It's got to do with health care, but not with overeating. (The Truth About...'s / Flickr Creative Commons)

On today's Planet Money:

Much of the debate over changing the U.S. health care system concerns the Americans who can't get care. But a majority of Americans have insurance of one type or another, and for them, the health care system often more closely resembles an all-you-can-eat buffet.

If you want to get your knee fixed, you can. If you want that drug you saw on T.V., no problem. As a consumer, you don't have to worry too a great deal about the price, to a point, because your employer pays much of your premiums and the insurer picks up much of the medical cost.

David Goldhill, author of an Atlantic article called "How American Health Care Killed My Father," calculates that the average cost of a family's health insurance over a lifetime is $1.7 million. Goldhill proposes that Americans pay for routine care up to $50,000 over their lifetimes, and then be required to build health savings accounts that would cover the rest.

Goldhill's idea strikes Richard Kirsch of Health Care for America Now as very dangerous proposition. He says you can't treat medicine like any other commodity.

Bonus: Video: "Principles of economics, translated," after the jump.

Download the podcast; or subscribe. Intro music: The Cribs' "I'm a Realist." Find us: Twitter/ Facebook/ Flickr.

Continue reading "Podcast: Health Insurance Is Like An All-You-Can-Eat Buffet" >

'Quality, Comfort & ROI': The return on your investment in the MSK Extreme MRI machine. (ONI)

By Chana Joffe-Walt

Say you're a doctor, hospital or group practice looking to offer MRI services to your clients. MRI machines are expensive. How do you know if it's worth it? You can tape this handy business plan from ONI Medical Systems to the back of the machine. Just use the machine on at least 10 patients a day and you can make $2.5 million over five years.

Continue reading "Chart: How to Make Money Off Your New MRI Machine" >

Take my mechanic's word for it: It's all good now. (Enlarge -- anyone heard of anti-rattle clips?)

By David Kestenbaum

We talked on the podcast about how economists sometimes compare doctors to auto mechanics, because in both cases you, the customer, suffer from a lack of information. If the doctor says you have Takotsubo cardiomyopathy, you:

a) have no idea what that is, and
b) say, "Fix it!"

The same goes with the auto mechanic. My wife and I just took our car in because it was making a rattling sound. The bill we got Friday says simply, "FOUND ANTI RATTLE CLIPS OUT OF PLACE." Cost: $82.

Really? The rattle was because our anti-rattle clips were broken? We trust these guys and paid the bill. But I always have this helpless feeling of not knowing.

Coolest quarterly economic newsletter cover ever. (EVE Online)

By Laura Conaway

You may think we here at Planet Money are the biggest geeks around. Here's compelling evidence to the contrary: EVE Online, the "massively multiplayer" game that's now witness to a virtual banking crisis, has its own economist.

Eyjolfur Gudmundsson reports in his second quarter 2009 newsletter that EVE is a closed world with a very, very free market. Gudmundsson, who's from Iceland and should know a thing or two about banking crises, writes:

"Financial institutions are not regulated by any high level authority within EVE. Deposits with banks are not insured. There is no government to support the financial system or any lender of last resort.

Continue reading "EVE Online's Got A Real Economist (And He's From Iceland!)" >

'It looked okay to me until my wife came home and said the back didn't look too great.' (Dan Morelle / Flickr / Creative Commons)

By Laura Conaway

"Use it up. Wear it out. Make it do, or do without." People have been living by those words since long before the Great Recession -- I first heard them in Maine, probably about the time we were driving a century-old spile into a freshly tapped maple tree. Sugar's free, if you've got time to make it yourself.

From the world today, two new looks at doing more with less:

First, more people are cutting their own hair or getting a family member to do it for them (count me in), which is great until someone goes a little wild with the clippers and lands in the Wall Street Journal.

Second, when times get tough, tough guys stop buying new underwear. The Washington Post reports that the men's underwear index, or MUI, has been falling but lately at a much slower rate. The idea is that since underwear don't show, men who are worried about money will wear a pair until they're in tatters. A spokeswoman for Target says sales have picked up recently, especially sales of multi-pair packs. No less an eminence than Alan Greenspan himself has used the men's underwear index as way to gauge the economy.

By Laura Conaway

Good morning and welcome to the last week of summer.

The U.S. taxpayer is turning a profit on some of the bank bailouts. Eight of the biggest banks have paid off their TARP loans, with a $4 billion and average 15 percent annualized return. American Express and Goldman Sachs top the list of bigs with big returns for the common person. Citigroup and Bank of America top the list for bigs that haven't paid back a cent.

Meanwhile, the Wall Street Journal (subs. requ'd.) notes that the FDIC has backed most of the risk on $80 billion as it tries to get solvent banks to buy up the assets of failing ones.

Japan has voted its Liberal Democratic Party out of office after 54 years of being in charge. Chalk the defeat up to two decades of economic stagnation.

Eurozone prices fell again in August, for the third straight month of negative inflation. The fall was at least slower than it has been, likely because oil prices are falling at much slower clip.

The Chinese got more bounce from their stimulus spending, are racing ahead on solar panels and now plan to sell an electric car in the U.S. in 2010.

Conversations worth joining, after the jump.

Continue reading "You Bought Banks, Made Profits. Plus: Japan's Fresh Start" >

An ad for how to get rich in ISK, the currency of EVE Online.

By Laura Conaway

Bank failure is getting a dry run in the multiplayer online game EVE.

In recent weeks, EVE's largest player-controlled bank has hit the skids after one player embezzled and sold for real the InterStellarKredits -- ISK -- that are the coin of the imaginary realm. That caused a run on the bank. Then came an admission from Ebanks's CEO of bad management, followed by a string of loan defaults. Now the bank has frozen customer accounts. Ars Technica has the rest:

The main problem with Ebank's account freezing is that it could do some serious harm to the game's economy, mainly because players won't be able to withdraw their funds in order to pay for in-game goods and services.

Listener Brian Saar, who sends the story, calls it "a virtual laboratory for what happens without the FDIC."

By Laura Conaway

American Banker is reporting that the FDIC has put the clamp on releasing certain types of information. Specifically, the FDIC has decided that for now it will no longer reveal losing bids for the assets for failed banks. If you're the winner, your bid is still public. If you're one of the losers, it's not.

Continue reading "The New Secrecy At The FDIC" >

Jen Firlik, who sent those amazing photos of a dress marked down from $28,000, got this receipt at Starbucks the other day:

Shared planet? No charge for that.

Enlarge: A little less last month, but still way up from 2008. (Calculated Risk)

By Laura Conaway

Inflation remains a nonfactor, the Bureau of Economic Analysis says today in the Personal Income and Outlay report for July. The BEA's price index increased less than 0.1 percent, compared to 0.5 percent in June.

If you take out the volatile prices of food and energy, you're still looking at an increase of 0.1 percent, compared to 0.2 percent in June. Economists consider inflation of 2 or 3 percent healthy.

Inflation is especially important to watch now that the recession appears to be bottoming out. As long as it stays out of the picture, the Federal Reserve says it will keep interest rates at record lows in an effort to stimulate the economy.

Continue reading "Inflation, Income Flat In July, While 'Clunkers' Sparks Spending" >

By Laura Conaway

Good morning. Shares of AIG have quadrupled in price over the last four months. Inquiring minds want to know why. Meanwhile the new CEO, Robert Benmosche, tells the Wall Street Journal (subs. requ'd.) he's content to wait up to three years to sell off the insurer's assets and pay back the federal government bailout money that could amount to $173 billion. The U.S. owns 80 percent of the troubled insurer.

Japan's reporting record unemployment, falling wages, falling prices and ... economic growth.

Continue reading "AIG's Rising. Iceland's Paying. Plus: A Blood Oath For Stanford?" >

Rep. Barney Frank, at left, welcomes Federal Reserve Chairman Ben Bernanke to Capitol Hill last month. (Karen Bleier / AFP/Getty Images)

On today's Planet Money:

If any single player is driving the process for reforming financial regulation on Capitol Hill, it's Rep. Barney Frank (D-Mass.). The chair of the House Financial Services Committee tells Adam Davidson that bipartisan consensus on the issue is beyond reach.

As you'll hear in this interview, Frank is an intense lawmaker with very definite ideas about politics and the art of the possible.

Correction: Adam says he goofed. While interviewing Frank, Adam said that Frank's staff had told him regulatory reform must happen this year or else never happen. Adam says he misunderstood and apologizes for the error.

Bonus: Rep. Frank confronts a person comparing President Obama to Hitler, after the jump.

Download the podcast; or subscribe. Intro music: The Beastie Boys' "Sabotage." Find us: Twitter/ Facebook/ Flickr.

Continue reading "Podcast: Rep. Barney Frank Checks In" >

By Laura Conaway

Simon Johnson blisteringly asks whether the same regulators and systems that helped cause the economic crisis are being rewarded for staving off the worst of the calamity. Johnson asks whether we're all watching a case of firefighter arson.

He writes on Baseline Scenario:

No one is suggesting that our illustrious financial firefighters deliberately triggered a crisis. But, for over two decades, they and their close mentors oversaw the operation and development of a banking and securities system with profound instability hard wired into its DNA.

Johnson, former chief economist for the International Monetary Fund, has been a critic of the official response from the outset of the crisis. He argued that the Obama administration should nationalize troubled banks, and here he unloads on the new plan for overhauling financial regulation:

President Obama said on Tuesday that Ben Bernanke helped avert a second Great Depression. That is a considerable achievement, but why then are this administration and the Federal Reserve proposing only minor adjustments in oversight and governance for the financial system that ran amok -- producing "financial innovation" that harms consumers and destabilizes everything?

Argentinian real estate still recovering. (Ryan Stotland)

By Laura Conaway

Ryan Stotland sends this picture from Buenos Aires of people camped on the street beneath a real estate sign.

Argentina's economy has been on track to shrink at a rate of 2.5 percent this year, but things have started picking up. A recent report out of Dow Jones says it might be about to grow again in the third quarter of this year. Sounds a lot like what we're hearing at home in the U.S.

By Laura Conaway

The FDIC fund for protecting $4.5 trillion in U.S. bank deposits slipped by 20 percent to $10.4 billion at the end of June, the the agency reports. A year ago, the fund held more than $45.2 billion.

So far this year, 81 banks have failed, requiring expensive rescues from the FDIC. The number of banks on the FDIC's "Problem List" rose to 416 at June's end, from 305 in March.

In a press release, the FDIC noted that more than 28 percent of all member banks reported a net loss in the second quarter. The FDIC says that's because more debtors are failing to pay back the money they owe.

Continue reading "FDIC Fund Falls 20 Percent. Bair Says Your Money's Safe." >

Craig Newmark, the picture of contentment. (Chip Somodevilla / Getty Images)

Defenders of the free market, in my mind, have always had a little explaining to do when it comes to things like computer software. Where is my minimalist option?? I want the version without all the stupid features that slow everything down. (Long liveXyWrite!)

Maybe times are changing. David Pogue writes in the New York Times today that Apple's new operating system, called Snow Leopard, is admirably streamlined.

It's the radical concept of a software update that's smaller, faster and better -- instead of bigger, slower and more bloated. May the rest of the industry take the hint.

Meanwhile, Wired this month goes after a related idea, "Why Craigslist Is Such A Mess." Craigslist's bare-bones approach has some obvious problems. It's so stripped of bells and whistles that you can scarcely find your way through it. So why hasn't a competitor stepped in and stolen all the business? Gary Wolf writes:

The Internet's great promise is to make the world's information universally accessible and useful. So how come when you arrive at the most popular dating site in the US you find a stream of anonymous come-ons intermixed with insults, ads for prostitutes, naked pictures, and obvious scams? In a design straight from the earliest days of the Web, miscellaneous posts compete for attention on page after page of blue links, undifferentiated by tags or ratings or even usernames. Millions of people apparently believe that love awaits here, but it is well hidden. Is this really the best we can do?

Why doesn't Craigslist feel the need to improve? Wolf says the answer starts with its founder, Craig Newmark:

Continue reading "Onward! (And Backward!) The Weird Economics Of Craigslist" >

A range of 300,000 to 350,000 is considered healthy. (Source: U.S. Department of Labor)

By Laura Conaway

Good morning, or what passes for it.

The U.S. economy was shrinking at annualized rate of 1 percent in the second quarter of this year, the Bureau of Economic Analysis reports today. The bureau confirmed the advance number it gave on July 31 for U.S. gross domestic product, or GDP, which measures all economic activity. That advance figure often changes in later reports, but not this time. In the first quarter, the economy was shrinking at a yearly clip of 6.4 percent.

New seasonally adjusted claims for unemployment insurance fell last week to 570,000, from a revised figure of 580,000 the week before, the Department of Labor reports. This decline ended two straight weeks of rising claims, after six weeks of falling.

The four-week moving average, generally a less volatile number, fell by 4,750 to 566,250. That's 90,000 lower than the peak in April. Economists consider a healthy number of new weekly claims to be between 300,000 and 350,000.

After the jump, the bigger picture on unemployment.

