Feb
18
This is tragicomic:
Enrollment rates are far higher than completion rates. Many college students drop out before completing their degree. Less than 60 percent of first-time full-time students seeking a bachelor’s degree at four-year institutions in 2000-1 completed that goal at that institution within six years (it’s difficult to track students who transfer to other institutions).
In other words, enrolling in college is a bit like joining a health club. And as with a health club, the revenue comes from signing people up, not from encouraging them to use the services. [link]
It’s a tough problem, and the challenge is to find the balance between business and value. Focus on creating a product that’s valuable enough and people will see its value, even if it does take some time. The rest of the stuff usually sorts itself out. Simplistic? Yes. Cliched? Yes. But something to think about.
Feb
18
And not one of those cheap chains either. Walgreen’s buys Duane Reade. Here’s The Curious Capitalist on the issue:
Duane Reade was a ratty little downtown cut-price operation until management decided that the key to drug retailing isn’t service—theirs was awful — but location. In the great space race of the last decade Duane Reades began to spring up everywhere there wasn’t a new bank branch going in. Result: there are 257 Duane Reades but independents got squeezed out. [link]
It’s a $1.08b deal, but almost half of that is Duane Reade’s debt.
Jan
08
Don’t pay your mortgage, that is. On purpose. That’s right. Just walk away from it. Roger Lowenstein in yesterday’s NYT:
…voluntary defaults are a new phenomenon. Time was, Americans would do anything to pay their mortgage — forgo a new car or a vacation, even put a younger family member to work. But the housing collapse left 10.7 million families owing more than their homes are worth. So some of them are making a calculated decision to hang onto their money and let their homes go. Is this irresponsible? [link]
Jan
08
Looks like the deficit in Q1 of FY 2010 was about $56 billion more than the same time last year. Although spending went down, revenues went down even more. Here’s what CBO Director Douglas Elmendorf had to say on his blog:
The federal budget deficit was about $390 billion in the first quarter of fiscal year 2010, CBO estimates in its latest Monthly Budget Review—$56 billion more than for the same period in fiscal year 2009 despite reduced spending related to turmoil in the financial markets. Outlays were slightly lower than they were last year at this time, but revenues have fallen by about 11 percent. Later this month, CBO will issue new budget projections for 2010 and the following 10 years. [link]
These are estimates, of course, but it’s always interesting to hear what the CBO has to say.
Dec
11
Brad DeLong gives us the real unemployment rate:
The real unemployment rate–the share of Americans who say that they are actively looking for work and don’t have jobs–has been drifting down since late spring–from 9.7% in June to 9.4% in November. The seasonally-adjusted unemployment rate over that same period has risen from 9.5% to 10.0%, as the actual unemployment rate has drifted down much more slowly than it usually drifts down from June to November as things pile up for the Christmas rush.
Dec
11
More gloom and doom for the holiday season – historian Niall Ferguson for Newsweek:
This is how empires decline. It begins with a debt explosion. It ends with an inexorable reduction in the resources available for the Army, Navy, and Air Force. Which is why voters are right to worry about America’s debt crisis. According to a recent Rasmussen report, 42 percent of Americans now say that cutting the deficit in half by the end of the president’s first term should be the administration’s most important task—significantly more than the 24 percent who see health-care reform as the No. 1 priority. But cutting the deficit in half is simply not enough. If the United States doesn’t come up soon with a credible plan to restore the federal budget to balance over the next five to 10 years, the danger is very real that a debt crisis could lead to a major weakening of American power. [link]
By the way, Happy Hannukah!
Dec
11
From The Economist’s Free Exchange blog:
RUSSIA was never an emerging market in the same mold as Brazil, China, and India, but the differences between the former and its acronymous partners have become crystal clear during the global recession. China’s statistics bureau reported today that Chinese industrial production grew by 19.2%, year-over-year, in November. Imports were up nearly 27%. And at present, China’s output growth in the third quarter was clocked at 8.9%.
Russia’s output also shifted 8.9%, year-on-year, in the third quarter. The shift just happened to be in the other direction. That’s an improvement from the 10.2% second quarter decline, but it’s still pretty awful. Forget the BRICs; Russia and Eastern Europe are forming their own exclusive club—of economies literally decimated by the financial crisis and global downturn. [link]
Nov
06
Ok, not zero. But still pretty impressive for the clunkers. From EconomPic Data:
Motor vehicles added a whopping 1.66% of the 3.5% growth in Q3 GDP. More specifically, motor vehicle output was up… wait for it… 157.6% on an annualized basis. [link]
Nov
02
Tyler Cowen answers two question asked to him by Noah Stoffman, and in the process predicts the future:
I believe with p = 0.6 that the world is in for a “great disruption.” It has come to MSM first but it will not end there. In the longer run I am optimistic about the results of this change — computers will free up lots of human labor — but in the meantime it will have drastic implications for income redistribution, across both individuals and across economic sectors. For a core metaphor, the internet displacing paid journalism and classified ads is a good place to start. The value of newspapers has been sucked into Google. [link]
And gives us some sound investment advice:
Suppose you were given a large amount of money (say $10 million) and you wanted to make sure that you would remain (relatively) wealthy in as many future states of the world as possible. Where would you invest it? Remote arable land? Organizing a cult of followers?
If you have $10 million, the safest thing to do is to diversify across currencies, buy government securities of various kinds, hold $1.5 million in gold, and otherwise not invest at all. Oh yes, invest in some cheap hobbies. In a real crunch remote land is worthless — transport costs — and your cult followers are as likely to betray you as not. Trying to become a professor is no longer such a safe path. [link]
Oct
19
From week-before-last’s Economist, the Buttonwood column:
Wealth consists of the goods and products we wish to consume or of things (factories, machinery, an educated workforce) that give us the ability to produce more such goods and services. Financial assets arise from the desire to postpone consumption so that money can be saved, either for precautionary reasons or to invest so that more goods and services can be consumed in the future.
Looked at in that way, financial assets are not “wealth” but a claim on real wealth. [link]
Seems commonsensical, but alas, common sense is not all that common.