Category: Markets, Business, and the Economy

New house sales are at a record high. That is today’s word from the Government, and that means people who own stock in house builders are happy. The report takes care to point out that rising mortgage rates don’t seem to be slowing home sales. I think it would be more accurate to say everyone is rushing to get the mortgage papers signed before rates go higher.

That last link points out that in some areas of the country, new home sales rose 53%. While that is clearly unsustainable, the Federal Reserve says there’s no housing bubble. Oh yeah, and they go on to say that it isn’t a big deal if there is. Everything is alright, even if we are wrong, unless we are also wrong about that. This study concedes that housing prices have been rising at double what was considered a high rate in the past, but reassures us by using what appears to be a very narrow definition of a bubble:

That definition says a bubble exists “if the reason the price is high today is only because investors believe that the selling price will be high tomorrow — when ‘fundamental’ factors do not seem to justify such a price.”

Don’t you feel better now?

Since housing prices are rising rapidly — but not alarmingly, the Fed tells us — and salaries are not, something’s got to give. For example, people are going to have to accept buying homes in previously undesirable urban neighborhoods. Like maybe Newark. Or maybe people will resort to housing assistance. Or just spending too much. In some areas of the country, we are already at the point where people are buying just because they fear they will not be able to afford to later, and if that isn’t a bubble I don’t know what is. It bodes ill for future prices.

The fact of the matter is that the Bush Administration is doing everything they can think of to encourage home ownership, particularly among minorities. It is a core Conservative belief that owning real estate is the cornerstone of financial stability: it is more than a home; it is an appreciating asset; it is potential collateral for loans to send kids to college or start a business; it is the American Dream.

Unfortunately, they must have slept through all those disclaimers about how no one investment is for everyone. Saying everyone should own a house is like saying everyone should like chocolate ice cream, or everyone should drive an American car. It just isn’t true. The truth is that it can be tough to own a home, and many people are spending too much of their income to say they own one. This is even a bigger problem among minority homeowners. Nor is this particularly “news.” Complicating the matter is a variety of alternative mortgages which bring down the initial payments, but may result in unpleasant surprises years down the road. Since it is clear that mortgage rates are going up, this may be the last chance most homeowners have to read the fine print and refinance ARMs and other “creative alternatives.”

At least apartment prices are reasonable.

In the movie Star Trek V: The Final Frontier, Captain Kirk asks the “entity” hijacking the Enterprise “What does God need with a spaceship?” Likewise, I ask myself “What does Google need with an IPO?”

An amended form S-1 was filed with the SEC today (here’s a handy guide to reading such filings), and still two key questions are unanswered: What does Google plan to do with the $2.7 Billion they are expected to extract from the deal compared (with approximately $455 Million cash-on-hand, and growing since they are profitable); and exactly how many shares are they planning on offering? Between these two variables, experts think it’s very hard to figure out what Google shares should be worth. In the absence of such estimates, “investing” in Google is based on nothing more than It’s the next hot IPO! You’ve got to get a piece of this action! You don’t want to miss out on the next EBAY or Microsoft or Critical Path, do you??

Even CNN has posted the opinion that more information is needed before anyone sane should consider this an “investment.” The LA Times tells us there are “many reasons” to not get involved with the Google IPO. The Motley Fool just says “no thanks.” They at least speculate about what Google might do with the money: buy stuff. Maybe they are being pressured by their venture capitalist investors to “cash out” — an aim which could be accomplished better through paying dividends and retaining close control. There is also the theory that stock options (and therefore stock shares) are needed for employee retention — although these days treating employees well has the same effect, particularly among computer professionals. Or maybe they have simply turned to the Dark Side.

Today’s interesting reading: can you prove you are a United States citizen; are the Saudis doing everything they can to catch terrorists; who’s reading your website; and the effect of Government regulation on the economy (I particularly like what is said about health insurance and rent controls).

Before I get started, here’s a couple of items as follow-up from last week. First, we have some scientists who found that consuming lots of sugar makes you want more food. And here we have some other scientists who almost started to laugh when they heard details of how Jose Padilla allegedly wanted to make his “dirty bomb.”

Meanwhile, back at the Federal Reserve….

Alan Greenspan has once more telegraphed his intention to begin raising interest rates. The only thing missing is a big sign with flashing lights. This colossal turn signal theoretically prevents the financial markets from panicking. Make no mistake, the rate hike is necessary: not only can we realistically stay at four decade lows for a limited period of time, but there is definite evidence that inflation is with us once more. Of course that couldn’t possibly have anything to do with the abnormally low exchange rate and the price of oil, but the FOMC can’t do much about those; their mandate says they should control inflation, and the tool for that job is interest rates.

