National News

Final Note: Peak Embarrassed

Marketplace - American Public Media - Fri, 2014-05-16 14:04

In our Final Note for Friday, May 16, I've flashed back to my teenage self: those awkward days when we felt we could do nothing right and mortification lurked at every turn, complete disgrace only a heartbeat away. For me, anyway.

Researchers apparently found the exact age when we're most likely to be embarrassed. "Peak embarrassed," they call it.

17. 2 years of age is that peak point when you're more likely to feel embarrassed by your own actions, according to a 2013 study in the journal Psychological Science.

And that's probably good news for adults, or at least anyone over the age of 17.2 years.

Who's at fault for credit fraud: Company or consumer?

Marketplace - American Public Media - Fri, 2014-05-16 14:04

We all know we're supposed to check our credit card statements every month to look for fraudulent charges.

But let's be real, we're supposed to do a lot of things.

We're slip up once in a while. And when we do, what safeguards are in place to catch these sneaky charges?

David Lazarus, columnist for the LA Times and frequent Money guest host, has been examining credit cards, and told the story of one woman's unidentifiable credit card charges for the LA Times.

When Kearns fell for AutoVantage's bogus check, the annual fee for the service was $119.99. Over the years it rose to $129.99 and then to $139.99.

Each time it appeared on Kearns' bill, it showed up in a cryptic fashion, usually "TLG*AutoVtg" and a phone number.

"Everything else had a name — CVS, Stater Bros., Best Buy," she said. "This was the only one that didn't."

Kearns mistakenly took the charge as auto maintenance paid for by her husband — an oil change, say, or tire rotation. It wasn't until this year that she finally realized she'd been paying over and over for something she couldn't identify.

To read more from David about credit card fraud, read his column for the LA Times

The Wrap: Keep chuggin' along

Marketplace - American Public Media - Fri, 2014-05-16 13:43

Things are generally well in the economy (key word = generally). Still, many people are leaving stocks and buying bonds behind, which is what they do when they are nervous about economic prospects. Why?

"The thing which is the risk to bonds -- which is inflation -- doesn't seem like it's going to turn up anytime soon," says Fusion's Felix Salmon.

We have to consider the relationship with inflation to better understand the bonds market. Here's the second question we want to know the answer to: Why is there no inflation in this dragging economy? 

"There's still so much slack in the labor market. People aren't getting hired. That's not pushing upward pressure on wages, the things people buy," Catherine Rampell from the Washington Post. "I think you really need to see a lot more activity in the economy before you really need to worry about inflation."

Inflation holding at low levels. People not getting hired. We've got that covered. We turn next to housing -- a key indicator of growth.

If you don't already know his name, Mr. Mel Watt is the director of the the Federal Housing Finance Agency, and this week, the oversight agency of Fannie Mae and Freddie Mac said they are going to make it easier for people to make mortgages and take out loans to boost the  housing market.

The third question on our minds at the end of this week: will the housing market ever recover, and how does that help the overall economy?

"I've always been suspicious about the U.S. government trying to boost the economy by making houses more expensive," says Salmon. "If you live in a country with 60-something percent home ownership, those policies always become very popular politically because people like to see the value of their houses go up."

But Watts wants to make Fannie Mae and Freddie Mac smaller: reform them, and maybe get rid of them.

"The administration has thrown its support behind a bill, that's kind of dead at this point, to wind down Fannie and Freddie. To replace them with something else. Hopefully something more permanent that would encourage more ownership. But it doesn't seem like that policy goal has turned around at all," says Rampell.

Are we stuck in the past? We ended our wrap with a callback to the past, as former Secretary of Treasury Tim Geithner released a memoir on his role supervising President Barack Obama on the Great Recession. Something which we're very slowly recovering from.

What Apple and a convenience store have in common

Marketplace - American Public Media - Fri, 2014-05-16 13:40

There’s a new study out from eMarketer that measures how much profit stores squeeze out per square foot.  Apple leads the pack, at $4,551 a foot.  Most of the retailers at the top of the list sell expensive stuff. 

“Clearly the high-end consumer has more discretionary dollars to spend, driving strong sales per square foot," says Ken Perkins, president of Retail Metrics. "You don’t see many discounters on here, or department stores.”

But you do see Murphy USA, which runs a chain of gas station convenience stores.  It came in second.  Weird, right?  Maybe not, says Gary Rosenberger of EconoPlay, who follows these kinds of trends. We spoke while he was on a roadtrip and had, ironically enough, filled up at a Murphy location in Dillon, S.C.

