Friday, July 26, 2013

Toyota is making a version of the Segway. Set themselves up to be mocked. I am happy to oblige them...

Toyota Has Made Its Own Version Of The Segway

Saw this headline. Will companies never learn.  Toyota has set themselves up to be mocked, considering the lawsuits that have been filed in regards to the acceleration issues they had a couple of years ago with the Camry.

I am happy to oblige them.

I discovered there is a Bermuda Triangle for Manufacturing Jobs in the US. This one graph will amaze you!

Was reading this short article on a potential manufacturing renaissance in the US.  As always, I try to connect this to jobs in that sector.

Using the St Louis Federal Reserve data and graph maker, I looked at the employment of "Production and Non-Supervisory Employees" (fancy way of saying "blue collar" front line manufacturing jobs) as far back as the data went.

The high point for employment of blue collar workers was 1980 (blue dot at the apex).

We now have as just about as many workers employed in front line production jobs as we did in 1940.  Read that again.  Amazing!

When I looked at the graph I could not help notice the triangle it formed and making the analogy of the Bermuda Triangle. Once manufacturing entered a period of globalization, the jobs disappeared never to be found again. But that does not stop people from looking for the wreckage to raise.

Blood boil time...See here why all those Corporate Profits you hear about that are "hoarded overseas" are not really overseas but in use HERE in the US of A. They just managed to avoid the taxman in doing so... Read it and weep...

Here is an excerpt from this brief "Are U.S. Firms Really Holding Too Much Cash?" (Via Tim Taylor) that tells part of the story regarding corporate "hoarding" of profits overseas to avoid US taxes (bold and underlined I did for emphasis):
"...It is also important to recognize that the “overseas” money owned by foreign subsidiaries need not be invested abroad, but instead can be held at U.S. banks, in U.S. dollars, or invested in U.S. securities.  
For example, according to SEC filings, $58 billion of Microsoft’s total cash holding of $66.6 billion is held by foreign subsidiaries. Surprisingly, about 93 percent of Microsoft’s cash held by foreign subsidiaries in 2012 was invested in U.S. government bonds, corporate bonds, and mortgage-based securities
The assets of Apple Operations International, Apple’s Irish subsidiary, are managed in Reno, Nevada, by employees at one of its wholly owned subsidiaries, Braeburn Capital, according to a Senate report, with the funds held in bank accounts in New York...."
 Don't hear much about this do, ya?  Corporate profits are really only keep outside the US  in accounting terms, not in practice.  They make their way back to the US to be used domestically in a whole host of ways.

Think about this.  Microsoft (and most other multinationals) earns profits in overseas subsidiaries, keep them there to AVOID US taxes, but are able to invest those profits in US government bonds (debt) which PAY Microsoft interest (out of general tax revenues).  The interest is paid to the foreign subsidiary of the US company.  Not sure if THAT is taxed either...

The briefing paper cited above is a GREAT primer on the sheltering of profits by US multinationals and how the issue is more nuanced and complex than presented in the media.

It also has a link to another longer and more detailed paper on the subject. Found HERE.

Both are worth the time to read if you are really interested in the topic.

Thursday, July 25, 2013

Want to know how much you will have to pay for an insurance policy under "Obama-care"? Or how much of a fine you will pay if you DON'T? See it here!!

The Wall Street Journal has an excellent article and interactive that uses Oregon as an example of what it is going to cost young people (up to age 35)  to purchase health insurance as mandate by the Affordable Care Act (aka "Obamacare").  Your State will likely have different prices, maybe higher or lower.

If you are not covered by your employer (or don't want to be) and you are NOT exempt for the provisions of the Act, then here is an example of how much you will be required to pay or face a fine (second graphic below).

I picked "Restaurant Server", but it could be ANY job paying about $12.71. I picked age 22 just as a reference.  You can go to the site and change the variables as they pertain to you.   The hourly wage/annual income is what is important.  You can see for yourself that you would not qualify for any subsidy help with your premiums at that income (assuming you are single, no kids) and what your premium might be for the coverage you choose.

FYI: A "deductible" is the amount you must pay BEFORE insurance kicks in.  Any medical costs you incur OVER the stated deductible is covered by insurance.  There are some exceptions to this as you can see under each policy description.  Basically, the more premium you pay, the better the policy terms are, i.e. a lower deductible you are responsible for paying.

