Intro To Business

"Rich people like me don't create jobs"

teri.bernstein — Fri, 17 May 2013 18:50:00 GMT

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Nick Hanauer is a consultant, venture capitalist, and billionaire based in Seattle, Washington. He was an early investor in Amazon.com and in the predecessor company to Overstock.com. The controversial TED Talk posted above was delivered last year. Hanauer had previously written an editorial piece for Bloomberg on the same topic.

Hanauer makes the following points in his talk:

"We capitalists are not job creators. New hiring is only done as a last resort."
"In a capitalist economy... the true job creators are middle class consumers."
"The annual earnings of people like me are hundreds, if not thousands, of times greater than those of the average American, but we don’t buy hundreds or thousands of times more stuff."
"Taxing the rich to pay for investments that benefit all is a great deal for both the middle class and the rich."
"Since 1980, the share of the nation’s income for fat cats like me in the top 0.1 percent has increased a shocking 400 percent, while the share for the bottom 50 percent of Americans has declined 33 percent."

His perspective is based on experience with dozens of companies in a wide range of industries. His viewpoint is not based on short-term self-interest, which would cause him to advocate anything that would lower his taxes on income produced by the wealth he has already accumulated. Instead, he is advocating for a public policy position that would produce the most sustainable and robust economic climate for the greatest number.

He is not the only billionaire that supports higher taxes and government policies that stimulate job creation in the public sector when unemployment is up and the economy is stagnant. Warren Buffett promoted a tax plan that was deemed "Smart, Fair and Reasonable," by Business Insider. Nevertheless, Hanauer's ideas are controversial...but worth thinking about.

Sources: "A TED Talk on Income Inequality by Nick Hanauer," by Nick Hanauer, TED Talks, delivered in March 2012, but not published until May 12, 2012.
"Employment Situation Summary," Bureau of Labor Statistics, April 2013.

"Raise Taxes on Rich To Reward True Job Creators: Nick Hanauer," op-ed piece by Nick Hanauer, Bloomberg.com News, November 30, 2011.

Follow up:

Read or listen to Nick Hanauer's piece, then research the Laffer Curve , which was a graph of government receipts versus tax rates that was supported by Republicans Gerald Ford, *** Cheney and Donald Rumsfeld. Based on these sources, what conclusions can you draw about the thesis that tax increases for the wealthy benefit everyone?
Looking at the Laffer curve model, what is the tax rate that is most beneficial for government revenues? Research the unemployment rates when a maximum marginal tax rates were equal to this rate. What conclusions might you infer from this data?
What other ways could you analyze the relationship between tax rates, unemployment, and government revenues (i.e. government expenditures), and what other conclusions might you draw?

Cyber bank robbery

teri.bernstein — Mon, 13 May 2013 22:34:00 GMT

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Visit NBCNews.com for breaking news, world news, and news about the economy

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Seven sophisticated cyber criminals, part of a global network, recently stole $45 million from multiple locations in a matter of hours. Here is the basic overview of how investigators are imagining the perpetrators pulled if off:

"hackers" invaded global bank information systems;
they stole prepaid debit card numbers;
they removed the restrictions on the maximum amounts that could be withdrawn;
they spread the information to others in their worldwide network;
across the world, these criminals coded the account information onto the magnetic strips that are on ATM cards;
the thieves began withdrawing money from as many ATMs as possible, before the accounts could be cut off;
they operated like a "virtual criminal flash mob"--at coordinated times;
the criminal network's trial run was on December 21, 2012 [4500 ATMs, $5,000,000];
on February 19, 2013 they hit 36,000 ATMs, stealing $40,000,000.

Arrests have been made, and the suspected ringleader was found murdered in the Dominican Republic between the robbery dates, but the investigation is not yet complete.

