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  • Google to Let Workers Sell Options Online

    Google to Let Workers Sell Options Online:

    It would mark the first time a U.S. company has created a private Internet auction for stock options. Investment experts called the idea creative and said other firms might follow suit if Google’s plan succeeds. The private online auction is to be managed by Morgan Stanley and accessible only by Google employees and the participating investment banks.

    A good idea that reduces friction in the marketplace. Options are transferable, the problem with employee granted options is there is no reasonable marketplace to exchange the options for cash (the friction is very high). Google’s engineers focus on reducing friction in many processes. Many others just accept that the level of friction is inevitable. Google realizes it is not. More on Google Management.

  • Manufacturing in Florida

    Nurturing an industry:

    About 20 years ago, the Tallahassee area was home to only a few manufacturers, said Nancy Stephens, executive director of the Tallahassee-based Manufacturers Association of Florida. “In the last five years, it has been growing. We’re now attracting manufacturers here,” she said. “You get synergies between manufacturers that require the same type of vendors. Once you get a core group here, you start to see a snowball effect.”
    …
    The universities are good resources, producing numerous engineering graduates, and there are people here with advanced research skills suitable for research and development, Stephens said. Syn-Tech needs electrical engineers, software engineers and engineering technicians, he said, adding “we have had very good luck attracting (engineering technicians) locally.”
    …
    Florida manufacturers employ more than 399,000 Floridians. The state Agency for Workforce Innovation reported that manufacturing employment was up to 394,700 in June 2005, a gain of 3,200 jobs over the previous year.

    Related: Manufacturing Jobs Data: USA and China – Engineering the Future Economy – The Future is Engineering

  • More Government Waste

    Dairy Industry Crushed Innovator Who Bested Price-Control System by Dan Morgan, Sarah Cohen and Gilbert M. Gaul:

    That was when a coalition of giant milk companies and dairies, along with their congressional allies, decided to crush Hettinga’s initiative. For three years, the milk lobby spent millions of dollars on lobbying and campaign contributions and made deals with lawmakers, including incoming Senate Majority Leader Harry M. Reid (D-Nev.).

    Last March, Congress passed a law reshaping the Western milk market and essentially ending Hettinga’s experiment — all without a single congressional hearing.
    …
    Most U.S. dairy farmers work within a government system set up in the 1930s to give thousands of small dairies a guaranteed market for their milk and to even out prices for consumers. Farmers who participate in regional pools operated by the federal government or the states deliver raw milk to cooperatives or food processors. They get a guaranteed price, whether the milk ends up in a gallon jug, cheese, butter or ice cream. In Arizona and other federally regulated regions, the Agriculture Department uses a formula to set the price processors pay for raw milk, issuing “milk marketing orders.”

    Developed for a bygone era of small dairies and decentralized milk plants, the system lives on when 3,000-cow dairies are not uncommon and huge cooperatives and food companies dominate the business. Business groups, fiscal conservatives and some dairy organizations have called for Congress to overhaul the complex system of protections and subsidies, which they say is costly to taxpayers and consumers. A recent USDA study acknowledged that “dairy programs raise the retail price” of milk. The watchdog group Citizens Against Government Waste estimates that the programs cost U.S. consumers at least $1.5 billion a year.

    These programs are effectively taxing everyone to pay special benefits to a few. Now perhaps you believe in this case milk production and purchase should not be part of the capitalist market system. That is a possible opinion. Somehow I doubt the politicians that take huge payments from huge dairy cartels to stop competitors from selling milk are doing so because they believe the market is incapable of delivering milk just as it delivers soda, water, hamburgers, cereal, pizzas, soup… Regulation is needed in various ways in the market. The problem is every special interest tries to claim the market needs to be regulated in a way that gives them benefits and the correlation to market needs and action seems to be very clouded by money received by politicians.

    It just seems more likely they are willing to do what they are paid to do. But others can see it differently. Certainly the whole political system seems very beholden to special interests to pay rather than to making decisions that are best for the country. That could change if political leaders choice to lead but a majority doing that is unlikely. More likely it will continue until the voters don’t allow special interests to reap huge rewards on the backs of the general public through congressional action. Remember last year when Congress forbid the Medicare system (with a law) from negotiating for lower drug prices?

    Related: Estate Tax Repeal – China and the Sugar Industry Tax Consumers – DC Paying Out Money it Doesn’t Have – Pork Sugar

  • Start Young with 401k and Roth IRA

    Putting away some money is vital, even if you are young and in debt by John Waggoner:

    Your company may also match your 401(k) contributions. Say you earned $50,000 a year and contributed 5% of pay to a 401(k). If your company matches 50 cents on the dollar and your money earns 5%, you’d have $3,847 after a year. In 10 years, you’d have about $56,000, if you got 3% raises yearly and earned 5% on your savings.

    Starting small – If you don’t have a 401(k) available, at least open a Roth IRA. You contribute after-tax money to a Roth, but you pay no taxes on your withdrawals at retirement.

    More on Roth IRA’s.

  • Cracks in US Economy?

