World Clock

This is a repeat of an older post, but I still love this site. Check out the world clock. Do you see any trends? Any of the numbers surprise you? Check out some of the other features on the site.

Economics: The 180 Degree Science

Read Steve Latter's article about how studying Economics just may cause you to re-examine some long held beliefs about the world. In your comments be sure to answer two of the four discussion questions found at the end of the article. Enjoy your Labor Day Holiday. Three cheers for the American worker, the most productive being the world has ever know.

The National Debt

Follow this link to view the 30 minute film entitled "I.O.U.S.A." The filmmaker is obviously not a big fan of George W. Bush. However, with that he mind, he still does an excellent job of educating us about the size and problems of the national debt. Leave your thoughts after watching the video in the comments section of this blog. Each comment must be a minimum of fifty words, make sure to leave your name and class period at the end of the comment. What are the lasting impressions that this video left on you?

Assignment #1

Follow link to Reffonomics.com, click on Macroeconomics Textbook. Click on "Basic Concepts" in the left hand column. Read all parts of first section "What is Economics?" Take online "What is Economics" multiple choice Quiz. Print off score sheet after quiz and turn in at the beginning of class Thursday August 27.

Welcome!

Welcome Class of 2010. The wonderful world of Economics is waiting for you.

Monkey Business

For this our final blog of 2008-09, I've decided to resurrect an oldie but a goodie.
As you all know, I am no big fan of monkeys. However, this is a pretty interesting article on the research being done by a Yale economist testing the economic behavior of a group of Capuchin monkeys.
What do you think of his research?

A Sin Tax on Video Games

OK, one of you recently told me that all of my current events and news stories were negative and that I was depressing all of you every day in class. Here is a lighter side story. A sin tax is a tax on negative behavior such as taxes on cigarettes or alcohol. A Louisiana lawmaker has decided that all of this video gaming and TV watching has got to stop. It's not just Louisiana either, lawmakers in New Mexico, Texas, and Wisconsin have tried to get similar legislation passed. What are your thoughts on this? Are the youth of America spending too much time in front of their Xboxes and Wiis? Will this legislation alter their behavior?

Making Sense of the Banking Crisis

This is, perhaps, the most engaging and accessible explanation of the current "Great Recession" I have come across. In this 59-minute podcast, Ira Glass and his cohorts at Chicago Public Radio and NPR create an ultra-simplified world of just one eager dollhouse buyer, a would-be banker with $10 in his pocket, and a young man with $90 he wants to put into a savings account to explain the financial mess we find ourselves in. This recording explains why TARP is called TARP, what insolvency is all about, what the term toxic assets means, and why America's biggest banks are afraid to "mark it to market" or re-value those toxic assets.

After listening I have a better appreciation for the state of all things financial but I am left wondering, what's the best way out of this morass?

Discussion Questions

1. Can you point to an underlying cause that precipitated this crisis?

2. Does the government nationalize the banks for a time, robbing banks' shareholders of their investments but allowing banks to start over with a clean slate? Does it help the banks get back on their feet by purchasing toxic assets with taxpayer money at artificially high prices? What are the short and long term effects of these different strategies?

3. Do you think the United States has "learned its lesson"? Will people (and businesses and governments) change their behavior? Or are we doomed to repeat this process?

4. Are there safeguards the government can introduce that will keep this from happening in the future?

Buy American

It seems obvious that the idea of "buying American" is a good thing. Shouldn't we try to buy American made goods, especially during this period of recession and economic downturn? It could almost be seen as our patriotic duty to purchase American made goods. We would be saving American jobs, wouldn't we? Well what seems obvious is not always the economic truth. Read this blog post by Steve Latter. He makes some very good points about free trade, and the evils of protectionism.

Should the Government Bail Out the Auto Industry?

by Victoria Miu

America's Big Three—General Motors, Chrysler, and Ford—are in big trouble. Sales from the not-so-fuel-efficient fleet of American-made vehicles had already suffered considerably because of high gas prices even before the financial crisis began to get serious in September of 2008. Faced with undesirable terms in private credit markets, the Big Three are now turning to the government for financial assistance. The House passed a bill to rescue the Big Three car companies with $15 billion in emergency loans on Wednesday, December 10, but the Senate abandoned the plan the day after. Should the government bail out the auto industry?