Continue reading "Surprise! GDP Stays At -1 Percent Growth. New Job Loss Claims Fall" >

Signs of life in Clover, South Carolina. (Aimee Ennis / Planet Money Flickr pool)

On today's Planet Money:

China's all over the headlines these days, as its economy recovers faster than the U.S. one. World newspapers trumpet the communist nation's rise, with stories like "Asia recovery show's China's ascendance" and "China to surpass U.S. 'within a decade.'"

Analyst David Gordon, head of research at Eurasia Group, says it's true that the Chinese responded to the global recession with a fast, effective stimulus program. The rest is hype, Gordon says, since the China's economy is nowhere near big enough or dynamic enough to save the rest of the world.

Plus: Listener Aimee Ennis checks in from her interrupted subdivision in Clover, South Carolina, where the developer is -- gasp! -- building homes again.

Bonus: A blog comment that made us laugh (hey, it was better than crying).

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

Continue reading "Podcast: Can China Save America's Bacon?" >

Wayne Tucker writes that he was glad to hear LL Cool J and Crazy Eddie on a recent podcast:

Both featured prominently in the soundtrack of my life in the mid '80s, when I was a bike messenger in Manhattan. It is the only job that left me feeling depressed on Friday afternoons because, even though I was in my 20s, had money in my pocket and was free in NYC, I couldn't hope to achieve the measure of fun that I could expect when I returned to work on Monday morning.

I also suppose that it's some sort of economic indicator that my bike messenger paychecks in 1986 were for precisely the same amount that is on my teacher's paychecks today. I don't mean that the figure is the same in adjusted dollars; it's the same series of digits. What is more, the modest sums on my 50-hour-week teaching checks don't reflect a prorated summer break; the checks stop coming when the school year ends in May. It's amazing what a quarter of a century, a Masters degree and 5 years in the same job can do for you.

Tucker teaches in Sierra Vista, Arizona.

I'm feeling like a dog. (Redjar / Flickr Creative Commons)

By Laura Conaway

Your insurance company, if you're lucky enough to have one, behaves like a monopoly. That's the picture in this map from the AP, and the argument from David Leonhardt in the New York Times today. Leonhardt writes that in the debate over health care, real choice is off-limits:

Health insurers often act like monopolies -- like a cable company or the Department of Motor Vehicles -- because they resemble monopolies. Consumers, instead of being able to choose freely among insurers, are restricted to the plans their employer offers. So insurers are spared the rigors of true competition, and they end up with high costs and spotty service.

I recommend Leonhardt's column this morning, which I so happen to be living in a small way. Since I'm about to get a little personal here, I'll put the rest of the story after the jump.

Continue reading "I'm Off To See The Doctor. Wish Me Luck." >

By Laura Conaway

A pair of indicators from the U.S. Census Bureau today, both on the upside.

First, sales of new single-family homes rose in June by 9.6 percent over the month before. They're still down from this time in 2008, by 13.4 percent. The U.S. Census Bureau says the average price was $269,200, down from $276,900 in June and $301,900 last year.

Second, new orders for manufactured goods increased 4.9 percent last month over June -- biggest jump in two years. MarketWatch notes that orders for new airplanes doubled. Transportation orders overall grew by 18.4 percent. Even without that bonus, orders were up .8 percent -- it's small, but these days it counts for something.

By Laura Conaway

Good morning. The economics world continues making sense of the first quarterly rise in housing prices in three years. Calculated Risk looks at a looming wave of foreclosures and predicts the market has further to fall. And pity California, where property values have fallen for the first time in 76 years.

Banks in France have agreed to curb bonuses, with penalties for traders who lose the firms' money after getting big paydays (Wall Street Journal, subs. req'd.). Also, never mind the puny uptick in U.S. consumer confidence yesterday -- a German index of businesses finds confidence rising for the fifth straight month, to levels not seen since before Lehman Brothers collapsed in September. That's what happens when your economy's growing, I guess.

Ford is on the verge of a deal to sell a dormant plant that once made gas guzzlers to a pair of green energy concerns, including a solar panel manufacturer. The Detroit Free Press reports the $1 billion conversion to an alternative energy park could be worth 4,300 jobs in the local economy.

And remember, you can still join in this week's fun of arguing the validity/ridiculousness of the "peak oil" theory, which holds that the world will start running out of oil -- and may already have begun doing just that. Start here, then forge ahead.

The more you borrowed, the less able you are to guess what your payments will be. Click to enlarge.(Sallie Mae/Gallup)

By Caitlin Kenney

That Sallie Mae/Gallup poll about student loans is still stirring up dust, with people arguing about whether it accurately reflects how much debt people are taking on for school. The survey found that fewer families borrowed money to send someone to college in 2008-2009 than the year before. I'm still thinking about it too and one section that particularly stands out to me is where they asked students to estimate their monthly loan payment once they graduate. The students were off -- by a lot.

Twenty-three percent of students wouldn't venture a guess at all, which I personally chalk up to fear. Can you blame them for not wanting to put a number to their future debt-filled lives?

The more debt you're staring at, the less likely you are to have a handle on the monthly load. Look at the chart above. Estimates from students who expected to borrow $10,000 or less were pretty close, but as their loans grew, the estimates all over the map. Sallie Mae says the range of estimates was $2 to $80,000 per month (those are the optimists who think they're going to pay it all back at once).

Continue reading "Student Loans: How Much Do I Really Owe Each Month? " >

By Laura Conaway

The White House budget office released its mid-session review of federal spending today. It includes the news that the 2009 shortfall will be $262 billion less than expected, because the White House has scaled back its estimates for continuing bailouts and lowered its projection for the cost of FDIC bank rescues.

Bank failures are still climbing, but the FDIC is now looking to "claw back" some of the profits from rescuing banks.

In his blog post, budget director Peter Orszag blames previous administrations for the running up the deficit. He argues it's important to consider the overall deficit as a proportion of gross domestic product in healthy economic years. Orszag's conclusion? It's too high. He writes:

It is worth noting, however, that by 2019, the difference between non-interest spending and revenue, which is also known as the "primary deficit," is only 0.6 percent of GDP. Interest payments, which almost entirely represent the cost of the debt accumulated due to the policies of past adminis??trations and the need to run short-run deficits to help the economy recover from the worst downturn since the Great Depression, are 3.4 percent of GDP.

During an economic downturn, one wants to allow the deficit to increase, so deficit reduction should be focused on the out-years -- after the economy has recovered. That said, the out-year deficits hover in the range of 4 percent of GDP, which is higher than desirable. Getting the out-year deficit under control is a top priority of the Administration.

Continue reading "White House Budget Office: The Deficit Must Fall" >

Andre Campana writes from Sao Paulo:

I was listening to podcast #81 on financial innovation, and I felt like shedding some light upon this subject from an overseas perspective.

Brazil was one of the economies that did not suffer so much with this crisis. The country's economy had a shorter decrease and had a faster recovery. In fact, the recession in Brazilian economy was only a technical one, as opposed to American or European economies, which indeed faced a recession.

One of the reasons for that stability is regulation. Here in Brazil, financial products as simple as mortgages are so regulated that most people don't have access to them. Actually, because the majority of the Brazilian population is poor, the financial system seems to reject the idea of launching risky products, as the default risk appears higher than in other economies.

Continue reading "Happily Cautious In Brazil " >

By Laura Conaway

Consumer confidence has risen more than expected this month, the Conference Board reports. In its index of how you're feeling out there, 90 is the minimum for economic health. In July, the number stood at 47.4. Now, it's at 54.1 Expectations for the future -- when it's all going to get better, right? -- rose to a level not seen since the recession started in December 2007.

So what's going right? Real estate, maybe. AP reports:

The Standard & Poor's/Case-Shiller's U.S. National Home Price Index rose nearly 3 percent in the second quarter from the January-March period, the first quarterly increase in three years. Home prices, while still down almost 15 percent from last year, are at levels last seen in early 2003.

A passing note on consumer confidence: Another index, from the University of Michigan, has been slipping. In recession like this, where we might have hit bottom but we don't feel very recovery-ish yet, we can expect surveys like this to be a little squishy. Just saying.

Click to launch interactive graphic. (Associated Press)

By David Kestenbaum

By now we've all heard about the money being wasted in our health insurance system. You'd think it would be in the insurance companies' interest to get rid of the needless spending. If they could do that, then they could charge lower premiums and attract more patients.

Lately at Planet Money, we've been asking why that hasn't happened. One answer is the insurance folks give us is that hospitals have been joining forces -- agreeing on protocols for treatment and presenting a united front. Insurance companies say that when they try to get hospitals to eliminate unnecessary tests or perform more efficiently or charge less for certain services, the hospitals just say no and there isn't much the insurers can do.

The insurance companies have some backing for their complaint. A study from 2004 by the Center for Studying Health System Change concurs that hospitals now often have the upper hand in these battles. One particular fight was referred to as a "sumo-wrestling match." The group's report from 2001 found showdowns erupting, with hosptials and health care providers willing to play chicken during negotiations.

Continue reading "Should We Pity The Insurance Companies?" >

Federal Reserve Chairman Ben Bernanke looks set for another go around. (Chip Somodevilla / Getty Images)

By Laura Conaway

The news today is a man: Federal Reserve Chairman Ben Bernanke. The head of the U.S. central bank is being nominated for another four-year term by President Obama. The announcement is expected this morning around 9 a.m. Eastern. Bernanke, whom Obama credits with staving off the Great Depression 2.0, still needs Senate confirmation.

Meanwhile, a court order says the Federal Reserve must name the financial firms it loaned money to during the economic crisis. The decision comes in a Freedom of Information suit by Bloomberg News.

The White House budget office and the Congressional Budget Office release reports this morning that are expected to predict giant federal deficits. The 10-year forecast calls for something like $9 trillion in red ink.

China has gotten the jump on the market for solar energy technology, in part because of Chinese government support for the industry. Chinese companies are planning production in the U.S. They've cut the price of solar panel nearly in half over the last year.

Calculated Risk tracks big banks raising more capital, including Deutsche Bank.

Advisers to GM are urging the automaker to keep its Opel line instead of selling it to the international companies vying for it. The idea is to give GM a larger presence overseas.

Just one person's opinion. (Simon Hildrew / Flickr Creative Commons)

On today's Planet Money:

If you find MySpace more chaotic than Facebook, that's no accident. Founders Chris DeWolfe and Tom Anderson wanted to create a site that's just as disorienting as your average nightclub, a crazy landscape of musicians and models and Hollywood desire, says Julia Angwin, author of Stealing Myspace: The Battle to Control the Most Popular Website in America.

DeWolfe and Anderson came to their social networking juggernaut from the world of porn and spyware. Their greatest asset? Complete ignorance, Angwin says. Not knowing what to fear, the entrepreneurs just dove in. It gave them a great beginning, Angwin says, but became an Achilles heel.

Bonus: DeWolfe and Anderson explain MySpace to Charlie Rose.

Download the podcast; or subscribe. Intro music: Four Tet's "Smile Around the Face." Find us: Twitter/ Facebook/ Flickr.

Continue reading "Podcast: MySpace Was Born Of Total Ignorance. Also Porn And Spyware" >

Going into debt to pay for school. Click to enlarge.(Sallie Mae/Gallup)

By Caitlin Kenney

Fewer families are borrowing for college than you might think. According to a recently released survey of college-aged students and their parents sponsored by student lender Sallie Mae, just 42 percent of families took on debt to send someone to college in 2008-2009. Last year, 47 percent of families did.

The survey included 800 students and 804 parents. Spending ranged from parental income and savings (for 36 percent of the students) to help from other relatives and friends (6 percent). A quarter of the respondents said they'd gotten grants and scholarships. Another 14 percent took out loans themselves.

Students are starting to show signs of putting off school for now. Fewer students said they would rather borrow than not attend college this year, with 53 percent compared to 67 percent last year. It may also be that budget-conscious students have become more wary of debt and are economizing by choosing cheaper schools. Students who borrowed money spent 30 percent more on tuition than those who did not.

Continue reading "Fewer Students Borrow For College. Those Who Do Spend More. " >

"Unlucky." (punk_drizzle / Planet Money Flickr pool)

Steve Haag heard our podcast about Crazy Eddie and the minds of financial criminals in KNAU land. Haag writes that he wants to hear more about morality in money management:

I don't hear it talked about much. Maybe it's not sexy enough. The economic crisis reads like a whodunit crime novel. Risk capitalists seem motivated by how much they can get away with and how cleverly they can think up schemes for leveraging money and not get stuck being accountable for losses.

Maybe morality is boring. Maybe the notion of setting up banking systems for long-term stable growth falls flat in terms of interesting story line. The collective consciousness seems to like big spikes and big dips, big winners and big losers, big secret dealings, big government interventions, big excuses from Wall Street, big shock and horror from the populous at large, big fears about what horrible thing might happen next. Maybe it's the thirst for adventure and a lot of very smart people chomping at the bit to see what innovative way they can play the system, just for the fun of playing it, like a board game where everyone's protecting their own advantages and hoping to dominate the other players.

Continue reading "Where's The Morality In Money Management?" >

By Laura Conaway

The Bank of Israel raised its benchmark interest rate by a quarter of a point today, becoming the first major central bank to hike the cost of borrowing in this present climate of a cheap money.

