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Texan winks, plays 'let's make a deal' with customers

Mon, 2015-01-12 11:55

A furniture dealer in Houston — arguably the center of the American oil industry — is offering quite the deal: If a customer spends $7,000 or more at his store, he'll refund the money if oil is going for $85 per barrel or more by Dec. 31, 

Current forecasts put crude somewhere between $50 and $75 by the end of the year. 

So, you know, caveat emptor.

Auto shows are in the business of creating a buzz

Mon, 2015-01-12 11:44

More than 750 cars are on display at Detroit's annual auto show, which opened for media previews Monday. It is one of the largest auto shows in the country – setting up the exhibition space takes months, says Rod Alberts, executive director of the North American International Auto Show, which is the Detroit show’s official name. Lighting installation alone took two weeks.

Yet for all that work, no cars are available for sale. So what’s the point?

A primary goal, Alberts says, is to help auto manufacturers get media attention for their new cars. David Cole, a former professor of auto engineering and chairman of AutoHarvest.org, says manufacturers also use auto shows to see what upcoming offerings resonate with the public.

 

Farmers, big oil fight over railroad access in Dakotas

Mon, 2015-01-12 11:42

Railroads and rail shippers are trying to figure out how to prevent a repeat of last year's troubles in the Dakotas.

When demand and bad weather joined to make a perfect storm, farmers had a lot of trouble getting railroads to ship their crops to market. There was too much competition for locomotives and crews between South Dakota farmers and oil producers in North Dakota.

“Agriculture was derailed by big oil interests," says Dennis Jones, a corn farmer in Bath, South Dakota. "We were basically shoved off the tracks.”

South Dakota farmers produced a bumper crop in 2014, and the North Dakota oil fields were going gangbusters, too, Jones says. The railroads couldn’t ship everything, so they had to make a choice, according to Jones.

“The railroad got paid a lot more for shipping oil," he says. "Grain cars were unhooked so the locomotives could hook onto oil and pull more oil."

The railroads say they didn’t favor oil over agricultural products. They say last year’s shipping problems were caused by one of the most severe winters in decades. But it is true that they can charge more to ship certain things, if there’s competition and those products could be shipped another way, such as by truck or water.  

“The railroad can set any price they want to, anywhere, anytime, and they do,” says Denver Tolliver, director of the Upper Great Plains  Transportation Institute at North Dakota State University. 

If shippers think the railroads are charging too much they can complain to the federal Surface Transportation Board, he says. But not many do, because it’s a complicated, expensive and slow process.  

It wasn’t always this way. 

Railroads and their rates used to be tightly regulated. But they were deregulated in the 1980s, after railroads were devastated by a growing trucking industry. 

“There was a time when you used to have what’s called' standing derailments,'” says Frank Mulvey, a semiretired economist who spent about a decade at the Surface Transportation Board. “The railroad infrastructure was so badly deteriorated that trains that weren’t even moving, standing on tracks – waiting on tracks – would fall over.”

Some railroads went bankrupt, Mulvey says.  Those that were left improved tracks and bridges, and became viable, strong companies – strong enough to turn back recent attempts at re-regulation.

“The railroads have been very, very successful as a lobbying organization,” Mulvey says.

One railroad, BNSF, spent more than $2.5 million dollars on political contributions during the 2014 elections, according to the Center for Responsive Politics.

The railroads say they can provide good service without more regulation. 

So far, so good this year in the Dakotas. There’s still a lot of oil being shipped out of North Dakota. But it’s balanced by falling demand from farmers, like Jones, who won’t ship their corn at today’s low prices.

“You’re selling corn today at below the cost of production," Jones says. "It would be suicidal almost – financial suicide – to sell it below your cost of production."

Farmers won’t ship their corn until prices go up, he says.  The railroads say they’ll be ready for the corn shipments, even if they start this winter. BNSF says it's added snow-removal crews and equipment and heaters on some rail switches.

Railroads try to avoid another Dakota bottleneck

Mon, 2015-01-12 11:42

Railroads and rail shippers are trying to figure out how to prevent a repeat of last year's troubles in the Dakotas.

When demand and bad weather joined to make a perfect storm, farmers had a lot of trouble getting railroads to ship their crops to market. There was too much competition for locomotives and crews between South Dakota farmers and oil producers in North Dakota.

“Agriculture was derailed by big oil interests," says Dennis Jones, a corn farmer in Bath, South Dakota. "We were basically shoved off the tracks.”

Jones says South Dakota farmers produced a bumper crop in 2014, and the North Dakota oil fields were going gangbusters, too. The railroads couldn’t ship all that stuff, and Jones says they had to make a choice.

“The railroad got paid a lot more for shipping oil," he says. "Grain cars were unhooked so the locomotives could hook onto oil and pull more oil."