Those in favor of the bill argued that the rescue plan can prevent the loss of 500,000 jobs in the auto industry. Job losses in the auto sector would most likely have spillover effects in other sectors. As auto workers lose their jobs, they would consume fewer goods and services, negatively affecting industries in retail, health care, and financial services. With unemployment already rising, supporters of the bailout argued that keeping auto workers in their jobs is much easier than creating new jobs for them.

Opponents of the bill compared the bailout to the inefficiencies generated by government subsidies and tariffs. Many companies face financial problems—why should the government save the Big Three and not the others? Poor performance is typically a good signal that a company should change how and what it produces. A partial government takeover of American auto companies will not ensure that the firms will start producing vehicles that people want to buy. A bailout, according to critics, will simply prolong the inevitable: the consolidation of the American auto industry, the large number of layoffs that come with it, and the migration of workers from autos to more profitable industries.

Discussion Questions

1. What is the role of labor unions in contributing to the financial problems facing the Big Three? In particular, how well do the wages reflect the productivity of the workers in the Big Three? Click here to read more.

2. Do you think the problems faced by the Big Three stem primarily from the recent financial crisis or from longer-term decisions about what types of vehicles to produce and how to produce them?

3. Some suggest that another reason leading to the failure of the Big Three is that American consumers prefer cars made by foreign companies, such as Toyota and Honda, to cars made by American-owned companies. How does the market of foreign-made cars affect the demand for American cars?

The Snuggie

Follow the link in the title to a USA Today article on the Snuggie. The Snuggie is the latest product to make the jump to pop culture icon. Why has this product become so popular. There are a host of other blankets-with-sleeves (a.k.a. “robes”) on the market, from the “original” Freedom Blanket to the socially conscious but awkwardly named Slanket. One upscale version, the Nuddle, even includes a pocket in front for your hands and another at the bottom for your feet (the Nuddle is so upscale that it doesn’t have sleeves, it has slats).

Niche-marketed blankets didn’t catch on last winter, when home heating costs skyrocketed with rising fuel prices.

So why now?

According to their ads, 4 million Snuggies have been sold in the past 3 months. Could the downturn in the economy have anything to do with the increase in infomercials and sales of these products?

Have you ever fallen victim to one of these must have products? Think "Shamwow", "Chia Pet", "Loud and Clear", etc.

Are Newspapers a Thing of the Past?

Precious News
by Kevin Zhang

News of Barack Obama's historic election on November 4 dramatically increased demand for newspapers on November 5. Tall, bold headlines announcing the nation's new president transformed copies of the daily paper into collector's items. Though many publishers printed thousands of extra copies in anticipation of higher demand for their post-election issue, at newsstand prices, supply simply couldn't keep up with the surge in demand. On Wednesday morning, many looking to own a piece of history found only empty news boxes and long lines in front of newsstands.

Not surprisingly, copies of major newspapers' November 5, 2008 issue began selling for as much as $200 on eBay and Craigslist.

This is a classic example of how a market responds to an increase in demand. The market equilibrium on a normal day for newspapers is at point A with price P1 and quantity Q1. As the demand curve for newspapers shifts rightward from D1 to D2 (people want more newspapers at any given price level), both equilibrium quantity and equilibrium price of newspapers increase as a result—from P1 to P2, and Q1 to Q2. On November 5, the quantity of newspapers supplied increased in part because publishers anticipated higher demand and in part because they scrambled to reprint when demand was even higher than expected. In the end, more newspapers appeared in the market, and at higher prices. The new market equilibrium for newspapers on November 5 is now at point B.

Though the consequences of the sudden shock in demand for November 5 newspapers are pretty much as expected, the reasons behind this shock are not so clear.

