National News

Argentina defaults

Marketplace - American Public Media - Fri, 2014-08-01 14:57

Talks broke down between Argentina and some of its bondholders, triggering its second default in the past 13 years.

Tim Ferholz, reporter for Quartz, explains the situation and Argentina's past:

The whole reason for Argentina’s 2001 default was the string of currency crises in Asia and South America in the 1990s, with the IMF and other international financial leaders having bungled their responses to a series of problems in developing economies. Between the specter of contagion, local corruption, and an unwise attempt to peg Argentina’s currency to the dollar, foreign investment poured out of Argentina, and the economy slumped. Social unrest rose, and amid a volatile mix of political chaos, bank runs and high unemployment, Argentina defaulted on $100 billion of debt, going from a poster child for the Washington consensus to its biggest victim. 

Panel Says Plan To Cut Army Strength Goes Too Far

NPR News - Fri, 2014-08-01 13:57

The Pentagon has recommended cutting troop strength to 450,000, but a bipartisan report says that given the global threats, the reduction is too big.

» E-Mail This

Automakers could sell 16 million cars this year. What?

Marketplace - American Public Media - Fri, 2014-08-01 13:23

Turns out, we snapped up around 1.4 million cars last month, an increase of around 9 percent over last year. That puts automakers on track to sell more than 16 million cars in 2014, the biggest auto sales number in eight years. 

So what's going on?

One of the big reasons car sales are so high this year? Banks have discovered the sweet business that is the auto loan.

"Banks have realized that when recessions hit, people may stop paying their mortgage payments, because it takes so long to get thrown out of your house, but very few stop paying their car payment, because those are so easy to repossess and you have to get to work," says Larry Vellequette, with Automotive News in Detroit.

Carmakers have done their part to sweeten that pot, too. "For example Ram, on one of its trucks right now has a 0 percent financing offer for 72 months," says Vellequette. "I mean, six years of free money and no payments for 90 days. That’s… I mean, a really attractive offer."

It's an offer many consumers have been waiting for. The average car on the road is more than 11-years-old, an all-time high. That means there's a lot of pent-up demand right now.

"They’re coming out of this really depressing time, when we had the big financial crisis," says Thilo Koslowski, Vice President and Auto Practice leader at Gartner

But cheap money and easy loans have some seeing signs of a bubble. "That's the $64,000 question right now," says Dan Picciotto, Senior Director at Standard and Poor's. He says the economic fundamentals of the industry seem solid, but, he says, the deep discounts and less-than-sterling loans needs to be kept in check. "Right now the industry is remaining relatively disciplined, but the track record of this industry is one where the risks emerge… It’s something that we continue to monitor."

The average incentive on a vehicle in July was more than $2,700, up 7 percent from last year. 

Everything in this store is made out of felt

Marketplace - American Public Media - Fri, 2014-08-01 13:15

A British artist by the name of Lucy Sparrow - whose bio says she "sets the agenda for textiles within the urban art scene" - has created something called "The Cornershop."

It's being billed as the "fluffiest, furriest shopping experience imaginable." You walk into what was an abandoned store, and everything that you might find in a convenience store - and I mean everything - is there, but it's made entirely out of felt.

She's sewn felt newspapers...

...felt cigarettes....

...felt cheese...

...even felt Prozac...

She spent seven months doing this, and it really does look amazing. You can see some more pictures taken by the Mirror in the UK.  The store will be up for a month, and each of these 4,000 or so felt objects is for sale.

Procter & Gamble shaves off a few brands

Marketplace - American Public Media - Fri, 2014-08-01 13:15

Two ingredients. That’s all Procter & Gamble needed to launch its enormous brand empire.

“Fat and oils," says Davis Dyer, co-author of "Rising Tide: Lessons from 165 Years of Brand Building at Procter & Gamble." "Originally, those were the key ingredients of soap."