Bank robbers hold a special fascination in the American psyche. Willie Sutton, who stole (only) $2 million from banks over an infamous 40 year "career" as a bank robber, is credited (perhaps apocryphally) as answering the question, "Why do you rob banks?" with "Because that's where the money is." It seems as though these modern crooks have the same motivation...but use far more efficient methods.

Sources: "In Hours, Thieves Took $45 Million in ATM Scheme," by Marc Santora, New York Times, May 9, 2013.

"$45 million stolen in cyber bank heist," (video embedded above) reported by Tom Costello and Brian Williams, NBC News Nightly Newscast, May 9, 2013.

Follow up:

What precautions do you take on a daily, weekly, monthly or yearly basis to ensure that your internet financial presence is secure?
What might this instance of cyber-crime mean for business and technology as we move into the future?
Research what Willie Sutton really said in his autobiography about why he robbed banks. Do you think that these modern criminals would be influenced by the same feelings? Why or why not?

Choosing NOW to avoid boredom as a working adult

teri.bernstein — Mon, 13 May 2013 22:03:00 GMT

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this is an edited version of the commencement speech given by David Foster Wallace
at Kenyon College in 2005. Posted on YouTube May 6, 2013.

It is graduation season, and many college students--if they are lucky--are about to start jobs that will keep them employed 40 or more hours per week, plus commuting time, 50 weeks per year. If they stay employed, they will work week after week after week and year after year after year after year.

How does a person keep a working routine--with all of its hurdles, hassles, annoyances and dailiness--from becoming mind-numbing and boring? David Foster Wallace's commencement speech addresses this issue. He calls upon the graduate to use his or her education to exercise the ability to choose to think differently, and to avoid being lulled into the automatic thinking that leads to separation and frustration.

Although David Foster Wallace does not use the term "zero based thinking" in his speech, the attitude-adjusting approach he describes is similar to the process popularized by Brian Tracy. Zero based thinking is derived from the accounting practice of "zero-based budgeting" and it epitomizes pure freedom. It is also the practice that is advocated by Elisha Goldstein in The Now Effect.The adjustment to focus on the realities of the present moment allows a person to let go of the burdens of the past, and let go of judgments about one's current predicaments. The changed perspective allows an individual to imagine his or her current circumstances with detachment and acceptance. It is a free platform for creativity and optimism, as it is unencumbered by preconceived ideas or thoughts of doom and failure.

Great management problem-solving and entrepreneurial thinking can come from this place. It can also lead to a happier experience of any life situation, thus making even difficult tasks more manageable, and one's work-life more sustainable. The technique is free and can produce instant results. If one remembers that one has the power to choose one's perspective, it can happen with one's next breath. Breathe in possibility...breathe out worries and burdens.

Everything is OK. What is possible now?

Sources: "Zero Based Thinking" by Dan Byrne, The Simplify Guy, May 10, 2012.

"The Value of Zero Based Thinking," by Kathi Laughman, The Mackenzie Circle, March 20, 2013.

"The Now Effect," by Elisha Goldstein, Simon & Schuster, reprinted February 12, 2012.

Follow up:

What is your reaction to the "This is Water" video at the beginning of this post?
What are the pros and cons of worrying?
What are the pros and cons of complaining?

BuzzFeed's "King of Memes" shares somes secrets

teri.bernstein — Thu, 09 May 2013 16:07:00 GMT

Jonah Peretti in the offices of BuzzFeed; photo by Benjamin Lowy

Here is the official story of how BuzzFeed got started. Its founder, Jonah Peretti, was a 27-year old grad student who ordered some customizable Nike shoes on a "break" while working on his master's thesis at MIT. Peretti wanted the word "sweatshop" printed on the shoes; this gave rise to a string of email's with Nike's customer service department.

image from 2001 ad for customizable Nike shoes

Peretti forwarded the amusing email thread to some friends, who forwarded it to more friends...and soon Peretti had his moment of fame--he was on the Today show talking about labor practices with Nike reps.

