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Marketplace with Kai Ryssdal: The Road Show

Wed, 2014-04-02 06:47

To celebrate its 25th year of bringing economics to life, Marketplace® is hitting the road.

On stages across the U.S., "How I Learned to Stop Worrying and Love the Numbers" will provide an irreverent, insightful look at the numbers in our lives. Numbers in headlines, numbers without context. From the Dow to the NASDAQ to weekly unemployment, we're bombarded with newsworthy numbers every day, how do we make sense of what they all really mean?

Join Marketplace host Kai Ryssdal — plus reporters Adriene Hill, Stacey Vanek Smith, Lizzie O'Leary, Rob Schmitz and Paddy Hirsch — as they humanize the numbers. It's an evening of radio, with sound elements, interviews and engaging storytelling.

What Marketplace does best, but in person, on stage, at the Strathmore.

April 24, 2014
7:00pm

To purchase tickets visit: http://www.strathmore.org/eventstickets/calendar/view.asp?id=10819

Tax-avoidance deal saves millions

Wed, 2014-04-02 02:52

If your tax return is based primarily on the W2 form you get for wages, tips and salary from your employer, there's not much wiggle room. You can take the deductions you're entitled to, but chances for savings are slim. 

That's not the case for big corporations, though. Allan Sloan, senior editor-at-large for Fortune Magazine and frequent Marketplace contributer, talks to host David Brancaccio about how our strange U.S. tax code makes it possible for some companies to legally avoid paying hundreds of millions of dollars. 

Are homes in a mudslide covered by insurance?

Wed, 2014-04-02 02:47

The death toll from the massive mudslide in March in Oso, Wash., stood at 27 as of April 1, according to the Snohomish County Medical Examiner’s Office.

More than 40 structures may have been swept away or damaged. Coverage for hazards like mudslide can cost an extra $1,000 per year, and fewer than 1 percent of Washington State homeowners carry it, according to the NW Insurance Council.

The financial risk of homeownership might have been heightened for some in the area. Local television station King 5 has identified one homeowner who bought a foreclosed property in the slide zone. At the height of the recession, 40 percent of sales in the county were foreclosures.

Herbert Burkart, owner of a RE/MAX realty office in nearby Arlington, Washington, says purchase contracts for foreclosures often don’t include a Seller’s Disclosure Statement (known in Washington State as Form 17) listing problems like landslide.

“A lot of banks did not want to provide the disclosure statement at all,” said Burkart, “because they don’t know anything about these properties that they’re foreclosing on.”

Washington’s governor has requested federal disaster assistance—which may be all that many survivors get to help pay off their mortgages and rebuild.

FTC wants stronger rules on consumer data

Wed, 2014-04-02 02:39

Massive security breaches at Target and Neiman Marcus last year put millions of customers at risk of identity theft and credit card fraud. In light of these major rifts in consumer secuity, Federal Trade Commission chair Edith Ramirez is urging Congress to adopt several new rules to better protect consumer data such as credit card information, usernames and passwords.

"What we are seeking is that there are robust security requirements as well as a national breach notice requirement," said Ramirez. "We'd also like any national legislation to include FTC enforcement with a civil penalty."

States currently enforce their own regulations when it comes to notifying customers of a breach in security. According to Ramirez, a federal requirement would benefit shoppers across state lines as well as aid law enforcement in prosecuting cybercrime.

"It's critical that consumers receive reasonably prompt notification so that they can take whatever steps they need if there has been a breach and their consumer information has been exposed," said Ramirez.

Several senators have introduced similar legislation to congress, but the bill has not moved out of committee. In the meantime, Ramirez says she hopes the FTC can fill the void of Congress. She added that the market also plays a significant role in determining privacy measures.

"Consumers are increasingly demanding adequate protection for their information both in terms of data security and larger privacy questions," said Ramirez.

'Save money, live better'

Wed, 2014-04-02 02:27

This story is part of a collaboration with Slate called “The Secret Life of a Food Stamp.” 