Rosenberger says the place was packed, with about ten people in line ahead of him.

“And everybody there was in line basically either to buy lottery tickets or cigarettes,” he says.

Rosenberger says Murphy sells lots of people lots of stuff, but there’s another reason the retailers on this list are profitable:  Most of them don’t have to worry about online competition, and they’re making their stores a destination.   Take Restoration Hardware, for example. 

“They’ve been fairly explicit about that saying we want people to come in, spend time here, hang out here,”  says Nicole Perrin, the executive editor of eMarketer.

They’re adding restaurants and rooftop gardens to some stores. Anything to squeeze out one more dollar, per square foot. 

 

FDA Dangles Golden Ticket To Spur Drugs For Neglected Diseases

NPR News - Fri, 2014-05-16 13:39

The Food and Drug Administration's approval of a new drug for leishmaniasis came with a voucher that can be redeemed to speed up the approval of a much more lucrative drug in the future.

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Why Darden ditched biscuits and not breadsticks

Marketplace - American Public Media - Fri, 2014-05-16 13:38

Red Lobster is getting tossed overboard. The parent company, Darden Restaurants, announced that it’s selling the seafood chain for $2.1 billion. Both Red Lobster and Darden’s other big chain, Olive Garden, have been losing customers for years.  

Casual dining faces two problems, says David Henkes of the food-industry consultancy Technomic.  “It’s certainly getting squeezed at the higher end by more of a ‘polished-casual’ as we would call it,” he says. Think Cheesecake Factory. “And then at the lower end, you’ve got an extremely high-quality fast-food segment that we call fast-casual.  You think Panera, Chipotle.”

Panera and Chipotle give consumers two things, says Harry Balzer, who looks at food and drink for the consumer-research firm NPD. “It’s time and money,” he says. “Save me time, save me money. And this country has been under pressure, for its income, for a number of years now.”  

Consumers have been eating out less often, he says, to save money. Minding the size of the bill counts, too: An average check at Red Lobster is about twice the average tab at Chipotle.  

Increased global demand for seafood has made it harder to contain costs, says Andy Brennan, a restaurant analyst at IBIS World. "Seafood is one of the foods that you can't substitute out for cheaper products," he says.

That's the money side. With time, casual-dining restaurants like Red Lobster fare even worse, compared with their fast-casual competition, says Alex Susskind, a professor of food and beverage management at Cornell University’s School of Hotel Administration.

Compared with fast-casual, an average party spends more than twice as long at a Red Lobster: 45 minutes to an hour. Even for family dining, that’s a stretch. “When I go out with my family— I have two young kids,” he says, “And if we could get out in 35 minutes, that’s better.”

Olive Garden has all the same problems, but Susskind says Red Lobster has an additional burden: demographics.  “It’s still perceived as a restaurant your grandma went to.”

Even attempts to update the decor— like putting the bar front and center— haven’t helped with that. "It's just that older demographic— that is the bread-and-butter, I guess, of their existence— that prevents that younger demographic from moving in," he says. "In terms of problems, they probably saw that as something insurmountable, given the number of years they've been trying to adjust it."

 

Ancient Skeleton In Mexico Sheds Light On Americas Settlement

NPR News - Fri, 2014-05-16 13:27

DNA from a 12,000-year-old skeleton of a teenage girl found in a cave in the Yucatan Peninsula shows the same markers found in modern Native Americans.

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An end to vulgar bankers

Marketplace - American Public Media - Fri, 2014-05-16 13:25

Exec to bankers: stop being jerks

I always read All Staff emails.  Especially the ones about a misplaced umbrella somewhere on the West Coast (I’m in NY) and definitely the ones about free cookies in the lunch room in Minnesota (I’m still in NY).

Some people ignore all staff emails.  So Colin Fan, co-head of Deutsche Bank’s investment banking unit, made his into a video.   

“This is an important message. You need to pay close attention,” he begins. 

“You may not realize it, but right now, because of regulatory scrutiny, all your communications may be reviewed.  This includes your emails, your conversations, and your conduct.  All of this is open to scrutiny.  Some of you are falling way short of our established standards. Let's be clear.  Our reputation is everything. Being boastful, indiscreet and vulgar, is NOT OK.  It will have serious consequences for your career.  And, I have lost patience on this issue.”

Fan concludes ominously with “Think carefully about what you say, and how you say it. If not, it will have serious consequences for you personally.”

So why the... gentle reminder?  Because a lot of financial firms have an enduring problem. 