The "viral" spread of the email was an "internet meme." Peretti pondered why goofy themes spread like crazy while important ideas did not seem to catch on. He developed BuzzFeed--which is an eclectic mix from the erudite to the ridiculous--to research what catches on and what does not. He applies his evolving theories to both the articles and the ad content on the site.

By the way, the articles ARE the ad content. Virgin Mobile USA has posted several articles on BuzzFeed, and noted that one "paid-for-post" for Valentine's Day, "urging consumers to 'break up with their carrier'," produced a "95 percent spike in sales that day,” according to Ron Faris, Virgin Mobile's head of brand marketing.

Virgin America has some informative "posts" as well. Detractors have complained that mixing up ads with content violates an important tenet of a free society (Andrew Sullivan, The Dish), but it seems to be working for BuzzFeed.

Sources: "Does BuzzFeed Know the Secret?" by Andrew Rice, New York Magazine, April 7, 2013.

Follow up:

What is the BuzzFeed headline today? Will this headline be "going viral" in your opinion? Why or why not?
What are the factors that contribute to an internet story becoming a meme? Read the entire article in New York Magazine and check out these sites for more data: Meme01 and Meme02
Who coined the term "meme"? What does it mean? Why are memes important to today's businesses?

Hospital price survey shows unconscionable price differences

teri.bernstein — Wed, 08 May 2013 23:23:00 GMT

The recent publication of the Medicare survey of hospital prices shows that there really is no semblance of a fair market for medical services. The existence of insurance companies as go-betweens makes it impossible for the consumer to make any provider decision with respect to price. There is no consistency, no fairness, no rationale and no transparency with respect to hospital charges...even within the same market.

Medicare and insurance companies only pay a small portion of the prices charged, because they negotiate prices. They have the clout to negotiate because of their size...the bigger the insurer, the more power they have in negotiations. That is one reason that individual consumers are at such a disadvantage.

Here is also a place that individuals--even with insurance--can get surprised by costs, or even cheated. Let's say the insurance plan pays 80% of costs negotiated, and the consumer pays 20%. The insurer may have made an overall deal with a hospital, based on surgeries that are very popular. But a surgery that is unusual may have a very high price relative to other hospitals. The patient needing the unusual surgery might end up paying 20% of a $200,000 bill--or $40,000 out-of-pocket. But, the way things are now--another hospital outside of the plan might only be charging $50,000 for the surgery. Even at out-of-plan reimbursement rates of 40% co-payment, the patient would end up with "only" $20,000 in out-of-pocket costs--half of what they are stuck with by going with the hospital their insurance provider recommends.

There is no way for the customer/patient to "shop around" because he has been led to believe that the co-payment amount of 20% will produce the lower price for him. When the insurance company is selling the policies, there is no disclosure about individual surgeries, and no disclosure about the real out-of-pocket costs to the patient.

This violates the basic integrity of the marketplace.

Let's apply the situation to a different arena: shopping for an apartment. Let's say that a person could shop for an apartment on her own (= uninsured), or could hire a broker to find an apartment for her (= insured). Various brokers would have relationships with different real estate management companies or consortiums. This reality exists in the rental real estate marketplace now.

But let's say that rental prices were not regulated (as it is,the same rate is quoted to all potential apartment renters; price discrimination is illegal). Let's change the reality for the sake of making an analogy with the health insurance industry: once the renter signs up with at broker, the renter is stuck with that broker in the search to get an apartment.

One broker might be quoted a $1200/month rate; another broker might be quoted a $3500 per month rate for the same apartment. When the wanna-be renter signed up with the broker, the potential price differences would not have been disclosed. Would this be fair? There would be no relationship between price and value, and the renter would be powerless to make a choice at the decision point where the real costs would be revealed.

...just like the patient dealing with hospital costs.

Since medical costs are the a leading factor in over 60% of personal bankruptcies in the U.S., the real costs of medical care are a life-changing issue for consumers.