When Stephanie Ballam finishes her shift at a Walmart Super Center near Columbus, Ohio, she sometimes picks up a few groceries—items she might have put on the shelves herself hours before: a box of oatmeal, a can or two of mini ravioli.

At the checkout, first she swipes her Walmart employee card to get her store discount. Then, because she doesn’t earn enough money at her job to make ends meet, she will often pay for the groceries with food stamps, using her Electronic Benefits Transfer card. Eventually, that money will show up in Walmart’s annual earnings report as sales.

Ballam, 31, is glad to have her job at Walmart. She currently works there full-time and just recently got a raise to $9.10 an hour; she thinks the raise might be enough to disqualify her from the food stamp program, though the state hasn’t processed the paperwork yet. For now—and for the last three years since she’s worked at Walmart, plus a few months before that when she was unemployed—food stamps have helped her survive. Back when Walmart first hired her and she found out how much she would be making, hearing the number was “like being punched,” Ballam says. Her starting hourly wage was $7.25. As for food stamps, “I knew that I would still need those services,” Ballam says.

So how typical is Stephanie Ballam's situation? The federal government doesn't keep nationwide data on how many workers at Walmart—or any other company—are on food stamps, which are officially known as the Supplemental Nutrition Assistance Program (SNAP). SNAP is available to people living at or near the poverty line; for a single person like Stephanie Ballam, that means an annual income less than about $15,000 a year.

Walmart is the largest employer in the U.S., so its work force is bound to reflect the country’s economic realities.

Although there are no federal numbers on where employed SNAP participants work, the state of Ohio, where Ballam lives, does keep a list of the top 50 companies with the most workers and their family members on food stamps. Ohio’s list includes lots of fast food chains, discount and big-box stores: McDonalds, Target, Kroger Supermarket, Dollar General. At the very top is Walmart, which had a monthly average of more than 14,500 workers and family members on food stamps last year. If you take into account the average size of a family on food stamps, as many as 7,000 individual Walmart employees were on food stamps last year—nearly 15 percent of the company’s work force across Ohio.

That means the same company that brings in the most food stamp dollars in revenue—an estimated $13 billion last year—also likely has the most employees using food stamps.

“I think it's troubling that any American has to turn to a program like that, but the fact is, they do,” says David Tovar, Walmart’s vice president of communications. I met him at the company headquarters in Bentonville, Ark. where the wall behind the front desk has giant painted letters that spell out the company motto: Save money. Live better.

The front desk at Wal-mart's corporate headquarters in Benton, Ark.

“We would love nothing more than a day when we didn't have to have programs like that,” Tovar continues. “But for now, with the economy the way it is, with customers continuing to struggle the way they are, I think it's really important to be able to help people along the way.”

When looking at the number of Walmart employees on food stamps in Ohio and elsewhere, Tovar stresses the importance of perspective: Walmart is the largest employer in Ohio, and the country, he points out, so its work force is bound to reflect the country’s current economic realities, including growing rates of food stamp use.

Tovar also quotes a line other Walmart executives have used before him: “It’s really not where you start; it's where you end up.”

But there was a time not so long ago when where you started—even in an entry-level job—could afford you a much different life right at the outset. And that brings us to the Hudson family.

Let's start with Adam Hudson, age 21. Last summer he got a job at a Walmart Super Center in Dayton as a hardware associate, stocking shelves, organizing displays and helping customers, making $8.25 an hour.

Adam Hudson works at Walmart for $8.25 an hour. He brought home $488.60 for 75.5 hours worth of work.

Adam Hudson, 21, at his mobile home in Ohio.

Until then, he had a pretty low opinion of the food stamp program. “I'd always considered people who use food stamps as just taking advantage of the government,” Hudson says, because they “weren't working hard enough to be able to afford for themselves.”

But at Walmart, Hudson saw lots of his co-workers working hard and still needing SNAP. One day after he returned home from work, he was talking with his fiancée, who was pregnant. “She had mentioned that she was hungry—hadn't been able to eat that day,” he told me. “I kept trying to suggest things we could do, like calling my mom or my dad for a little bit of help…It dawned on us that we can't afford to feed ourselves and make sure all of our bills are paid and have a car with gas to get to work every day.” A few weeks after Walmart hired him, Hudson enrolled in the food stamp program.