The railroads say they didn’t favor oil over agricultural products. They say last year’s shipping problems were caused by one of the most severe winters in decades. But it is true that they can charge more to ship certain things, if there’s competition and those products could be shipped another way, by, for example, truck or water.  

In that case, “the railroad can set any price they want to, anywhere, anytime, and they do,” says Denver Tolliver, director of the Upper Great Plains  Transportation Institute at North Dakota State University. 

He says shippers can complain to the federal Surface Transportation Board if they think the railroads are charging too much.  But not many do, because it’s a complicated, expensive and slow process.  

It wasn’t always this way. 

Railroads and their rates used to be very tightly regulated. But they were deregulated in the 1980s, after railroads were devastated by a growing trucking industry. 

 “There was a time when you used to have what’s called standing derailments,” says Frank Mulvey, a semi-retired economist who spent about a decade at the Surface Transportation Board. “The railroad infrastructure was so badly deteriorated that trains that weren’t even moving, standing on tracks – waiting on tracks – would fall over.”

Mulvey says some railroads went bankrupt.  Those that were left improved tracks and bridges, and became viable, strong companies – strong enough to turn back recent attempts at re-regulation.

“The railroads have been very, very successful as a lobbying organization,” Mulvey says.

In fact, one railroad, BNSF, spent more than $2.5 million dollars on political contributions during the 2014 elections, according to the Center for Responsive Politics.

The railroads say they can provide good service without more regulation. 

So far so good this year, in the Dakotas. There’s still a lot of oil being shipped out of North Dakota. But it’s balanced out by falling demand from farmers, like Jones, who won’t ship their corn at today’s low prices.

“You’re selling corn today at below the cost of production," Jones says. "It would be suicidal almost – financial suicide – to sell it below your cost of production."

Jones says farmers won’t ship their corn until prices go up.  The railroads say they’ll be ready for the corn shipments, even if they start this winter. BNSF says it's added snow-removal crews and equipment and heaters on some rail switches.

Quiz: What matters most in online education?

Mon, 2015-01-12 08:07

U.S. News & World Report released rankings for more than 1,200 online programs.

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PODCAST: Golf greens go green

Mon, 2015-01-12 03:00

First up, we have a preview of the North American International Auto Show. Plus, the first-ever college football playoff championship game is played Monday under the most generic name possible: the College Football Playoff Championship Game. We look at the marketing strategy behind the non-name. And since the recession, hundreds golf courses have been closed in the U.S.—but what happens to all that green? Turns some golf courses are going even greener— in some cases they're getting turned into wetlands by conversation groups.

It's all about the hardware at Detroit auto show

Mon, 2015-01-12 02:00

The North American International Auto Show kicks off in Detroit this week. This year’s show is going to be all about showing off hardware after a year of booming sales, falling gas prices and growing consumer confidence. Trucks sales are expected to strong in 2015, especially small and midsize models.

“Pickup trucks in particular, from parts of the market that have not been well represented until now,” says Bill Visnic, Edmunds.com editor. 

While cheap gas may be driving sales of trucks and SUVS for now, automakers are doubling-down on fuel-efficiency.

“We’re living in this new trend where everything is going to be kind of environmentally responsible too,” says Jake Fisher, director of auto testing at Consumer Reports. “So those high performance vehicles and sports cars, they’re going to be hybrids, they’re going to be plug-in hybrids, they’re going to be electric.”

General Motors also hopes to make a splash with plug-in electric cars. GM has rolled out an upgrade to its hybrid-electric Volt, as well as new Bolt concept car. With a range of 200 miles and a cost of around $30,000 (including state and federal rebates), the Bolt would be a cheaper alternative to rival Tesla.

“We don't make $100,000 cars, this is what the [Chevy] brand is about,” says Stuart Norris, director of advanced vehicle design at GM. As with other automakers, GM is banking on a return to higher gas prices.

“This is a long-term vision. We can't have our electrification strategy being driven by local gas-price fluctuations," he says.

The Bolt is scheduled to hit the market in 2017.

Old golf courses become new kind of wilderness

Mon, 2015-01-12 02:00

I'm in a dry overgrown field of thistles and goldenrod with Michael Enright, the conservation manager with Five Rivers Metroparks.  

“I’ve been to Africa several times and it reminds me of the savannah there when I look out across it,” says Enright.

Not too long ago, this was a trim, manicured golf course called Larch Tree. The private course in the Dayton suburb of Trotwood went out of business after the recession, and the parks district bought it to turn the 190 acres back into a mix of wetlands, streams and grasses. The property is adjacent to wetland restoration area of over 350 acres already owned by MetroParks, so the project will result in more than 500 acres of contiguous wildlife habitat just west of Dayton.