Some observers think that this publication of the wide discrepancies in price is the first step to fixing the problems...but maybe the system is too broken to be fixed. A "zero-based thinking" approach might be needed.

Sources: "U.S. releases data showing striking differences in hospital prices" by Dan Gorenstein, Marketplace, American Public Media, May 8, 2013.

"Hospital prices diverge wildly, U.S. data show," by Chad Terhune and Ben Poston, Los Angeles Times, May 8, 2013.

Follow up:

What is "zero based thinking"?
Can you think of--or research--three possible solutions to this pricing dilemma? Who would benefit and who would be hurt in each situation?
How would you remedy the downsides of each of your scenarios?
What is your personal experience with hospital costs and insurance coverage?

"The Red": a movie about dealing with student debt

teri.bernstein — Wed, 08 May 2013 04:53:00 GMT

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from "The Red" the official short film, posted on YouTube

"The Red" is a horror film about student debt. The film was developed by SALT, an offshoot of the American Student Assistance non-profit. It was directed by the same folks who made the indie film Marcy Martha May Marlene, a film about being in a cult. The main theme of the film is to "borrow less, borrow smart and repay well,” according to Sue Burton, SALT's managing director of consumer products and marketing.

SALT's mission is to help students manage their educational debt, and to deal with it without denial. Their motivation vehicle in the film is a strangulation metaphor. A young woman tries to escape from a red cloud that is wrapping itself around her neck. The young woman's fear increases as her attempts to escape fail.

Senator Elizabeth Warren is trying a different approach to help students with their debt burden. She has introduced a bill called the Bank on Student Loan Fairness Act, which would cap the interest rate on Stafford student loans from the federal government so that students would get the same rate that big banks get on loans from the federal government.

Two different approaches to confronting the problem of student debt. What do you think?

Sources: "A Film To Help Students Face Their Debt" by Ann Carrns, NYT Bucks Blog, May 7, 2013.

Face The Red (the eight-minute version of the film).

"Elizabeth Warren: Students should get the same loan rate as big banks," by Joan McCarter, The Daily Kos, May 8, 2013.

Follow up:

How much student debt do you have? If you have no debt, who paid for your education? What sacrifices (if any) did your education fund-ers (or you) make so that you could go to college without assuming any debt?
Do you think that a horror film is an appropriate way to motivate students to deal honestly with their debt? Are you motivated by fear? Compare, contract and evaluate the effectiveness of the fear motivation of this film to the activist/alleviation approach proposed by Elizabeth Warren.

The Van Halen contract: "No brown M&Ms"

teri.bernstein — Tue, 07 May 2013 16:21:00 GMT

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from youtube, posted by rockfan7777

"M&M's (WARNING: ABSOLUTELY NO BROWN ONES)."

This is part of a rider, page 40, to the 1982 concert contract of the rock band Van Halen. It is sometimes joked about by those making fun of the excesses demanded by rock stars demanding diva treatment.

But, according to band singer David Lee Roth, there was a good reason for this clause. Van Halen was the first band to travel with a huge number of big lights. They would contract for facilities that could deal with their electricity and space requirements, but sometimes they would get to a venue and find that one thing after another that was clearly designated as needed in the contract was not available.

Therefore, the M&M clause was inserted as a "bright line test." David Lee Roth explained: “If I came backstage and I saw brown M&M’s on the catering table, it guaranteed the promoter had not read the contract rider, and we had to do a serious line check.”

Sources: "Van Halen explains the U.S .government" by Ezra Klein, Bloomberg News, April 30, 2013.

Follow up:

What is a "bright line test" or "bright line rule"? Give some examples from other situations.
Note the disparity in reactions possible between hearing the short version of the M&M clause story, and the longer explanation. What miscommunications can occur from limited information?