Compare Adam’s situation to that of his father, Jim Hudson, who has never been on food stamps in his life. Back when Jim was a young man, his life was in many ways very similar to his son’s: He was starting a family and looking for a job he could get with no college degree. The plentiful work was not in retail, but manufacturing. Jim got hired at what was, back then, the largest employer in Ohio and the country: not Walmart, but General Motors.

Jim Hudson says his starting wage in 1991 at a GM factory near Dayton, building Trail Blazers, was $9.35 an hour, which in inflation-adjusted 2014 dollars comes out to $16.12 per hour—almost twice what his son makes now. Adam Hudson says he would love a job at the GM plant where his dad worked. It shut down in 2008.

Adam and Jim Hudson at Adam's home in Ohio.

Back when GM was still Ohio's largest employer, it would not have ranked as a top food stamp employer. It may not have had any workers—even entry-level workers—on food stamps at all.

“Those workers would have earned too much to qualify for the program,” says James Ziliak, an economist at the University of Kentucky who has been looking at the way food stamp enrollment has changed in the last 30 years. One of the starkest changes is the increase in people who have steady jobs, either part-time or full-time, but still use food stamps because they earn so little. According to Ziliak’s analysis of census data, these days about 24 percent of households on food stamps are headed by people working year-round. That’s up from just 15 percent in 1980.

Put another way, one of the big drivers of food stamp growth in the last few decades is the difference between Jim Hudson’s job at GM and his son’s job at Walmart.

Back when manufacturing was still king, “wages would grow, prices would grow, but wages would grow faster than prices,” Ziliak says. “So people were actually making real increases in their standard of living.” Those increases drove the consumer economy.

Today, in an economy fueled by the retail and service industries, companies try to stay competitive by keeping prices down. “One way to do that is to make sure their wages are kept in control,” Ziliak told me. “But that also has a feedback effect, because if wages aren't rising, that means many families have less spending money, which means they have less cash to spend, maybe even at their own employers' stores.” Food stamps help fill that spending gap for Walmart and other companies.

But as helpful as food stamps may be—as an economic stimulus and a support for low-wage jobs—when you talk to workers who have used them to supplement their income, their feelings can be complicated.

“I’m not proud that I was on assistance, but I had to provide for my family—and I am so thankful for my job now, because I’m off of it” says Mary Burkett, 26, who until recently was a store manager at Dollar General. At that job, she made about $28,500 a year—little enough that she and her husband, who is unemployed, and their two children qualified for food stamps. (Based on state numbers from Ohio,  nearly 40% of Dollar General workers there are enrolled in SNAP.) But then Burkett was hired as an assistant manager for a Walmart supercenter in the Dayton suburb of Huber Heights, where she earns $43,000 a year. When she found out her new salary, Burkett says, she literally cut up her food stamp card.

“I was so happy,” she told me. “I knew with the amount I was making that I would be able to provide insurance for my kids, and put food on the table, and I wouldn't need everything I was on before.”

But not everyone is able to work their way off food stamps. Tera, who asked not to use her last name for fear of risking her job, has been at an Ohio Walmart for four years and now makes $10 an hour. She lives with her son and his father, who was laid off from the industrial adhesives factory where he used to work and has not yet found a new job. Tera’s family was on food stamps when she started at Walmart, and they are still are on food stamps now.

Tera has heard the criticisms of food stamps—that they're a drain on taxpayer dollars. “I don’t really pay attention to them,” she says, “because I work for my food stamps.”

 

Tera brings her Walmart groceries inside.

All photos by Krissy Clark.

Additional reporting and production on this story from Jolie Myers and Martha Little.

Microsoft's Siri: What took so long?

Wed, 2014-04-02 02:10

Microsoft, what took you so long? 

“It’s a question,” David Smith, an analyst at Gartner says, “you could ask about an awful lot about Microsoft in the past ten years.”

