Louis CK On Technological Advancements and Quality of Life

View the video at Sangent

World Series of Poker: The Second Place Winner Won Twice As Much Cash

The World Series of Poker ended this week at the Rio Hotel and Casino in Las Vegas, and Denmark's Peter Eastgate (pictured above) became the youngest-ever winner of the world title. He is very much the new breed of player: 22 years old, Danish, mathematically brilliant, who gave up a fledgling career in accounting to "turn pro."

As the winner of the main event Peter won about $9.2 million, but would he actually end up with all that money?

Denmark's tax rate is 45% on the first 4 million Danish Kroners (about $680,000) and 75% on income above that. Mr. Eastgate will owe about $6.7 million in Danish taxes, and will get to keep only $2.5 million of his winnings—just 27.23% of his prize. In other words, he faces an effective tax rate of 72.77%. Ouch.

Ivan Demidov of Moscow finished second and won $5.8 million. Russia has a 13% flat tax rate, so Mr. Demidov will owe about $755,247 to the State Taxation Service of Russia. After taxes, Ivan will still have more than $5 million, more than twice as much as the first place Danish winner.

Read more here.

H/T: Carpe Diem

In A Slowing Economy, SPAM Thrives

It may be "Crazy Tasty," as the can says, but the increasing demand for SPAM is not crazy to economists. SPAM is an inferior good, where as income falls, demand rises for an inferior good. In the following article from the NY Times, demand is also rising for other inferior goods, such as rice, beans, among others. Here is more from the NYT:

"The economy is in tatters and, for millions of people, the future is uncertain. But for some employees at the Hormel Foods Corporation in Austin, MN, times have never been better. They are working at a furious pace and piling up all the overtime they want.

The workers make Spam, perhaps the emblematic hard-times food in the American pantry....

Even as consumers are cutting back on all sorts of goods, Spam is among a select group of thrifty grocery items that are selling steadily.

Pancake mixes and instant potatoes are booming. So are vitamins, fruit and vegetable preservatives and beer, according to data from October compiled by Information Resources, a market research firm.

“We’ve seen a double-digit increase in the sale of rice and beans,” said Teena Massingill, spokeswoman for the Safeway grocery chain, in an e-mail message. “They’re real belly fillers.”

The Worst Economy Since When?

Above you can see the US Unemployment Rate since the 1930's. So comparisons to the 1930's seem quite overblown. It is likely that the unemployment rate will continue to rise, but more likely to levels seen in 1992, when the rate was 7.8%, or in the early 1980's when the rate hit 10.8%. So perspective is needed when analyzing the current situation.

Markets At Work: Presidental Inaugration Tickets Going For $40,000.

Markets at work, Presidential style. It looks like some tickets to the Presidential Inauguration may sell for as much as $40,000 (tickets are handed out for free by Congressional offices and other connected politicians, donors, etc.) What recession? Anyway, some Senators are trying to ban the resale of these tickets on sites like E-bay, Craigslist, etc. I highly doubt this will stop those who place a high value on tickets from getting them. Whenever you have many people after scarce goods, the price will rise. Read more here.

Happy Halloween

The first cartoon reflects the Stock Market in October, that was definitely scary. The worst month since 1987.

Now That's Some Serious Inflation

Check out these pictures from Zimbabwe:
Headed to the grocery store.

The 1.243 Billion dinner bill (I hope that tasted good)
Paying the tab.
See more pics here.

The World's Most Expensive Cars

Read here from Forbes to see the World's most expensive cars. It will be interesting to see how these sell with the economic slowdown. Photo: The Saleen S7 ($395,000)

Poor Warren: Buffett is Down $9.6 Billion This Year, Only Has $52.1 Billion Left

Here's an interesting article in todays Wall Street Journal regarding how much today's chief executives have lost in the stock market this year. Here's a sampling: (Photo: Warren Buffet)

1. Warren Buffett (Berhshire Hathaway): Down $9.6 Billion (Value of remaining equity: $52.1 Billion)
2. Larry Ellison (Oracle): Down $6.6 Billion (Value of remaining equity: $19.8 Billion)
3. Steve Ballmer (Microsoft): Down $4.8 Billion (Value of remaining equity: $9.8 Billion)
4. Jeff Bezoz (Amazon.com): Down $4.2 Billion (Value of remaining equity:$5 Billion)

Overall, The top CEO's at 175 of the U.S's biggest companies have lost $42.3 billion dollars from the beginning of the year.

Centrally Planned vs. Free Market Economies

Here you can see the difference between North and South Korea at night. According to the CIA Factbook, South Korea's GDP is $25,000, where North Korea's is $1,700. Here, Professor Mark Perry from the University of Michigan writes how Socialism has failed and why capitalism works.

One of My Favorite Graphs

Check Out The Econ Nerd Featured In the Latest Minnesota Council on Economic Education's Newsletter

Read more here on my trip to Georgia, or click on the article below.