Not everybody agrees, however, that there even is inflation. Or that raising interest rates would fix it without negative impact to other areas of the economy. After all, raising interest rates will mean it is harder to pay off debts. This is true of everything from your credit card and adjustable rate mortgage (call your mortgage company and lock in that rate now!) up to and including the National Debt.

As if that weren’t problematic enough, we are told by pundits that raising interest rates might cause fewer jobs to be created, and you don’t want that, do you? This arguement loses some steam when the government’s own figures show almost a million jobs created in the last 3 months, and 9 straight months of job growth. Of course there is some question about the accuracy of those numbers, and the impact of those jobs (some of them are not what you would call a “career”).

Math time! Something between 1.9 million and 3.4 million jobs were lost in the Bush Administration. In the interest of fairness, let’s do a simple average and call it 2.65 million. Here are the jobs “created” by month: May, 248,000; April, 288,000; March, 337,000; February, 21,000; January, 97,000; December, 8000; November, 43,000; October, 126,000; September, 57,000. That adds up to 1,225,000 new jobs in the last 9 months (by the way, according to these figures, only 873,000 jobs were added in the last 3 months, far less than a million. Maybe the nice people at the P-I were adding to the beginning of the year, which gets you 991,000). That still leaves 1,425,000 people who had full time jobs at the beginning of the Bush Administration that do not have them now.

But wait! There’s more! Economists believe we need to add 150,000 to 200,000 jobs to the economy each month just to keep up with people entering the labor force. That means we needed at least 1,350,000-1,800,000 jobs in the last 9 months — and we fell short. Over the 40 months (so far) of the Bush Administration we needed 6-8 million jobs added; instead we have a net loss of 1.5 million jobs. It is ironic that attempts to make the figures seem as if the job market is finally recovering are giving Greenspan exactly the cover he needs to raise interest rates.

The job market stinks, plain and simple. Nevertheless, inflation is here, and therefore interest rates are going up. At least there was somebody who knew how to deal with similar problems. Right?

Everyone knows the somewhat embellished story of Marie Antoinette proposing that if the peasants had no bread and were therefore starving, then “Let them eat cake!” This level of being out of touch with everyday people and their needs did not die with the French monarchy.

This week the Berkshire Eagle of Pittsfield, MA reports that Secretary of Housing and Urban Development Alfonso Jackson told a congressional committee he doesn’t talk about housing the poor because “being poor is a state of mind, not a condition.” The irony of such a comment is the fact that HUD’s mission specifically includes that they will “increase access to affordable housing.”

Lest you think this is made up, here are comments by one of the Congressional Representatives that was present. Nor are such comments out of character for Mr. Jackson. If you’d like to know more about Mr. Jackson, try the official HUD biography, but don’t look too hard for the part about growing up and overcoming poverty.

It seems obvious that Mr. Jackson meant to invoke the famous saying “Broke is a state of wallet; poor is a state of mind,” and it’s inevitable baggage that being “broke” can be fixed with good old fashioned work. Under this logic, if you are continually broke, it is your own darn fault. No bread? Let them eat cake. No jobs? Let them start their own businesses. Nowhere to live? Let them… uh, well, apply for a grant to build low income housing? The Berkshire Eagle put it best: “as a personal philosophy, it’s admirable. But as public policy, it stinks.”

They go on to point out that “This newspaper has observed before that liberal government doesn’t give away tax money for love of poor people, but out of the enlightened view that a modicum of economic justice is an insurance policy against social unrest.” Housing is not the only area where this expectation that the poor — I mean the “broke” — should pull themselves up by the bootstraps. The number of people whose healthcare plan is “hoping we don’t get sick” has grown to 43 million. Next time you are in a crowd of people, think about the fact that one in 6 does not have health insurance.

Now, don’t get me wrong, I believe that health insurance drives up the cost of healthcare. But, we live in a country where health insurance is just short of a prerequisite for getting care outside community clinic or emergency room. It should be patently obvious that working and paying the bills and not coming out “broke” on a regular basis is predicated on a certain level of health. Most jobs are almost impossible to do from a hospital bed. And since ignoring little health problems until they become big health problems is a way of life for way too many people in this country, health insurance will remain a need rather than a luxury for the foreseeable future. Oh, and before you start on how you aren’t one of those people, let me point out that some of those people are sick with communicable diseases. Have a nice day.