Ivory, to be exact. Dyer says P&G worked business magic at the time by branding a commodity like soap. After that, the company used its technology and those key ingredients to develop other products like shortening, peanut butter and detergents. The rest is classic corporate history, but now P&G is getting rid of lots of the brands it worked so hard to build.

“I’m actually surprised it’s taken this long," says Barbara Kahn, a professor of marketing at Wharton. She points out the company has a lot of redundant products, like shampoo. P&G doesn't just make Head & Shoulders, but also Herbal Essences, Pantene and Vidal Sassoon. 

"At one time that made a lot of sense," Kahn says, "because it allowed them to appeal to different segments. It allowed them to get more shelf space."

Kahn notes reaching audiences in the last century was a lot easier than it is now, when consumers' attention spans have splintered. It used to be much easier to build brand awareness.

“There used to be three networks, and everybody watched Ed Sullivan on Sunday night,” Kahn says.

Morningstar senior equity analyst Erin Lash says more problems face today's marketers, like today's increasingly global market.

“Some of their struggles, at this point, may have resulted from the fact that they have maybe tried to get into or tried to play in too many categories, in too many regions,” she says.

Tastes and preferences vary, says Lash. You can’t always take a product, like razors, that work in the U.S. and easily transport it to an emerging market.

Procter & Gamble hasn’t announced which brands it will be shaving away, but it says the products it’s holding on to account for almost all of its profit.

The world of brands at Procter & Gamble


easel.ly

More jobs, but wages stay flat

Marketplace - American Public Media - Fri, 2014-08-01 13:15

The monthly jobs report showed Friday that the U.S. economy gained 209,000 jobs in July. That's a decrease from the 298,000 added in June, but the overall trend still suggests the economy's on a slow but steady jobs recovery.

Still, when it comes to jobs in the U.S., the question is not just of quantity but quality. And in the quality department, there's a long way to go. Average wages are growing at about 2 percent a year, barely enough to keep up with inflation.

Stagnating wages aren't that surprising in an economy slowly plodding out of recession, where there aren't enough jobs to go around and the number of long-term unemployed Americans has stalled at 3.2 million.

"If you're an employer, you've got many applicants for a job. Some people have been out of work for quite some time and are quite desperate," says Joshua Shapiro, chief U.S. economist at MFR, a financial consulting firm. That means employers "don't have to bid up wages to attract qualified people," Shapiro says.

Sure, wages are still growing fairly rapidly in some specialized fields like computer programming or engineering, which face a shortage of skilled workers. But wages are not accelerating for the "the broad, garden-variety worker," Shapiro says.

Wage growth should eventually accelerate, at least a little, if the economy continues to add jobs and labor markets tighten. But, beyond those supply and demand dynamics, there are deeper forces working against wage growth that got started long before the great recession, including the declining power of unions and the increasingly globalized economy.

"The sheltered economy that the U.S. had after World War II, which allowed us to have high wages and high benefits, is now being tamped down by countries with cheaper wages competing against American manufacturers," says Joseph Blasi, a professor of management at Rutgers University.

It's not just manufacturing that's feeling the pressures of globalization. Companies are increasingly outsourcing white-collar jobs like paralegals and architectural draftsmen. Meanwhile, many of the service jobs that still can't be sent overseas — like stocking shelves or flipping hamburgers — have traditionally paid low wages to begin with.

Damon Silvers, policy director for the AFL-CIO, says workers in those industries have started to demand higher wages but are struggling with confidence.

"Decades of anti-worker policies, and on top of that a profound economic crisis, have really put American workers through an experience of powerlessness," Silvers says. "Everything you see going on right now, in terms of worker protests at Walmart, at fast foods, even those people kind of want to know: is this going to work?"

One way or another, says Shapiro, we should all hope that wages will rise eventually for workers. "Because that's who buys stuff."

And buying stuff is what ultimately keeps our economy running.

NYC Man's Chokehold Death Was A Homicide, Medical Examiner Says

NPR News - Fri, 2014-08-01 12:57

The controversial death of Eric Garner was captured in a video that showed his confrontation with police on a Staten Island sidewalk.

