Day: December 13, 2008

A Dinosaur Returns

From an Article in the NY Times written by Eric Dash.

Today, with the financial crisis worsening, the layaway sign has crept back into consumption culture. Discount retailers like Kmart and Sears are aggressively promoting layaway as a smart and exciting way to buy. No less a tastemaker than Oprah Winfrey has suggested that a new frugality might herald the return of the installment plan. “Remember layaway?” she prodded on her talk show this fall. “That is where we are heading.”

Perhaps. But never underestimate the cravings of the American consumer and the convenience of the credit card. Fifty years ago, the financial industry was transformed by a thin piece of plastic. It was an innovation that lifted the American economy — and the world’s, too. By making it easier to obtain credit — sometimes recklessly easy — the credit card empowered people to buy their dreams.

Still, the economic upheaval now under way raises the question: will the current crisis leave a lasting impression on the credit card? Consumers, having watched their home values, their retirement plans and in many cases even their jobs evaporate, are plucking more slowly from their wallets. Banks, already crippled by billions of dollars in mortgage-related losses and fearful that bad credit card debt will balloon, are tightening standards and raising interest rates. And the federal government is considering tough new regulations that the industry says will end up restricting credit further.

If they do, the impact on the American economy could be profound. Debt-fueled consumer spending accounts for as much as 70 percent of gross domestic product.

Do not look now but the ghosts of Christmas’ past is coming to call.  Layaway?

Almost sounds like a novel idea: “Pay first. Buy later.”

Damn! The Luck!

Dutch authorities have revealed details of their plans to clean up Amsterdam’s famous red light district.

They say they will close half the city’s brothels, sex shops and marijuana cafes in a bid to drive organised crime from the city centre.

Council officials gave the sex industry a warning a year ago that they were going to close some brothels.

The deputy mayor of Amsterdam says the plans will stop the city being a “free zone” for criminals.

Last year the city said it wanted to close one-third of the red light district’s brothels, where scantily-clad prostitutes display themselves in shop windows.

But the new measures aim to reduce the number of sex “windows” from 482 to 243, a council spokesman said.

Amsterdam also wants to close half of the 76 marijuana shops in the city centre.

The city council says that some other businesses are also related to the decay of the city centre, including peep shows, sex shows, mini-supermarkets, phone and souvenir shops, and they will also be shut down.

It says there are indications that some red light businesses serve as a cover for organised crime, including drugs and the trafficking of women.

“Money laundering, extortion and human trafficking are things you do not see on the surface but they are hurting people and the city. We want to fight this,” said Deputy Mayor Lodewijk Asscher.

“We can still have sex and drugs but in a way that shows the city is in control.”

Prostitution will be allowed only in two areas in the district – notably De Wallen, a web of streets and alleys around the city’s medieval retaining dam walls.

The area has been a centre of prostitution for hundreds of years.

Prostitution was legalised in the Netherlands in 2000, formalising a long-standing tolerance.

Marijuana is technically illegal in the Netherlands, but prosecutors will not press charges for possession of small amounts. Coffee shops are able to sell it openly.

There goes my European vacation….crap!  Damn! The Luck!

How Does Your Brain Use Information?

The brains of children from low-income families process information differently to those of their wealthier counterparts, US research suggests.

Normal nine and 10-year-olds from rich and poor backgrounds had differing electrical activity in a part of the brain linked to problem solving.

The 26 children in the study, conducted at the University of California, Berkeley, were measured using an electroencephalograph (EEG), which measured activity in the “prefrontal cortex” of the brain.

Half were from low income homes, and half from high income families.

During the test, an image the children had not been briefed to expect was flashed onto a screen, and their brain responses were measured.

Those from lower income families showed a lower prefrontal cortex response to it than those from wealthier households.

Dr Mark Kishiyama, one of the researchers, said: “The low socioeconomic kids were not detecting or processing the visual stimuli as well – they were not getting that extra boost from the prefrontal cortex.”

Since the children were, in health terms, normal in every way, the researchers suspected that “stressful environments” created by low socioeconomic status might be to blame.

Previous studies have suggested that children in low-income families are spoken to far less – on average hearing 30 million fewer words by the age of four.

Professor Robert Knight, added: “This is a wake-up call – it’s not just that these kids are poor and more likely to have health problems, but they might actually not be getting full brain development from the stressful and relatively impoverished environment associated with low socioeconomic status.”

“The study showed that low socioeconomic status children behaved exactly the same way as high socioeconomic status children, but their brain processed the information differently.”

Whatever!

Success Of Factory Sit-In

Do you remember the sit down strike at Republic Windows and Doors?  The workers were being screwed out of their benefits and the plant was closing with 3 days warning of the closing.  Then the workers decided that they would sit-in and demand their rights.

And to their surprise, their drastic action worked. Late Wednesday, two major banks agreed to lend the company enough money to give the workers what they asked for.

“In the environment of this economic crisis, we felt we were obligated to fight for our money,” Armando Robles, a maintenance worker and president of Local 1110 of the United Electrical, Radio and Machine Workers of America, which represented the workers, said in Spanish.

The reverberations of the workers’ victory are likely to be felt for months as plants continue to close. Bob Bruno, director of the labor studies program at the University of Illinois at Chicago, predicted organized labor would be emboldened by the workers’ success. “If you combine some palpable street anger with organizational resources in a changing political mood,” he said, “you can begin to see more of these sort of riskier, militant adventures, and they’re more likely to succeed.”

Bank of America caved to advoid unwanted attention on their financial moves…they are doing their back street trading and getting lots of cash to do it…they wanted to avoid the press and its coverage…yes the workers won this one….but do not look for too many more wins…..the companies are thrilled that the Senate is helping them bust the unions.

Which Way To Throw The Cash?

It began as a taxpayer-financed fund to buy so-called toxic assets, shifted to one that injects capital into distressed banks, and is now veering toward propping up ailing U.S. automakers.

The $700 billion bailout fund administered by the Treasury Department has changed direction roughly in tandem with the economy’s deepening woes.

When it was first conceived, Treasury Secretary Henry Paulson said the fund would be used to buy unwanted or failing assets from financial institutions in a bid to clear the way for lenders to make more loans and loosen a credit crunch.

The sheer mechanics of setting up an operation inside Treasury to evaluate questionable assets that lenders might want to sell guaranteed a slow process, so by mid-November that tack had changed to stress putting capital into banks to ensure they had funds that, hopefully, they would lend.

While he, Paulson,  warned of the economic harm that could come if a major automaker failed, he argued the Treasury-run program was meant only to stabilize the financial sector.

But that apparently changed when the Senate balked at a bailout on Thursday night and the White House said funds from the financial bailout program might have to be used — another change in direction.

Out of the initial $350 billion Treasury has drawn down, only $15 billion is still uncommitted, although Paulson could redirect billions more he had pledged to pump into banks.

Looks like Paulson is not too thrilled with the prospect of helping workers, but he may have no choice in the end.