The Israeli economy was growing at an annualized rate of 1 percent last quarter. Inflation showed up, too -- consumer prices jumped 1.1 percent from June to July. From Bloomberg:

"[Bank of Israel Governor Stanley Fischer] has to curb inflation and to curb inflation for next year he has to act now," said Shlomo Maoz, chief economist at Excellence Nessuah Investment House Ltd. in Tel Aviv, who predicted a quarter-point increase. "To act alone will be hard, but it will be a mistake for him not to act."

Fischer's walking the same political tightrope as other central bankers, including Federal Reserve Chairman Ben Bernanke. They've got to get their economies back to health, and they've got to watch out for inflation.

Continue reading "Sign Of Recovery: Israel's Central Bank Raises Interest Rate" >

By Laura Conaway

File this under "unofficial and unusual sources," as Reuters puts it: Bernie Madoff is dying of cancer, the New York Post reports his fellow inmates say. From the NY Post:

Bernie Madoff had little to lose by confessing to masterminding the world's biggest Ponzi scheme -- he's dying of cancer, sources told The Post.

The Post says Madoff's lawyer would neither confirm nor deny reports that his client is terminally ill and taking more than a dozen medications a day. The same jailhouse sources say the Ponzi schemer, who's serving his 150-year sentence in North Carolina, has stripped off his shirt for Native American sweat lodge ceremonies with other prisoners. One anonymous prisoner tells the tabloid Madoff has been making friends with Native Americans and gay prisoners. The former financier is now working at painting fences.

UPDATED: The New York Times reports that prison officials say Madoff doesn't have cancer and isn't terminally ill. (Hat tip to our pals at The Two-Way.)

By Laura Conaway

Morning! The world's central bankers signaled their intent to keep interest rates low after their annual confab in Wyoming. The bankers say they can keep rates low and spur growth without risking inflation for perhaps a couple more years.

Labor unions, including autoworkers, could benefit from a $10 billion provision tucked into Congressional bills for overhauling health care. The Detroit Free Press reports that the measure "would see the government -- at least temporarily -- pay 80 cents on the dollar to corporate and union insurance plans for claims between $15,000 and $90,000 for retirees age 55 to 64."

Three from the New York Times: First, Paul Krugman has just about it had with "zombie" Reaganomics in the debate over health care. Second, Nicholas Kristof and Sheryl WuDunn argue that empowering women is the key to saving the world. Third, a little more on Goldman Sachs programmer Sergey Aleynikov, who's accused of stealing proprietary software used for computerized trading.

And you've got a few hours left before the government's $3 billion Cash for Clunkers program shuts down later today -- if you can find a dealer who's still taking part. The Detroit Free Press says many dealers have given up because of problems getting reimbursed.

Just spit and scan: home genetic kits like this one could mean big trouble for the health insurance industry. (CrashIntoTheSun / Flickr )

On today's Planet Money:

Information problems are some of the biggest hurdles in fixing health care. Doctors know plenty about you and your ailments, but you aren't usually given much information about them in return. Choosing your physician is an important decision, but how can you know if you are making a good choice? Robert Krughoff of Consumer Checkbook says he's got a new website, Patient Central, that makes finding a good doctor a whole lot easier. The website uses detailed survey information obtained by actual patients to measure doctor performance. One of the site's top rated docs, Dr. David Graham, says he likes the idea but thinks it isn't perfect.

Plus, a health care paradox. Sometimes you can have too much information. Naked Economist Charlie Wheelan says knowing our genetic makeup is good for us but bad for the insurance industry. Wheelan argues that as soon as our insurance pool is "corrupted" by this information, healthy people will begin to opt out and people likely to get sick will be forced to opt in at higher rates.

Bonus: A nurse says your doctor is not a mechanic.

Download the podcast; or subscribe. Intro music: Apollo Ghosts' "Land of the Morning Calm." Find us: Twitter/ Facebook/ Flickr.

Continue reading "Hear: Too Much Information" >

Another victim of the struggling economy. (Beerzie Boy)

By Chana Joffe-Walt

A couple months back we got an letter from listener Beerzie Boy, who said everyone in his office had started using coins instead of bills in the office vending machines. Turns out it was an illustration of something called the denomination effect. Priya Raghubir explained people are much more likely to spend smaller denominations than larger bills.

Now, Beerzie Boy checks back in with an update -- it looks like people aren't just laying off spending coins, they're are laying off snacking in general. This note was recently posted on the machines:

"Due to very low volume sales at this location we regrettably need to remove the vendors from this site. The poor sales too frequently lead to outdating of product. The equipment will be picked up in approximately one week. We are sorry for any inconvenience."

Continue reading "Indicator: Goodbye Vending Machines" >

By Caitlin Kenney

With its deposit insurance fund running low, the FDIC is looking for new buyers to take over failed banks. The government agency has shown increasing willingness to work with foreign buyers and participate in loss sharing agreements. Banco Bilbao Vizcaya Argentaria SA recently won the bidding for struggling Guaranty Financial Group, and other foreign banks have shown an interest in taking a stake in the U.S.'s troubled banking industry.

The FDIC is also reportedly trying to entice more private equity funds to the table by softening the rules for private equity takeovers. The proposed rules call for banks acquired by private equity groups to maintain tier one capital ratios of at least 15 percent, three times the level of other banks. The rules also require funds to hold on to the lenders for at least three years. The private equity industry and some of its biggest funders, pension funds, say the rules are too strict and will deter funds from investing in the banks.

So far this year, 77 banks have failed. The FDIC insurance fund has dipped from 35 billion in April down to 13 billion today -- a year ago it was at almost 53 billion.

(Source: Bureau of Labor Statistics)

By Mathew Katz

Weekly initial jobless claims may be up, but mass layoffs are dropping -- fast. According to the Bureau of Labor Statistics' seasonally-adjusted numbers, employers in the U.S. took 2,157 mass layoff actions in July, 606 fewer mass layoffs than June. A mass layoff is defined as any single employer laying off 50 or more people. July's numbers are the lowest in nearly a year.

The manufacturing sector was the hardest-hit, accounting for 37 percent of mass layoffs. California was the state with the most people fired in mass layoffs. Last month, Cisco Systems alone laid off over 600 workers.

The decline may just be because we've had so many mass layoffs already that we've exhausted them. Still, there's something about the nosedive that chart is taking that makes me happy. Let's hope it continues.

Budae jjigae or "army stew" includes hot dogs and spam. (su-lin / Flickr)

Gillian Gutierrez writes:

I have a new alternative economic indicator for you: what cooking websites (Epicurious, Cooks.com) offer as suggestions for ingredients. I just got an email from cooks.com with 6 recipes for HOT DOG dishes. I kid you not! Crown roast of hot dogs and weenie stew included.

When the economy tanks, we start cooking with cheap foods! I guess they'll be no lamb, veal or king crab this season.

Bonus: A recipe for the stew pictured above above.

(Source: National Association of Realtors)

By Mathew Katz

After a week of mixed housing market indicators, we finally have one that shows some firm good news. Sales of existing homes rose in July, for the fourth consecutive month, according to the National Association of Realtors. They're up 7.2 percent from last month, and 5 percent from year ago. It's the largest gain since record-keeping began in 1999.

Overall, July existing home sales hit a seasonally-adjusted annualized rate of 5.24 million, far exceeding expert predictions of 5 million. Experts attributed the increase to the housing stimulus tax credit, and the best housing affordability in two decades. According to the report, the median price of existing homes fell 15 percent.

If the building boom and housing bust lead to too many empty houses, an increase in home sales is a very good sign -- it means that some of those houses are starting to be filled, which could encourage home builders to start building again. Still, at the current pace, it would take 9.4 months to sell every previously-owned home on the market. In a stable market, it should only take seven months.

By Mathew Katz

We've got more signs today that Europe is entering a recovery. A couple major indexes of the European economy unexpectedly crossed into growth territory, according to data released today by financial information company Markit Economics.

The German service industry purchasing manager's index (or PMI), a gauge of private-sector activity, rose to 54.1 from 48.1 last month. The French manufacturing index jumped from 48.1 in July to 50.2 in August. Readings above 50 indicate industry growth. European stimulus spending was likely a factor in the growth, which is seen as a sign of broader global recovery.

Those two readings -- representing the euro zone's two largest economies -- drove a rise in the composite index of the service and manufacturing industries of all 16 countries in the euro zone. That figure, the Euro Zone PMI, jumped to a 15-month high of 50 in August.

By Mathew Katz

If you have a clunker you want to trade in for cash, you better do it this weekend. The Obama administration announced last night that they'll be ending the popular 'Cash for Clunkers' program on Monday evening. The abrupt end comes after dealers complained of long delays in getting rebate money from the government. The administration needed to wind down the program in order to avoid going over their $3 billion budget. Overall, the program seems to have been a successful shot in the arm for the auto industry -- it's generated over 457,000 auto sales so far, and caused some automakers to increase production.

Meanwhile, Starbucks, which has been hit hard by the recession and increased competition, announced that it has raised prices on frappuccinos, macchiatos, and other "complex" drinks by up to 30 cents in some cities. At the same time, they've decreased the price of more basic drinks by 5 to 15 cents each. You know there's something wrong anytime a seemingly-ubiquitous coffee giant makes a price change (and is closing down stores). Perhaps this American institution could use a bailout?

Continue reading "No More Cash For Clunkers, More Cash For Coffee" >

A storeroom containing about 2000 wheels of Parmesan cheese in Parma, Italy. (cosmos_72 / Flickr)

By Mathew Katz

Twitter pal @snorerot13 sends this delicious economics story from the Guardian. Gianni Zonin, an Italian bank chairman and wine producer, is proposing that banks accept expensive wines and legs of prosciutto as collateral on loans to producers. The quintessentially Italian notion even has the support of Luca Zaia, the Italian agriculture minister. Here's a bit:

"We've done it with cheese, why not with prosciutto and good wines like Brunello di Montalcino and chianti classico?" said Gianni Zonin, chairman of the Banca Popolare di Vicenza and head of wine producer Zonin.

The Italian bank Credito Emiliano has long stored hundreds of thousands of parmesan wheels, worth about 300 euros each, in warehouses as collateral while they age.

Since the bank can sell the cheese if creditors default, it can afford to offer low interest rates to an industry which is suffering from recession and supermarket discounting.

That's the sort of financial innovation I can get behind. Though that might only be because I've always wanted to walk into a massive bank vault filled with cheese, wine and ham.

By Mathew Katz

The first part of new regulations governing credit cards go into effect today, part of the Credit Card Accountability, Responsibility, and Disclosure Act. We've discussed these here before, but there's been a lot of buzz about them on the web today.

Over at MarketWatch, Chuck Jaffe thinks that the new rules have too many loopholes and unintended consequences that will endanger consumers:

For example, starting August 20, card issuers must give 45 days' notice before any rate hike. Alas, that only applies to fixed-rate cards, a loophole that most industry watchers say means that it won't apply to more than 90% of the cards issued; many issuers of fixed-rate cards have been converting them to variable rates in advance of the new rules.

Continue reading "A Closer Look At The New Credit Card Rules " >

Vice President Joe Biden and Health and Human Services Secretary Kathleen Sebelius at Mt. Sinai Hospital in Chicago. (M.Spencer Green / AP Photo)

By Caitlin Kenney

The government is handing over $1.2 billion in grants to help health care providers take their medical records digital. A huge chunk of the grants, $598 million, will go towards creating 70 Health Information Technology Regional Extension Centers, which will provide technical assistance to hospitals and doctors. Another $564 million will go to states to support to help them share patient information within and across state lines.

Vice President Joe Biden made the announcement today in Chicago alongside Human Services Secretary Kathleen Sebelius.

"With electronic health records, we are making health care safer; we're making it more efficient; we're making you healthier; and we're saving money along the way, "Biden said in the announcement in Chicago. "These are four necessities we need for healthcare in the 21st-century."

The U.S. has a long way to go before every American has an EMR (electronic medical record). David Blumenthal, the national coordinator for health information technology, says right now "only 20 percent of physicians and 10 percent of hospitals have meaningful electronic records." One notable exception is Massachusetts, a leader in EMRs, it's estimated that 30 to 50 percent of the Bay State currently uses them.

Transportation Secretary Ray LaHood kicking off the 'Cash for Clunkers' program in July. (Win McNamee / Getty Images)

By Mathew Katz

General Motors says it will begin advancing dealers the cash the government owes them under the Federal Cash for Clunkers Program. GM made the announcement today after a number of dealers said they were dropping out of the program because of delays in being reimbursed. GM said its recent sales have surpassed expectations largely due to the federal program. On Tuesday, they announced plans to ramp up production.

The Greater New York Automobile Dealers Associations said yesterday that their dealers have only been compensated for about two percent of the deals already made under the program. Some dealers say they've been waiting so long, they don't have have enough cash to give out new rebates. Over 200 New York area auto dealers have already left the program because of the delays.

Continue reading "Dealers Withdraw From Cash For Clunkers, G.M. Moves To Bring Them Back" >

Maryellen G. has another answer to our question about who a patient most closely resembles in our current health care system. She writes:

A patient is a corporation hoping it's too big to fail.