Though newspapers received renewed attention after the election, newspaper circulation has fallen steadily across the country for years. The ease of instant access to up-to-date information and the accessibility of free content have turned many readers to the Internet for news. The spike in demand for newspapers after the election raises interesting questions about the value of the daily newspaper in a digital world.

With the prominence of the Internet, why do you think people still wanted physical copies of newspapers with news they probably already knew? What factors do you think drove up the value of newspapers after the election? What do paper newspapers have that websites do not?

Are Women About to Become a Majority of the U.S. Work force?

Check out this NY Times article about a truly historic economic event. Women are about to make up the majority of the U.S. labor force. Read the article and see what you think. Is it time for a little role reversal. Is it time to redefine our beliefs about gender responsibilities?

Which Jobs are Recession Proof?

Recession-proof
by Kevin Zhang


Doomsayers are coming out of the woodwork en masse as 2008 ended during a dismal economic downturn. With consumer confidence at an all-time low, the financial industry shell-shocked as grand, monolithic companies crumbled all around, and nearly 2 million jobs lost in the past year, the end looks nigh indeed.

But before you don your sandwich boards and raise high your signs, things may not be as bad everywhere as they seem.

The economy rises and falls in what's called a business cycle. Some years are relatively prosperous with rapid economic growth and expansion while other years see the economy contract or stagnate. These fluctuations last over periods of years and their timing is largely unpredictable.

Some firms stick with the general trend of the market, their business conditions weakening when the market weakens, strengthening when the market recovers. These are procyclical firms. Others, countercyclical firms, do the reverse; their business conditions weaken when the times are good, and strengthen when times are bad. There are still other industries that don't depend on how the economy is doing at all.

So, while the bankruptcies and bailouts get the boldest headlines these days, here's a brief list of industries that are doing just fine.

The funeral services industry depends more on long-term trends such as aging populations and baby booms rather than on the twitching of the stock ticker. And of course, it also helps that their services are always in demand.

The entertainment industry is another good example. Revenue from concerts and movies have stayed strong during this economic downturn. Faced with gloom and doom, many find the few hours of escapism well worth the price of admission.

Discount stores, most notably Wal-Mart, are attracting cash-strapped customers looking to get the most out of their money.

As jobs get scarcer, going back to school makes a lot of sense for those looking to weather the fierce competition in the job market and to improve their skills and credentials. According to the Labor Department, the education industry has added 9,800 jobs in November.

Can you think of any other industries that are counter-cyclical? Has the recent recession caused you to rethink your career plans?

The World Clock

This is a repeat of an older post, but I still love this site. Check out the world clock. Do you see any trends? Any of the numbers surprise you? Check out some of the other features on the site.

We are moving back to this site

We will resume our blogging project on this site. You may still use the wetpaint.com site to get class notes and to reference the other resources on that page, but our blogs and responses will now be posted on this site.
Mr. Pye

Texas to Execute 10 Men in a Month

We spoke about this in class the other day. This is one of those hard issues that you need to think about and have an opinion on as an adult. Remember you vote for candidates that share your views on the issues. This is one of those issues. Where do you stand on the question of capital punishment?

A Call to Action

Check out this op ed from Robert Samuelson at the Washington Post. As young voters it is now your responsibility to take charge of your own future. What do you think about the author's ideas?

A Hippocratic Oath for Business People?

Over the past year the credit crisis has erased trillions of dollars in investor wealth. Peoples retirement funds, savings for college, and home equity have disappeared almost overnight. The economic downturn has now spread worldwide, with one country, Iceland, teetering on the edge of bankruptcy. Business executives assuredly played a part in this catastrophe.
Perhaps it is time to come up with a business version of the Hippocratic Oath, taken by doctors and medical workers. This interesting idea is the thesis of this article taken from the Economist magazine. Sound like a good idea or not. Can you think of any unintended consequences that might arise?

What happened to all my money?

editor's note - There will be two articles to comment on this week to make up for last week.

Read this interesting article about what constitutes money and what doesn't. Will the events of the past few weeks cause a fundamental change in our assumptions about the market, and how we invest our money? The Great Depression caused our grandparents to lose their faith in banks. What lessons do you think we will come away with from this current crisis?