A Clean Ohio restoration grant helped cover much of the cost of the purchase. Enright says it helps that property values around here are low and not much is getting built; they weren’t competing with developers for the land.

“The economic downturn certainly has aided open space preservation,” Enright says.

Golf courses have been closing down by the dozens, and old greens have gone wild in Michigan, Tennessee and even California in the last few years. Florida attorney Dawn Meyers says in her neck of the woods, developers often grab up property quickly, but she says the neighbors usually don’t want a bunch of buildings going in.

“They like the view, they like the open space and they don’t want to see it developed into anything else,” Meyers says. She says parks or wildlife areas could be a good option.”No matter what happens on this property, it’s not going to be a golf course any more.”

For Dayton’s parks district, the deal is working out pretty well: once the restoration is done, MetroParks will pay it off by selling wetland mitigation credits to developers who’ve destroyed wetlands elsewhere—it’s called mitigation banking. In California, at least one company is working on a golf course conversion into a mitigation bank as a private enterprise.

As we’re leaving Larch Tree, a neighbor, Elmer Williams, pulls up in a van.

“Are you allowed to fish in here?” He’s been fishing the pond since the golf course closed—he’s happy it’s gonna be a park. “I think it’s great! You know, someone needs to take it over and make it back to something good. Add more fish.”

The marshy ponds and crumbling trails are already open to the public.

A preview of the North American International Auto Show

Mon, 2015-01-12 02:00

The North American International Auto Show kicks off in Detroit this week. This year’s show is going to be all about showing off hardware after a year of booming sales, falling gas prices and growing consumer confidence. Trucks sales are expected to strong in 2015, especially small and mid-size models.

“Pickup trucks in particular, from parts of the market that have not been well represented until now,” says Edmunds.com editor Bill Visnic. 

While cheap gas may be driving sales of trucks and SUVS for now, automakers are doubling-down on fuel-efficiency.

“We’re living in this new trend where everything is going to be kind of environmentally responsible too,” notes Jake Fisher, Director of Auto Testing at Consumer Reports. “So, those high performance vehicles and sports cars, they’re going to be hybrids, they’re going to be plug-in hybrids, they’re going to be electric.”

General Motors also hopes to make a splash with plug-in electric cars. GM has rolled out an upgrade to its hybrid-electric Volt, as well as new Bolt concept car—that’s Bolt with a “B”. With a range of 200 miles and a cost around $30,000 (including state and federal rebates), the Bolt would be a cheaper alternative to rival Tesla.

“We don't make $100,000 cars, this is what the [Chevy] brand is about,” says Stuart Norris, Director of Advanced Vehicle Design at GM. As with other automakers, GM is banking on a return to higher gas prices.

“This is a long term vision. We can't have our electrification strategy being driven by local gas-price fluctuations," he says.

The Bolt is scheduled to hit the market in 2017.

Why the College Football Playoff has a generic name

Mon, 2015-01-12 02:00

For a major sporting event, the College Football Playoff National Championship, which debuts January 9, has an extremely generic name. We asked some specialists to chime in with other ideas. 

Alexandra Watkins — who runs the brand-naming consultancy Eat My Words and wrote the book “Hello My name is Awesome”— started brainstorming right away.

"How about Goldfish Bowl?" she asks. "Is that taken? And Mixing Bowl? I also like Punch Bowl, because it’s kind of aggressive."

I hate to tell her that they had two years to settle on College Football Playoff. 

"No!" she says. "Please tell me nobody paid for that name. Are you kidding me?" She thinks all the good ideas must have been shot down in meetings.

In fairness, starting with a generic name has worked before. The first Super Bowl was officially just the AFL-NFL Championship Game, recalls Michael Oriard, a retired English professor, former NFL player, and author of the book “Brand NFL.”  

Also, the tournament now called “March Madness” was simply the Men's Division I Basketball Championship when the National Collegiate Athletic Association first introduced it.

"The NCAA couldn’t invent March Madness," says Oriard. "It had to emerge over time. So my guess is the College Football Playoff will acquire some jazzier, sexier title at some point."

A dissenting view comes from David Placek, arguably the biggest name in brand names. He is president of the brand-naming company Lexicon, which claims successes like Procter & Gamble's Febreze and Swiffer cleaning products, Coca-Cola's Dasani water, and Research in Motion's BlackBerry phone.

"Why give someone else the power to name something that you’ve created?" says Placek. "I would want to take the responsibility and keep the power in my own organization, and start off with something that provokes people more."

His first thought: Platinum Bowl. 