I think a lot of us patients are like very large corporations who make risky choices for short term gain, assuming that if and when things get really bad, the public will have to step in and help us. We argue against regulation that might make it more possible to plan for and avoid economic disaster from a health crisis. We argue against it until the very minute when we actually need public help (and sometimes even still then!), because we think by buying cheap health insurance, we'll save some money short term, and if we ever get really sick, we'll get help from the public - the government, our families, other patients (by just not paying or going bankrupt).

(Source: Mortgage Bankers Association)

By Mathew Katz

The number of mortgages with overdue payments rose to a seasonally-adjusted 9.24 percent of total mortgages in the second quarter of 2009, according to today's Mortgage Bankers Association National Delinquency Survey. That's the highest it's ever been since the MBA began keeping records in 1972. The figure is up from Q1's figure of 9.12 percent, and up nearly from 6.41 percent last year.

The percentage of foreclosures is at the highest in three decades: it's at 4.3 percent. Loans overdue by at least 90 days -- which is an indicator of foreclosures to come -- rose to 7.97 percent, the highest on record.

But what's scariest isn't the numbers, it's that the increases are no longer being driven by subprime loans. Instead, they're being caused by unemployment. From the report:

While the rate of new foreclosures started was essentially unchanged from last quarter's record high, there was a major drop in foreclosures on subprime ARM loans. The drop, however, was offset by increases in the foreclosure rates on the other types of loans, with prime fixed-rate loans having the biggest increase. As a sign that mortgage performance is once again being driven by unemployment, prime fixed-rate loans now account for one in three foreclosure starts. A year ago they accounted for one in five.

By Caitlin Kenney

AIG's new CEO Robert Benmosche says he won't be pressured by the government to sell the company's assets before he can get a good price for them. Benmosche's comments come from a recording of a meeting for employees obtained by Bloomberg. Here are some other highlights:

"I'm appalled at how much pressure has been put on all of you to just sell it no matter what, because the Fed wants out, or the Treasury wants out. If they want out in a hurry, they shouldn't have come in in the first place."

"It's time the people in Congress stopped talking about you as the problem, because you're the solution. It's not your fault, it's their fault, it's the regulators' fault."

"My fear is that you'll say, 'I don't know if Treasury wants it, I don't know if the Fed wants it, I don't know if the lawyers want it, I don't know whatever. If you sit there every day not making the right decisions to take us to the next level, we'll miss an opportunity."

Earlier this month, AIG announced that it had its first profitable quarter since 2007. The company said it earned $1.82 billion from April-June. AIG has received a government bailout package worth a total of $182.5 billion, which it says it plans to begin repaying this year.

We're still way above the 'healthy range' of 300,000 to 350,000 new claims. (Source: Department of Labor)

By Mathew Katz

New seasonally-adjusted claims for unemployment insurance rose last week to 576,000, up from from a revised figure of 561,000 the week before, the Department of Labor reports. Before this morning's report, analysts had expected new claims to drop to 550,000. This is the second week in a row that initial claims rose -- they had fallen for six straight weeks, but ticked up last week.

The four-week moving average climbed by 4,250 to 570,000 -- which is still up from the average weekly decline of 6,077 from April 25 to July 25, but not as bad as last week's jump of 8500. The figures for July are a bit off, because of problems with the Department of Labor's formula for calculating new claims. The DOL takes seasonal factors into account, and this year the usual summer layoffs in the auto industry happened in the spring. The DOL says its formula should now be back on track.

Today's report also shows that the number of people on regular unemployment benefits is a tiny bit up -- the number is now 6,241,000 from 6,239,000 the week before.

After the jump: a reminder of the bigger unemployment picture.

Continue reading "New Job Loss Claims Up Again" >

Hippocrates: his oath has had thousands of years of staying power. (Tony the Misfit / Flickr)

By David Kestenbaum

We talked on the podcast last week about how doctors occupy this strange position in the health care market. On the one hand they're like any sales person (most are paid on a fee-for-service basis) but on the other hand, we trust them to have our best interests at heart.

The Nobel economist Kenneth Arrow wrote about this in a famous 1963 paper analyzing the peculiarities of the health care market. He suggested that the reason we keep things like the Hippocratic Oath around and enforce a culture of professionalism among doctors is precisely because they have this financial incentive not to act in our best interests.

Here's a great interview with Arrow by Conor Clark at the Atlantic that got posted recently. And here's a modern version of the Hippocratic Oath with updated economics.

I will apply, for the benefit of the sick, all measures [that] are required, avoiding those twin traps of overtreatment and therapeutic nihilism.

A Crazy Eddie stock certificate: evidence in one of the largest securities fraud of all time. (Sam Antar)

On today's Planet Money:

Before Bernie Madoff, there was the Antar family. In the seventies and eighties, the family ran a popular electronics chain, Crazy Eddie, which was known for its frenetic commercials and low prices. The business was crooked from the start, but the fraud got more serious when the family took the company public in the 1984. Going public earned the Antar family millions of dollars, but infighting and jealousy later led them to turn against each other. In 1987, the Securities and Exchange Commission investigated the family and discovered years of inflated profits and overstated income.

Today one of the masterminds of the fraud, Eddie's nephew Sam Antar, explains how they did it and why it worked for so long. Antar now lectures about white collar fraud and says it's a brutal crime.

Bonus: Crazy Eddie wants you to beat the heat.

Download the podcast; or subscribe. Intro music: LL Cool J's "I Can't Live Without My Radio." Find us: Twitter/ Facebook/ Flickr.

Continue reading "Hear: Inside The Mind Of A Financial Criminal" >

By David Kestenbaum

Reading about health care economics can put even a caffeinated person to sleep so as I go I've been keeping a list of quotes. Not from the authors. Quotes used by the authors to try to lighten things up. Here are a few andwe welcome your additions.

1) From Lawrence Casalino's scholarly article Markets and Medicine:

The Doctor's Dilemma, George Bernard Shaw (1911) pointed out the obvious problem with the traditional fee-for-service approach: "that any sane nation, having observed that you could provide for the supply of bread by giving bakers a pecuniary interest in baking for you, should go on to give a surgeon a pecuniary interest in cutting off your leg, is enough to make one despair of political humanity."

Continue reading "Jack Benny and Health Care" >

By Caitlin Kenney

The Cleveland Fed is trying their hand at breaking down economics for "people who aren't policy wonks." In this video, a researcher breaks down the 4 C's of systemic risk: contagion, correlation, concentration and context and then proposes a three tiered system for regulating these types of financial institutions (that part comes in at 5:58). It's a pretty good explanation although I did find the technique somewhat familiar.

By Caitlin Kenney

House Democrats want the country's top insurance companies to reveal some intimate financial details including how much their top executives make and what their profits are. Information requests from the House Energy and Commerce Committee went out to the companies on Monday, with a deadline of September 14. It's still unclear which companies will cooperate but already the industry has showed some apprehension about handing over the information. Robert Zirkelbach is a spokesman for the group, America's Health Insurance Plans:

"This is a fishing expedition that is designed to silence the health-insurance industry," said Zirkelbach. "It's an effort to change the debate to focus on health insurers rather than focus on the solutions to the health care concerns that the American people have raised."

The letter sent to the companies asks them to name all employees who were paid more than $500,000 in a single year between 2003 and 2008. It also asks for details about corporate events held off site since Jan. 1, 2007.

Has the financial crisis made you afraid of banks? Here's an animated take on writer/economist Stephen Leacock's story of a man who is so intimidated by banks that the second he walks into them, nothing he says comes out right. An oldie, but a goodie, this fun little cartoon comes to us via @thenfb.

Data Source: Mortgage Bankers Association

By Mathew Katz

In the past two days, we've seen optimism among home builders that the housing market is about to bounce back, but we've also seen a decrease in the construction of new houses. Today, another important housing market indicator was up: the Mortgage Bankers Association index of new mortgage applications increased by 5.6 percent in the week ending August 14th.

The index is still down over fifty percent from April high of 1250.6 -- it's now at 527. But the real thing to pay attention to is the reason for the rise: affordability. According to the report, interest rates are at a five-week low. Analysts say that the low rate, combined with low housing prices and the stimulus' $8000 tax credit for first-time home buyers, is encouraging more folks to take out mortgages.

Switzerland's largest bank, UBS AG, is set to give the U.S. government information on 4,450 accounts suspected of hiding money from the IRS. In June, the U.S. and Swiss governments came to an information-sharing agreement after a six month battle over how much the bank would divulge. The Swiss government says it will fulfill a request for the information within a year.

Back in February, UBS admitted to participating "in a scheme to defraud the U.S.," paid a $780 million fine, and gave the IRS the names of 250 American clients who hid assets. The IRS then sued the bank for information on 52,000 accounts. UBS argued that disclosing more information would violate Switzerland's banking confidentiality laws but eventually agreed to hand over information related to 4,450 accounts that were of "the greatest interest" to the IRS.

Since UBS admitted its part in the scheme, four of its clients have agreed to plead guilty to failing to report their offshore bank accounts. Thousands of other clients have avoided penalties by sharing their accounts with the IRS under a special volunitary program that ends in September.

Paul S., a doctor from New Mexico, writes:

Another issue that is important is the medicolegal cloud that hangs over everything we do. Your example of the cost of a Medicare patient differing between Florida and Colorado is a simplistic view of the issues. Why do MDs order more tests? I get no extra reimbursement for tests I order in the hospital -- zero. The easiest thing for me is to "order the aspirin" and send the patient home. That way I get to go home early and see my kids.

The reason is because of the odds game. Medicine is not exact. We make diagnosis based on odds. Your patient example may have a 1-2 percent risk that this chest pain is a heart attack. 98 times I make the right decision to send him home, however, if I am wrong and the patient has a heart attack, I'm at fault. In states that have an onerous tort system (Florida is one of them), MDs treat patients not to miss the 1-2 percent heart attack as opposed to playing the odds this is simple non cardiac chest pain.

If you have ever been sued, it is an extremely distasteful experience. The opposing lawyers job is to prove you incompetent, saying the odds were against this being a heart attack does nothing to win over a jury or family members of a loved one that passed away. This causes MDs to practice defensive medicine -- I am going to treat this patient as if this is a heart attack until proven otherwise. That means I will order the MRIs, CAT scans etc. You may catch that heart attack 1-2 percent of the time but the other 98 percent is wasted resources.

Continue reading "'Fixing Health Care Requires Tort Reform'" >

By Mathew Katz

Faced with low polling numbers, the White House is looking to take a different approach to selling health care reform. White House officials tell the Wall Street Journal the Obama Administration is shifting ts pitch for health care reform away from the minutiae of costs and insurance regulation, toward a more emotional appeal.

The president will test out the new approach during a conference call today with liberal religious groups and roll out the new emphasis to a wider audience as summer ends. One official says the new strategy focuses on speeches rather than the type of town hall events that have recently become so heated.

While the new strategy certainly won't bring in some of the more hardened conservatives, the New York Times reports that the Democrats are okay with that. This shift in strategy away from a primary Republican concern -- costs -- demonstrates what some see as a larger move away from bipartisanship. The new key, it seems, is to gain as much support from Democrats and independents as possible to pass reform.

By Mathew Katz

It looks like foreclosure rates are spiking in areas that were relatively unscathed before, according to a realty data firm called RealtyTrac. Large amounts of foreclosures are popping up Idaho, Oregon, Utah, and Illinois -- places that didn't have the same level of subprime lending as states like California. This time around, it's not just folks who took out bad loans: the culprit now is unemployment and a prolonged recession making it more difficult for people to make mortgage payments.

An update on Guaranty Financial: Reuters reports that a consortium that includes financial services executive Gerald Ford and several private equity firms has put in a bid for the the struggling bank. Reuters' sources also say that there have been a number of other bids. If a deal goes through, we may not be facing another big bank failure after all.

Continue reading "A Whole New Batch Of Foreclosures. Plus: A Warning From Warren Buffet" >

In Hour we trust. (Shira Golding / Flickr/Creative Commons)

By Mathew Katz

How's this for financial innovation? A group of artists in North Brooklyn is trying to develop a local Brooklyn currency -- the Brooklyn Torch -- that's meant to encourage locals to spend within the community, and boost local pride.

Turns out, local currencies are not only legal, they already exist in places like Madison, Wisc. and Ithaca, NY. Since we no longer back up money with the gold, notes only have to be declared to be money by an authority. The U.S. dollar is backed by the U.S. government, and the Ithaca Hour is backed up by the Circulation Committee of Ithaca HOURS, Inc.

Continue reading "Brooklyn Artists Propose Local Currency " >

By Mathew Katz

In an article set to be published tomorrow, IMF Chief Economist Olivier Blanchard says recovery has begun but warns that returning the economy to "normal" is going to be a long, hard process. He writes:

The turnaround will not be simple, the crisis has left deep scars, which will affect both supply and demand for many years to come.

As for what that recovery will look like, Blanchard has a few ideas:

First, the crisis is likely to have led to a decrease in potential output. One should not expect very high growth rates in the recovery.

Second, sustained recovery in the United States and elsewhere eventually requires rebalancing from public to private spending.

