EconomyEinstein

The Road to Hell is Paved with the Good Intentions of Recycling

Thu, 16 Apr 2009 00:45:54 -0500

The modern recycling movement can be traced to two events that happened in the late 1980’s. The first, in 1987, involved a barge named Mobro 4000 that attempted to dock in Morehead City, North Carolina and dump its 3,100 tons of waste that originated in Islip, New York. The garbage was ultimately carried back to Brooklyn, burned and the ashes buried in Islip. The other event, in 1989, was the publication of a paper by Jay Winston Porter, a former Environmental Protection Agency administrator. The paper was titled “The Solid Waste Dilemma: an Agenda for Action.” In the paper Mr. Porter stated that recycling was “absolutely vital”. Local governments took notice and since the late 1980’s, the growth of mandatory recycling programs has reached nearly 10,000 communities in the United States today. Sadly, recycling in America is a colossal waste of money.

The Global Economic Collapse Part 3: Questionable Derivatives

Wed, 25 Mar 2009 22:27:31 -0500

Leave it to Wall Street to make money in new and imaginative ways. Most people, when they think of Wall Street, think about the usual way of making money: buy low, sell high. That relies on a very simple and understandable concept: buy something real like stock, which is a real percentage of ownership in a real company, and when the value goes up, sell out. Derivatives are trickier.

Who does the U.S. owe anyway?

Wed, 25 Mar 2009 19:08:40 -0500

When we talk about who the United States owes, who are we talking about exactly? Here's the list of the 15 holders of U.S. debt.

Moody's Deadpool

Tue, 10 Mar 2009 08:20:29 -0500

Moody's plans to publish "Bottom Rung" today which is the list of companies it says has a high likelihood of defaulting on debt. The 30 biggest companies can be accessed here. Take it with a grain of salt, Moody's also rated CDOs as AAA investments too.

The Global Economic Collapse Part 2: The Money Chain

Mon, 09 Mar 2009 16:47:55 -0500

It was uncharted territory: Fannie Mae and Freddie Mac (GSEs) used to be the only game in town for mortgage originators and their strict guidelines limited the number of people able to get mortgages. After the GSEs' accounting scandals, suddenly mortgage originators both new and old found someone to replace the GSEs deep pockets: Wall Street. If you're a mortgage originator you obviously want to make more loans and now it was easier than ever. Combining an unregulated Wall Street with a bunch of new money begat a new and experimental wave of securitization. The greed stretched from unqualified borrowers all the way to the international finance arena.

AIG: Socialized Risk, Private Gain

Fri, 06 Mar 2009 09:18:39 -0500

No doubt if you've been watching the news you've noticed American International Group (AIG). Taxpayers have pumped about 170 billion dollars into AIG, and you probably are wondering why.

The Global Economic Collapse Part 1: The Beginning

Thu, 26 Feb 2009 19:13:41 -0500

How did the global economic collapse occur? It built up over a few years and involved a perfect storm of greed, lack of oversight and the creation of new derivatives. Circulation of money is what makes the economy work. That circulation is credit.

An Analysis of Surplus and Deficit

Sun, 21 Dec 2008 12:41:17 -0500

Politicians constantly push trade tariffs and exchange rate controls, both of which are targeted at, and affect, international trade. The effect of these controls ultimately resound through domestic economies. Is NX < 0 a bad thing? Not necessarily.

Deconstructing the GDP - Net Exports

Sun, 21 Dec 2008 11:52:39 -0500

In the equation constructing the GDP ( Y = C + I + G + NX ), the "NX" stands for net exports. When domestically produced products are sold in other countries, those products are classed as exports. When a consumer in the U.S. buys a product produced in another country, those products are classed as imports. To obtain the net export number you merely total up exports, total up imports and subtract your import total from your export total. "NX" is that figure.

Deconstructing the GDP - Government

Sun, 14 Dec 2008 15:49:07 -0500

In the equation constructing the GDP ( Y = C + I + G + NX ), the "G" stands for government. A huge amount of GDP is spent by government, even more in Europe!

Deconstructing the GDP - Investment

Sun, 14 Dec 2008 11:41:50 -0500

In the equation constructing the GDP ( Y = C + I + G + NX ), the "I" stands for investment. Capital is extremely important to a country's ability to make output. A country's capital increases as more things are bought.

Deconstructing the GDP - Consumption

Wed, 10 Dec 2008 12:10:49 -0500

In the equation constructing the GDP ( Y = C + I + G + NX ), the "C" stands for consumption. The consumption variable refers to expeditures made by households on goods and services produced both in the U.S. and abroad.

What is the GDP?

Tue, 09 Dec 2008 14:46:40 -0500

You hear the term GDP but what is it? GDP is an acronym for Gross Domestic Product and it's one measure of a given country's national income and output.

Mistaking Percentages and Dollar Amounts

Sat, 06 Dec 2008 10:40:56 -0500

Let's say that you would drive to the next town to buy groceries. You know from experience that the same items bought every week cost you $200.00 locally, but the superstore in the next town, a 30 minute drive, can give them to you for $180.00. That's a savings of 10%! Now let's say that you need a new washer and dryer. Locally the cheapest deal is $2,000 but an appliance store in another town (also 30 minutes away) has it for $1,900. That's a savings of only 5% percent so you decide that you're just going to buy it locally. Good decision?

What is Sunk Cost and How Does it Affect Decision Making?

Thu, 04 Dec 2008 13:25:49 -0500

If you just paid $10.00 to participate in the all you can eat buffet, how much should you eat? Most people would say $10.00 and that answer is wrong.