The Entrepreneur Quiz

teri.bernstein — Tue, 07 May 2013 04:44:00 GMT

image from www.entrepreneur.com

Entrepreneur-aptitude quizzes cannot really predict who will be the next great success as an entrepreneur. But they can help identify personality traits that might hinder entrepreneurship. So take this quiz (developed by Andy Yates of Huddlebuy, a website devoted to small business):

Question 1: Why do you want to start up your own business?
a. To make a difference.
b. To make a lifestyle choice.
c. To make a bundle of cash.

Question 2: How committed are you?
a. I will do whatever it takes.
b. I will commit whatever time I can manage.
c. I will do whatever makes sense - I have a lot of things on the go.

Question 3: Are you a team player?
a. I know I can’t do this alone - I do, or will, work with experienced people with complementary skills.
b. I know I can work on my own or with other people.
c. I know what I am doing and I can take this on myself - after all, the reason I am in this business is that I can do it better than other people.

Question 4: Where do you want to be in five years' time?
a. I want to see my product or service used by thousands of people.
b. I want to be happy.
c. I want to be sitting on a beach.

Question 5: How are you going to make money?
a. I have spoken to customers, I know what they want and what they would pay and I have worked out my supply and distribution costs.
b. I have spoken to suppliers, worked out the costs and I reckon I can make a margin.
c. I will provide it, customers will come.

Question 6: How are you going to grow sales?
a. I am going to lead initial sales and then hire more experienced people.
b. I am not a sales person, so I will focus on getting the product right and sort out the rest later.
c. I will provide it, customers will come.

Question 7: Have you got any competitors?
a. Yes, but I have identified the gap in the market, understand the market size and opportunity and outlined clear reasons why people would buy from me.
b. Yes, there are some big competitors but I know who they are and I will watch them closely.
c. No, I haven’t got any competitors - my business is unique.

Question 8: How much profit is the business going to make in five years' time?
a. I am ambitious and forecast strong growth based on reasonable assumptions from what I already know of the market and the opportunity.
b. As long as I pay the bills and do my best to grow, the business should make profits.
c. The business is going to be massive. Revenues are going to go through the roof, while costs will stay really low.

Question 9: How much do you know about your industry or sector?
a. I and/or my team have experience and contacts in this sector.
b. I have done a bit of work in this area and reckon I should be OK.
c. I know what I am doing. How hard can it be?

Question 10: What have you achieved so far?
a. I have sorted out my initial product/service and got some initial sales/traction/data/PR/social media followers/marketing exposure.
b. I have done a lot of research.
c. I have a brilliant idea.

According to Yates, those who answered mostly "a" stand a decent chance at being able to succeed. Those who answered mostly "b" might be aiming for the lifestyle associated with being one's own boss, but may not have the temperment for assuming the risk of managing a capital investment. Those who answered mostly "c" might be better off "sticking to their day job."

Sources: "The Great Entrepreneur Quiz: Have You Got What It Takes To Make It Big?" by Andy Yates and Huddlebuy, ThisIsMoney.uk.co, April 30, 2013. Follow: @MailOnline on Twitter | DailyMail on Facebook

http://www.huddlebuy.co.uk -- "Europe's largest daily money-saving site for small business"

Follow up:

If you took the quiz, what were the results? Are they what you predicted? If you have an entrepreneurial idea, what is it and how will you make it happen?
Why do you think that Yates judged the following as "c" items?:
- "No, I haven't got any competitors. My business is unique."
- "I have a brilliant idea."

Econ 101 by Stephen Colbert via Comedy Central

teri.bernstein — Thu, 02 May 2013 16:57:00 GMT

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The Colbert Report
Get More: Colbert Report Full Episodes,Indecision Political Humor,Video Archive

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Last week I cited a column written by Paul Krugman about the debunking of the "austerity" approach to economic downturns and debt that led to sequestration. Several political leaders promoted the austerity approach, partially based on a paper by Carmen Reinhart and Kenneth Rogoff of Harvard University. Thomas Herndon, a grad student at the University of Massachusetts, detected some math errors in the spreadsheets in the Reinhart/Rogoff paper, and also found that they had ignored data that did not support their hypothesis. Paul Krugman's article was a timely response to the "uproar" that ensued.