We asked you to come up with a better (or at least more interesting) name for the game on Twitter, and here are the results:

Some thought the huge price tag of collegiate sports should be highlighted:

@Marketplace The Money Grab Bowl

— Boulder Cycle Sport (@bldrcyclesport) January 11, 2015

@Marketplace the National college “championship”? The Cash Cow. Putting higher education down the bowl…

— Brian Ross (@theclevertwit) January 12, 2015

Others pointed to the pro-football feel of the game:

@Marketplace, how about the Who's Leaving for the NFL Bowl?

— Jeff Newberry (@NewberryJeff) January 11, 2015

@Marketplace i think the name should be jr. Super bowl.

— Brianna Jones (@godsgirl13jones) January 12, 2015

Some thought the name should capitalize on marketing possibilities:

@Marketplace Naming the College Football Championship: FootBowl. Athletic shoe companies will line up for sponsorship. #kiss

— Dennis Kmiec (@DennisKmiec) January 12, 2015

@Marketplace Highest Bidder Bowl

— Billy Easton (@BEastonNY) January 12, 2015

...And then there's these:

@marketplace We should call the college football playoff the American Standard Toilets Bowl

— FeaR Harry (@HarryH987) January 12, 2015

@Marketplace Spaceballs 2: The Search for More Money

— Dylan Wilbur (@Dwilbur003) January 11, 2015

Alcoa results expected to please

Mon, 2015-01-12 02:00

Alcoa (AA) unofficially kicks off the earnings season for the last quarter of 2014, reporting earnings on Monday after the market closes. 

The name ‘Alcoa’ still conjures up an image of aluminum smelters and smokestacks for many, says Morningstar analyst Andrew Lane. But actually, the company’s products are more diverse, value-added and cutting-edge than basic aluminum sent on to other manufacturers to be made into consumer goods and industrial equipment. 

For instance, Alcoa aluminum goes into the new, all-aluminum Ford F-150 pickup truck, as well as lightweight heat-tolerant aerospace components. 

“We have a very positive outlook for Alcoa’s earnings for the past quarter and over the next couple years,” says Lane. He adds that Alcoa has expanded into global markets and multiple industrial sectors in recent years through major strategic acquisitions. 

Lane points out that low oil prices are helping Alcoa, because the aluminum-fabrication is so energy-intensive. But low gas prices for consumers may be a counterweight: “The use of aluminum materially improves fuel efficiency. But given the steep decline in oil prices for the consumer at the pump, an all-aluminum vehicle is obviously going to have a less attractive value proposition.” 

 

 

 

Would you like an online class with your book?

Mon, 2015-01-12 01:30
$5.2 billion

On Monday, Irish-based Shire, a pharmaceutical company, announced plans to purchase NPS pharmaceuticals Inc. for $5.2 billion. As reported by Bloomberg, the move follows a failed attempt by the company to purchase AbbVie Inc. 

23 percent

The difference between the actual portion of French people who are Muslim and the average guess from survey respondents, according to the Guardian. It turns out most people vastly over- or underestimate the number of Muslim, unemployed, voting, Christian, and non-native people in their home country.

$25 to $85

These days, authors have to do a whole lot more than just write books. In fact, Simon & Schuster announced that some of their most popular authors will host online courses for $25 to $85. As reported by the New York Times, the courses will include workbooks and access to live question-and-answer sessions.

$5 million

The amount IFC paid to bankroll the 12-year making of "Boyhood," which took home top honors at the Golden Globes Sunday. The film represented an unusual and risky investment for both the studio and director Richard Linklater, CNN reported. The former had to wait more than a decade for any return on investment and the latter had to hope IFC's leadership would remain consistent over an eternity in Hollywood.

71 percent

The portion of online adults who use Facebook, according to a wealth of new survey data released from Pew. Facebook is still the dominant social network a couple times over, but its share has not grown, while younger sites are expanding rapidly. Two more key stats: more than half of online seniors use Facebook, while a whooping half of young people are on Instagram.

Would you like a MOOC with your book?

Mon, 2015-01-12 01:30
$5.2 billion

On Monday, Irish-based Shire, a pharmaceutical company, announced plans to purchase NPS pharmaceuticals Inc. for $5.2 billion. As reported by Bloomberg, the move follows a failed attempt by the company to purchase AbbVie Inc. 

23 percent

The difference between the actual portion of French people who are Muslim and the average guess from survey respondents, according to the Guardian. It turns out most people vastly over- or underestimate the number of Muslim, unemployed, voting, Christian, and non-native people in their home country.

$25 to $85

These days, authors have to do a whole lot more than just write books. In fact, Simon & Schuster announced that some of their most popular authors will host online courses for $25 to $85. As reported by the New York Times, the courses will include workbooks and access to live question-and-answer sessions.