The Bush Administration seems to have a very shortsighted view of what this Marie Antoinette philosophy will do — or as Paul Krugman prefers to interpret it, Dooh Nibor economics (reverse Robin Hood). Yes, the nobles were terribly rich and powerful. But in the end, some of them really lost their heads.

Oh, and if you really must eat cake? Alton Brown’s book on baking comes out in September.

For the benefit of those of you who may indeed be reading this from under a rock, I will point out that the prices of both gasoline and oil are at highs, with more highs coming. I will not be shocked if Trilby Lundberg continues to announce record high gas prices at least once a month until Labor Day. On the West Coast and many other places, you can expect to pay at least $2 per gallon, even at Bad Neighborhood No Name Gas Co. Quickie Mart. Some analysts are predicting a full blown 70s style oil crisis. Any readers from elsewhere in the country who might be able to shed light on whether gas prices are really higher in Red States than Blue States, please feel free to comment.

Some of you are wondering when these kinds of things are going to have an impact on the economy at large. The answer is right about now. The world’s biggest retailer, WalMart, figures the current price of gas costs its customers an addditional $7 per week. This of course means about $45 less they can spend each month on other necessities, let alone desires. This is a big deal to the typical WalMart shopper. This is almost certain to effect all but the highest end retailers.

The fact that almost every product you can have in your home spent part of its supply chain in a truck means that rising gas prices very quickly translate into general inflation. It’s happening now. The Europeans are worried about us. Well, more precisely, they are worried that inflation will effect earnings, and they are worried about the standard prescription for inflation, interest rate hikes. Oh, make no mistake, they know it’s coming. They are concerned about the timing and dosage. After all, the Fed Funds rate has been sitting at 1% for a while. A modest sounding 25 basis point hike (0.25%) would be a rise of 25%! As if that isn’t enough, there is some evidence to suggest that spikes in oil prices come before recessions.

Want to know who else is worried about oil prices? The Airlines. All those planes use a lot of fuel. It should be no surprise that when you can’t control your costs, you can’t predict how much money you will have at the end of the quarter. Frankly, the airlines have enough to worry about. Consumers just don’t like what’s happened to traveling by air. Even the TSA realizes there is a problem.

Alas, it isn’t as simple as just pumping more oil. Here’s Paul Krugman’s take on the situation. In short, however much the Saudis would like to control crude oil prices, they can’t. The oil they are able to bring online in a timely fashion has too much sulphur in it. And OPEC is already pumping over its targets. Bringing new sources online is a long term answer to an emergency problem. In Alaska, they are not counting on these high prices lasting for long. Seriously, new sources of oil can take 5 to 10 years to yield marketable quantities. And that’s assuming there is oil to be found, that permits can be obtained, that the area is accessible, that the oil can be transported away….

Of course there are some winners in this oily mess. The Globe and Mail has a nice well thought out list, but really, the only one you need to know is this: Oil Companies.

Yeah, they are making millions on the additional $7 per week that WalMart estimates each customer is spending at the pump.

It isn’t your imagination. Prices are going up. Food is costing more. Gas is costing more. Anything imported from China is costing more. It doesn’t take Warren Buffett to tell you that inflation is here and “that the companies that will be best suited for this environment will be ones that either have unique products and services or aren’t as dependent on purchasing inflation sensitive goods.”

The bottom line is that the FOMC will be raising interest rates — probably not at their Tuesday meeting, but at their June 29 meeting. So say the experts, and frankly the FOMC does not like to move unless the experts know it’s coming. But since Reuters and the Associated Press both see it coming, a hike in interest rates shouldn’t surprise anybody who keeps track of these things. Lock in those Adjustable Rate Mortgages now, alright? And don’t say I didn’t warn you.

One of the more important things about the currently beginning round of inflation is that the items in question are not things we can do without. Everybody eats food. Of course, shoppers are doing everything they can think of to pay less for food. Who can blame them? Maybe that’s why grocery chain Winn-Dixie is planning on selling or closing 156 stores. Insert obligatory comment of what you think of Winn-Dixie, but the fact is they can’t compete on price, and they’ve never been known for competing on quality.

As for gasoline, even if you don’t own a car you probably depend on the stuff. Indeed, if you are reading this site on a computer, that computer had to be transported to where it sits from the factory. Chances are it rode in a truck for at least part of that journey. At least be cheered by the fact that truckers aren’t happy about rising fuel prices either. The bottom line is that gas prices are continuing to go up, that Trilby Lundberg will continue to announce record high gas prices as needed through the summer, and that Big Oil will make a lot of money.