Law of Unintended Consequences

When the government gets involved in situations, we often see that unintended and unanticipated consequences arise. A perfect example recently occurred when the Nebraska state legislature passed a "safe haven" law designed to protect mothers who drop off newborns that they are unable to care for at Nebraska hospitals. Read the article and leave your comments. Can you think of any other examples of the law of unintended consequences when the government tries to fix something but messes it up even more?

Is it Time to abolish the Penny?

With all the doom and gloom of the previous week, I thought it was time for a lighter post. Follow the link above to an activist website dedicated to abolishing the penny. As you know the Mint just announced its plans to introduce four new designs for the penny. Leave your thoughts on this and on the penny in general.

A Return to New Deal Intervention in the Economy

While we were suffering along without power, it was a week for the ages on Wall Street. By Wednesday, the Dow was down 800 points, and was poised to drop further. The Federal Reserve decided to keep interest rates unchanged. Financial heavyweights like Merril Lynch, Lehman Bros., Morgan Stanley, and Goldman Sachs were declaring bankruptcy or agreeing to be sold to the highest bidder. Gold prices were surging as investors dumped their stocks and invested in gold. Oil prices began climbing again. It was truly a grim situation.
Then on Thursday, word leaked out of a possible government plan to stop the bleeding. The government would step in and start buying up these bad mortgages that were killing the banks and financial firms. The plan is still being worked out by Congress, but it offered hope for a long term solution. Stocks rebounded and the Dow ended on Friday where it started the week.
Here is the problem: $30 billion to save Bear Stearns, $85 billion to save AIG, $500 billion to save Freddie Mac and Fannie Mae, and now as much as $1 trillion to buy up bad mortgage debt. We really don't know how much this bailout will cost.
Should government be in the business of saving the banks from their own bad decisions? It was the banks that made these bad loans in the first place. Will business owners continue to make poor decisions knowing that the government will always come to the rescue. Can we continue to keep spending money like this? What would Adam Smith say?
-or-
Was this action necessary to save the U.S. economy from collapsing? Doesn't the federal government have a responsibility to do what it can to keep us out of recession?
Read the articles and decide for yourself. Post your comments on this wild week.

The High Price of Gas Changing Our Driving Habits?

Read this article, and comment on whether or not the high price of gas is changing the way you drive or even how much you drive.

The American Worker

In honor of Labor Day, read this article about the American worker and leave your comments.
"American workers stay longer in the office, at the factory or on the farm than their counterparts in Europe and most other rich nations, and they produce more per person over the year."

Assignment #1

Follow link to Reffonomics.com, click on Macroeconomics Textbook. Read all parts of first section "What is Economics?" Take online "Hot Potato" Quiz. Print off score sheet after quiz and turn in at the beginning of class Thursday August 28.

Welcome Class of '09

Welcome to AP Economics. This blog will contain readings and assignments that will need to be completed weekly. You must comment on all posted articles, and comments must be a minimum of 50 words. All posts for the week must be completed by Friday at midnight. Any posts made after that time will not be counted.

Monkey Business

As you all know, I am no big fan of monkeys. However, this is a pretty interesting article on the research being done by a Yale economist testing the economic behavior of a group of Capuchin monkeys.

Is the Housing Market Really That Bad?

Check out this story about a new incentive that home sellers can offer potential buyers, the "death incentive."

The Argument Over Free Trade Continues

Read Mankiw's latest regarding the ongoing debate over free trade. Economists and the public are at polar opposites on this issue. Now it is bleeding over into the presidential race.

Candy Sales Going Underground

"Sugar Pushers" roaming our halls. Teachers confiscating candy from students. What is happening in our schools. In Connecticut, an eigth grader and vice president of his class was forced to step down when he was apprehended with an illict bag of skittles. Any thoughts?

Financial Mess

Want a good explanation of the current financial mess the economy is facing, check out Paul Krugman's NY Times editorial. I usually don't agree with Krugman, but this is a very clear and concise explanation of today's banking crisis.