$5 million

The amount IFC paid to bankroll the 12-year making of "Boyhood," which took home top honors at the Golden Globes Sunday. The film represented an unusual and risky investment for both the studio and director Richard Linklater, CNN reported. The former had to wait more than a decade for any return on investment and the latter had to hope IFC's leadership would remain consistent over an eternity in Hollywood.

71 percent

The portion of online adults who use Facebook, according to a wealth of new survey data released from Pew. Facebook is still the dominant social network a couple times over, but its share has not grown, while younger sites are expanding rapidly. Two more key stats: more than half of online seniors use Facebook, while a whooping half of young people are on Instagram.

Why are there so few $2 bills?

Fri, 2015-01-09 12:10

THE QUESTION:

Patricia Anita young of Minneapolis to ask, in essence, "What's the deal with $2 bills?" She wanted to know why they're so rare, if they are worth more than $2 and if the government will ever stop printing them.

WHY THE TWO IS SO RARE:

It wasn’t too hard to find the definitive expert on Toms — that's the nickname of the $2 bill thanks to the portrait of Thomas Jefferson that adorns them. John Bennardo, producer and director of an upcoming film called, "The $2 Bill Documentary," has done hours of interviews and gathered tons of research, so we took Patricia's question to him.

John says Tom's story starts in 1862, when the federal government printed its first nationalized paper bills. The $2 was in that first printing, along with the $1 bill, but it took a while for paper money to catch on.

That's because a lot of folks made less than $15 a month before the turn of the century. Inflation slowly brought the value of paper money down, but then the Great Depression hit. "This was a time when our country did not have much wealth and a lot of things cost less than a dollar," Bennardo says. "So the $2 bill really didn’t have much of a practical use."

The economy recovered, but the $2 eventually found itself in a strange price point. It became the the perfect note for some rather nefarious purposes. "Politicians used to be known for bribing people for votes and they would give them a $2 bill, so if you had one it meant that perhaps you’d been bribed by a politician," Bennardo says. "Prostitution back in the day was $2 for a trick so if you were spending two-dollar bills it might get you into trouble with your wife. $2 is the standard bet at a race track, so if you were betting $2 and you won, you might get a bunch of $2 bills back and that would show that you were gambling."

The 'Tom' got kind of a dirty rep, and over the years as inflation brought the value of the single and the two closer and closer together it became even less necessary. "Imagine if we had a $25 bill," Bennardo says. "Which one would you use the 20 or the 25? You probably wouldn’t use both."

Folks didn't see much use for poor ol' 'Tom,' and in 1966 the government decided to stop making it. Ten years went by with no twos.

But here's the thing, the $2 bill saved the government a bunch of money. "It’s more cost-efficient to print twos instead of ones," Bennardo says. "You can print half as many twos and get the same dollar amount."

Today, for example, it costs about 5 cents to make a dollar … and it costs the same amount to make a 2. Since the U.S. Bureau of Engraving and Printing presses upwards of 4 billion $1 bills a year, that adds up to a lot of ... coin.

In 1976, the Treasury decided it would take another shot at the $2 bill. It would order the Bureau to print a special bill for the country's bicentennial, with a big picture of the signing of the Declaration of Independence on the back. "They made 400 million of them and half as many ones," Bennardo says. "They saved themselves a lot of money."

The bicentennial bills turned out really nice. A little too nice, actually, "The way it looked, it was just so beautiful that people said this is a collector’s item, this is worth something more than $2. I’m going to save this," Bennardo says.

Much to the government’s chagrin, people put the fancy new 'Toms' in drawers and keepsake boxes, and passed them down to loved ones. Again, 'Toms' didn't catch on, and they've been a cherished rarity since.

BUT ARE $2 BILLS ACTUALLY RARE?

The answer depends on what you consider rare.

There are roughly 1.2 billion $2 bills in circulation right now, and they are still being printed. 75 million came off the press in the last 18 months, but in that same time, around 3 billion new 'Georges' have come into the world. Out of the $1.2 trillion worth of coins and bills in circulation right now, less than 0.001% are Toms. 

"When you compare that to other notes that’s rare," Bennardo says. But you can get twos at almost any bank, you just have to ask. 

And there’s a small subculture of $2 ambassadors who do just that. In his film, Bennardo interviews several people who get stacks of bills at a time and spend them, trying to keep the two alive. They keep up demand enough for the Federal Reserve to keep ordering them more, even if the number is small.

John says 'Toms' always get a reaction. Some people think they're fake, but usually they bring a smile. In fact, he says, sometimes a Tom will get you more than that. 

"If you start tipping waiters and waitresses and valets, they’re going to remember who you are and the next time you come in if you keep doing it, you’re going to get better service. This has been proven to me several times when I use them. It’s a way to get remembered, it’s a way to stand out.”

SO, HOW DOES THE GOVERNMENT DECIDE HOW MUCH OF A DENOMINATION TO PRINT?