Oh yes. And then there’s China. Part of our inflation problem is that China is experiencing inflation, and their currency is linked to ours. This of course means anything they export to the United States has to cost more to cover the increased costs of manufacture. This is a big problem. Just look at some random country of manufacture tags around your home and in stores. A lot of goods come from China. And why does China have an inflation problem? Because of the Weak Dollar. Frequent readers know that the Weak Dollar policy is allowed by the current administration for several reasons, including a misguided belief that it will improve the trade deficit. But this policy had another consequence: oil is pretty much bought and sold in American dollars around the world; the Weak Dollar means OPEC feels they can’t afford to keep oil prices low.

The high price of gas and the rising price of Chinese goods are inextricably linked by the Weak Dollar. This leads to higher prices for everything, including food. The cycle feeds itself.

The good news is that Wall Street has another word for inflation: “Pricing Power.”

Certain analysts and economists are shocked, just shocked I tell you, to find that the Consumer Confidence numbers — what Joe and Jane Average think of the economy — are getting worse. Hasn’t Joe read that job cuts are at a 9 month low? Isn’t Jane pleased that the Nasdaq is over 2000 again? Are they unaware that inflation is low? Don’t they know job growth hit 4 year highs last month? How could public sentiment not have changed instantly upon hearing this good news?

I think maybe Joe and Jane are focusing on the fact that despite the touted low inflation rate, gas prices are at an all time high and housing in some areas is appreciating at absurd rates, aided and abetted by mortgage companies, appraisers, and Fannie Mae. They would like to believe there is something to those job numbers, but then they hear that the 3rd biggest bank in the United States is eliminating 12,500 jobs. Adding insult to injury is the fact that on average an American with an actual job is still only working 33.7 hours a week and earning $523.70 per week. And that’s before payroll taxes. There still aren’t enough jobs being created, and too many of the jobs created are of the part-time no-benefits variety. More than one analyst thinks things aren’t as good as they should be. The future really isn’t that rosy either. The Baby Boomers are looking at retirement in a decade or so, assuming they can afford to do so. And some analysts say we can’t count on Wall Street to bail us all out.

And maybe consumer sentiment is also effected by what Joe and Jane see happening to America and the World. Joe knows that another mega-blackout could still happen, and that the last one was preventable. Jane knows her rights under the Constitution aren’t what they used to be, particularly if she wants to get on an airplane. And it has not escaped their attention that things are not going well in Iraq, where over 600 American soldiers have been killed in addition to an unknown number of “contractors” doing everything from cooking meals to providing security in lieu of the military. There is some question about whether we will ever be able to bring our troops home — at least there is to everyone but Paul Bremer.

The Statue of Liberty is still closed, and it appears she will remain closed. If this isn’t symbolic, I’m not sure what is.

It seems like just yesterday we were told that the Federal Reserve would keep interest rates low for a while, that they could afford to be “patient.” Oh wait, that was yesterday! Although the Fed rate takes a while to trickle through to effect mortgage rates, mortgage rates are down too.

But there is a fly in the ointment. It seems that inflation is starting to rear its ugly head, buoyed by oil prices at $38 a barrel. Oil futures — bits of paper people buy to bet on or protect themselves from future oil prices — are at an all-time high. Remember, oil prices are at these levels because OPEC cut production levels, because the dollar is weak, which the Administration allows because they think it will help the trade deficit.

The other potential wrinkle is that low mortgage rates are contributing to a rise in housing prices. In some areas, it is more noticeable than others. Greed and speculation rule in some regions. This is aside from any consumer debt bubble which may exist.

The bottom line is that inflation is beginning. Yes, the food and energy sector had the highest rise. Oil prices will have an impact on the price of other goods you buy within six months. After all, as a friend of mine put it, “If you’ve got it, a trucker brought it.”

Alan Greenspan cannot be patient forever.

Finally, I’d like to point out that President Bush is probably sorry he told Kerry to put up or shut up regarding the endorsement of world leaders. Kerry has the support of Spanish Prime Minister-elect Jose Luis Rodriguez Zapatero, who says “We’re aligning ourselves with Kerry. Our allegiance will be for peace, against war, no more deaths for oil, and for a dialogue between the government of Spain and the new Kerry administration.” On the other hand, Mr. Bush has dragged down an endorsement from none other than Al Queda, in a statement which said “Kerry will kill our nation while it sleeps because he and the Democrats have the cunning to embellish blasphemy and present it to the Arab and Muslim nation as civilization. Because of this we desire you (Bush) to be elected.”