Stephen Colbert weighed in about the Reinhart/Rogoff paper in the video clip above from The Colbert Report of April 23rd. Colbert also interviewed Thomas Herndon later in the same show.

For those of you unfamiliar with Stephen Colbert, his on-screen persona symbolizes one point of view, but his message often connotes the opposite point of view. This works to his comic advantage, but could be a dangerous ploy for a marketer, as it may produce misunderstandings.

Colbert's show is not likely to sway anyone's opinion, and the two sides to this issue continue to produce controversy. Nevertheless, the data delivered by Colbert (when it can be separated from the non-factual parody or satire) might hold a viewer's interest longer than the Krugman article on the same topic.

Colbert's approach widens the possibilities for communicating information about economic issues.

Sources: "Stephen Colbert discusses and mocks the problems resulting in basic mistakes made in a study by Reinhart and Rogoff" episode of The Colbert Report, by Stephen Colbert, et. al., Comedy Central via YouTube, airing April 23, 2013, published April 24, 2013.

"Reinhart-Rogoff uproar settles nothing," by Caroline Baum, Bloomberg View, May 1, 2013.

Follow up:

Watch the video and read the Krugman article. Which did you enjoy the most and why? From which piece did you learn more, and what did you learn?
Watch the remainder of The Colbert Report for April 23, 2013, in which Colbert interviews Thomas Herndon. What did you learn? Which segment of the show was more effective at communicating about the economic theories at issue?
Discuss the pros and cons of using humor to communicate about difficult (or boring) and controversial subjects.

Stop doing these 8 things for a better work day

teri.bernstein — Thu, 02 May 2013 04:06:00 GMT

Increasing productivity and managing interfaces are obviously business goals in manufacturing operations and in service businesses with billable hours. But productivity and interpersonal interactions in an office setting are vitally important to an individual's career growth as well. Here are some suggestions from a recent column from Inc. magazine's website:

Don't check your smartphone while you are having a conversation with someone. Pay attention. Be present. Let the other person know they are important.
Don't multi-task during a meeting--treat the meeting with importance.
Don't think about celebrities others who have no impact on your life...the people who actually ARE in your life are the ones who will help you grow and succeed.
Don't let your phone interrupt you with notifications of every email, tweet and message. You be in charge, and check your phone periodically when it is convenient for you.
Don't dwell on the past--learn from your mistakes and then take a breath and turn your thoughts to something else if your brain tries to start re-writing history, or makes you tense by dwelling on errors. "The past is just training."
Don't wait till you are certain of success...just act with the intention of doing your best. You don't want to miss opportunities.
Don't talk about anyone behind their back.
Don't say "Yes" when you mean "No." It's easier if you also remember this saying as well: "No" is a complete sentence. Don't try to convince yourself by giving excuses to someone else. It might be hard to say "No" but it is even harder to live through all the moments that result from saying "Yes" to something that doesn't work for you.

Source: "8 things you should NOT do every day," Jeff Haden, Inc.com, April 8, 2013.

Follow up:

Which of these suggestions might you consider?
What additional "bad habits" are hampering you at work or school on a daily basis?

Apple borrows billions even though it has a pile of cash

teri.bernstein — Thu, 02 May 2013 04:04:00 GMT

image from appleinsider.com

Why would a company with $145 billion in cash reserves borrow $17 billion more by issuing bonds?

to take advantage of very low interest costs--at the U.S. Treasury rate
to pay more dividends to shareholders
to buy back some of its stock from existing shareholders
to avoid having to move cash from low-cost overseas locations to the United States, where it will be subject to higher differential tax rates

Apple's action is also part of a trend--Nike recently issued bonds, and Microsoft issued bonds late in 2012. But the market was still hungry for Apple's bonds: investor demand was at $52 billion--more than 3 times the size of the bond issue.