» E-Mail This

As Flow Of Migrants Into Mexico Grows, So Do Claims Of Abuse

NPR News - Fri, 2014-08-01 12:44

Like the U.S., Mexico is struggling with a surge in illegal migrants. Mexico criticizes how the U.S. treats its migrants. But it faces similar criticism from Central American migrants in Mexico.

» E-Mail This

WWI Diaries Of Poet Siegfried Sassoon Go Public For First Time

NPR News - Fri, 2014-08-01 12:39

Nearly a dozen notebooks and journals by the author, who fought in the British Army during the war, are being released to coincide with the centenary of the start of the conflict.

» E-Mail This

Breast-Feeding Is Still Difficult For Many Moms

NPR News - Fri, 2014-08-01 12:18

Access to lactation specialists is slowly improving in the U.S., according to a CDC survey. And that can help many women who want to breast-feed stick with it longer, health officials say.

» E-Mail This

Some Public Pension Funds Making Big Bets On Hedge Funds

NPR News - Fri, 2014-08-01 12:14

States and cities have been investing billions of pension money dollars in hedge funds. That's costing a lot of money in fees, and experts say the pensions don't have much to show for it.

» E-Mail This

As Ebola Outbreak Worsens, West Africa Turns To Quarantines

NPR News - Fri, 2014-08-01 12:10

Leaders of the three African nations hit hardest by the Ebola virus met to discuss ways to fight the outbreak. With the situation deteriorating, it's likely more of the region will be quarantined.

» E-Mail This

President Obama Slams Congress As He Welcomes Economy's Gains

NPR News - Fri, 2014-08-01 12:03

Citing 6 months of strong job gains, President Obama says America's recovery from a debilitating recession is well underway. But he says the economy "could be doing even better" if Congress helped.

» E-Mail This

Fla. Judge Orders Lawmakers Back To Work On A New Congressional Map

NPR News - Fri, 2014-08-01 12:01

A Florida judge has ordered the state legislature to come back from recess for a special session. Lawmakers will be expected to draw up new maps for congressional districts found unconstitutional. The judge says he may push back the November 4 election date and order special elections in the affected districts.

» E-Mail This

In July Jobs Numbers, Fodder For Cautious Optimism

NPR News - Fri, 2014-08-01 12:01

According to new numbers, the U.S. economy continued to add jobs at a steady pace in July. Employers added 209,000 jobs to their payrolls, and while the report showed the unemployment rate ticking up slightly to 6.2 percent, even that was a somewhat positive sign.

» E-Mail This

Wall Street sees an opportunity in baby boomers

Marketplace - American Public Media - Fri, 2014-08-01 09:25

Fed up with hearing about millennials? So is Wall Street. At the moment, an enormous amount of energy and money at America’s biggest financial firms is focused on a very different generation, with trillions of dollars at stake: Big banks want baby boomers, big time.

Boomers are hot targets for banks and financial advisers eager for a slice of their retirement savings. While wary of Wall Street’s aggressive sales pitch, more and more older Americans feel they could use some advice. Why? Because they face the most challenging retirement landscape in modern U.S. history, one that is complicated by longer lifespans, the slow disappearance of pensions and rapidly multiplying offerings of complex financial products.

Sandy and Jim deBettencourt are typical examples of Wall Street’s current obsession. On a recent morning, they looked over their financial picture while sitting at their dining room table in Skokie, Illinois. For them - like most Americans - this is more of a puzzle, made up of piles of paper and scrolling screens of online text and graphs. It’s a lot more complicated than what their parents had to deal with.

“My dad never had to do this,” Sandy deBettencourt says, speaking longingly about his far simpler landscape of pension and Social Security checks.

Sandy deBettencourt is 58 and teaches second grade, which means she expects a pension. But she has worried in recent years, as pensions have come under pressure and governments come up short of funding.