But what is clear, says Smith, is that now Microsoft is working to stay competitive with Apple and Google. Which is why Microsoft's voice-recognition system may be significant.

"I don't think it will make a big difference, but I think it's more if it was missing, it's a noticeable difference," says Norman Young, an equity analyst with Morningstar.

Young says although Microsoft's product, called Cortana, may look and work a little differently than Siri. But both interfaces use Bing,  Microsoft’s search engine, so developers should have an easy time making Window’s new digital assistant better and better.

Here's a supposedly leaked video of the product:

Shrinking Middle Class? Not in Latin America

Wed, 2014-04-02 02:04

A growing economy doesn't always help everyone.

"One thing is a society where the middle class is growing," says economist Julian Messina, with the World Bank. "And a different thing is a society where inequality is falling."

The middle class is on the agenda of the World Economic Forum on Latin America, now underway in Panama. But unlike in the U.S., the gap between rich and poor in Latin America has narrowed. And the middle class has grown.

That’s largely due to economic growth, with help from assistance programs that promote social advancement. 

"And these are notable because they give subsidies to poor families, but they're conditional upon sending children to school and vaccinating children," says Barbara Kotschwar with the Peterson Institute for International Economics.

Hungry for Savings

Tue, 2014-04-01 23:18
Thursday, April 3, 2014 - 04:57 Chris Hondros/Getty Images

An employee restocks a shelf in the grocery section of a Walmart Supercenter in Troy, Ohio.

This story is part of collaboration with Slate called “The Secret Life of a Food Stamp.” 

Karrie Denniston is standing in the meat department of a Walmart Supercenter peering at the sell-by dates on a stack of pork chops. Denniston, director of hunger relief and nutrition programs at the Walmart Foundation, is at Walmart’s “Store 100,” the showcase Supercenter across the street from company headquarters in Bentonville, Ark. Store 100 is one of thousands of Walmart locations where the company collects billions of pounds of vegetables, dry goods, and other items for its food-donation program. Every day, as part of its anti-hunger initiative, Walmart associates scour the shelves looking for food that falls into a donation sweet spot: just past its sell-by date but still safe to eat. 

Karrie Denniston of the Walmart foundation.

Walmart—which in 2012 made a five-year pledge to donate $2 billion in cash and food to fight hunger—works with local food banks to distribute the meat, in a system of carefully temperature-controlled steps. Denniston holds up a family pack of pork chops. If no one buys it before its sell-by date, “that meat may end up as part of a stew at a local soup kitchen, or it may end up being distributed at a food pantry to a mom so that she can make tacos for her kids,” she says. 

Some of Walmart’s donations end up on the shelves of the Lutheran Social Services food pantry in Columbus, Ohio. “Walmart, Save-a-Lot, Giant Eagle, Kroger, they all send a lot of food back here,” volunteer Jordan Moore says. The donations are “a blessing,” he says. 

But there can be moments that throw him. Recently, a shopper at the food pantry took an item off a shelf and told Moore, “I put this on the shelf, too.” The shopper was a Walmart worker. 

“It’s this cycle that keeps going around and around,” says Jason Elchert, deputy director for the Ohio Association of Foodbanks. “We need to take a deep breath and think about how can we move our country forward.” Elchert says that over the past few years more and more working people in need of food assistance have been showing up at the charities his group serves. These include workers whose food stamps have run out before the end of the month as well as people who still can’t make ends meet even though they make too much to qualify for government food assistance.  (The Supplemental Nutrition Assistance Program, the formal name for food stamps, has an annual gross income cap of just under $25,400 for a household of three.)

Like many anti-hunger advocates who receive donations from corporate retailers known for low wages, Elchert is in a tricky spot when it comes to addressing the paradoxes of the food stamp economy. His group gets financial support from Walmart and other food retailers. “When we’re talking a lot with corporations,” he says, “it’s one of those situations where, well, let's talk about this in some way where we’re not offending them.” 