Text not lest ye be judged. And email not. And gchat not.

“We’ve seen time and time again these  emails, which are meant to be private, don’t stay private,” says Kevin Roose, author of Young Money

As investigation after investigation has turned up documents and texts and even recorded conversations, these communications have not been flattering.  Some were illegal, others crass, plenty were both and ALL made the firms look terrible.    You can see some juicy ones here.  

“Not just during the financial crisis but also things like the LIBOR scandal last year,” says Roose.  “Traders were emailing back and forth about fixing a key interest rate in exchange for bottles of champagne and calling each other nicknames.”

“What’s astounding,” says Roose, “is that people are still doing this kind of thing.”

In part, it’s the same mistake that anyone can make: what you put in writing can come back to haunt you.  But it’s also cultural.

A culture of high stress and hyperbole?

Henry Blodget is currently the editor of Business Insider, but he spent a decade working on Wall Street

“On trading floors in particular, and among people on Wall Street in particular, there’s a lot of tension, a lot of jocular communication, yelling and screaming, gamesman ship.  It lends itself to the very colorful emails and texts we have seen,” says Blodget.   It’s akin to other hyper masculine cultures, like that of the military.  “As an analogy, if you were to put a microphone on the side line of a football team, you would hear many things that in isolation would sound terrible – ‘our coach is an idiot!’ and  ‘That’s the dumbest play ever’ – imagine that in a deposition.  Imagine a prosecutor asking you on the stand ‘so clearly, you think your coach is an idiot?’  It’s hard to explain yourself later.”

And yet, says Blodget, in the case of the financial industry, the jocular, aggressive culture is increasingly subject to withering scrutiny: “Because even conversations are recorded on the trading floor, you can’t even engage in normal banter that you normally would.  It’s hard because you want to talk to people who you want to be friends with, you want to talk the way people talk.”

...Or a culture that promotes recklessness?

That scrutiny is well deserved, says Karen Ho, an anthropologist at the University of Minnesota who has spent years studying, working, and socializing within the finance industry and on Wall Street in particular.  “These folks have undue influence in our social economy, in our institutions, on interest rates.”

Moreover, the jocular culture is far from harmless, argues Ho. “The boasting and vulgarity help to create a perverse motivational environment where traders through their talk their texts their emails their yelling are egged on” to be more transgressive.

Transgression and aggression become “a sign of not just one-upmanship, but masculine achievement,” Ho says.  Blaming Wall Street excesses on greed lets culture off the hook.  Ho is basically saying that Wall Street culture as it stands reinforces an unholy marriage between masculinity and prowess, and aggression and transgression.  “We need to delink these things, which I think the Deutsche Bank video begins to do,” says Ho.

 “The good news is that if it’s cultural, and folks are socialized into it, then hopefully they can be socialized out of it,” she says.  Canadian bankers don’t seem to have the same problems.

Cultural shift is easier said than done

“I think it’s extremely challenging to imagine that people closely working every day on the phone and instant messaging and email will ever be able to communicate in the boring stilted corporatese that sets lawyers at ease,” says Blodget, regarding the effort to reign in distasteful communication. 

But some financial firms are nevertheless trying very hard to do a la DeutscheBank.  Goldman Sachs installed a filter to prevent people from sending emails with cursewords.  “You can’t even send ‘wtf’” says Roose.  “They installed willpower via software.” 

Roose says a shift in culture has to come from the top.  

And to really make its mark, it will probably require people getting fired.  From the tone of that Deutsche Bank all-staff memo - that sounds pretty likely.

 

Will Soda Lovers Drink To Less Sugar?

NPR News - Fri, 2014-05-16 12:39

U.S. sales of sugared and diet sodas have slumped. So soda-makers are trying to win back consumers with new flavors and less sugar. But historically, midcalorie sodas haven't sold very well.

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In Indian elections, it's the economy, stupid

Marketplace - American Public Media - Fri, 2014-05-16 12:19

In India on Friday, Narendra Modi claimed victory as the country's next prime minister. It's a big win for his Bharatiya Janata party, which is expected to take control of Parliament.

India's long-ruling Congress party is out: it has been swept away, says Sruthijith KK, by a new wave of pro-business sentiment.

"The [Bharatiya Janata] used to profess a very different kind of economics early on," says KK, the New Delhi-based Indian editor for Quartz, "which focused on self-reliance and boycotting American products, but Modi has completely changed that economic philosophy. He has modeled himself off Reagan or Thatcher, and that is very reassuring to business men."

