's anything particularly magic going on here; I think it's just that I'm a one-person operation with no overhead.

Continue reading "Doing Well In Chicago" >

[W]e stand on guard for thee.

 

After so many people wrote in defending Canada, I had to listen to the April 3 podcast a second time myself to be sure we'd mentioned the Truth North at all. And we had.

Anne-Marie Rivard writes:

Just a quick word to let you know how incredibly offended I was upon hearing Adam Davidson and Alex Blumberg refer to Canada (and Italy, no less!) as insecure nations. Please. I usually find your podcast quite interesting and informative. But thanks for reminding me that I'm in fact listening to an American product, i.e. a product with a superiority complex.

Continue reading "Our Beloved Neighbour" >

The Wall Street Journal writes today about an increase in the number people getting into the hot dog business. The Journal reports that most of them are trying boost their rainy day funds:

Sales of carts, which start at about $2,000 new, have heated up in the past year. "Every model is...taking off," says Joel Goetz, owner of American Dream Hot Dog Carts Inc. in St. Petersburg, Fla. Since January, he has sold about 25 carts a week, 15 more than usual.

"Business is really off the charts," says Dan Jackson, a division manager at Nation's Leasing Services in Newbury Park, Calif. Leases for hot-dog carts account for about three-quarters of sales, and revenue is triple what it was this time a year ago, he says.

Continue reading "A Back-Up Plan On A Cart " >

Seen in the Bucktown neighborhood, Chicago. simonk/NPR/Planet Money Flickr pool

 

Curtis writes:

Well, I can say I have good news. In California where I reside, I earn a living servicing water pumps -- BIG pumps. As water restrictions increase, so does the emphasis on better control of the water. This stretches from the golf industry to the municipal water industry.

There is a slight diversion of purchasing strategy, repair rather than replace.This feeds a blue collar industry in the local region.

Continue reading "Repair Beats Replace " >

The Obama administration's new idea gives you a chance to get in on the action: bailout bonds. The New York Times reports that they'd be sort of like the war bonds:

The idea is that these investments, akin to mutual funds that buy stocks and bonds, would give ordinary Americans a chance to profit from the bailouts that are being financed by their tax dollars. But there is another, deeply political motivation as well: to quiet accusations that all of these giant bailouts will benefit only Wall Street plutocrats.

Plus: Unemployment claims hit an all-time high, and Warren Buffet's Berkshire Hathaway gets downgraded.

Looking for work in Manhattan. Caitlin Kenney/NPR/Planet Money Flickr pool

 

On today's Planet Money:

-- When you need help installing a giant computer system, you might call someone like Brian McCaffrey, and these days you might be looking to pay less for that help. The IT recruiter says he's seeing hourly wage cuts of 30 percent for skilled workers on big-ticket projects.

-- Another big bailout is on the way, reports the Wall Street Journal. The WSJ says the Treasury Deparment is now aiming to extend help to life insurers as part of the TARP program. It's a complicated endeavor, one that runs the gamut from your premiums to mortgage-backed securities. Rolfe Winkler of Option Armageddon walks us through.

Bonus: Commuters of the world, sing out.

Download the podcast; or subscribe. Intro music: Ernie and the Automatics' "The Good Times (Never Last)." Find us: Twitter/ Facebook/ Flickr

Continue reading "Hear: The Next Big Bailout" >

On a quick read, a couple of points strike me in the new Congressional Oversight Panel report on the progress of TARP.

COP leader Elizabeth Warren still isn't convinced she's getting a straight enough story about the bank bailout from Treasury Secretary Tim Geithner. "[T]he need for a clearly articulated strategy remains paramount," the report says.

COP thinks the bank bailout is still batter, and not yet cake. The COP report says it's too early to tell whether the economic assumptions TARP is based on will hold. "Economic forecasters have predicted that a recovery in GDP will commence in the fall," the commission writes. "However, the trend line in adjustments to those predictions has been consistently downward, with the projected beginning of the recovery receding into the future and its scale diminishing."

And then, of course, there's this bit about troubled banks:

Continue reading "TARP's Report Card" >