Third, sustained recovery is likely to require an increase in U.S. net exports and a corresponding decrease in the rest of the world, coming mainly from Asia.

Blanchard also notes that even though current forecasts predict positive growth in many countries, it will "will not be quite strong enough to reduce unemployment, which is not expected to crest until some time next year."

The number one car folks are buying with clunker-cash: the Toyota Corolla (danakin / Flickr/Creative Commons)

By Mathew Katz

The AP has a list of the top ten vehicles being purchased by folks trading in their clunkers as part of the Obama Administration's "Cash for Clunkers" program. The Toyota Corolla is at the top of the list, and Ford makes it on the list twice with the Focus and the Escape. Besides those two, all of the cars are imports -- Chrysler and GM cars don't even make it onto the list.

Of course, due to bankruptcies and dealer shutdowns, Chrysler and GM don't quite have the sales and industrial infrastructure that they used to -- and it could just be a lack of supply that's leading to a fewer sales than other manufacturers. Most auto manufacturers have announced production increases in the wake of the clunkers program, but it's clear that some are selling more than others. Since GM and Chrysler are both re-starting old assembly shifts, they could soon have enough supply to edge their way onto that top ten list. Of course, there's another factor in all this: many consumers find GM and Chrysler to be just plain unreliable.

By Caitlin Kenney

On Friday's podcast, we asked you to tell us who a patient most closely resembles in our current health care system. Michael V. has an answer:

A patient is a student.

He is a consumer when choosing a school to go to. Once he's enrolled in school, he hands over his authority to the teacher who knows "best" how to train/teach him a particular discipline. He pays the school/teacher, but has very little say over how he is taught.

The fiduciary model of medicine is wrong, but so is the open market, consumer model...in my opinion.

By Mathew Katz

Wholesale prices paid to producers were down in 0.9 percent in July, according to the Bureau of Labor Statistics. The number comes from a BLS report on the Producer Price Index, which represents prices paid to producers of goods -- like farmers and factories. A major factor in the drop was a 2.4 percent decline in energy prices. The index for July is down 6.8 percent from a year ago -- the biggest year-on-year drop since the government began keeping records in 1947.

The drop is important because it counters some fears of inflation, but it's also another sign of slack in the economy -- between this and today's housing starts numbers, it looks like we're not quite in a recovery yet.

By Caitlin Kenney

The cozy relationship between doctors and prescription drug companies has long made people queasy. Remember all those free pens and mugs? Now with the health care reform debate in full swing, there are new questions about the financial ties between physicians and industry. Here's a bit from today's Washington Post:

You may not be able to trust your mortgage broker, your car salesman or your congressman, but you can trust your doctor.

Can't you?

Patients might well ask themselves this question when they learn that 94 percent of physicians have "a relationship" with the pharmaceutical, medical device or other related industries, according to a national survey of physicians published two years ago in the New England Journal of Medicine.

It is unclear how much those businesses spend on marketing overall, but Integrated Medical Systems, a research firm, estimates that pharmaceutical companies spend more than $20 billion annually marketing directly to doctors.

The group Pharmaceutical Research and Manufacturers of America says only 1.5 cents of every dollar spent on health care goes to drug company profits, but with outpatient prescription medicines making up 10 cents of every dollar spent on health care in the U.S., it's worth knowing exactly where that money is going. A new bill sponsored by Senators Chuck Grassley and Herb Kohl aims to do just that. The Physician Payment Sunshine Act would require drug manufacturers to report any payments of more than $100 made to a physician.

Bonus: Pharma funding for medical classes draws scrutiny

Data Source: Census Bureau

By Mathew Katz

Construction of new houses was down one percent in July, according to the latest Residential Construction Report from the Census Bureau. Housing starts fell from a seasonally-adjusted annual rate of 587,000 in June to 581,000 in July. That's below analyst's expectations, and down 37.7 percent from last year's rate of 933,000.

Yesterday, the National Association of Home Builders released their index of home builder confidence in the industry, and it was up -- largely based on expectations that an increase in home sales is on the way. But today's report may bring those expectations down to earth, especially since applications for building permits -- an indicator of future home construction -- are also down 1.8 percent.

By Mathew Katz

U.S. prosecutors have charged a man with stealing data related to 130 million credit and debit cards -- the largest case of identity theft in American history. Authorities have accused Albert Gonzalez and two other unnamed Russian partners of hacking into retail payment systems for major nationwide chains, like 7-Eleven, and trying to sell the data. According to prosecutors, Gonzalez was once an informant for the Secret Service, helping them track down hackers.

On the auto-industry front, after months of negotiations, GM has signed an agreement to sell Saab Automotive to to Sweden's Koenigsegg Group. Details of the plan haven't been released, but representatives from both companies say they require an injection of cash into Saab from the European Investment Bank. Since the deal requires government money -- at one point Saab pegged the figure at $600 million -- it won't officially go through until it gets approval from the European Commission.

Continue reading "Credit Card Scammers Caught, And Germans Are Feeling Good" >

By David Kestenbaum

So the U.S. spends about $2 trillion a year on health care. We here have been trying to tally up how much of that people think is wasted, how much you could bring that down without reducing the quality of care. Where could we save money? Drug company profits? Unnecessary procedures? Fraud?

I had this little fantasy today that if I added up all the possibly exaggerated claims we'd end up with over 100 percent.

That doesn't seem to be the case, though the numbers are hard to find. Let us know if you see estimates out there. Here are a few (and a correction from our recent podcast.)

Continue reading "Heath Care Math: How Much Could We Save?" >

Can financial innovation help this t-shirt wearer? (Steve Rhodes / Flickr/Creative Commons)

On today's Planet Money:

We started our debate on financial innovation a few weeks ago with the Atlantic's Mike Konczal and Columbia's Charles Calomiris. Today Tyler Cowen of Marginal Revolution and Felix Salmon of Reuters join Mike to answer the question: has financial innovation in the last 25 years been positive or negative?

-- Blogger Felix Salmon says that financial innovation was a good thing, until it became a way for bankers to get around regulation.

-- Economics professor Tyler Cowen argues that it wasn't financial innovations that caused economic calamities -- it was leverage -- banks being able to borrow huge amounts of cash with little money down.

-- Financial engineer Mike Konczal says it's all about competition. If a rival bank comes up with a new innovation, you need to compete -- whether it's dangerous or not.

Bonus: An innovation in the way you buy your newspaper.

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

Continue reading "Hear: Is Financial Innovation A Friend Or Foe? " >

By Mathew Katz

This weekend, it looked like the Obama administration was shying away from insisting on a public option as part of health care reform. Today, an aide wrote that the president will continue to fight for the creation of a public health insurance plan.

The notion that the administration was giving up on the public plan ruffled a lot of feathers on the left. Even if it's apparently back on the table, there's going to be huge hurdles to passing it. Yesterday, Democratic Senator Kent Conrad, a ranking member of the Senate Finance Committee, said that there simply aren't enough votes in the Senate in favor of the plan. His committee is likely to endorse a regional health-care co-op program.

If you're confused about what these co-ops are all about, there's a great explainer over at Reuters. In short, these co-ops involve a form of health insurance wherein all policyholders have some ownership rights, and, more importantly, don't have to worry about turning a profit. The government would provide money to help set up national, state, and regional co-ops. However, co-ops already exist, and few have managed to be successful competitors to major insurance companies. If the point of a public plan is to provide a viable, competitive, nonprofit alternative to private insurers, co-ops may not be able to cut it.

It's a long climb to where we were.

By Mathew Katz

The National Association of Home Builders and Wells Fargo just released their monthly housing market index, and it's up one point. The index came in at 18 for August, the second increase in two months and the highest it's been in over a year.

Breaking down the numbers, the increase has more to do with expected housing sales than current sales, which remained unchanged this month. Expectations for sales over the next six months rose to 30 points from 26. That prediction is based on an increase in people are looking to buy a house: the index of buyers' traffic rose from 13 to 16.

Still, analysts were expecting the index to rise to 19 this month, and the current number is a far cry from its height during the bubble -- it hit 72 in 2005. And the index is still among the lowest it's ever been since NAHB began recording numbers in 1985.

By Caitlin Kenney

The Federal Reserve and the Treasury Department are extending the TALF program to help support the credit markets. The program provides money to investors to purchase new asset-backed securities as well as commercial real-estate debt. The commercial real-estate industry and a group of lawmakers requested the extension, saying the program needed more time to get going.

Bloomberg reports:

Commercial property values have fallen 35 percent since peaking in October 2007, according to Moody's Investors Service. The extension may help firms such as Vornado Realty Trust, which is considering the sale of commercial MBS through the TALF. Almost $165 billion of mortgages for skyscrapers, shopping malls and hotels are due this year.

While financial-market conditions "have improved considerably in recent months," the markets for ABS and CMBS "are still impaired and seem likely to remain so for some time," the Fed and Treasury said.

The Fed says loans for newly issued commercial mortgage backed securities have been extended through June 30, 2010 because "new CMBS deals can take a significant amount of time to arrange." Loans for other asset backed securities and CMBS sold before Jan.1 have been extended three months to March 31.

Will consumers flock to a huge new mall in Calgary, like they have to this mall in Toronto? (asdsoupdsa / Flickr/Creative Commons)

By Mathew Katz

When it comes to measuring consumer confidence and spending habits, we often look to reports and surveys. But in Calgary, Alberta, economists and retail specialists have a chance to see firsthand if consumer strength will grow or fall as the recession tapers out. Their 'lab' is CrossIron Mills, a massive new 1.1-million-square-foot mall, which is set to expand the city's retail space by 3.5 percent when it opens this week.

The opening is a huge gamble on the part of the developers of the $495-million shopping center, but it might be a great predictor of where the retail economy is heading. Economists and retail experts aren't just analyzing foot traffic and sales numbers at the new mall -- they're also looking at consumer behavior. Are consumers going to avoid the stigma of conspicuous consumption and stay away from expensive new luxury stores, or re-embrace Gucci and Prada with gusto?

So far, things look fairly gloomy -- a number of anchor retailers that were set to open in the new space have either delayed their opening or pulled out altogether. And a nearby mall, the Chinook Centre, just saw July sales fall two percent.

Government offices like this one are closed today. (mason.flickr / Flickr/Creative Commons)

By Caitlin Kenney

Non-essential city services are closed in Chicago today. The city's public libraries, health clinics, town hall and other offices have been shut down as part of an effort to help balance the 2009 budget. Today's closure is one of three planned reduced-service days this year, the other two will be held the Friday after Thanksgiving and on Christmas Eve. The city expects the three reduced-service days to save $8.3 million.

"Every dollar we save from these measures helps to save jobs, and in the long-term, maintain service for Chicagoans," said Mayor Richard M. Daley. "This plan engages most civilian employees to accept cuts and to be part of the solution to our budget crisis. I want to thank them again for their sacrifice."

In addition to working without pay today, city workers have been asked to take six furlough days and six unpaid holidays this year. Mayor Richard M. Daley says the city is expecting a 2009 budget shortfall of between $250 million and $300 million.

Peter writes:

Watching the US health care debate from a distance, with the context of the Australian system on my mind, one question keeps coming up: why does it cost so much more in the USA?

The pharmaceutical benefit scheme (PBS) ensures that no matter how much a particular medication costs, the most I will pay is $33-$35/month. The PBS is set up around the very idea that the patient shouldn't have an interest in the cost of a medication. If the most appropriate medication costs twice as much as something that will kind of do the job, the government will cover the difference.

Medicare, which covers all Australians, will pay doctors for each consultation. This is a little misleading as the scheduled fees set by the government are generally low, so usually an out of pocket expense is incurred. There are doctors who charge only the scheduled amount (bulk bill) but these generally feel like a McDonald's drive through, with each appointment lasting 5-7 minutes. I prefer to have 15 -20 minutes set aside for the appointment, so I pay an extra $22.

Continue reading "The Economics Of Health Care (Australian Style)" >

By Mathew Katz

More good news: manufacturing is up in the New York region for the first time in over a year, according to the Federal Reserve Bank of New York. The bank just released its monthly Empire State Manufacturing Survey for August, and the general business conditions index is up 13 points to 12.1, its highest level since November 2007. Any number higher than zero indicates growth in the manufacturing industry.

The New York numbers come after last week's announcement by the Federal Reserve that overall industrial production across the country is up by 0.5 percent. Today's report also has some interesting details for the unemployed: while increased demand for cars and auto parts fueled part of the index's rise, manufacturers are finally re-starting assembly lines after months of slashing their inventories. With signs pointing toward an end to the recession, companies are trying to re-stock their shelves, hoping that demand will follow.

By Mathew Katz

Laura's on a much needed vacation this week, so I'm back at Planet Money HQ to help on the blog.

Last week, we posted a scary chart showing plummeting Japanese wages. This week, there's some good news for Japan -- their recession is over. Japan is the world's second-largest economy, and this recovery comes after four successive quarters of negative GDP growth. Let's hope an increase in wages will come out of this.

The Financial Times reports that U.S. bank regulators have set today as a deadline for bids to buy Guaranty Financial. The FDIC is trying to find a buyer for the troubled bank, which said last month that it will likely fail soon. If it does, it could be the largest bank failure of the year.