WOW!! Dow Has Biggest Point Day Gain EVER!! UP 936 POINTS!

Dow has biggest point gain ever. 936 POINTS! En Fuego! Read more here.

Gas Below $2.60 in the Twin Cities

THE WORST BEAR MARKETS OF ALL TIME

Here's an excellent interactive chart in the NY Times about the worst bear markets of all time.

THE WORST WEEK EVER!

If you are in the stock market, like 60% of Americans, it was a really, really bad week. Read more from the Wall Street Journal here.

Another Great Depression? Noble Prize Winning Economist Becker Says No

Is this a final "Crisis of Global Capitalism" -- to borrow the title of a book by George Soros written shortly after the Asian financial crisis of 1997-98? The crisis that kills capitalism has been said to happen during every major recession and financial crisis ever since Karl Marx prophesized the collapse of capitalism in the middle of the 19th century. Although I admit to having greatly underestimated the severity of the current crisis, I am confident that sizable world economic growth will resume before very long under a mainly capitalist world economy.

Consider, for example, that in the decade after various predictions of the collapse of global capitalism following the Asian crisis, both world GDP and world trade experienced unprecedented growth thanks to the power of market competition on a global scale. The South Korean economy, for example, was pummeled during that crisis, but has had significant economic growth since. World economic growth will recover once we are over the present severe financial difficulties.

Read more from Noble Prize winning Economist Gary Becker here from Tuesday's Wall Street Journal.

New Definitions of Stock Market Terms

A fun email circulating trading desks, worthwhile as an informal measure of sentiment:

CEO --Chief Embezzlement Officer.

CFO-- Corporate Fraud Officer.

BULL MARKET -- A random market movement causing an investor to mistake himself for a financial genius.

BEAR MARKET -- A 6 to 18 month period when the kids get no allowance, and the wife gets no jewelry.

VALUE INVESTING -- The art of buying low and selling lower.

P/E RATIO -- The percentage of investors wetting their pants as the market keeps crashing.

BROKER -- What my broker has made me.

STANDARD & POOR -- Your life in a nutshell.

STOCK ANALYST -- Idiot who just downgraded your stock.

STOCK SPLIT -- When your ex-wife and her lawyer split your assets equally between themselves.

FINANCIAL PLANNER -- A guy whose phone has been disconnected.

MARKET CORRECTION -- The day after you buy stocks.

CASH FLOW -- The movement your money makes as it disappears down the toilet.

YAHOO -- What you yell after selling it to some poor sucker for $240 per share.

INSTITUTIONAL INVESTOR -- Past year investor who's now locked up in a nuthouse.

PROFIT -- An archaic word no longer in use.

HT: Big Picture

Here's One Way To Get Back At The CEO Who Bankrupted Your Company

More on Microcredit: A Video and Excellent Article on Noble Prize Winner Muhammad Yunus

Here you can link to a video to learn more about microcredit and learn about 2006 Nobel Peace Prize winner Muhammad Yunus' amazing work in bringing credit and hope to some of the world's poorest people.

Thursday's Video Conference: Founder of Microcredit Website KIVA: Matt Flannery

Click Here for the website kiva.org, to read more about how you can help empower some of the world's poorest people.

Biggest Dow Jones Point Drop Ever

Here are today's headlines from the Wall Street Journal and the New York Times. The Dow fell 777 points, mainly on news the U.S. House of Representatives defeated the proposed $700 billion financial rescue package.

The Dark Bailout

Students Talking Free Trade

"Business is Booming On College Campuses" ... according to the StarTribune

PHOTO: University of Minnesota's Carlson School of Management's Hanson Hall, a new 47.9 million dollar building.

Business is Booming in the classroom, according to this article written by the Minneapolis StarTribune.

Some stats:

1. 4,000 high school students applied for 450 spots for admittance into the U of M's Carlson School of Management.

2. 40% of University of St. Thomas students major in a business related degree.

3. University of Minnesota-Duluth's Labovitz School of Business has gone from 1,200 students in 1998 to 2,000 now, and is building a new $23 million building.

And of course a great incentive for students to major in business/economics, is the pay; see here for a previous Redonomics post on this.

Have Change For A Quadtrillion?

This actual check from Zimbabwe, 1.027 Quadtrillion, is worth about $27 US Dollars. I previously blogged about the world's worst hyperinflation here, here, here, and here.

Detroit House Sells For $1

This house could have been all yours... for $1. Read here from the Detroit News.

DETROIT -- "One dollar can get you a large soda at McDonald's, a used VHS movie at 7-Eleven or a house in Detroit.

The fact that a home on the city's east side was listed for $1 recently shows how depressed the real estate market has become in one of America's poorest big cities.

And it still took 19 days to find a buyer.

The sale price of the home may be an anomaly, but illustrates both the depths of the foreclosure crisis in Detroit and the rapid scuttling of vacant homes in some of the city's impoverished neighborhoods.

