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Archive for September, 2010

I studied economics and finance. I work at a firm that specializes in serving the finance industry. I read the Wall Street Journal.

So, I hear and read a lot of the grumblings lately about the state of the country and how poorly Obama is doing at running America.

Usually I stay fairly hushed on the subject because it’s one of those topics you don’t talk about in polite company: Religion, Money and Obama.

I’ve had enough though as of late.

Everyone is so good at spewing the propaganda of media outlets. It should be well known that television and print will publish the topics that get people most riled up. What gets people riled up now? Hating Obama.

Sure, he hyped up his goals– he encouraged people to be optimistic about the government and about the future of the country.
While he has not delivered 100% on his promises, I personally don’t think he deserves the harsh criticisms people love to dole out.

First of all, he inherited a terrible economy. He took over in a wild world where power players like Lehman Brothers, Fannie Mae and AIG quickly lost their footing on the crumbling foundation of an industry held together almost entirely by systemic risk. A scary world where the very notion of a failing economy would circle around and magnify into an even greater dive into recession. How does anyone bandage a hemorrhaging society in three short years?

A lot of money was spent trying to bolster the failing firms our country was so dependent on. People cite worries that foreign investment into America now is a controlling factor in the future of the US. China in particular is named as a huge risk to the prosperity of our country. “What if China sells all of the US bonds?” To that I reply, China is not in a good position to do any sort of thing like dumping US T-bills. China is most heavily reliant upon exports. Which country is a huge importer of goods? Well none other than America! Also, one of the motivating factors for China to invest so heavily into US bonds is that China wanted to maintain the artificially low value of their currency, the RMB. China’s biggest advantage is their low cost of production. Countries like the US must constantly convert USD into RMB to execute transactions in China. If the value of RMB appreciates relative to the dollar than US firms would be less inclined to transact with China and would instead turn to countries like India. So, to maintain the low value, China purchases US bonds. China would have to sell RMB and purchase USD, thereby increasing the RMB supply and increasing the demand of USD. RMB depreciates relative to USD and everyone is happy. If you were in China’s place would you piss off one of your top customers and screw over your main advantage? Not likely.

Speaking of the depreciating value of the dollar. People are worried about increased inflation due to the expansionary monetary policy, see 700B stimulus package. Basic economics tells you that increased inflation leads to decreased purchasing power. Things are more expensive. You aren’t getting paid any more than before. Life sucks. While this is very true, what people fail to realize is how much worse it could be for the country if it experienced extended periods of deflation. Deflation could lead to what is known as the deflationary spiral. The deflationary spiral occurs when consumer expectations are that prices will drop even lower.When people believe prices will drop lower they will hold off making purchases leading to a drop in demand of goods/services. Consequently, firms producing goods/services will not have the revenue streams to continue investing in future production, pay increases, etc… Which leads to lower GDP and the vicious cycle continues.

There are other pitfalls to deflation, but they are very dry and technical, so I’ll spare you the details. In addition to all of this, in 2008 there was a bit of high inflation, but then there was deflation. Between 2009 and 2010, we’re slated for an optimal rate of inflation, “A broad consensus among academic economists and monetary policymakers around the world [is] that the optimal inflation rate is in the range of about 1 to 3 percent” (Mishkin) So, personally, I’m not ready to make a fuss about a banana that costs a little bit more.

 

Year CPI % Change
2000 172.2
2001 177.2 2.90%
2002 179.9 1.52%
2003 184 2.28%
2004 188.9 2.66%
2005 195.3 3.39%
2006 201.6 3.23%
2007 201.3 -0.15%
2008 215.3 6.95%
2009 214.5 -0.37%
2010 217.6 1.45% * Incomplete data. Aug 2010

CPI Data

Healthcare is another big pain in everyone’s side. I’m not going to into this as deep as with the economy, but think about this:

The new healthcare system is failing because we refuse to give up third-party insurers
Third-party insurers make a profit, plain and simple. Running a “universal” healthcare plan in parallel to the existing, money-grubbing one doesn’t save money, it only costs more. So, if we want to see an improvement in the healthcare system, we need to ditch the existing one that clearly does not work and go all in to the new one. If Canada can do it, I think we can do it in a way that is successful.

Personal story time: My mother has pretty severe cancer–no secret there. She’s not that old, 52. She’s very resilient under the circumstances, and her insurer whom she’d been paying money to for the past decade dropped her because she cost too much. I guess the pros of having my mom were outweighed by the shareholders loss of profits. It seems to me the whole purpose of paying insurance is so that when you need help paying for medical costs it’s there. If my mom was deemed terminal, in her death bed, maybe then I could rationalize a situation where it doesn’t make sense continuing payment for treatments, but that’s not the case. She is responsive to treatment, so how does some faceless monster get to interrupt her treatment? Dumb-as-shit Palin called ObamaCare “Death Panels,” but I’m pretty convinced we already have death panels in our current system.