Continue reading "Recession Over! (In Japan). Plus: Here Comes A Bank Failure" >

And imagine this here is your spleen, see. (Douglas Grundy / Three Lions/Getty Images)

On today's Planet Money:

Imagine two identical hospitals, side by side. One charges patients a little, and the other piles on the bills. Where do patients get better care? Researchers at Dartmouth say that, overall, there's no connection between the intensity, quality or cost of treatment and how well patients fare.

That's one of the biggest challenges in fixing health care -- patients, doctors and insurance companies aren't all playing with the same information. As patients visiting a doctor, most of us are like drivers taking a car to the mechanic. If we had the know-how, we'd fix it ourselves, but we don't and so we have to rely on someone else's judgment.

With appearances by Deborah Kimbell of the Dartmouth Institute for Health Policy and Clinical Practice, Chana Joffe-Walt's mom, a sunglasses vendor in Manhattan, and mechanic Ari Cohen.

Bonus: After the jump, David Kestenbaum impersonates Kanye West.

Download the podcast; or subscribe. Intro music: The Ramones' "I Wanna Be Sedated." Find us: Twitter/ Facebook/ Flickr.

Continue reading "Podcast: Your Doctor Is Like A Mechanic" >

It's all in fun until someone makes a million dollars. (Second Life)

By Laura Conaway

I don't know how I missed this key, crucial and totally critical piece of news: The economy in Second Life has grown by 94 percent over the past 12 months, with activity that equates to $144 million in the second quarter.

Granted, the real people and their groovy avatars in the 3D virtual reality world are trading in Linden dollars, except when they're not, like the woman who made a million U.S. dollars selling virtual real estate. Beam me up, I guess. Oh, wait -- wrong world.

Bonus: Is Second Life having a recession?

Going for less in Kent, Wash. (Mark Terry)

By Laura Conaway

The news says inflation disappeared in July. Listener Mark Terry sends photo evidence from Kent, Wash.

After the jump, more evidence: an amazing deal on an amazingly priced amazing dress.

Continue reading "Pics: Dollar Store Goes 88 Cents. Dress On Sale for $2,499." >

By Laura Conaway

The world is ginning out numbers today.

Factories in July made more stuff for the first time in nine months. The Federal Reserve reports industrial production was up 0.5 percent, which amounts to a big increase in these days of stagnant economic indicators.

You folks out don't seem any happier. The Michigan Consumer Sentiment Index skidded this month from 66 to 63.2, whatever that means. High Frequency Economics' Ian Shepherdson says the dip may stem from rising gas prices. "Either way, it is not clear that the confidence numbers are as useful a guide to spending now as in the past," he writes.

Me, I'm still blaming unemployment for the general gloom, especially the rise in people who've been out of work six months or longer. How's anyone supposed to feel confident in a time like that?

By Laura Conaway

Inflation watchers, keep looking. The new Consumer Price Index just came out, and it shows overall prices were absolutely flat in July. In June, prices rose 0.7 percent. Economists had predicted an increase in July of 0.1 percent.

Today's numbers track with the report on retail sales from July, which fell 0.1 percent. Clearly, demand is still very low.

Prices were down in several major categories last month. Food fell by 2 percent, led by critter products at 1.3 percent. Housing dropped 0.2 percent. Energy fell 0.4 percent

The report shows signs of what's in the news. Used vehicles fell 7.9 percent. New vehicles rose 1.2 percent (more cash for non-clunkers?). Medical care rose 0.2 percent.

CPI has fallen 2.1 percent over the past year. The lack of inflation has so far allowed the Federal Reserve to keep interest rates low. Inflation hawks have warned that the loose monetary policy will lead to inflation once the economy recovers. Not yet.

Economists consider an inflation rate of 2 or 3 percent a year to be healthy, since it wards off deflation. Technically, deflation is when wages and prices are both falling, with wages falling faster. In real terms, deflation is a spiraling disaster. It's much harder to fix than runaway inflation.

By Laura Conaway

Welcome to a gorgeous summer Friday (in New York, at least). Here's what has caught my eye:

Ford seems to be drawing a diagram of Keynesian economics at work. Ford says it will build 18 percent more cars and trucks this quarter to meet demand created by the government's now $3 billion Cash for Clunkers program.

Japan is stuck in neutral, the Economist says, in a great look at what's wrong with one of the world's more important economies. I'll drop a chart of scary Japanese wages after the jump.

Foreclosures are up in Illinois, and this time they're coming for the rich folks. Calculated Risk wonders what the fix might be.

For those who need to catch up on the Colonial Bank debacle, which could become the most expensive FDIC takeover of the year, check out Floyd Norris' column in the New York Times. Norris notes that Colonial met government standards for being "well capitalized" in March. "How could a bank be well capitalized and facing government orders to find more capital?" he asks.

Finally, if this whole health care debate is getting you down, check in with Baseline Scenario. James Kwak unloads about the opposition from American seniors to government care, which they've had since the 1960s. "But hey, it's a democracy, and people don't have to wish for others the benefits they themselves enjoy," he writes.

Continue reading "Ford Ups Production. Plus: The Tangled Debate Over Health Care" >

No more messages like this. (mileena/Flickr/Creative Commons)

By Caitlin Kenney

California will stop issuing IOUs on Sept. 4, a month earlier than expected. The state started paying private businesses, local governments and individual taxpayers with the registered warrants back in July to help deal with a massive budget shortfall. It has doled out almost $2 billion in warrants since then.

The decision to end the warrants came today after state officials and Governor Schwarzenegger decided the IOUs were no longer needed under the new state budget. The spending plan allows California to borrow the money needed to cover its daily expenses. State Controller John Chiang says it's likely California will need to borrow $10.5 billion in the coming year, with $2 billion of that coming from local governments.

"The State of California owes a debt of gratitude to the thousands of individuals and businesses that were forced to bear the brunt of the state's chronic fiscal mismanagement," Chiang said. "Along with short-term loans that are routinely obtained in the fall, this spending plan should provide sufficient cash to meet all of California's payment obligations through the fiscal year."

California's largest banks stopped accepting the IOUs last month, leaving thousands of creditors looking for other banks to honor them.

By Laura Conaway

When investors feel skittish, the way they did after news that retail sales fell in July and job loss rose last week, they run for safe bets like U.S. Treasury bonds. Demand for 30-year Treasurys led to a record $15 billion auction today.

Investors stand to make less off bonds they buy in a heated auction, yet they bought them anyway. If you pay more for a bond -- say, $97 for a $100 bond instead of $96 -- then your yield when the bond matures is $3, not $4.

Before today, yields had begun to climb again as investors became more willing to take on the risk (and potential reward) of buying stocks. The news about falling retail sales and rising job loss was particularly nervous-making, since consumer spending accounts for nearly 70 percent of the economy.

So who was taking the deal on Treasuries today? Bloomberg reports that indirect bidders, which includes foreign central banks, bought 48.1 percent of them.

By Laura Conaway

What's for supper. (Wal-Mart)

Wal-Mart's reporting it beat expectations for the second quarter by managing shrinking its inventory (a theme of the day) and by selling cheap food and flat-screen TVs.

From Bloomberg:

The chain also attracted more customers, helped by price reductions on its Sam's Choice Black Angus beef patties, baked beans and flat- panel televisions to lure consumers grappling with shrinking paychecks and the worst unemployment since the Great Depression.

Wal-Mart pulled in a profit of $3.44 billion last quarter. A retail consultant, Craig Johnson of Customer Growth Partners, told Bloomberg TV, "They are providing great value to the consumer, but the consumer is very stressed these days." You can say that again.

The ratio of inventory to sales has been falling. Click to enlarge.(Source: Department of Commerce/ U.S. Census Bureau)

By Laura Conaway

In trying to become profitable again, businesses have been cutting workers, and they're cutting inventory, too.

The Census Bureau and the Commerce Department report today that inventories fell by 1.1 percent in June, a little less than the 1.2 percent drop in May and .2 more than economists expected. Inventories are down 9.8 percent from June 2008, as manufacturers and wholesalers stop stockpiling goods for customers who aren't showing up.

Sales rose .9 percent after being flat in May -- that's down 18 percent from a year ago.

Economists consider a healthy range to be 300,000 to 350,000 new claims. (Source: Department of Labor)

By Laura Conaway

New claims for unemployment insurance rose last week to 558,000, from 554,000 the week before, the Department of Labor reports. Heading into Thursday morning's report, analysts expected new claims to drop to 545,000. They had fallen for six straight weeks.

The four-week moving average, often a more reliable barometer, climbed by 8,500 to 565,000 -- significantly more than the average weekly decline of 6,077 from April 25 to July 25. The figures for July are clouded because of problems with the Department of Labor's formula for calculating new claims. The DOL takes seasonal factors into account, and this year the usual summer layoffs in the auto industry happened in the spring. The DOL says its formula should now be back on track.

Today's report also shows that the number of people on regular unemployment benefits fell to 6.2 million from 6.35 million the week before.

Continue reading "New Job Loss Claims Creep Upward After Weeks Of Falling" >

By Laura Conaway

Call it a mighty .3 percent. France and Germany report their economies were each growing by that much between April and June. Feast on the headline: "France and Germany Exit Recession." The overall eurozone economy was still contracting, a .1 percent. Last quarter, the U.S. economy was shrinking at a pace of 1 percent.

The FDIC has forced Citigroup to hire external consultants who'll decide whether management, including CEO Vikram Pandit, is up to the task.

Foreclosures hit a new record in July, up 7 percent from the month before and 32 percent from this time last year. Real estate agents report that in the second quarter, 63 percent of sales involved distressed homes -- meaning the owners were in foreclosure or at risk of it.

The Commerce Department says retail sales fell by .1 percent in July. Economists in a Thomson Reuter survey said they'd expected a gain of .7 percent. Auto sales rose by 2.4 percent, its biggest jump in six months and owing largely to the Cash for Clunkers program.

Almost 5 million of America's most polluting cars got left out of Cash for Clunkers, the L.A. Times reports. That's because the classic car lobby persuaded the government to exclude cars made before 1984. Collectors didn't want to see them destroyed, and auto parts dealers didn't want to lose their business.

And major food companies have warned the U.S. Agriculture Department that the nation could run out of sugar (WSJ, sub. req'd.) if it doesn't ease up on import restrictions. The food co's also threatened to jack up prices and lay off workers.

Plenty of food. (Joits / Flickr/Creative Commons pool)

On today's Planet Money:

Some days, you just have to wonder why the world is the way it is. Emily Oster is making a career out of training the lens of economics on just that question.

Oster talks about her economic of analysis of AIDS and risky behavior in Africa (see her amazing TED talk on that), and she answers a riddle from a Planet Money listener. That riddle: Why, when prices are flat or falling, are restaurants piling more food on our plates?

Bonus: A health insurance testimonial from the U.K., after the jump.

Download the podcast; or subscribe. Intro music: Can's "I Want More." Find us: Twitter/ Facebook/ Flickr.

Continue reading "Podcast: Emily Oster Decodes The World" >

Federal Reserve Chairman Ben Bernanke sees the economy stabilizing. (Chip Somodevilla / Getty Images)

By Laura Conaway

The Federal Reserve today announced that it will wind up its planned $300 billion program for buying government debt from financial institutions by the end of October, since the economy is "leveling out." The Fed has bought $253 billion worth of U.S. Treasury bonds from banks in an effort to get more money moving through the economy. If banks are holding cash instead of Treasurys, the thinking goes, they'll be more likely to lend to people and businesses.

The Fed also announced it will not be raising its key interest rate, the federal funds rate. This target rate is the amount the Federal Reserve hopes banks will charge for overnight loans to other banks. The decisions come after a two-day meeting by the Federal Open Market Committee, which sets monetary policy and works to carry it out.

Continue reading "Federal Reserve Won't Raise Rates, Moves To End Buying Spree" >

By Laura Conaway

Health Care Bluebook describes itself as a guide to the going rate for specific health care services in various parts of the country. Insurance companies have been complaining about big, arbitrary-seeming bills from medical providers.

With Health Care Bluebook, just type in the service you're looking for and your ZIP code, and the "private and independently owned resource" spits out a price. Consumerist took it for a spin:

I tried "nasal endoscopy," a procedure that my New York doctor recently billed about $400 for. According to the Blue Book, the standard cost for this in my area is $386. So my doctor's price is about right. If my doctor charged $800, however, I could print out the estimate on the Blue Book site and use it to haggle with my doctor.

I'm interested in the results you folks get. What's an appendectomy going for in your neighborhood?

By Caitlin Kenney

President Obama wants to make electronic medical records a key part of his health care reform. Yesterday at his town hall address in New Hampshire, he called them "a sensible thing to do." But as the current battle over these records in the U.K. shows, figuring out a system may be harder and more expensive than it looks.

The U.K.'s plan to create a single database known as the "spine" has been plagued by cost overruns and delays. In 2008, the company contracted to build the database was fired after a contractual dispute, a new IT services provider has since taken their place.

Continue reading "The Big Business of Electronic Medical Records" >

Crime and the Times - Arrears from crimeandthetimes on Vimeo.

