Economics

The War on Asparagus

"American asparagus farms were worth just over $233 million in 1999. A decade later, those farms (or, those which still existed, as the farm sizes fell by two-thirds over that same decade) were worth just under $90 million. The drop off is stark, but it’s not because of a lack of demand from American consumers. In the 1990s, the United States started paying Peruvian farmers to grow asparagus, hoping they’d forgo growing coca (the plant used to make cocaine) and instead grow the totally legal vegetable. In 2004, the New York Times estimated that the cost of this program ran the United States around $60 million per year. The effect: a lot of cheaper-than-typical asparagus." Continue reading →

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How Prohibition Made Pot More Potent: Q&A with Auburn University’s Mark Thornton

"'The plant hasn't changed, the consumers haven't changed,' says Auburn University's Mark Thornton, 'it's prohibition and the difficulties and risks of getting it from the growing stage to the consumer.' Thornton, author of The Economics of Prohibtion, sat down with ReasonTV's Tracy Oppenheimer to discuss how prohibition distorts the market for marijuana, and why potency levels are on the rise. He says that the potency of other illegal drugs has also increased and that this even included alcohol during prohibition. 'It's a phenomenon that exists anytime government tries to prevent the consumption of something.'" Continue reading →

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Gold at a huge premium as Indian imports dry up; survival of small jewellers at stake

"India's gold imports in June are estimated to have fallen drastically to 35-40 tonne, less than a quarter of what the purchases in May were because of state restrictions, triggering a sharp rise in premiums in the local market and raising a question mark on the survival of small jewellers. The acquisition cost of the yellow metal has shot up as bullion dealers are now charging a premium of up to Rs 350 per 10 grams over and above the metal's international price, up from only Rs 40 two weeks ago. The premium, along with the increase in landed price of gold because of the rupee's depreciation, has denied Indian buyers the benefit of the fall in international prices last month." Continue reading →

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Gold smuggling rampant in India

"Gold smuggling has gone up several notches in India. According to customs officials, after banks stopped selling gold coins and following the hike in import duty, there has been a spurt in demand for the metal prompting people to smuggle. Officials pointed out that smugglers and buyers of smuggled gold tend to save on import duty as well as other taxes like value added tax and income tax. Given the severe curbs on gold buying and selling, other sources are trying to pitch in and take advantage of the situation, by selling gold through illegal means, they added." Continue reading →

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Historical Opportunity for 21st Century Economics

"Who are people turning to nowadays for business advice? Celebrity economists. Big-name experts on the economy like Paul Krugman, Joseph Stiglitz, Michael Porter, Robert Reich and Muhammad Yunus feature prominently in a new ranking of influential business thinkers compiled for The Wall Street Journal. The findings – based on Google hits, media mentions and academic citations – show just how much the business-guru landscape has changed since 2008, when a previous ranking was conducted using similar methodology. Author and consultant Gary Hamel ranked No. 1 at the time, a spot now occupied by Krugman." Continue reading →

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The Flashpoints of Revolution Here at Home

"During the Great Recession, 60% of the job losses occurred in the middle-income ranks. Yet, 60% of the jobs that have returned have come in the low-income ranks. Worse, the labor participation rate of America’s youth – those aged 16 to 24 – is at its lowest level since, at least, the 1970s. Obama’s America, thus, is breeding economic desperation as middle-income families struggle to reclaim a lifestyle they once knew and as easily agitated youth with little to lose find that America has too few jobs for them. That is a flashpoint. So, too, is the systemic and expanding welfare mentality that has infected our government and too many of our people." Continue reading →

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The Great Obamacare Intergenerational Swindle

"Will we be able to talk healthy young Americans into buying medical insurance that costs seven times what it would in a free market in order to subsidize our increasingly expensive health care? Or will we have to sic IRS enforcers on them for selfishly taking advantage of the law’s pre-existing condition protections to get care at someone else’s expense in case of serious illness? It’s a tough sell, but take heart, fellow Boomers. We’ve been preparing our children for community servitude for years. Why else did we feed them a steady diet of social consciousness, while preaching that it takes a village from the day we dumped them in daycare? Now, it’s time for them to pay up." Continue reading →

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Could the U.S. delay Obamacare’s mandate for individuals, too?

"President Barack Obama can expect mounting pressure to make new concessions on healthcare reform, especially the requirement that all Americans obtain insurance, after delaying penalties for businesses for the first year of his plan. The individual mandate, which the U.S. Supreme Court upheld as constitutional a year ago, is the government’s only lever to compel young healthy people to sign up for federally subsidized coverage in new online health insurance marketplaces that are slated to begin enrolling new beneficiaries on October 1. If too few younger adults enroll, insurance costs could soar and jeopardize the entire reform effort." Continue reading →

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Kyle Bass: If China Doesn’t Change, ‘Full-Scale Recession’ Sometime Next Year

"'The compounded annual growth of bank assets as measured by the China Banking Regulatory Commission has been 30.8%,' Bass wrote. 'To give some perspective, a 30.8% compounded annual growth of credit in the U.S. equivalent over 5 years would be an expansion of $33 trillion. This rate of credit growth is three times the total credit system growth experienced in the U.S. at the peak of the bubble in 2006... The debt-to-equity ratios of Chinese companies are exploding as they funnel new capital, not into yield returning investments, but into the black holes on their balance sheets that have been created by a slowing growth environment.'" Continue reading →

Continue ReadingKyle Bass: If China Doesn’t Change, ‘Full-Scale Recession’ Sometime Next Year

China’s central bank ready to unveil deposit insurance

"The central bank released the China Financial Stability Report 2013 on 7 June, saying that a consensus has been reached on the establishment of a deposit insurance system and that the system may be launched and implemented at a suitable time. Sources say China will set up an insurance fund and the maximum coverage for each bank account will initially be set at Rmb500,000. With the absence of a deposit insurance system, the state has actually taken on the responsibility to guarantee deposits in banks, which can easily lead to slack risk management and excessive speculation of commercial banks in seeking profits, the central bank report said." Continue reading →

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