Source:Wall Street Journal
Don't want to pay?  Remember, unless you qualify for an exemption this is an either/or proposition.
Here is the penalty you will have to pay for not doing so starting in 2014. The cost of not buying insurance will escalate in subsequent years.  This is what the IRS will be responsible for collecting from you at tax time.


Wednesday, July 24, 2013

See here how the number of new movie releases AND their MPAA ratings have changed since 1997. Can you guess which rating is trending up?

It is hard for me to enjoy a movie.  My mind wanders.

I wondered how the number of movies has changed over time and their assigned ratings.  Many suggest movies have become coarser, more violent, more sexual, etc.  The rating system is suppose to give us some guidelines as to the nature of the content of each movie. Not a perfect system, but let's go with it here.

Using historical data from THIS WEBSITE  I plotted, going back to 1997, the number of movies released at the different ratings we are all familiar with.  You can see the color-coding for each one with the key on the right.

I connected the beginning data point and the last one (dotted line) to give you are reference.

In absolute terms, R-rated movies dominate.  I was surprised by the relative flat lining for G and PG rated movies.  Notice any trends??

Here is the data I used to create the graph above.

Empirically, it appears PG-13 rated movies have grown the most consistenly over that time period.  Here is a table that  may shed some light as to why (source HERE)

R-Rated  are produced, BUT  PG-13 rated movies are where the money is made.  With a combined market share of 74% for both ratings  over 17, I expect it to continue.

Tuesday, July 23, 2013

Why prices of consumer goods rise (or could rise) when a disaster or other "extraneous" event occurs.

Most producers of a good do not maintain excess capacity to produce and supply a particular good.  It would be costly to maintain facilities and to stock extra inputs/materials over what is necessary to make the good on a daily basis.

If I produce bottled water I maintain just enough machinery, inputs and transportation capacity to make my current production goals. I can make small adjustments here and there, but I try to have my costs as fixed and predictable as possible.

If there is a major, unexpected disruption in the supply chain my cost structure can be altered.

Example.  A looming (or just occurred) natural disaster increases the quantity demanded for bottled water. Stores are screaming at me to get them more water!!

The only way for me to produce what I already produce PLUS additional bottles AND deliver it in the short term is to add a production shift (overtime costs!), order more inputs (plastic bottles,etc) which I likely will have to pay a premium to get quicker, and get additional contract trucks to deliver the water (I likely don't have trucks sitting idle). Or I can have my drivers make additional runs in my trucks but that will incur more transportation costs as well.

All these things increase my costs of producing those additional bottles of water that I NORMALLY don't produce on a daily basis.  The Marginal Cost of those bottles is going to be higher than the ones I usually produce. Hence, I should receive a higher price for those bottles.

But will I?  I may not pass on the cost to the retailer for a variety of reasons.  I may require the retailer to pay me more for the bottles but they may or may not charge their customers more for them. It gets complicated.

But what does not get complicated is the increase in cost associated with producing additional units of a good, assuming no/little excess production capacity.

This posting was inspired by this article.  While it is not about the event of a disaster, the principle still holds.

Monday, July 22, 2013

Are people not dining out hurting box office revenues or is a poor box office hurting the restaurant industry? See the data then you tell me...

I have been reading where the movie box office for the summer has been down.  Bad movies? Bad economy? Sequestration?  Effect of January's payroll tax cut finally kicking in?

I don't know which reason makes the most sense, if any of them

I read today where monthly retail sales were down from the previous month.  I started thinking about the relationship between these two measures.

Going to a movie and dining out seem to go hand in hand for many/most people, right?  It makes for a nice day/evening.

The Commerce Department report on Retail Sales has a nice breakdown of each sector of retail and the category "Food and Drink" is one of them.  LUCKY ME!!

I created this crude graph with historical data from the Commerce Dept and only went back to January of 2012.  Figured that was far enough to see a trend.

The line looks like a bull-whip. From January of 2013 (first red dot on left) to present the tail of the whip is unstable. Prior to that is was pretty smooth and trending up.

The erratic trend might/should set off some alarm bells.  Employment in "Food and Drink" has been a savior in the last couple of months.  Is that about to come to an end?

So what do you think.  Is not dining out hurting the movie industry or are crappy, lackluster movies hurting the food and drink industry?  Probably neither, but they are both tethered together for better or worse.

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