Matt Habash, president of the Mid-Ohio Foodbank—which has representatives from retail companies including Kroger and Giant Eagle supermarkets on its board—has tried to broach the issue of low wages with his corporate supporters. At a recent board meeting, Habash brought up the idea of promoting a living wage as part of the food bank’s mission. “Some of the folks in that room were employers who knew their wages were not” living wages, Habash says. “They were willing to engage in the conversation,” he says. “But no one employer can do it on their own.” 

Wages might be a sensitive issue to tackle, but there is one cause many big retailers have already come together on: protecting funding for SNAP. The program, which gives low-income families an average of $130 a month in food assistance, is lucrative for stores; food stamps accounted for $76 billion in store revenue in 2013.

But spending on the program has become the subject of protracted debates in recent years as food stamp rolls have soared, largely in response to the poor economy. Congress voted earlier this year to cut $8 billion from SNAP over the next decade, after House Republicans gave up their fight for much larger cuts (that would have reached nearly $40 billion).

In the middle of the battles over food stamp funding, the Ohio Grocers Association sent Congress a joint letter with the state’s Association of Food Banks. They wrote, "Cutting SNAP doesn't just hurt the poor, it hurts business too."

Food banks receive a sizeable proportion of their donations from big stores like Walmart.

“You tend to think that larger retail chains, with their corporate culture and perspective, might be less inclined to support a large, federal program, but certainly on the other side, these programs benefit them tremendously,” says Julie Paradis, former administrator of the Food and Nutrition Service at the Department of Agriculture, which oversees the food stamp program.

Toward the end of the SNAP funding debates in January, I met with Rep. Marcy Kaptur, a Democrat from Ohio (and the daughter of a grocer) who was working to persuade her Republican colleagues to minimize the food stamp cuts. “Walmart is a helpful force, as well as many other retail stores. All the big retailers, the grocers, make a great deal of money” from SNAP, she said. 

Walmart confirms it takes in about 18 percent of U.S. food stamp dollars, a share that would have amounted to more than $13 billion last year. Walmart spokesman David Tovar told me the company did not take a position on the recent food stamp funding cuts but that it likes to be “part of the dialogue” to help elected officials consider the issue of food stamp funding. “We oftentimes will provide useful information about our business, some of the trends we’re seeing, how it’s impacting customers,” Tovar says.

But public lobbying records suggest Walmart is playing a more active role in those discussions. Disclosure forms for the end of 2013, when debate over SNAP funding was in full swing, show that Walmart paid in-house lobbyists $1.9 million. The report itemizes lobbying activity on a broad range of issues, among them SNAP, the farm bill legislation that determines SNAP funding levels, and “discussions regarding Federal Nutrition programs from the consumer and retail perspective.”

Further down the lobbying form, Walmart also disclosed discussing the minimum wage. (Walmart says that it has not taken a stand on the proposed raise to the federal minimum wage to $10.10 but that it’s looking into the effect it would have on its business.)

If you go to Walmart’s headquarters in Bentonville, in a drab brick building that looks more like a public school than a corporate HQ, you will probably hear at least one person quote a certain Walmart aphorism: “EDLC equals EDLP.” Translation: “Every Day Low Costs” equal “Every Day Low Prices.” That’s part of why discount retailers like Walmart take in so many food stamp dollars in the first place, as low-income customers look to get the most bang for their food stamp bucks.

You can think about that equation two different ways. Walmart sees its low prices as a chief force in fighting hunger, says Denniston of the Walmart Foundation. “We want to take the best of what Walmart as a business has to offer and build on that,” she says, “and so one of the greatest assets that we provide to local communities is being a grocer that can bring safe, affordable, nutritious products.”

But one of the Every Day Low Costs that Walmart needs to keep in check is the price of labor. In the EDLC = EDLP equation, low wages help make low prices possible—and if that means some companies don’t pay their workers enough to make ends meet, it’s the government that makes up the difference. 

Additional reporting and production on this story from Jolie Myers and Martha Little.

