Makin' Money
Eating your words... and vegetables
Ok ok so apparently many of you are vegetarians and do NOT — I repeat — do NOT resort to buckwheat loaves as our beloved Cash Peters did. You eat well and manage to enjoy veg’ing out while listening to Marketplace Money. Excellent! Thanks for your comments over the weekend… we’ll be sure to air some of them in our next listener letters segment (which, by the way, comes around every four weeks or so).
So this morning we debated in our weekly editorial meeting about what kind of followup we should do around the dollar gaining strength and oil prices falling. There was some argument in favor of explaining the macroeconomics of what’s going on with the dollar. But I countered that unless and until it gains enough to really make a difference in our lives (i.e. it’s finally time to book the trip to EuroDisney!) that it felt too early to be doing that story. What do you think? Is the dollar’s value top of mind in your personal finances this week? If so, what would you have wanted to hear about it?
It also seems like yes, oil and gas prices are falling, but jeez we’re still at, what, $114/barrel and I paid almost $4.40/gallon over the weekend, so I’m not seeing any real savings yet. Are you?
What we did decide to do is look at two surveys that came out with what seem like dueling takes on the economy. One, published in USA Today, says “fewer economists believe recession likely…” and the other, published in Bloomberg, seems to paint a different picture. How are the rest of us supposed to interpret all that? We’ll talk to two economists about what’s really going on and which survey participants could be eating their words at this time next year.
We’ve got a bunch of Marketplace reporters helping out this week. Bob Moon is going to talk us through the practical effect of all those legal settlements over auction-rate securities that have locked up a lot of money that people thought was safe. How will they get their money, and what happens if all those funds just get yanked out of the market because people don’t trust those securities anymore? Steve Henn will join us for a quick followup to last week’s story about companies that cull prescription drug records and sell them to insurance companies. A listener wrote in and wondered how that’s allowed to happen in light of what are supposed to be pretty rigid medical privacy rules. Good question!
Scott Tong has a fun piece from China looking at the American shopping experience during the Olympics. No more knockoffs for YOU! And while we’re talking about China — anybody worried about all those foreign investment decisions you made way back, oh, a year ago when emerging markets were all the rage? D’oh!
And finally a sneak preview of our extended coverage of the third anniversary of Hurricane Katrina. I went to New Orleans a couple of weeks ago and we’ll be devoting much of the show the weekend of the 22nd to the personal finance and rebuilding troubles that STILL plague residents there. This weekend we have an interview with Allison Plyer of the Greater New Orleans Community Data Cater, who talks about the lack of housing, childcare, public transportation and more that are making it hard for people to justify returning to their city. The only thing they have a surplus of in the Big Easy? Jobs.
Hope it all sounds interesting… what did you want to hear about this week?
- August 11, 2008
- 5 comments
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Latest Comments
- And if you threw it all a-way (10)
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- Spare a dime? Or $900 billion? (4)
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Comments (5)
Tess,
You wrote, "two surveys ... seem(s) to paint a different picture. How are the rest of us supposed to interpret all that?"
The dirty little secret is that the US economy has been stagnant for a decade. Instead of creating any actual value, we have been going from one bubble to the next; sort of like an economic shell game where the money just keeps getting moved around by the sleight of hand of skilled hucksters, and the poor dupes playing the game (that would be you and me and other regular taxpayer/citizens) can never win.
The real recession started long ago and shows no sign of letting up. (BTW, Chris Farrell said pretty much the same thing in his 25 July "Straight Story.")
Tess,
I'm extremely interested in the strength of the $US, and would very much like a more detailed explanation of what causes currencies in relatively stable economies to move so much.
The reason I care so much is that 10 years ago we moved from Australia to the US for a short OS work experience. After 3 years we moved savings from Oz to buy a house, and got pounded on the exchange rate - 56 cents to the dollar! It made no sense, the Oz economy was obviously full speed ahead, and I didn't see what was special in the US at the time. Why was the $AU worthless then? Then it starts creeping up, and what feels like suddenly, it was near parity and we can't move home! Why would anyone want the Ozzie, it's such an overheated economy (how can Australian's afford to live?!? Why is the Greenback turning around when the economy here continues to stink?
Is looks feels and smells like it is simple as interest rates. Everyone wants the high cash rates in Oz at the moment. But are investors really such risk takers? If the $AU tanks it wipes out any gains in the higher rates - which it must. Can it be so simple?
If it were that simple then it would seem obvious why China doesn't want to float their currency. The exchange rate gives them a genuine direct control on inflation. And if that is the case why would any country's government give up that control (i.e. why did Oz float their dollar in 1983?). I've read the explanation of the Ozzie bean counters of why it has been a great success. What I hear is that it lets the Oz economy ping pong between two unstable equilibriums (boom bust), with a corresponding dramatic effect on the labour market. And that is a good thing??? My favorite quote is "we have the remarkable situation now where the Australian dollar's more than 73 US cents; official interest rates are just over five per cent. Certainly that is a wonderful outcome for the economy, if you look at it over time" (this was late 2003). Yeh over time. The economy was in that perfect zone for about 5 seconds as it zoomed towards where it is now! Over time it must spend more time at the extremes, and the extremes suck for people!
And why are the only 2 options to have a value pegged to someone else's or float. Why not have a more complex value linked to other economies, weighted by their size, or something? Is this what China does? Surely economists would love coming up with complex models to back their wild ass guesses in this situation (to quote the NYer?).
Maybe it is just a shell game and I should stop moving countries.
So the value of the $US is top of my mind and I look forward to understanding what is influencing it - and maybe some good news:)
Yours,
Darryn
Ok, this is a story idea and not really a blog.
I would like to hear a story about sponsorship and the Olympics focused on the athletes. I read on the official Olympic website that Michael Phelps was offered $1 million from Speedo if he won eight golds at the games. Did he live off of sponsorship dollars leading up to the Olympics?
There could be a few stories here. How many top tier athletes in a given sport get serious sponsorship? Does it pay for a company to sponsor the number two, three or five athlete? The life of a sponsorship, short lived or a lifetime of dividends? The life of an athlete before and after a big sponsorship payoff...
First, love the show, it's in my top 3 podcasts. The recent series on estate planning was excellent.
Second, we have seen relief at the pump in the Phila. area. Over the past few weeks, I went from paying a high of $4.13 down to $3.69. And it's usually about 25 cents cheaper on the Jersey side of the Delaware River.
Addendum to my earlier comment:
If you saw Bill Clinton on The Daily Show this week (and how could you miss it -- apparently the staff of Marketplace are HUGE fans of Jon Stewart), he gives an even more cogent and specific critique of how the economy has been (mis)managed so far this decade. His observation is that from 2001 to 2006, most of the available capital in the country was sunk into real estate (either through direct investment or through mortgages). If that money had been invested in actually _making_ things (he suggests clean energy tech), this financial crisis would not even exist.