“The Secretary of the Treasury can say, at any time, ‘I want a hundred million more $2 bills in circulation,” Bennardo says. “That can happen, but generally, it doesn’t work that way.”

Instead, most printing is based on a calculation of supply and demand. “The Federal Reserve has all kinds of tracking data they accumulate, he says. “They put together their print order annually and they put that through to the Bureau of Engraving and Printing who makes the money.”

One of the main bits of tracking data the Federal Reserve relies on to determine demand is called “destruction.” “Whenever you spend any cash and deposit it at the bank, the bank looks at it to determine whether it’s fit to return to circulation or not,” Bennardo says. “If you’ve folded up the bill or crumbled it or written on it or if it’s worn out, they’ll replace it.”

John says the banks then send the bills to the Federal Reserve where special equipment is used to test them. “They have a machine that checks them for fitness,” Bennardo says. “Just like a vending machine can check to see if a bill is real, they have more advanced machines that can tell you if a bill is fit or not fit to return to circulation.”

These days, the lifespan of a $1 bill is approximately 18 months, but because people generally put them away and don’t spend them, a $2 bill lasts around six years.

Since less 'Toms' need to be destroyed, less 'Toms' are made. 

THE BEST $2 BILL STORY WE COULD FIND

Originally Printed in the New York Times:

Myrta Gschaar recalls her parents’ saving $2 bills and half-dollar coins in a drawer at her childhood home; her mother earned many of them as a seamstress at a women’s underwear factory on Spring Street.

When her husband, Robert Gschaar, proposed to her at a restaurant on Wall Street in the late 1980s, he did not have an engagement ring to offer. He was a history devotee, and this would be the second marriage for them both. That night he pulled a pair of twos from his wallet, giving one to her. He explained that as long as they carried these twos, they would be united.

Four years after the Sept. 11 attacks, her husband’s remains had yet to be found. A special property recovery unit at the Police Department notified Mrs. Gschaar that it had recovered personal items of Mr. Gschaar’s at ground zero. The items were a wedding ring and a wallet containing a neatly folded $2 bill.

Continue reading...

Sony might break even with 'The Interview' after all

Fri, 2015-01-09 11:04

Capitalism seems to be working in Sony's favor.

Yesterday, we talked about how the FBI still thinks North Korea was behind the hack of the studio over its film, "The Interview."

Today, according to Bloomberg, Sony says the film is doing better than expected since it was delayed, and then released, on Christmas Day.

Our best guess is that between online sales and rentals, plus factoring in the international market, Sony will bring in about $60 million from the movie.  The reported budget to make the film was $44 million.

Because the marketing budget was inevitably curtailed after the movie was originally pulled from big-name theater chains, that means the company will just about break even.

Fun Fact Friday: This is the way the world ends

Fri, 2015-01-09 11:02

Catherine Rampell from the Washington Post and John Carney from the Wall Street Journal talk wages, Europe, and everything else to wrap up the week.

What else did we learn this week?

Fun fact: CNN has a doomsday video ready to broadcast when the world ends.

The video shows a band playing "Nearer, My God to Thee." Then the screen goes black. Yes, it's as creepy as it sounds.

CNN's ready for the apocalypse

Fun (and kind of gross) fact: Fresh scallops should still be twitching when you cut them ... and you can eat them raw.

That's according to Rod Mitchell Browne, the owner of a seafood business in Portland, Maine. Restaurants shell out for high-priced scallops

Fun fact: Hundreds of polar bears gather in the town of Churchill, Manitoba for seven weeks out of the year.

But scientists say the polar bears could be gone in a matter of decades. A polar bear capital fears a bearless future

Fun fact: The movie “Selma” tells the story of Martin Luther King Jr. without using the actual words from his speeches.

The King estate has a vise grip on the intellectual property of King's speeches, so the movie studio side-stepped the issue altogether. Why 'Selma' can't show video from Martin Luther King Jr.'s speeches

Forget the selfie, how about a 'dronie'?

Fri, 2015-01-09 11:02

While thousands of companies exhibited their products at the Consumer Electronics Show, the massive tech industry gathering in Las Vegas that comes to an end Friday, about a dozen received outsize attention.

They were the drone manufacturers displaying all manner of consumer drones – most of which were about the size of a basketball or slightly smaller. What they had in common was a desire to appeal beyond the hobbyist, to the consumer who may want a new way of taking photos of themselves or others in action. 

Nixie, which was shown off during Intel CEO Brian Krzanich's keynote address, was a standout. It's a wearable bracelet drone that can unfurl, boomerang out to take an aerial selfie – or a "dronie" as Krzanich put it –  then fly back. The product won the $500,000 grand prize in Intel's 2014 Make It Wearable contest. 