Source: "To Satisfy Its Investors, Cash-Rich Apple Borrows Money," by Peter Lattman and Peter Eavis,
New York Times, April 30, 2013.

Follow up:

When is it a good idea for an individual to borrow money, even if they have cash?
What is a poor source of loaned funds, especially if an individual has other resources?

What do entrepreneurs REALLY think about the minimum wage?

teri.bernstein — Tue, 30 Apr 2013 04:08:00 GMT

image from www.staffinglink.com

Recent research has produced two opposite outcomes regarding entrepreneurs' attitudes toward raising the minimum wage:

Result #1: two-thirds of entrepreneurs support raising the minimum wage (Small Business Majority-SBM)
Result #2: 93% of entrepreneur oppose raising the minimum wage (National Federation of Independent Businesses-NFIB)

One might conclude that there is a lot of variation in entrepreneurial ranks (they are a diverse lot), but as it turns out, the language used in the questions may have skewed the outcomes of each of the surveys.

"When the Small Business Majority asked its minimum-wage question, it stated the amount of the current minimum wage -- $7.25 an hour -- but did not mention how much the minimum might rise. You can understand how a business owner would listen to this question and think, 'Well, $7.25 sounds awfully low. My people get more than $7.25 anyways, and keeping up with inflation sounds fair. Sure, let’s raise the minimum.' "

On the other hand:

The NFIB survey "asked if respondents were in favor of amending the state constitution to include a 14% increase in the minimum wage. It didn’t state the current minimum. This sounds like a bigger deal...Most entrepreneurs didn’t get 14% raises last year, and they don’t want their payroll costs to go up by that much, either." Plus, mentioning that the state constitution would have to be amended made it sound serious.

So--which survey was more fair? Or, were both flawed?

Source: "Who Speaks for Entrepreneurs?," by Kimberly Weisul, Inc.com, April 25, 2013.

Follow up:

What do you think is the "real" result? Which question was phrased in the more objective and fair way?
How would you word a survey on this topic to produce the most objective results?
How do you feel about the minimum wage, for yourself and for others?

Literally, it's "Power clothing"--and it may soon be everywhere

teri.bernstein — Tue, 30 Apr 2013 03:57:00 GMT

photo by Ken Bennett, Wake Forest University, shows a
piece of material that is hooked up to meter

David Carroll, of Wake Forest University, has developed a kind of cloth that can charge your cellphone. He calls it "power felt." The material works by using body heat and movement to create electricity.

The science behind this is thermoelectrics. We experience a cruder form of thermoelectrics when we hold onto a piece of cold metal and it warms up. What causes the warmth is the movement of electrons. With nanotechnology, Mr. Carroll has made a fabric that can manufacture electricity by converting the movement of bouncing on a carseat or flapping in the wind. The fabric is flexible and relatively cheap.

According to Business Insider, "this fabric soon may be stitched into every shirt, lying under every car hood and wrapped around every house."

Where do I invest?

Source: "How 'High-Performance Clothing' Will Power Your Phone And Monitor Your Health," by
Robert Ferris, Business Insider, April 16, 2013.

Follow up:

What other uses have been suggested for this "power felt" other than charging your cell phone?

Economics 101 in 2013

teri.bernstein — Tue, 30 Apr 2013 03:53:00 GMT

Government stimulus .................vs.................Austerity

image from decisionsonevidence.com

The economics story of our time, according to Paul Krugman, is the failure of "austerity" as a response to a fiscal downturn when compared with government stimulus packages to stimulate the economy. The "real-life experiment' has taken place over the last three years, as the United States government provided modest economic stimulus by spending tax dollars investing in government projects and infrastructure. During this time, several European countries, notably the United Kingdom, has "tightened its belt," responding only with shrinking government and cuts to services.