Part Two: The Secret Life of a Food Stamp

Marketplace Morning Report for Wednesday, April 2, 2014Marketplace Morning Report for Thursday April 3, 2014 by Krissy ClarkPodcast Title: The anti-hunger movement's strange bedfellowsStory Type: FeatureSyndication: SlackerSoundcloudStitcherSwellPMPApp Respond: No

Filling up the landfill, one coffee pod at a time

Tue, 2014-04-01 16:28
Tuesday, April 1, 2014 - 17:14 Wikimedia Commons

Ninety-five percent of the material in those K-Cup single serve coffee pods is non-recyclable composite plastic, according to Mother Jones. And with only 5 percent of the pods currently recyclable, the company that makes Keurig machines, Green Mountain Coffee, says it is going to make all of its K-Cups recyclable by 2020.

That's why Roberto A Ferdman's article in Quartz is titled, "The world’s growing love affair with the most wasteful form of coffee there is."

"In 2011, there were enough K-Cups used to encircle the globe more than six times," says Ferdman. "If you were to extrapolate the numbers to last year, it would be more than ten times."

And in his story, Ferdman writes:

"The sheer volume of pod waste is staggering. As Murray Carpenter notes in his book Caffeinated, the K-cups discarded in 2011 would have encircled the globe more than six times, and in 2013, more than 10 times. Across the coffee pod industry, hundreds of millions of pounds of unrecyclable trash are now being made, used, and then tossed away each year in the US."

 

Marketplace for Tuesday April 1, 2014Interview by David GuraPodcast Title: Filling up the landfill, one coffee pod at a timeStory Type: InterviewSyndication: Flipboard BusinessSlackerSoundcloudStitcherBusiness InsiderSwellPMPApp Respond: No

3-D printing could be the future of construction

Tue, 2014-04-01 15:48
Tuesday, April 1, 2014 - 17:03 http://3dprintcanalhouse.com/thingiverse

You can seriously print out the 3D print canal house.

There is a 13-room house being built in the Netherlands -- with a 3-D printer.

President Obama checked out models of the house last week. So far, one corner of the house is up, just off a canal in Amsterdam.

The builders say this is the future of construction. There's no waste.  

And as a bonus: If you get tired of your house, you can chuck the whole thing in one big recycling bin.

Marketplace for Tuesday April 1, 2014by David GuraPodcast Title: 3D printing could be the future of constructionStory Type: News StorySyndication: SlackerSoundcloudStitcherSwellPMPApp Respond: No

Filling up the landfill, one coffee pod at a time

Tue, 2014-04-01 14:14

Click the audio player above to listen to our piece on the growth of single-cup coffee machines and the recyclability of those products.

Ninety-five percent of the material in those K-Cup single serve coffee pods is non-recyclable composite plastic, according to Mother Jones. And with only 5 percent of the pods currently recyclable, the company that makes Keurig machines, Green Mountain Coffee, says it is going to make all of its K-Cups recyclable by 2020.

That's why Roberto A Ferdman's article in Quartz is titled, "The world’s growing love affair with the most wasteful form of coffee there is."

"In 2011, there were enough K-Cups used to encircle the globe more than six times," says Ferdman. "If you were to extrapolate the numbers to last year, it would be more than ten times."

And in his story, Ferdman writes:

"The sheer volume of pod waste is staggering. As Murray Carpenter notes in his book Caffeinated, the K-cups discarded in 2011 would have encircled the globe more than six times, and in 2013, more than 10 times. Across the coffee pod industry, hundreds of millions of pounds of unrecyclable trash are now being made, used, and then tossed away each year in the US."

*CORRECTION: An earlier version of this story included a photo of Nespresso coffee pods but the interview never explicitly mentioned Nespresso. The photo has been changed.

PB&J tops the menu

Tue, 2014-04-01 14:09
Tuesday, April 1, 2014 - 12:54 Justin Sullivan/Getty Images

Jars of Skippy peanut butter are displayed on a shelf at Cal Mart grocery store on Jan. 3, 2013 in San Francisco, Calif.

In Washington, the Commerce Department reports on factory orders for February.

The House Small Business Committee holds a hearing on "Bitcoin: Examining the Benefits and Risks for Small Business."

