Tis The Season

Our family has kicked Christmas shopping into high gear this week.  I find that I am often asked what we will buy our son, who will be 10 months-old during Christmas.  My usual response is "not much", since I firmly believe in being cheap for the holidays when your child is too young to know the difference between an X-box and a cardboard box.  Nonetheless, I came across an interesting article in the WSJ regarding starting your child in investing as a gift and a means of financial education.  Here is the link: How to Give Children the Gift of Investing.  At first glance, I thought the idea of buying your kid stocks and bonds for Christmas was pretty lame.  However, after some thought, I am coming around to the idea.  Prior to taking this BUS 501 class, I literally knew practically nothing when it came to finance.  I knew the terms stocks and bonds, but had no idea what the difference was other than I was pretty sure bonds were safer for some unknown reason.  Yet, with this scarcity of knowledge I have purchased a home, acquired a credit card and started saving for retirement.  I'm lucky I have not put myself in financial ruin with my blind pursuits.  Maybe by introducing finance and investment at an early age to my kids, I can set them up for an easier road and more future success than I have had.

The Video Gamer's Day Has Come

Remember the grief your mother used to give you for spending too much time on all of those mindless video games?  Well, it turns out you may have inadvertently been learning some futuristic job skills.  I'm referring to the evolving world of robotic warfare.  Check out the article in the WSJ: War Machines: Recruiting Robots for Combat.  I used to enjoy watching those TV shows where people would build their own robots equipped with axes, saws or any other device capable of inflicting destruction on one's opponent.  It was like the Ultimate Fighting Championships for intelligent people, or those who got beat up by the ultimate fighters in high school.  Now, the government is creating their own robots, albeit with machine guns and grenade launchers replacing the axe or circular saw.  This sounds like a good idea in regards to saving soldiers' lives, but I would imagine the economic cost for robots versus soldiers will be greater.  Likewise, I would think the robots would eliminate much of the need to employ humans.  This technology may raise our deficit and eliminate jobs.  I'm sure these topics will not be highlighted in the press releases.  I'm off to make sure my Roomba is not plotting a coup against me.

The First Cut is the Deepest

Today's Wall Street Journal has an article detailing a plan by a White House commission to cut the federal deficit.  Check it out: Deficit Panel Pushes Cuts.  The plan includes horribly unpopular cuts to entitlement programs like Social Security and Medicare, defense spending, and middle class tax breaks.  Being fairly conservative, I suppose I should jump at the chance to criticize President Obama's crew for another terrible plan.  Yet, after reading some of the details I have to admit that I think this plan is a big step in the right direction.  Unfortunately, I am certain this plan will not come to fruition because we Americans only support cuts that do not impact us.  People will eagerly rally to support a "balanced budget", but if you want our votes you had better not plan to do anything that will negatively impact our pocket books.  Likewise, too many politicians are eager to jump on the bandwagon of this sentiment and portray anyone who proposes cuts to entitlements as a villain.  I may not be eligible for Social Security or Medicare, but as I member of the middle class I am willing to accept losing some tax breaks.  I will gladly pay my portion to help get out of this economic hole we are digging.  Medicare/Medicaid, Social Security and Defense make up nearly two-thirds of federal spending.  It only makes sense that they should have proportional cuts to reduce the deficit.  It's frustrating that most seem to burst with the desire to fix the economy, but are only willing to give up someone else's piece of the pie.

Not a Formula for Success

Why does it seem like America is no longer the economic superpower it once was?  Perhaps, with the shift to a more global economy, consumers care less about "buying American" and more about getting the most quality for their dollar.  Today's article in the Wall Street Journal detailing car reliability ratings illustrates the point.  Here is the link: Rating Car Reliability: Detroit Moves Up but Asia Rules.  In summary, of the 27 brands ranked for reliability by Consumer Reports Ford ranks 10th, Chevrolet (the highest ranking GM brand) ranks 17th and Chrysler stumbled into the ranks at 27th.  However, I am almost certain that if one surveyed the rankings of wages and benefits, the American autoworker would be at the top of the list.  Yet, we as Americans are still perplexed at how to get out of our economic funk.  Compare American auto producers versus our foreign competitors.  We produce lower quality cars, which results in fewer sales at a lower price tag.  Then we pay our workers more in wages and benefits.  It doesn't take a genius to figure out why we had to bail out the industry.  The days of getting by on average products and services is gone.  Check out Thomas Friedman's column at the NY Times The Election That Wasn't.  He does a great job of expanding on the same sentiment.

Up, Up and Away

Have you flown recently?  If so, you are likely a superhero, a drug taker, an airline passenger or perhaps any combination of the three.  As just a plain, old airline passenger and wannabe superhero I had a hard time swallowing the mass of charges included in a recent air travel ticket purchase.  The total cost of a trip ends up nowhere near the price quoted on an initial search of an airline website.  So, today's story in the Wall Street Journal, Airline Profits Taking Off, came as no shock to this customer.  The essence of the article was to report the record profits that U.S. airlines have reported this quarter.  The reasons for these gains should be fairly obvious.  The increase began when airlines permanently raised their prices in response to the skyrocketing oil prices of 2008.  Likewise, they tacked on a slew of charges including those for luggage.  The recent mergers of several big airlines have created a practical oligopoly in the U.S. market.  This might normally be good for consumers, as a price war could erupt between competitors.  However, as the WSJ article reports, the airlines are now concerning themselves more with returns, rather than market share.  Translation: They care more about profit than growth.  If this mentality continues across the industry, we should not expect to see prices fall anytime soon.  I guess I should thank Southwest for not charging me for my bags.  Those rebels.  Bold Prediction for 2011: Quarter- operated bathrooms and $1 charge for hitting the flight attendant call button.

Going Green with a Little Noise Pollution

Today's Wall Street Journal (yes, I read WSJ quite a bit) features a story about Sun Chips ditching their attempts to "go green" after numerous complaints from their customers.  Here's the link: Sun Chips Bag to Lose its Crunch.  In summary, Sun Chips created chip packaging that was advertised as biodegradable.  On the surface, this sounds like a good idea.  Yet, as a lover of the Harvest Cheddar Sun Chips, I can tell you the new earth-friendly bag has one giant drawback.  It's loud.  I mean really loud.  So, unfortunately every time a consumer opens the bag of their favorite snack everyone within a half mile can hear the loud crinkle of them digging into their chips.  I have no idea who was in the marketing meeting when this idea came up, but a rational person would think that someone might have raised the concern over the obnoxious sound of the bag.  When eating these chips, opening the bag is like making an announcement to your friends and family that you are just too gluttonous to put your chips down.  They may even think a bear broke into your kitchen and is destroying your home in an effort to satisfy its insatiable hunger.  This is a classic example of an idea that is good on paper but never should have made it to production.

Will Work for Food, as Long as the Work is Easy

Yet again, the U.S. continues to display the traits that have us sinking from world power to world pouter.  We can find plenty of energy to complain about the lack of jobs and poor economy, but we won't accept jobs unless they pay very well, offer regular 9-5 hours, and offer a comfortable working environment.  Check out this article from the Wall Street Journal regarding a meat factory struggling to find workers: Hot-Dog Maker, Lured for its Jobs, Now Can't Fill Them.  Our government has made well-intentioned efforts to offer unemployment benefits, debt relief help, and hundreds of other programs to aid the American worker, yet we workers do not seem willing to help ourselves.  We are becoming a culture dependent on the government to somehow meet our needs, and less and less of us value hard work to make a living.  Businesses need laborers to make their products in order to build equity, and I can no longer blame them for taking their jobs elsewhere when I read stories like this about American workers shunning these opportunities.