High Price of a Gallon of Gas

The national average is $3.20 per gallon. It will only go higher. At what point do we start making changes in our lifestyles? Will you continue to drive as much as ever, and just cut back elsewhere? Is the demand for gas totally inelastic? Surely, at some point we will start driving less. What are your thoughts?

How Government Makes Things Worse

I know we just had an article on the law of unintended consequences, but I couldn't pass this one up. Ethanol and Sub-prime have more in common than what we would think.

Price of gold soars

The price of gold has reached historic highs. As young economists, can you predict some of the consequences of this? Go beyond the obvious of just more expensive jewelery.

The Scarlet Letter for Drunk Drivers

What do you think of this plan being proposed in the state of Washington? Get convicted of drunk driving and your car is affixed with a bright yellow license plate for a year. Will this serve as a deterrent? The bill's author seems to think it will prevent repeat offenses, and warn the rest of us to give these cars a wide berth. What do you think?

Free Cell Phones for Achievement in School

Obviously, doing well in school should be its own reward. However, in todays society that doesn't seem to be the case. What do you think of this program being tried out in a few Brooklyn middle schools? Free cell phones and minutes for good grades.

Thoughts from a respected Economist

Check out this article from renowned economist, Greg Mankiw. It is a very insightful commentary about the economic problems this country will face in the near future. Dr. Mankiw is an economics professor at Harvard, and he served as head of the Council of Economic Advisors under President Bush. He has also written numerous textbooks on Economics.

The Baby Name Wizard

This is a fun little site. It tracks the popularity of thousands of different baby names. Check out the historical trends. Check out your name and see where it falls on the timeline.

The Death of the CD

This is a short article about downloaded music sales surpassing CD sales by the year 2012. Will CDs go the same route as LPs, 8-tracks, and cassetes?

The Secret to Raising Smart Kids

This article raises the point, it's all about effort and not about talent and ability. What are your thoughts?

The Law of Unintended Consequences Strikes Again

"What do a deaf woman in Los Angeles, a first-century Jewish sandal maker and a red-cockaded woodpecker have in common?"
Politicians would do well to remember a basic principle of Economics, "the law of unintended consequences."

Is it time to say goodbye to the Penny?

Has the venerable $.01 piece outlived its usefulness? Check out the website for some of the arguments in favor of eliminating the penny. What do you think?

Pigou would say, Hooray for the Irish!

A Pigovian tax, named for British economist Arthur Pigou, is a tax aimed at diminishing an activity seen as harmful to society. An example would be a pollution tax on companies guilty of polluting the air or water.
The Irish have taken this step to rid their society of plastic bags. Could we do the same here? Should we? Can you think of other activities that could be taxed?

World Clock

Check out this facinating website. Did any of the numbers surprise or even frighten you?

Bail Bonds; A Purely American Tradition

I did not realize that the use of bailbondsmen was unique to the American Justice system. Read this article and comment; What are your thoughts on allowing people to pay a percentage of their bails to bondsmen in order to get out of jail while awaiting trial? Is it free enterprise at its best? or Is it a practice that needs to be done away with?

Tax Rebates by May

Tax rebates of up to $600 per person could be in our hands by early May. Is this a good idea? Can you think of any drawbacks? Could it just be an election year ploy?

Cash for Grades

The New York school system is considering a plan for rewarding student performance with cash. Do you think this is a good idea?

What does Economics mean to you?

As we embark on this new semester of Economic study, I am curious to know what Economics means to you and what role it plays in your life. Leave your comments.
Mr. Pye

Week 1 Assignment

Go to Reffonomics website. Click on Lesson Plans link. Under basic concepts lessons, click on "Introduction to Economics." Review lessons 1 and 2. "What is Economics?" and "Opportunity Cost vs. Tradeoffs." Click on Multiple Choice quiz link and take 10 question MC quiz. Print off your score. Bring to class on Friday January 25, 2008.

Holiday Wishes

Have a Merry Christmas, and a Happy New Year. See you in 2008.