Jim is 62, a tech consultant and teacher. Like many Americans, he has worked at several places, which means his savings are an increasingly typical grab bag of different retirement accounts and investments. Lately, the deBettencourts have sought professionals to sort everything out and plan ahead.

“It has, partially, become way too complicated to really understand what’s going on and it’s very hard to figure out who you should trust,” says Jim deBettencourt.

For a long time, banks and advisers weren’t exactly lining up to earn that trust and win that business. The deBettencourts heard little from financial marketers until about five years ago. These days, they get pitched all the time. They get all sorts of fliers in the mail and see endless ads on their favorite shows and websites from banks, financial advisers and insurance companies.

“Now, I feel like they’re marketing toward me,” Sandy deBettencourt says.

They certainly are.

"Financial Gerontology" revitalized

We can get a peek at just how hard Wall Street is gunning for older Americans inside a corner meeting room in a tower high above Midtown Manhattan. Bank executive Cyndi Hutchins is talking strategy with Jeff James, a longtime financial adviser with many older clients. She’s got quite a title: Director of Financial Gerontology for Bank of America Merrill Lynch.

That’s a brand new position, previously unheard of at big financial firms. Its mere existence demonstrates how seriously the company takes the older demographic. Wall Street’s historic gold rush for older Americans’ money has brought to prominence a once obscure field called financial gerontology. Firms across Wall Street are currently looking for folks like Hutchins, with financial experience, but also special understanding of older clients (in her case, a graduate gerontology degree). A lot of money is up for grabs.

“It’s $22 trillion that will be money in motion over the next several years with these clients that are retiring,” Hutchins says. “It’s not a small opportunity. It’s a huge market that we’re looking at.”

She, and many others in finance who want the business of older Americans, need to learn new tricks. Chief among those tricks is grappling with an era of longer lifespans and crushing medical expenses. Hutchins says clients are deeply concerned about how to save for a retirement that may last 40 years and how to put enough money away to take care of future medical expenses. Modern advisers also need to know how to deal with the increasingly shaky ground under the longtime pillars of American retirements: pensions and Social Security.

With Wall Street racing to figure out what older clients today need and how to win their business, the aggressive push is worrying those who look out for retirees. One false move in financial planning can ripple for decades.

“People really have to do a lot of homework to make sure they’re going to be both with an adviser and then also with the type of products that can meet their needs,” says AARP's executive vice president Debra Whitman. “It has to be from somebody that the individual trusts and is looking out for their interest, not just trying to sell them something.”

Back at the deBettencourt’s dining room in Illinois, this isn’t about bank profits or a marketing opportunity or some interesting demographic trend. It’s their life. And it can be a little scary.

“We’re the ones that all these changes in retirements, the loss of pension funds, things like that, we’re the experiment in seeing whether or not it works,” says Jim deBettencourt.

Just think: You and people you love are living that high-stakes financial gerontology experiment right now, the very thing Wall Street wants in on.

Photographing the wage gap over time

Marketplace - American Public Media - Fri, 2014-08-01 09:03

Jim Goldberg, photographer of "Rich and Poor", says he was interested in looking at the ways people spoke about wealth and poverty.

"I wanted to open up the discussion and ask interesting questions about how discussions of wealth and poverty are framed," says Goldberg. "And look at the language that is used to describe them, and who gets to use that language."

His collection of photographs compares two economic classes of San Francisco. Each photograph is accompanied by comments written by the subjects themselves.  

As Goldberg’s work became more known, he ran into many of the wealthy people he photographed at museums or openings. Their worlds began to coincide. The poor, however, usually disappeared over time.

"As much as I tried to be present in their lives, they would have to move on, or go to prison or die," says Goldberg. "Not to be dramatic, but the life of the poor is somewhat dramatic in that sense. It’s an interesting contradiction."

Goldberg says his beat has changed since he started taking pictures decades ago. He says yesterday's wealthy would have looked poor today.

"It’s as if the income gap has grown exponentially between the wealthy and the poor, I think the wealthy now are able to exhibit their wealth in ways that the wealthy of the past could not."

Pages