Modi's origin story is straight out of a Horatio Alger novel. Growing up he sold tea at railway stations to make ends meet. KK says his rise from obscurity is an inspiration for India's urban youth, fed up with a lack of jobs and stagnant economic growth.

"The changing demographics of India is precisely what has delivered a thumping victory to Modi... His pitch has been we need to get rid of Welfarism. Growth will pick people up from poverty."

In looking for a Prime Minister, KK notes that Indians put a premium on someone who could cut through the country's enormous amount of red tape.

"In Gujarat Modi showed he could make the bureaucracy work...the size of mandate that the people have now given him gives him so much stature that people expect he'll be able to push through things. He'll get the bureaucracy to deliver what needs to be done."

European Ruling On Removing Google Links May Leave A Mess

NPR News - Fri, 2014-05-16 12:12

Europeans now have the right to have search results about them deleted from online databases. But legal experts say each of the EU's 28 countries could interpret the decision differently.

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After Eastern Ukrainian Steel Magnate Flexes Muscle, Barricades Fall

NPR News - Fri, 2014-05-16 12:01

Barricades in the eastern Ukrainian town of Mariupol have been dismantled, following a deal between separatist leaders, police and steelworkers from the city's biggest steel mill.

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Feds Slap GM With $35 Million Penalty For Safety Law Violations

NPR News - Fri, 2014-05-16 12:01

Transportation Secretary Anthony Foxx has announced that General Motors has entered into a consent decree with the U.S. government, a response to how the company handled its ignition switch recall. As part of the agreement, GM will pay a record penalty of $35 million.

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What's To Blame For California's Early Fire Season?

NPR News - Fri, 2014-05-16 12:01

John Laird, the secretary of the California Natural Resources Agency, discusses how to fight fires differently, as well as the role climate change may play in the frequency of fires in California.

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To Pay For Hepatitis C Drugs, Medicare Might Face A Steep Bill

NPR News - Fri, 2014-05-16 12:01

The federal Medicare program for the elderly and disabled will cover two new drugs that can cure hepatitis C, a liver disease that can cause cancer and lead to death. The drugs are very expensive, but they cure hepatitis C in most cases. The government and insurers are concerned about these costs; three million Americans have hepatitis C, most of whom don't know they have it.

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After Weeks Of Voting, India's Opposition Party Gets A Sweeping Win

NPR News - Fri, 2014-05-16 12:01

After several weeks, India's parliamentary elections have finally finished. Voters swept opposition leader Narendra Modi into power as prime minister, voting for the Hindu nationalist party he leads.

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Amid Raging Wildfires, Southern Californians Find Blaze On Doorstep

NPR News - Fri, 2014-05-16 12:01

Wildfires are burning in California's San Diego County. Megan Burks of KPBS says that one person has been killed in the blaze, and high temperatures are frustrating containment efforts.

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Watergate Conspirator Jeb Stuart Magruder Dies At 79

NPR News - Fri, 2014-05-16 11:45

As President Nixon's deputy campaign committee head, Magruder helped authorize the unsuccessful break in of the Democratic National Committee's headquarters on June 17, 1972.

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A Role Reversal In Pennsylvania's Race For Governor

NPR News - Fri, 2014-05-16 11:39

GOP Gov. Tom Corbett is using a populist attack against Tom Wolf, the businessman who is leading the Democratic field in the May 20 primary.

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Do millionaires pick up stray coins on the street?

Marketplace - American Public Media - Fri, 2014-05-16 11:09

From the Marketplace Datebook, here's an extended look at what's coming up next week:

Students from around the country are in Washington to compete in the annual National Geographic Bee championships getting underway Monday.

Look over your financial plans because Tuesday is Be a Millionaire Day. Something I think most of us like to think about. At least how we'll spend it.

Also on Tuesday, the Senate Health, Education, Labor, and Pensions Committee holds a roundtable discussion on economic security for working women.

And 60 years ago, Bill Haley and His Comets' "Rock Around the Clock" was released as the B-side of the single "Thirteen Women." It still sounds totally rockin'.

Toward the end of the week, we get some reports on housing for April: Thursday, the National Association of Realtors reports on sales of existing homes. Friday, the Commerce Department issues data on new home sales.

And before you vanish into your three-day odyssey of BBQ, beaches and beer for Memorial Day weekend, let's land face up on National Lucky Penny Day.

That's right, pick that lucky penny up: you're working toward being a millionaire, after all.

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