Which endorsement would you rather have?

The official United States employment numbers for February have come out, along with figures revised downward for both January and December. Although I think by far this Reuters story is the best coverage, here is the Associated Press version. This one from CNN includes a pretty graph. This one from The New York Times admits some of their “reporting” was contributed by the Associated Press. For the hard core financial news junkies, don’t forget Bloomberg. In short, 21,000 jobs were created — an average of 420 per state — falling far short of the 125,000 jobs that economists expected.

Both sides of the political spectrum are concerned about these numbers. Democratic heir apparent John Kerry says there is one more guy who needs to lose his job, and that man is George W. Bush. On the other side, we have Treasury Secretary John Snow, who called the number “disappointing.” He went on to say this was why we needed to make the Bush tax cuts permanent.

Do not be fooled by those who say “Unemployment is still only 5.6%. Back in the Clinton Administration we considered that low. What is your problem?” Problem one is that the unemployment rate doesn’t really mean that much. It only measures those who had a full time job, lost it, are looking for a full time job, are receiving unemployment benefits, aren’t going back to school, aren’t temping, aren’t taking part time work to make ends meet, aren’t giving up, aren’t declaring themselves an independent contractor. Think about the adults you know. Would you say more or less than one in twenty is unemployed? How many of them are underemployed? Even Alan Greenspan says it is more accurate to measure the people actually getting paychecks.

These disappointing jobs numbers are important for several reasons, which are outlined particularly well in the Reuters and CNN articles above. First, in order to keep up with people just entering the job force, the economy needs to add roughly 150,000 jobs each and every month. Yes, if we don’t add those jobs, the new people don’t count as unemployed because they never were employed in the first place. In fact, the experts would really like to see a consistent 200,000 to 300,000 jobs created monthly before they declare the job market “good.” Even at that rate, it will be a long while before the 2.3 Million jobs lost over the last 3 years are replaced.

Not only were there 24,000 fewer construction jobs. Manufacturing jobs declined for the 43rd month in a row. Even the much ballyhooed service sector, the sector that would save us all, has not produced the expected jobs. In fact, the second paragraph of the Reuters article above points out that private job growth was flat; the 21,000 new jobs were all in Government.

Oh, and the 8.2 million unemployed people — and I hope they are all registered voters — have on average been unemployed over 20 weeks, the highest level in decades. Think about that. On average, 5 months unemployed by the very strict Government definition. Many of these people are close to exhausting their unemployment benefits and perhaps their savings too. This is to say nothing of how demoralizing it is to be out of work for months on end. No wonder there are so many “discouraged workers,” people who no longer count as unemployed because they have given up looking for work.

As if that were not reason enough to consider this number important, it also means that Greenspan cannot raise interest rates. The Fed Funds rate sits at 1%, the lowest level since 1958, a rate the Fed has already said is unsustainable. For reference, the Bank of England has rates set at 4%. This low, low interest rate helps anyone looking for a mortgage, anyone with debts they can refinance, but has been almost completely ineffective at it’s stated goal: spurring business investment.

The final reason this number matters may have escaped your attention altogether. You will hear it glossed over in the news, with statements like “The Dollar dropped against the Yen/Euro on sluggish jobs data.” The Administration is letting the Dollar drop against other currencies, on the theory that it will make American goods cheaper overseas, thus stimulating job growth. Of course, the fact that it makes imported goods more expensive in the middle of a huge trade deficit just means we will all have incentive to “buy American,” right? Wrong. One of several reasons gas is so expensive these days is that crude oil is bought and sold in dollars. With the dollar this low, the members of OPEC have trouble making money on oil, as they have to pay their oil-field workers in local currencies. Therefore, they are cutting production and forcing prices up. As a strict aside, oil and oil services companies (such as Halliburton) have historically made more money when crude oil prices are high.

It’s tough to fill up the car to get to a job interview with gas prices near record highs.

Yesterday morning’s CNBC Squawk Box Poll asked very simply whether there should be government regulation of offshore outsourcing. To the great surprise of host Mark Haines, 53% of respondents favored such regulation, 47% against. That it should be statistically even among a viewer base that is largely business people brought the guest host to rhetorically ask what the percentages must be like for the Average Joe. Indeed, the subject has already come up in the political arena.