 You can view the Nixie demonstration at the 57-minute mark in the video of the keynote below.  

Drones are projected to bring in more than $100 million in 2015, according to the Consumer Electronics Association. That's a 50 percent increase from last year. And more companies are entering the market.

"We sold 15,000 units via Kickstarter. so it's been pretty big," says Reece Crowther, product designer for a palm-size drone called Zano, which is expected debut in the U.S. this summer and cost $300. The Zano drone can follow you around, taking photos and video.

"We developed [the technology] with the intention of being used in law enforcement, military applications," Crowther says. "Zano is a consumer version of that technology."

Almost all the drone makers at CES are trying to pull in consumers with small models crammed with sophisticated sensors and guidance systems. On the other end of the spectrum is Chinese manufacturer Harwar, whose drones are $15,000, the size of a microwave — although they weigh only 5 pounds — and can fly to 15,000 feet.

"For us, it's more focused on high-end commercial use," says Frank Yang, a Harwar spokesman. "So they'd be used for ... firefighting, border controlling and public security. And also natural gas pipe-leaking detection."

Interest in their drones had been high, Yang says, with some CES attendees approaching the company about distribution. One ranch owner wanted to buy a drone from Harwar's exhibit booth, but went home empty-handed, Yang says.

One of the challenges for the company is that the FAA is still drawing up the rules for big drones – the ones, like Harwar's, that can fly high and could pose a danger to other aircraft or people on the ground if they come crashing down.

Jim Williams, who heads the FAA office in charge of unmanned aircraft, spoke on a CES panel about future regulation of drones. He says the agency is trying to figure out how much regulations the drones require.

"There already is a graduated level of certification required based on the risk. We plan to fit unmanned aircraft into that same risk-based approach that we have for manned aircraft," Williams said during the panel discussion.

That could mean requiring a drone operator to have a pilot's license or making sure the drones have sophisticated communications equipment, such as transponders. But the little guys, like Zano, don't have to worry about those requirements, because the FAA considers them hobby aircraft.

That doesn't mean there are no rules. Even hobby aircraft must adhere to certain FAA regulations. They must be flown below 400 feet, avoid areas around airports, not be used for commercial purposes and be kept within the operator's sight to prevent it from interfering with other aircraft.

"You don't want to be flying in urban areas. You don't want to be flying over the top of a lot of people," says Gordon Cockburn of Hobbico, one of the biggest makers of radio-controlled toys and now drones.

"So what we suggest is that you fly in open space, near nature, over the ocean,"  Cockburn says.

Or, you could fly a drone they way they did at CES: in small areas surrounded by nets.

Time Warner and AOL: The marriage that never took

Fri, 2015-01-09 11:02

Some deals are so bad (Time Warner + AOL, we're looking at you), it's not even worth trying to find something nice to say.

"Pretty much everything went horribly wrong with that deal," says Kevin Werbach, a professor of legal studies and business ethics at the Wharton School.

At the time – right before the dot-com bubble burst in 2000 – most everyone told Time Warner it needed to find a way in to the newfangled world of Internet media. The easiest way to do that? Merge with a company that already had it.

“We are the missing piece of each other’s puzzle," says a company executive in a news clip from 2000.

The idea, Werbach says, was synergy. If done correctly, one plus one can equal billions. Time Warner’s content plus AOL’s distribution network would somehow be more powerful together.

“It’s ironic in some ways, because Time Warner was really the desperate party," Werbach says. "They wanted to do the deal because they wanted to get access to this sexy go-go Internet dot-com magic, but in hindsight AOL is the company that was about to fall off a cliff.”

Alec Klein, a reporter investigating the company for the Washington Post, figured that out. He went on to write the book "Stealing Time: Steve Case, Jerry Levin, and the Collapse of AOL Time Warner." "The problem," he says, "is that AOL was not doing as well as it seemed.”

Klein uncovered a company improperly inflating its ad revenue. Dial-up modems were on their way out, broadband on its way in – and AOL had missed the high-speed connection boat.

They also had a legal problem. After the Post's investigation, the company was investigated by the Justice Department and the Securities Exchange Commission, Klein says, and "people were fired."

Rita McGrath, a professor of strategy and innovation at Columbia Business School, says "culture is usually to blame when these things go horribly wrong.” 

"In this day and age you’re not buying  the assets or the physical thing, you’re buying the talent and the goodwill and the engagement of the people," McGrath says. "So if you have a cultural misfit, those are the things that are going to get lost — not the hard core, the factory or the assets."

The anxiety and energy surrounding today's app market is not unlike the anxiety and energy experienced during the dot-com bubble, McGrath says.

Jobs are rebounding. Why are wages stagnant?