 

Finally, a topic that really is a legitimate gripe: unemployment.
My boyfriend and I grappled financial uncertainty while my boyfriend searched 11 months for a job. He does not have a college degree, which deeply hurt his chances for quickly getting hired. Despite how emotional I could feel about the high rate of unemployment, 9.6%. I still have faith in our country. 10% unemployment quivers in the shadow of the 25% unemployment rate experienced in the Great Depression. Moreover, unemployment is very heavily based on expectation and opinion. It relies on executives and managers feeling confident enough about our country to open their doors and invest money that would otherwise be profits into their workforce. It is also a time consuming process to beef up the labor force to pre-recession levels given the time to interview, hire and train.

All in all, as much as Obama has not succeeded in the promises he made, neither did FDR. We should give Obama his Works Progress Act (which cost $76M 2006 dollars and deemed an essential failure) and hope that a regained American confidence will result in the long-run.

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I don’t have any of your products, but I love (and I’m not the only one) your bold funky statements/creative. Acting on it? That’s another story.

FALL 2010/WINTER 2011 CAMPAIGN

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AND TRENDY!  AND SMART! AND TECHY!

With all the clutter that surrounds us, it isn’t surprising that marketers have turned to changing the way their products are packaged a la vending machines. Here are some of my faves:

1. UNICEF: DIRTY WATER

To urge New Yorkers to learn about the effects of dirty water on developing countries and donate to the UNICEF, this company bottled dirty water in 8 lethal varieties, placed them into a vending machine, and sold them on the streets of Manhattan.

2. BUY A DRINK, BASED ON THE MACHINE’S RECOMMENDATION

This 47-inch touch panel recommends a beverage for you based on gender, age, and environmental factors such as season, time of day and temperature. Accuracy: 75%! It’ll also store your purchasing history for purposes of targeted ads. Creepy. This is in Tokyo’s Shinagawa Station; with plans to install 500+ in the city.

3. DRENCH: PLAY SOME GAMES, WIN A DRINK

In cities across the UK, Drench’s machines challenge passersby to participate in brain games to win free drinks. Why? To illustrate that hydrated brains function better. How clever. You can also play these games online:  Drench site.

4. UNILEVER: SHARE HAPPY

I read about this during June’s Cannes Lion International Advertising Festival.  This idea brings a smile to my face. Even the vending machine delights me (red does elicit feelings of hunger). The concept is simple: smile = get ice cream = photo may be on Unilever’s FB page, Twitter or Youtube. No smile = no ice cream. In the future, consumers will be randomly selected to receive free ice cream. Watch how SapientNitro created this.

5. KIT KAT: HUMAN VENDING MACHINES

Borrowing Japan’s idea of human vending machines, Kit Kat dropped a few of them into London’s Victoria for their ‘Working Like A  Machine’ campaign. Watch video here. FYI,  I could never work in a job like that.

6. FLOSSIE: MEN VENDING MACHINE

New Zealand’s women’s lifestyle magazine, Flossie’s challenge: come up with a way to dramatize their mantra ‘Whatever you need, it’s on us.’ Solution: Packing real single men with vibrators into vending machines.

7. GRAFFOMAT: THE ARTISTS’ LIFE

The Graffomat supplies spray paints, caps, gloves and permanent markets for graffiti artists who want to create a masterpiece on the spur of the moment. This should make the banana of the group happy 🙂 A mystery of whether this is real or a hoax surrounds this –omat.

9. BODEGA: BOSTON’S BEST KEPT SECRET

Bodega, Boston’s hippest ‘underground’ sneaker store, is disguised as a convenience store. In order to actually get to it, you have to step in front of the faux Snapple vending machine to activate the hidden sliding door! Although this machine isn’t selling anything directly, it’s an innovative and experiential approach to entice people to check out the latest kicks.

10. COKE EVERYTHING

Coca Cola has got it going on. They’ve been consistently named Interbrand’s #1 Best Global Brand for the past few years, so it’s no surprise that they’re on top of this technology.

JAPAN’S BAD BOY ROBOT: IS THERE A PERSON IN THERE?

The HAPPINESS MACHINE: IT’S ON US

UVEND: TOUCHSCREEN YOUR DRINK  + DOWNLOAD MUSIC & WALLPAPER FOR YOUR CELLY

COKE FREESTYLE:  RASPBERRY COKE? GRAPE SPRITE? MIX YOUR DRINK WITH 104 DIFFERENT FLAVORS


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