By Laura Conaway

"I'll never own a thing," Crime and the Times sing on their new album, Arrears. "I've got nothing to give but my debt."

The title track makes even me seem optimistic, and I'm one of the people who has to spend all day looking at lousy economic data. On the other hand, the Recession Generation may have just gotten its Nevermind, its College Dropout. I say may have -- the answer's in the listening, mine and yours.

(Thanks to listener Nolan Hurley for the link.)

The U.S. trade deficit dipped as the recession set in. (Source: U.S. Commerce Department)

By Laura Conaway

The U.S. trade deficit rose less than expected in June, to $27 billion from $26 billion, the Commerce Department reports. Economists had predicted it would rise to $28.7 billion.

The trade deficit measures the difference between the dollar value of goods the U.S. buys from other countries and the dollar value of the goods it sells to other countries. The jump of just 4 percent in June reflects a bump of more than 2 percent in non-oil exports as demand for American products increased just a bit. Among the sectors selling more was the automotive industry. Exports of consumer goods, the more daily stuff people buy, were flat.

Imports rose 2.3 percent, and most of that was due to the higher price of oil. Prices for oil -- and food -- tend to rise and fall more rapidly than for other goods, so economists often separate them out of their calculations. Consumer will feel the difference in their wallets, even though oil and food may not be helpful in understanding the overhaul situation.

Continue reading "U.S. Trade Gap Widens Less, And For Once It's (Mildly) Good News" >

By Laura Conaway

It's easy enough to guess -- or find out -- the price of a gallon of milk or a loaf of bread or even a house. With medical procedures, that's far, far from the case. "It's the wild, wild West when it comes to prices of anything in the U.S. health care system, whether for a doctor visit or for hospital charges," Dartmouth health economist Jonathan S. Skinner tells the New York Times. The Times reports on a new survey by America's Health Insurance Plans, which finds that insurance companies are just as sick as consumers of getting hit with very big bills.

Retail sales were up in June by .6 percent, down from the 9 percent growth in June 2008.

Student borrowing increased about 5 percent, adjusted for inflation, over the four years leading to 2007-08.

Economist Simon Johnson reveals the real reason Americans should be worried about China.

California has a record number of foreclosed homes ready for sale.

Finally, in yet another economic indicator, Latinos in the U.S. are on pace to send 11 percent less money to their birth countries this year.

By Laura Conaway

Bernie Madoff aide Frank DiPascali pleaded guilty today to charges including securities fraud, falsifying records and international money laundering. DiPascali told the federal court in Manhattan he'd been a knowing part of a scam. From the Wall Street Journal (subs. requ'd.):

"It was all fictitious. It was wrong, and I knew it at the time."

DiPascali, Madoff's former director of options trading, could get 20 years apiece for the fraud and money-laundering charges. His old boss is now serving 150 years in North Carolina.

Opposing the Obama plan in Portsmouth, N.H. (Jim Cole / AP Photo)

UPDATED By Laura Conaway

At a town hall meeting in Portsmouth, N.H., President Obama took a question from schoolgirl Julia Hall of Malden, Mass., telling her his plan won't "pull the plug on Grandma."

Key bit: Obama said of rationing care:

"Right now, insurance companies are rationing care. They are basically telling you what's covered and what's not. They're telling you, 'We'll cover this drug but we won't cover that drug. You can have this procedure or you can't have that procedure. So why is it that people would prefer having insurance companies make those decisions rather than medical experts and doctors figuring out, you know, what are good deals for care and providing that information to you as a consumer and your doctor so you can make good decisions?"

Continue reading "Obama Says His Health Plan Won't 'Pull The Plug On Grandma'" >

By Laura Conaway

The Congressional Oversight Panel is warning that federal efforts to help struggling banks aren't doing enough to help smaller institutions. The panel, chaired by Elizabeth Warren, homed in on what it sees as shortcomings in the Public-Private Investment Plan, or PPIP.

Designed to encourage investment in the toxic mortgage-backed securities that fueled the current financial crisis, PPIP has been scaled back from $100 billion to $30 billion. Warren and COP argue in their August analysis that PIPP doesn't reach far enough. Calculated Risk pulled this part of the report:

The problem of troubled assets is especially serious for the balance sheets of small banks. Small banks' troubled assets are generally whole loans, but Treasury's main program for removing troubled assets from banks' balance sheets, the PPIP will at present address only troubled mortgage securities and not whole loans. The problem is compounded by the fact that banks smaller than those subjected to stress tests also hold greater concentrations of commercial real estate loans, which pose a potential threat of high defaults. Moreover, small banks have more difficulty accessing the capital markets than larger banks. Despite these difficulties, the adequacy of small banks' capital buffers has not been evaluated under the stress tests.

The emphasis is Calculated Risk's.

Not a helicopter: the 1997 Geo Prizm. (Edmonds.com)

By Laura Conaway

Friday's podcast about health care included the story of a doctor who'd asked his hospital for a helicopter to use in commuting. That struck Ronald Meyer of WBEZ land as ridiculous, on our part. He writes:

As one who has listened to virtually every podcast since you began last autumn, I can tell you that the foolishness over the helicopter rides for the doctor was not up to your usual standards. Imagine having a show about journalism, and focusing only on the most abject plagiarism. I believe you spent about 10 min acting as though all doctors commute in helicopters. Not true.

I am an anesthesiologist in suburban Chicago in my 26th year of practice. I commute in a 12 year old Geo Prizm. I typically awaken at 5:10 AM so I can get to work and make sure everything is safe for my 7:00 or 7:30 case. The hospital I work at is pleasant, but all they give us is a 9x15 "office" for members of our 16 person group to hang out between cases. An adjoining room is just big enough for a bed for the days I spend 24 hrs there.

Continue reading "Letter: This Doctor Rolls In A Geo Prizm, Not A Helicopter" >

By Laura Conaway

American workers increased nonfarm productivity an annualized rate of 6.4 percent in the second quarter of this year, the Bureau of Labor Statistics reports. That's well more than the 5. 5 percent increase many economists had expected. Workers saw their overall compensation grow by .2 percent, while companies enjoyed a drop in labor unit costs of 5.8 percent.

This official number helps make sense of a few developments in the economy. First, many large corporations reported that revenue was down but profits were up last quarter. That's because they'd cut labor costs by laying off workers and squeezing more productivity out of the people who remained. Second, workers who say they're being asked to do more with less are just plain right.

The numbers also seem to show that inflation is not an immediate threat. The slight rise in hourly compensation is stronger than the negative 2.4 percent from the first quarter, but it's a shadow of the 1.3 percent gain from a year ago and the 4.2 percent gain overall in 2007.

The BLS reports that the jump in productivity is the result of "hours falling faster than output" -- and how. Output was falling last quarter at a yearly clip of 1.7 percent. Meanwhile, hours worked fell for the sixth straight quarter, at an annualized pace of negative 7.6 percent compared to negative 9 percent from the first quarter. If not for the last two miserable quarters, this quarter's drop in hours would be the steepest in the BLS data -- back to 1947.

By Laura Conaway

The Federal Reserve's Federal Open Market Committee starts a two-day meeting today. Investors are watching for any sign of whether the Fed intends to raise interest rates from near zero.

Commercial lender CIT predicts a loss of more than $1.5 billion for the second quarter of 2009, but says its bondholders aren't pushing for bankruptcy.

The Obama administration awarded $20 million in stimulus funding for a program to compress carbon for storage instead of releasing it into the atmosphere. The Washington Post reports that Big Coal is betting its future on just this kind of carbon capture.

Calculated Risk tracks auto sales and unemployment and the New York Times finds your next job, in China.

Among the numbers we'll be seeing this week is the nonfarm productivity report from the Bureau of Labor Statistics. Due out today, the report gives a sense of how occupied workers have been lately. Economists expect a jump of more than five percent, which is a big deal because the length of the average workweek has been dragging around in record-low territory for a couple of months now. The recent round of corporate earnings reports showed many companies generating profits by laying off workers -- if the remaining workers are growing busier, that offers hope that employers will tiptoe back toward hiring.

At rest in Burgandy, France. (Sobakasu / Flickr/ Creative Commons)

On today's Planet Money:

Is hope unfulfilled worse than no hope at all? Medieval historian Philip Daileader says it might be. People in places like 12th and 13th century France lived far more constrained economic lives than we do, but they had no expectations that their situations would ever improve.

Link from the podcast: 123 recommendations for the Australian health care system.

Bonus: After the jump, a guy in Israel wonders how Americans put up with their health care system.

Download the podcast; or subscribe. Intro music: Tracey Thorn's "Raise the Roof." Find us: Twitter/ Facebook/ Flickr.

Continue reading "Podcast: Economics For 12th Century French Peasants" >

"The big elephant in the room." (Carl Weinberg/High Frequency Economics)

By Laura Conaway

Right in the middle of last week's data-lanche on unemployment, Marc Chandler of the Brown Brothers Harriman currency group called for a breath. "There is another development, though, that should not be lost in the shuffle," he wrote in one of his regular notes. "During the economic downturn, trade fell more than industrial output, which collapsed."

The chart above shows that we're living through the only major, sustained fall in global trade since 1970. Carl Weinberg of High Frequency Economics notes that French exports are down 18.7 percent, after a 24.7 percent year-over-year decline just a couple of months back. Monthly reports on German exports document declines of 24.8 percent and 29 percent. Australia, which has been feasting on its export economy, is down 14.7 percent.

"Behind each story lies a catastrophic decline in gross exports," Weinberg writes. The IMF data on exports track a 36 percent fall from the peak of $1.5 trillion in July 2008. "We have never experienced anything like this in our lifetimes. Neither, quite frankly, did we ever think we would."

By Caitlin Kenney

Ann K. writes:

I have been temping for the last year in the patient accounts department of a prominent neurosurgery group. I deal with insurance and billing from the specialists end of things. Our surgeons range from those that will send patients to a collection agency in a heartbeat, to those who will almost always take a personal hit to write off a patient's bill. What bothers me most, though, is observing how patients are treated, both by us in patient accounts and the insurance companies.

When patients claim they don't have the money to pay us (they have thirty days from when the insurance pays to pay the remainder or set up an payment plan, which can take no longer than one year), we don't take their word for it. We have them fill out a monthly budget, go to the county auditors website to find out the value of their homes, and push back at every turn - often nearly forcing them to pick up a medical only credit card, called CareCredit. If they qualify for CareCredit but choose not to use it, we have no mercy. We use a lot of black humor when talking about patients because otherwise I don't think we'd be able to look ourselves in the mirror, sometimes.

Continue reading "Letter: 'The Really Ugly Side' Of Paying For Health Care" >

This number dropped, too. (Source: Bureau of Labor Statistics)

By Laura Conaway

The U.S. will likely not reach 10 percent unemployment in this recession, argues Nate Silver of FiveThirtyEight.com. Silver, the master statistician and predictor of the 2008 election, says that people misread part of Friday's unemployment report -- specifically, he says they made too much of the shrinking labor pool.

Some 422,000 people bailed out of the workforce in July, the Bureau of Labor Statistics reports, and that's part of what caused the unemployment rate to fall from 9.5 percent in June to the new rate of 9.4 percent. At least some of those people are thought to have given up on hunting for work completely.

The BLS does track discouraged workers, which it defines as unemployed workers who give an economic reason for why they've stopped looking. Silver writes:

This discouraged workers story has been a bit oversold though: U-4, the measure of unemployment that includes discouraged workers, went down too. Most of this, rather, is a matter of people finding somewhat longer-term alternatives to seeking employment: going back to school, early retirement, joining the Army or the Peace Corps, etc.

As you can see in the chart above, the category of U-4 -- total unemployed plus discourged workers -- fell by .2 percent, more than the decline in the overall unemployment rate.

Remember those vintage-y Wells Fargo ads, the ones that looked like spin-offs from Little House on the Prairie? The Big Money's Win Rosenfeld (an NPR alum) says you can watch the financial industry evolve through its pitches to you, the consumer.

Chelsea Pennick writes:

I, admittedly, have nothing to complain about. I have a good and secure job that also happens to be with a nonprofit organization. But I am also young and building my career. About a year ago, I decided I was ready for the next challenge and began looking to make my next move.

Nada. Nothing to even apply for. Of course, my expectations were not high considering I live in Montana, but my town is credited with the highest per capita number of nonprofits in the US (or at least was at one time), so I held some faith that over a year, something would spark my interest.

And I'm not alone. I've had any number of conversations with other folks my age (30-ish) who are either in the same boat--or worse--are finding themselves competing with seasoned professionals and baby boomers who, under other circumstances, would no longer be in the job market. Now THAT is frustrating for a young person looking to develop their career, and who may consider themselves "next generation's leaders." It leaves one with diminishing hope when we find ourselves competing with people who should be retired. Maybe now we should start calling ourselves the next-after-the-next generation's leaders--the "3rd string."

By Laura Conaway

Welcome back to the first workday after the unemployment rate fell. Here at Planet Money HQ, you can almost hear the air hissing out of inflated expectations.

Ah, but the news. Big pay for bankers is back, in the form of the oxymoronic "guaranteed bonus." We'll see what the new pay czar, Kenneth Feinberg, says about that.