The Senate Homeland Security Committee holds a hearing titled, "Data Breach on the Rise: Protecting Personal Information from Harm."

"As the World Turns" premiered on April 2nd, 1956. The sudsy drama continued until 2010.

And sandwiched between all the big news is National Peanut Butter and Jelly Day.

Marketplace for Tuesday April 1, 2014by Michelle PhilippePodcast Title: PB&J tops the menuStory Type: BlogSyndication: SlackerSoundcloudStitcherSwellPMPApp Respond: No

3-D printing could be the future of construction

Tue, 2014-04-01 14:03

There is a 13-room house being built in the Netherlands -- with a 3-D printer.

President Obama checked out models of the house last week. So far, one corner of the house is up, just off a canal in Amsterdam.

The builders say this is the future of construction. There's no waste.  

And as a bonus: If you get tired of your house, you can chuck the whole thing in one big recycling bin.

The yacht index: How the price of pricey boats shifts

Tue, 2014-04-01 13:27

Is it possible that yachts can serve as an economic indicator? The Monaco Yacht Show, where billionaires gather to browse for boating baubles, is coming up in the fall. But event organizers say the yacht industry is beginning to bounce back from the recession.

"The yacht industry is the first thing to crash and the last thing to come back," says Lang Ryder, who runs the Marine Lending Division for Seacoast National Bank. He says there was even a boating bubble - owners needed cash so they sold and prices dropped. "The bubble was overnight, if you had a boat in 2007 that was worth $1,500,000. In 2009 it might be worth $750,000."

Claudette Bonville, an interior designer for yachts, says renovating a boat is just like redoing your house, "except it costs a lot more money. Sometimes it can be a $1 million, sometimes it can be $5 million." 

Michael Lewis calls the stock exchange 'rigged'

Tue, 2014-04-01 12:28

You know that image of the trading floor? The sweaty guy screaming, yelling, shouting "Sell! Sell! Sell!" and waving at a big screen?

Author Michael Lewis says it's all fake: "The New York Stock Exchange is really just a backdrop for TV shows."

In his new book Flash Boys: A Wall Street Revolt, Lewis tells the story of a shift to "computer time" on the markets, that "it’s all been automated in the last decade. All the meaningful stuff happens in black boxes," which has serious implications on human high-frequency traders.

He tells the story through one trader, Brad Katsuyama. One night in 2008, Katsuyama pushed a button and realized the market seemed to anticipate what he was going to do before he did it. It was as though someone was "front-running" the whole process. As he investigated, he realized that, in fact, they were. High-frequency traders had begun using tricks to make money off other people's trades, by making the same trades milliseconds earlier.

Kastsuyama called it "rigged" against individual investors. And Lewis agrees:

"Imagine a casino that wants to create a new poker game, and it wants to get people into the poker game. It goes to a handful of good poker players and it says, 'Hey if you sit at this table you can deal the cards, and you alone will know that the decks have no fours, no nines and no queens in it. Then they go to tour bus companies and say 'Bring in tourists to come play against these guys. We're not going to tell those people that there are no queens or nines or fours in the decks.

Of course, the guys who know the missing cards have this huge tactical advantage over the suckers who roll into the casino.... Basically, in this analogy the casinos are the stock exchanges, they provide this unfair edge to the high-frequency traders who are the card sharks and investors are the guys on the tour bus."

In short: The NYSE doesn't look like this anymore.

Author Michael Lewis calls stock exchange 'rigged'

Tue, 2014-04-01 12:28

You know that image of the trading floor? The sweaty guy screaming, yelling, shouting "Sell! Sell! Sell!" and waving at a big screen?

Author Michael Lewis says it's all fake: "The New York Stock Exchange is really just a backdrop for TV shows."

In his new book Flash Boys: A Wall Street Revolt, Lewis tells the story of a shift to "computer time" on the markets, that "it’s all been automated in the last decade. All the meaningful stuff happens in black boxes," which has serious implications on human high-frequency traders.