The home, at 8111 Traverse Street, a few blocks from Detroit City Airport, was the nicest house on the block when it sold for $65,000 in November 2006, said neighbor Carl Upshaw. But the home was foreclosed last summer, and it wasn't long until "the vultures closed in," Upshaw said. "The siding was the first to go. Then they took the fence. Then they broke in and took everything else."

The company hired to manage the home and sell it, the Bearing Group, boarded up the home only to find the boards stolen and used to board up another abandoned home nearby.

Scrappers tore out the copper plumbing, the furnace and the light fixtures, taking everything of value, including the kitchen sink.

"It about doesn't make sense to put the family out," Upshaw said. "Once people are gone, you're gonna lose the house in this neighborhood."

Tuesday, the home was wide open. Doors leading into the kitchen and the basement were missing, and the front windows had been smashed. Weeds grew chest-high, and charred remains marked a spot where the garage recently burned.

Put on the market in January for $1,100, the house had no lookers other than the squatters who sometimes stayed there at night. Facing $4,000 in back taxes and a large unpaid water bill, the bank that owned the property lowered the price to $1."

Update On My Friends In Georgia

Below, you can see a picture of our wonderful host in Batumi, Natia, an economics professor, and her son Lasha, during my visit to Georgia. I received the e-mail below a few days ago from Natia. Lasha, a banker, has now gone off to fight with the Georgian army.

Hello!

I was very glad to hear from you. For this moment the general condition in Georgia is very dangerous. Lasha is in the center of conflict region and it makes all of us anxious. I pray everyday for him and hope he'll return back safe. Our country doesn't want any conflict, it only needs to be free. We are so grateful to USA for it's helping and proud of our closest friends we have there.

Thank you for your attantion. Best wishes to your family,
I hope we'll have chance to meet eachother again in our countries.

Best regards
Always,
Natia

Map of Russian Attacks, Checkpoints in Georgia, and The Economic Impact On Georgia

Now back from vacation, here are a few comments on Russia's invasion, and lack of withdrawal of Georiga. Russia's president claimed to begin pulling out of Georgia on Monday (8/18), yet observers on the ground say Russia is doing excatly the opposite. NATO is meeting today and hopefully will have a strong response to Russia.

The Georgian people are very fond of America, and according to this report feelings still remain strong towards the US. The Georigan economy has come so far since 2003, improving the lives of every day Georgians, and I saw this first hand on my visit to Georgia in March of this year. Georgia was the world's World Bank's #1 Economic Reformer for 2007. Unfortunately, the Russian invasion will have a serious impact on Georgia's economic progress. Investors are wary of investing when the Russian forces may invade again. The Georgian infrastructure has been destroyed in much of the country, making it difficult to trade and transport goods.

Here the Wall Street Journal goes into detail on how the Russian forces are attempting to strangle the Georgian economy:

"Events in Poti, a Georgian town on the Black Sea coast, also suggest Russia has used the conflict to draw a noose around Georgia's economy. Though hundreds of miles from the fighting in Georgia's separatist province of South Ossetia and clearly not a military asset, Poti's huge commercial port was targeted 10 days ago in a Russian bombing raid that killed 10 people and wounded 40. The town itself has seen daily incursions by Russian troops who have looted stores, trashed offices and systematically destroyed military infrastructure, according to Georgian officials. Some looting has been captured on local television.

"The Russians deliberately targeted commercial operations to inflict economic damage on Georgia," says Alan Middleton, the English head of Poti Sea Port Corp. "Dropping bombs on Poti port, killing people -- I don't see how you can connect that with South Ossetia."

The container terminals of Poti's commercial port are now operating normally again, but the trading relationships that underpin Poti's success are in peril. The only functioning road to Azerbaijan and Armenia via Georgia now is an unpaved dirt track through mountain passes and hilly farmland southwest of Tbilisi. It is impassable for big, articulated vehicles of the kind that normally ply their trade between Poti and points east. After the weekend bombing, all rail links are cut, too.

Poti's port isn't the only Georgian economic asset that has come under threat. Russian-backed rebels in the country's second breakaway region, Abkhazia, have moved south to grab a big hydroelectric power station near the Inguri River. Russian planes have also dropped bombs on the Heidelberg cement factory near Gori, and near the BP PLC-run Baku-Tbilisi-Ceyhan pipeline, which carries 850,000 barrels of oil a day to the Mediterranean, according to Georgia's government. Russia denies targeting them."

Zimbabwe Hyperinflation Hits A New Low....or High

I have written about Zimbabwe and dictator Robert Mugabe's incompetent economic management here and here. But Zimbabwe has hit a new low, now printing the 100 billion dollar bill, worth about one US dollar. However, this bill has been sold on e-bay in the US for as much as $71 dollars (see here), presumably to be used in a rap video... and I thought my one million Turkish bill was cool.

Above, an article from the economist about the world largest bills. Believe it or not, Zimbabwe has a long way to go to reach the Hungarian Pengo note, which had 19 digits! Anyone know what you would call that bill?