In the category of stuff to read for self-improvement, economist Robert Lucas defends the dismal science.

A new research paper says Americans will spend the next 20 years turning away from sprawl and homeownership and toward filling in those donut cities created by suburban flight.

Paul Krugman says President Obama should reappoint Federal Reserve Chairman Ben Bernanke. Eyeing a long recovery, Joseph Stiglitz says he's not so sure.

The U.S. federal deficit grew by $181 billion in July.

And the New York Times offers a primer on the health care overhaul. It's worth a click.

A question of resources in California. (Steve Rhodes / Planet Money Flickr pool)

On today's Planet Money:

The cost of health care is rising faster than our economy is growing -- it's an economic train wreck waiting to happen. The debate over fixing that situation rests on a couple of key questions, namely how do we get coverage for everyone and how do we control costs.

That second question turns out to be much harder to answer. For all the talk about healing, a hospital is also a business. Cutting costs at a hospital falls to a hospital administrator like Daniel Kearns. He worked at a string of hospitals in the Southwest. Kearns says the hardest part of his job was dealing with doctors, like the one who wanted baseball season tickets for his family and the one who wanted a helicopter for transportation.

Those may sound wacky, but Harvard health economist Tom McGuire, says neither patients, doctors nor hospitals have real incentives to trim expenses because they're all spending someone else's money.

Bonus: Out of college, out of work, out of insurance.

Download the podcast; or subscribe. Intro music: The Hold Steady's "Stay Positive." Find us: Twitter/ Facebook/ Flickr.

Continue reading "Hear: Taking Health Care To The Economist" >

It makes you feel better. (Screen saver by Geliosoft.com)

By David Kestenbaum

You may have caught our story this morning about a curious experiment showing that if you count dollar bills then put your hand in hot water, the hot water is likely to feel less hot than if you had just counted blank paper. It doesn't even have to be your cash. Just being reminded of money makes things hurt less. That's the idea, anyway.

One of the scientists, Kathleen Vohs, published another surprising paper a few years ago with two colleagues. If I can summarize the findings non-scientifically it would be like this: money can turn people into selfish jerks.

In one experiment, they had students play games of Monopoly. At some point the game was stopped and cleared away except for a certain amount of money. In some cases, $200, in others $4,000. Then, as a test, the researchers had someone walk into the room and spill some pencils as if by accident. Result? The students who had been left with more money helped pick up fewer pencils.

"Even though gathering pencils was an action that all participants could perform, participants reminded of financial wealth were unhelpful," they write in the paper.

And it was just play money! The weirdness continues...

Continue reading "Money And The Brain: More Weirdness" >

Wages may be up, but a lot of people who have been laid off are taking new jobs with a pay cut. We get this story from Elliot Vos, from Rochester, New York:

I had only been in the workforce for six months when I lost my job in December (not counting paid internships during college). The company I worked for cut a ton of back office staff to weather the recession. They gave me a decent severance package, and I had too much withheld from my paycheck for taxes, so I was able to retreat back to a "college kid" budget and survive pretty well.

I was unemployed for six months. I had a couple promising interviews, but nothing materialized. Finally, a company I had worked for before on one of my paid internships called me up. They offered me 75 percent of what I had been making, with a loose promise that once their income had straightened out fully, I'd get another $5,000/year. The only problem was that this company was in my parents' town and I didn't want to move back home to that small town. They're graciously letting me telecommute, but I'd much rather work locally in Rochester. I'm still working at my starting salary, too, which is much lower than the average for my profession (actually, their promised increase is still a bit lower than average). So, I'm still looking.

Making all of this worse, my father lost his job the day before me. He eventually changed his career slightly, and found a job in his small city getting about 75 percent of what he was making as well.

Finally tapering off. (Source: Bureau of Labor Statistics)

By Mathew Katz

One number that really interests me in this morning's employment report is the U-2 measurement of job losers and completed temporary jobs. That number has more than doubled in the past year, but it's finally leveling out.

It might seem like a statistic that's so obvious there's no point in keeping it. The BLS defines "job losers" as people who involuntarily and unexpectedly lost their jobs -- folks who were fired or suddenly laid off, arguably the worst way to lose a job. The BLS asks laid-off workers if they were expecting it, if they'd had any warning. The "job losers" are the ones who say they didn't really get any chance to prepare for unemployment. These are the sort of sudden, jarring layoffs that have defined this recession -- you show up to work on Monday, and your job is gone by Wednesday.

Then there are the people who completed temporary gigs, the ones who know it's coming. I'm really interested in that category because as of 5:00 this evening, I'm part of it. Today's my last day as an intern at Planet Money. Tomorrow, I'll be an addition to the August unemployment statistics we all know and love -- and yes, the BLS counts unemployed Canadians in the U.S. in their jobless numbers.

There are three possible reasons for that temps number flattening out: either there was less temp work to go around, individual temp jobs are being extended, or people finishing temp jobs have been able to pick up new work after their gig ends. I'm hoping the third option wins out.

Some of you might remember Daniel Cross, aka @engineer27. He's a circuit designer in Florida who got furloughed, then laid off, then hired by a new company for less money, then laid off again, all in the last 12 months. Cross writes:

Like the hot and humid air here in South Florida, the market for technology work in June and July has been completely motionless, even stifling. However, as August begins, just as the tropical winds begin to pick up, we are starting to see some hiring action occurring. One person in our networking group has accepted an offer, and word-of-mouth reports indicate that the slew of job ads and recruiter postings are for "real" jobs. Still, employers right now have their pick of qualified candidates, with 10-50 qualified local applicants for each position.

Hiring firms also save by lowballing salary offers, not offering relocation, and more. Not all of them get away with squeezing their employees, however. A friend in IT just jumped to a new company when her previous employer cut her pay and reduced her flexibility of work hours (she is a new mom).

In summary, the job market is up to "really tough" from "abominable."

The government's view of unemployment. (Source: Commerce Department)

By Mathew Katz

Economists were surprised by today's drop in the unemployment rate, which went from 9.5 percent in June to 9.4 percent in July. Close watchers of the labor market had expected to see the figure rise to 9.6 or 9.7. White House press secretary Robert Gibbs told reporters today that President Obama still expects to see unemployment hit 10 percent this year.

So why did the number go down in July? Part of the reason is that employers cut fewer jobs -- by 247,000, against an average of 331,000 for the last three months, including July.

Another, and perhaps larger part of the answer is that one key number factored into the rate fell unexpectedly. Unemployment is the number of people out of work as a percentage of the total labor force. The labor force in everyone who's employed or who wants a job. In July, that total labor force fell by 422,000.

Continue reading "Why The Unemployment Rate Fell" >

As fun as charts are, a more visceral take on job market is what you folks are feeling on the ground. We got this story from Pam Chozen, of Bloomington, IN:

I'm an advertising copywriter who got laid off (along with 40 percent of agency) in April. Since then, I've been applying to at least three agencies a week but have only gotten two interviews so far -- UNTIL THIS WEEK. I'm just about to do my third phone interview of the week, and I've also gotten two new freelance gigs in the last 24 hours. It really feels like the ice has broken, except I am not at all sure whether to trust it.

We'll likely hear more from Pam on today's podcast.

Up slightly from a record low. (Source: Bureau of Labor Statistics)

By Mathew Katz and Laura Conaway

In the June unemployment report from the Bureau of Labor Statistics, one of the most startling numbers was for average time spent working each week. It hit 33 hours in June, the lowest on record, and a monthly fall of .8 percent. Employers are less likely to hire new people until the ones they've got are occupied full time full-time.

In today's new report, for July, the average number climbed a nubbin to 33.1 hours per week.

Other Charts: Overall Unemployment/ Duration of Unemployment/ Average Hourly Wages

Going up again. (Source: Bureau of Labor Statistics)

By Laura Conaway and Mathew Katz

As the unemployment rate has risen, wages have all but stagnated. By contrast, today's unemployment report from the Bureau of Labor Statistics finds hourly wages rising in July to $18.56 from $18.53 for June and May.

The overall picture for wages remains cloudy. Compare the small increase reported today with official indicators of income. This week, the Bureau of Economic Analysis found that personal income notched a fourth straight monthly decline in June with a fall of .4 percent. The BEA said the increase may have stemmed in part from a one-time stimulus boost to Social Security recipients the month before.

And Bureau of Labor Statistics reported on July 31 that overall wages and benefits grew by .4 percent in the second quarter. For the year ending June 2009, wages grew by just 1.8 percent.

Charts:Overall Unemployment/ Duration of Unemployment/ Average Workweek

The average job search is taking longer. (Source: Bureau of Labor Statistics)

By Mathew Katz and Laura Conaway

Today's report from the Bureau of Labor Statistics finds the unemployment rate ticking downward, to 9.4 percent in July from 9.56 in June. The BLS describes the situation as "little changed."

One number that has continued to shift is the duration of unemployment. In a sour note for people who've been laid off, the duration of unemployment has kept rising. The average search took 25.1 weeks as of July, up from 24.5 weeks in the June report.

After the jump, a chart that breaks that number down.

Other Charts: Overall Unemployment/ Average Hourly Wages/ Average Workweek

Continue reading "Job Searches Taking Longer" >

By Laura Conaway and Mathew Katz

Unemployment fell to 9.4 percent in July, the Bureau of Labor Statistics reports. That's down .1 percent over the June rate of 9.5 percent. Economists had expected the number to increase by .1 or .2 percent. It's the first decrease in 15 months.

UPDATE: President Obama's spokesperson Robert Gibbs told reporters this report "is more evidence that we have pulled back from the edge and away from the brink of a depression." He added, "The pace of job loss is declining and that's positive, but no one loses sight of the fact that last month a quarter million people lost their jobs." Gibbs said the president still expects the jobless rate will hit 10 percent later this year.

All told, 14.5 million people were unemployed. Employers last month shed 247,000 nonfarm jobs last month. The average monthly job loss for May through July was 331,000, about half the rate of 645,000 from November through April. Since the beginning of the recession, 6.7 million jobs have been lost.

The broadest measure of unemployment -- U6, which includes discouraged workers and those working part-time because all they can get -- hit 16.3 percent. That's down from 16.5 percent in June. We've got a chart after the jump.

As the unemployment rate has risen, wages have all but stagnated. By contrast, today's report finds hourly wages rising to $18.56, after being flat for May and June.

Duration of unemployment: The average length of unemployment hit 25.1 weeks, up from 24.5 weeks in June.

After the jump, a look at the broadest measure of unemployment.

Other Charts: Duration of Unemployment/ Average Hourly Wages/ Average Workweek

Continue reading "Unemployment Takes Surprising Dip: Falls To 9.4 Percent" >

By Laura Conaway

We're all about the July unemployment numbers, due out at 8:30 today. But there are a few others worth your attention:

The recession appears to be affecting the U.S. birthrate -- since 2007, the nation has seen about 2 percent fewer babies born.

The former head of AIG, Hank Greenberg, has settled with the SEC over charges that he manipulated earnings reports. Neither admitting nor denying wrongdoing, Greenberg agreed to pay $15 million. Meanwhile, AIG clocked a profit of $1.82 billion (WSJ, subs. requ'd.)last quarter, after losing money for six straight quarters. Congratulations, Uncle Sam, which owns 80 percent of the insurer.

The White House estimates that $100 billion of the $787 billion stimulus package has made its way into the economy.

The Chinese sovereign-wealth fund, China Investment Corp. lost 2.1 percent on its global portfolio last year (WSJ, subs. requ'd.).

Click for a larger version. (Source: OC Register)

By Mathew Katz

Mathew Padilla has an interesting take on mortgage delinquencies over at the O.C. Register. He looks at the 90-day delinquency rates in Orange County. The data charted above come from FirstAmerican Corelogic, and makes it seem like the foreclosure rate is only going to go up. It shows the 90-day delinquency rates, the foreclosure rates, and the rates of REOs (or real-estate owned, meaning the foreclosured properites on banks' books).

The 90-day rate includes mortgages that have been delinquent for at least 90 days, but aren't foreclosed yet. That rate just keeps on going up. Sam Khater, senior economist at First American CoreLogic, told the OC Register that government efforts have delayed some foreclosures, hasn't prevented many.

Of course, Orange County has been particularly hard-hit by the mortgage crisis, but this still could be an bad omen for the wider market -- especially when combined with Deutsche Bank's prediction that nearly half of U.S. mortgages will be underwater by 2011.

The Town and Country broke down by the side of the road one day. (Courtesy of Michael Langdon)

By Laura Conaway

Among the people who took advantage of Cash for Clunkers are Michael Langdon and his wife, Baraba Ebel-Langdon of Newaygo, Mich.

They clunkered a 1997 Chrysler Town and Country minivan, for which they'd been told to expect a trade-in value of about $1,000 (the Kelly Blue Book puts the sale value at $4,750 to $6,075). The government says it gets 14 miles to the gallon in the city, 20 on the highway.

The mileage in the photo of above is considerably less, as that's when the Town and Country overheated and left them stranded by the road. After the jump, what they bought.

Continue reading "Cash For Clunkers: Couple Gains 10 MPG, With Help From Uncle Sam" >