Theoretical support for austerity has recently been debunked. But Paul Krugman makes additional points with respect to why austerity is still a bad idea:

The economy is not like an individual family, which earns what it can and spends what it can afford, as its own, closed system. The economy is interdependent: In the economy, if one person spends, then someone else earns.
Because of the interdependency, if both entities stop spending at the same time there can be a depression. If one side stops spending (in response to earnings loss), and the other side is still spending, there is some hope that the earning will revive for the economic partner, and the cycle will get back on track.
History lesson: in 2008, because of the housing bubble bursting, there was a subsequent restriction of loan money, which curbed spending, which led to more job loss, etc.
We are still in a period of underemployment, and government stimulus is still needed to bring more people back into the interdependent economic community.

Of course there are still other ways to look at things, but growing businesses and start-ups love investors, and a government investor is better than no investor at all.

Krugman makes the point that there are other ways to look at the situation--but that recent economic history has given a clear indication of what works now.

Source: "The Story of Our Time," by Paul Krugman, New York Times, April 28, 2013.

Follow up:

What are the solutions offered by those favoring austerity? Several are mentioned in the linked article.
Under what circumstances have these solutions worked in the past?

Marrying your money-management opposite?

teri.bernstein — Sat, 27 Apr 2013 22:54:00 GMT

image from activerain.com

Why do people avoid talking about money? That is too big of a question to answer here, but in committed couples it is necessary to come to some understanding regarding money, spending, and planning for the future. Financial planning has a major effect on lifestyle, housing, feelings of security, travel, leisure activities, care of children and pets, and retirement. Couples can't avoid the topic forever.

Tara Siegel Bernard interviewed a couple who succeeded in avoiding "the money talk" until six months after they were married. At this point, Jennifer and Scott Bartone nominated themselves for a "Fiscal Health Day" tune-up offered by Ms. Bernard. The Bartones had some big issues:

they had discovered they were "financial opposites": Scott's income was mostly cash, which he spent freely; Jennifer had set and achieved savings goals in the past
jointly, they had about $30,000 in credit card debt--and Scott's interest rate on debt was double Jennifer's
they couldn't see a way to ever meet their goals of home ownership and starting a family

Ms. Barnard consulted with Kristin Harad, CFP, a financial planner in San Francisco, and suggested the following:

make a "money talk" into a weekly ritual
put those credit cards into a drawer (or cut them up)
focus on paying the higher-interest bills first
check each person's credit history at annualcreditreport.com and also pay for each person's credit scores (MyFico.com)on a one-time basis
sign up with Mint.com to track expenditures (done automatically if done by debit card)
open an account at a bank like Ally or Capital One and open savings account "subaccounts" for specific savings goals.
open an IRA for Scott (Jennifer already had a 401k through her employer)--even if they couldn't afford to fund it yet
make their first savings goal a three-month...then a six-month...emergency fund.

Another good idea for everyone sharing finances was recommended by Kristin Harad:

"I always recommend that each partner receives a predetermined amount that they direct to a 'totally fun' account — one solely for the fulfillment of the individual, spent without judgment or review. The restriction is put on the front end by the amount directed; however, the actual purchase can be whatever the partner desires. This essential simple freedom relieves an unbelievable amount of marital tension."

I can say from personal experience that this piece of advice really works.

image from everydayfeminism.com

Sources: "Your Agenda for 'Fiscal Health Day'," by Tara Siegel Bernard, New York Times 'Bucks', April 26, 2013.

"Are you married to your financial opposite?" by Brian Turner, CNN Money, August 27, 2009.

Follow up:

Have you talked with your significant other about short and long term finances? If not, do so. What was the outcome of the conversation? Do you have a plan to meet your goals?
Did you know about "Fiscal Health Day"? The good news about this holiday is that it is not yet official...so you can pick your own day. One suggestion--make if for a few weeks after you finish your tax return. Put it on your calendar as an annual event.