As I see it, there are several issues to be addressed when discussing overseas outsourcing: the impact on American businesses, the impact on foreign nations, the impact on American workers, and the impact on American consumers. Please note that “impact” can be positive or negative. Sometimes one point can be both.

So how does this impact American business? They believe it saves them money. Indeed, it’s the only way to remain competitive, they say. After all, wages are much lower in places like India and China than the United States. Depending on the area, offices and factories might well be cheaper too. But some might argue that the lower costs are offset by productivity losses: working around cross-cultural issues; language barriers; security issues; differing regulations and local politics; differing time zones. Ah, but although differing time zones may make it difficult to get ahold of responsible parties and resolve problems, it may be an advantage if your business demands 24/7 service. For example, if you have a call center.

What about foreign nations? Well, the incoming wages — low by American standards but often still generous by local standards — often boost the local economy. Just like here in the states, people earning paychecks have money to spend. It is a difficult siren song to resist. But the same factories and offices which bring money to ordinary people may also bring pollution, opportunists, unexpected migration, and crime. Furthermore, the same American corporations that bring jobs to the region bring American ways of doing things, eroding traditional customs and social structures, if not outright demanding that things be done the Corporate Way.

You may find it curious that I have broken out the concerns of American workers and American consumers. Although these may well be the same group of people, overseas outsourcing effects average Americans in two distinct ways, depending on whether they are a customer or an employee of the company in question. Let’s look at the employees first.

Employees stand to lose jobs. There, I have said what everyone knows to be true. When there are not constraints of time or space, an American employee has to be at least twice as productive as a low-wage foreign employee to be cost effective. And this is where the “invisible hand” theory of market economics breaks down: American workers are only semi-mobile; they can pick up and move across the state or maybe even across the country, but with few exceptions they can’t just move overseas to follow their outsourced jobs. The tired old rhetoric of “training for the jobs of the future” no longer works. Not only are there roadblocks along this path, not only is it nearly impossible to tell what will really be a necessary profession in 5 or 10 years (remember when web design was the next big thing?), but what is to say those jobs won’t be long since filled by the time workers can possibly be trained? Perhaps by foreign workers? Thankfully, some things can’t be done overseas. Other things simply shouldn’t be.

And thus, we come to the American consumer. Theoretically, we should reap the benefits of reduced cost by paying reduced prices. Just think how much a pair of Nikes would cost if they had to be made by workers making American wages. Oh wait, some of those cost savings actually go towards hefty executive salaries and beating Wall Street profit estimates. Of course it’s a good thing if some of those cost savings are passed on to the consumer, particularly if they are one of the people who has been impacted by jobs moving overseas in the first place.

There is one more important consumer concern regarding overseas outsourcing, one that has grown larger in the post-9/11 world. In short, one of the easiest things to send overseas is data: computer code, information that needs to be processed. Some of this information is sensitive, and sadly the same kinds of protection we would expect this data to have in the United States should not be assumed to exist overseas. Not only proprietary corporate data is at stake, but also personal information, such as financial and medical records. This should concern you. Data which you consider private may potentially be in the hands of people who are under no legal obligation to keep it private. Should it be released or used in a fraudulent manner, law enforcement in the United States has no jurisdiction. The “419” scammers will no longer need any information from you to drain your bank account. This is a national security problem in the making: the terrorist of the future may have the benefit of using your Social Security Number, knowing your medical history, having access to your financial information, even knowing where you went to college and that you dropped PolySci.

Calls to “regulate” overseas outsourcing are often met with the the obvious reply, “How?” Tax penalties for American corporations who engage in the practice? Prohibiting government contracts with such corporations? There are frankly limited legislative remedies for this problem. However, the one thing we should all be able to agree on is that the practice of sending personal data for processing overseas must stop immediately: anything that might normally have a Social Security Number attached to it; anything the average American would expect to be kept confidential; anything subject to privacy laws and policies. This would certainly include financial data, medical records, and educational records.

In conclusion, I bring you two views of Ralph Nader. One, several years old, by New York Times economics columnist Paul Krugman. My favorite passage: “Mr. Nader did not begin as an extremist. On the contrary: in the 1960’s, when he made his reputation, the striking thing about Mr. Nader was his relative moderation. Fashionable radicals were preaching revolution; he was demanding safer cars.” This particular article is reproduced in his book, The Great Unraveling, which is a good read but slow. No matter how interesting an economist is, you can only read so many pages at a time. The other item is a very interesting analysis of Nader’s 2004 Presidential campaign by Elisa Camahort.