Fri, 2015-01-09 11:01

Job growth and unemployment ended 2014 on a strong note. The monthly Employment Situation report from the Department of Labor showed the U.S. economy added 252,000 jobs in December, compared to a revised 353,000 in November, and the unemployment rate fell 0.2 percent to 5.6 percent.

December’s employment report also provides full-year measures of the labor market. Unemployment declined by 1.1 percent in 2014, while job-creation averaged 246,000 a month over the year. Approximately 2.95 million jobs were added in 2014, the most since 1999.

However, average hourly wages fell in December by 0.2 percent after rising in November. Wages were up 1.7 percent for the year. That is very close to the multiyear inflation trend for consumer prices in the economy, says Elise Gould of the Economic Policy Institute. “Once you look at inflation, which has been around 2 percent, inflation-adjusted wage growth has been around zero for the last five years," she says.

Standard economic theory predicts this situation will produce more wage inflation. If the economy is creating a lot of job openings, and unemployment is falling, employers should be worried about finding enough people with the right skills to hire. So they should offer more money.

“If these factors are not enough to keep the economy growing with rising wages,” says Bernie Baumohl at the Economic Outlook Group, “then we really do have to go back to the drawing board and revisit everything we know about how economies work.”  

Baumohl is convinced this scenario will unfold later this year: Once labor shortages really settle in and companies can't meet demand in the economy, they will raise wages to attract good employees.

Conservative economist Peter Morici of the University of Maryland disagrees. “So many people have dropped out of the labor market," he says. "If wages started rising again, they would return. So there’s really  this large contingent supply of labor.”

Gould estimates there are as many as 6 million potential workers who have dropped out of, or never entered, the labor market because of the poor economy who would be ready to work if jobs were available. They create a shadow reservoir of potential workers, she says, helping to keep wages down and increasing the bargaining leverage of employers. 

Obama proposes free community college plan

Fri, 2015-01-09 11:00

President Barack Obama traveled to Knoxville, Tennessee, Friday to unveil a proposal to cover the cost of two years of community college for most Americans.

Under the plan, the federal government would cover three-quarters of the average community college cost, which could save one full-time student about $3,800 in tuition a year, according to the White House. States would have to pony up the rest if they choose to participate. Students would also have to maintain at least a 2.5 GPA and at least half-time enrollment.

The White House

Obama announced the program Friday afternoon at Pellissippi State Community College. Students in the audience cheered when he mentioned the idea of free tuition.

"I want to make it free," he said. "No one with the drive and discipline should be locked out of opportunity, or denied a college education just because they don’t have the money."

Obama said he wanted two years of college to be as free and universal as public high school is today. A degree, he said, is a sure ticket to the middle class. The plan is also being applauded in some academic circles. 

“Students who go to community colleges and get associates degrees as well as students who get bachelor’s degrees end up earning significantly more than, students who, say, stop at high school, ” says Thomas Bailey, director of the Community College Research Center at Teachers College, Columbia University.

Lauren Asher, president of the Institute for College Access and Success, says she wishes Obama had targeted just for the neediest students.

“You’re spreading available resources across many that don’t need them, and leaving those with the  greatest need still facing substantial affordability barriers,” she says.

The plan was inspired by a similar program that went into effect last year in Tennessee, called Tennessee Promise. The state was the first in the nation to pay for every student to go to community college for free. In that program, students must first apply for federal financial aid and the state pays whatever tuition is left over. Inspired by the program, Obama named his initiative America's College Promise.

Since the funding would come out of the federal budget, the president still faces opposition from Congress. Republicans, who are now in the majority, aren't likely to approve the president’s plan. Still, there’s optimism.

"The headline 'free community college' is valuable in itself, if it sort of plants the seed that, you can do this," says Matt Reed, vice president of academic affairs at Holyoke Community College.

Just the publicity generated by the president's proposal could make low-income students more aware of financial aid that’s already available, Reed says. Obama says he plans to spell out his plan further in his State of the Union address later this month.

"Here in America, we don’t guarantee equal outcomes ... but we do expect that everybody gets an equal shot," Obama said in his announcement.

Details about the $60 billion federal cost will be included in the 2016 budget Obama will send to Congress Feb. 2, according to a statement from Eric Schultz, deputy White House press secretary.

America's College Promise, by the numbers

$80 billion

Total cost for the proposed program over the next 10 years.

3/4

The portion of the average cost of community college the federal government will cover, with states funding the rest.

$3,800

Average tuition savings per year for a full-time community college student.

9 million

Students who will benefit every year, if all 50 states implement the plan.

35%

Estimated percent of job openings that will require at least a bachelor's degree by 2020.

2.5

GPA students must maintain to be eligible for free tuition.

1,100

Total number of community colleges nationwide.

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