    Learning about the economy is not required to learn about investing but it helps to get the basics. One of those basics is that it is not easy to know what is actually going on today, or to predict what will happen in the future (other than the fairly accurate “close to what it was last year”). So when reading about the economy you have to accept that there often is plenty of room in the data to allow for differing opinions. Here is one opinion: Cracks widen in U.S. economy:

    “Industry is clearly going through a rough patch” that few anticipated, said Daniel Jester, analyst at Moody’s Economy.com. Outside housing and autos, the Federal Reserve had expected business to pick up rather than decline this fall, supporting a so-called “soft landing” in the economy.
    The weakness in manufacturing started with autos, was compounded by housing, and recently has spread to big-ticket capital goods such as technology and telecommunications equipment, Mr. Jester said. In addition, a broad array of manufacturers are cutting back because of an unexpected buildup of inventories this fall that has to be worked off, he said.

  • Retirement – Working Longer

    Retirement planning has some pretty straight forward aspects and some difficult to predict aspects. If you don’t save substantial amounts of money over a long period of time there is little hope for a good retirement nest egg (outside of things like winning the lottery or living off an inheritance). So consistent savings over a long period is normally a requirement. You can get decent estimates like saving 8% of your income from age 30 to age 65 (in a 401k, Roth IRA…) but how you investments perform during that period will have a large impact on your success (as will how much risk you want in retirement, the state of health care at that time, inflation, tax rates, your health insurance…).

    This is a good article discussing some options as you close in on retirement and the financial picture become clearer: Two More Years for a Better Retirement. From Fidelity: Survey: One-Third of Americans Delaying Retirement.

    One alternative to delaying retirement is to start saving more earlier but the overall data shows few are taking that option.

  • Coming Collapse in Housing?

    I do not believe we will have a huge decline in most housing markets see: Housing and the Economy. Still the article below is packed with great information. Definitely worth reading. Other related posts: 30 Year Fixed Rate Mortgage Rates – Europe and USA Housing Price Boom – How Not to Convert Equity – Beginning of the End of Housing Bubble?

    The Coming Collapse in Housing November 17, 2006

    by John Mauldin

    I am convinced that the housing bubble is gigantic and will burst before long with massive implications here and abroad. In fact, it’s the key to the global economic outlook.

    Setting the Scene

    House prices in recent years have leaped well beyond their normal relationships to the CPI.

    Even when the increasing size of houses–the McMansion effect–is excluded, inflation-adjusted house prices have jumped as never before in over a century.

    (more…)

  • China’s Job Market

    Students Grow Desperate Over China’s Tight Job Market

    The Labor and Social Security Ministry estimated recently that as many as 4.9 million youths will graduate from universities by the end of 2007, up by nearly 20 percent over 2006. Another 49.5 million will graduate from high school, also a 20 percent increase. The sharp climb in graduation rates represents a dramatic improvement in the lives of many Chinese, made possible by the economic transformation that has taken place here over the past quarter-century.

    But indications have emerged that, booming as it is, the economy may not be able to absorb that many degree-holders into the jobs for which they are being trained. “The fact is that it’s very hard for college students to get the right job these days,” said Zhang Xuxin, a Zhengzhou student with close-cropped hair and plastic-rimmed glasses who plans to pursue postgraduate studies next year. “You may have a job, but it’s very hard to have an ideal one.”

    Growing an economy to create huge numbers of even decent jobs is very difficult, especially when starting from where China and India were in 1990. Often the strength of China’s economy blinds people to the continued great difficulty. Good jobs are the lifeblood of an economy. China has lost far more manufacturing jobs than any other country. Yes, even as they have grown their manufacturing production enormously. The entire world is increasing manufacturing output while decreasing manufacturing employment, see: Manufacturing Jobs Data: USA and China.

    Graduates shut out of job market
    (more…)

  • Europe and USA Housing Price Boom

    The booms in Spanish and Irish real estate make the US real estate boom look timid

    Central banks are concerned that recent pursuance of housing price growth in both countries wasn’t supported by fundamentals. The Irish national Bank stated in its latest financial stability report that the 2006 price surge wasn’t expected. In Spain, the Central bank has already issued some warnings regarding credit risk monitoring. The IMF Directors noted “that an abrupt correction cannot be ruled out” in Ireland.

    Cotis from the OECD has acknowledged that several big countries are at risk of a housing downturn: with the USA, France and the UK topping the list. But, given the extreme dependence of both Spain and Ireland on housing, both countries are even more exposed to a sharp correction.

  • Pork Sugar

    A good article from the New Yorker – Deal Sweeteners:

    But American sugar producers aren’t satisfied with supplying the most sweet-hungry population in the world. They’ve relentlessly sought—and received—special favors from the federal government, turning the industry into one of the most cosseted in America today. The government guarantees producers a fixed price for domestic sugar and sets strict quotas and tariffs for foreign sugar. Economically speaking, this has many obvious bad results. It keeps sugar prices in the U.S. at least twice as high as the world average. It makes it harder for companies that use lots of sugar to do business here—in the past decade, an exodus of candy manufacturers from the U.S. has eliminated thousands of jobs.

    Related: China and the Sugar Industry Tax Consumers