He tells the story through one trader, Brad Katsuyama. One night in 2008, Katsuyama pushed a button and realized the market seemed to anticipate what he was going to do before he did it. It was as though someone was "front-running" the whole process. As he investigated, he realized that, in fact, they were. High-frequency traders had begun using tricks to make money off other people's trades, by making the same trades milliseconds earlier.

Kastsuyama called it "rigged" against individual investors. And Lewis agrees:

"Imagine a casino that wants to create a new poker game, and it wants to get people into the poker game. It goes to a handful of good poker players and it says, 'Hey if you sit at this table you can deal the cards, and you alone will know that the decks have no fours, no nines and no queens in it. Then they go to tour bus companies and say 'Bring in tourists to come play against these guys. We're not going to tell those people that there are no queens or nines or fours in the decks.

Of course, the guys who know the missing cards have this huge tactical advantage over the suckers who roll into the casino.... Basically, in this analogy the casinos are the stock exchanges, they provide this unfair edge to the high-frequency traders who are the card sharks and investors are the guys on the tour bus."

In short: The NYSE doesn't look like this anymore.

Delayed foreclosures: Drawing out the agony?

Tue, 2014-04-01 12:00
Friday, April 4, 2014 - 05:56 Nancy Marshall-Genzer

Robert Witherspoon's townhouse is on a quiet cul-de-sac in Prince George's County, Maryland.

The townhouse where Robert Witherspoon and his eight-year-old son live is in a quiet cul-de-sac in Prince George’s County, Maryland. Witherspoon greets me as I drive up, telling me he’s lived here for 10 years. 

The brick townhouse is solidly built, like Witherspoon, a 52-year-old Navy veteran who now manages a small IT company and works from home.

This house is lived in, but it was sold in a foreclosure auction last September. Witherspoon says his bank bought the house, and that he hasn’t paid his mortgage in a couple of years. 

Witherspoon first fell behind on his mortgage payments when he was laid off in 2009. Now, he’s squatting – not so unusual in Maryland, which has the second-highest foreclosure rate in the country, the forefront of a second wave of foreclosures across the U.S.

Approximately one out of every 540 homes is in foreclosure in Maryland, says Marceline White, the executive director of the Maryland Consumer Rights Coalition. 

She says it’s not that unusual for people to keep living in foreclosed homes, since the foreclosure process takes so long. On a recent afternoon in Prince George’s County, she pointed to one example.

“It’s clearly occupied,” she said, pointing out a jet ski. “There are cars in the driveway.“

At one point, while banks were negotiating a national settlement, they stopped foreclosing in some states. And still, the average foreclosure in Maryland takes almost two years. That’s because Maryland requires foreclosures to be approved by a judge. And new laws slowed things down even more by allowing things like mediation.

Opinions vary on whether that's helpful for homeowners.

“The longer process has definitely helped,” says Lisa Butler-McDougal, executive director of Sowing Empowerment and Economic Development, a group that helps homeowners avoid foreclosure.

Butler-McDougal says foreclosures in Maryland used to be rushed.

“Some people’s homes were being foreclosed in 15 days, 30 days," she says. "Where before they could even understand the notice of intent to foreclose, they were receiving notice of a sheriff’s sale.”

But there's a flip side.

“There’s so many people that come in here that have medical issues as a result of the stress of trying to hold onto a house, that isn’t worth it,” says Manny Montero, an attorney who represents homeowners in foreclosures.

Montero says many homeowners don’t realize that living rent-free in a foreclosed house could eventually cost them, because it makes it much tougher for them to file for bankruptcy and wipe out their debts. 

The pace of foreclosure proceedings in Maryland appears to be picking up, says Daren Blomquist, vice president at RealtyTrac. 

“I would guess sometime this year Maryland would turn the corner and we’d see the numbers go back down,”

Back in his townhouse, Robert Witherspoon says he doesn’t want to file for bankruptcy, and he says he’s tried to start making mortgage payments again. He couldn’t because the bank wanted a lump sum up front, which he didn’t have. Witherspoon’s bank, JP Morgan Chase, wouldn’t comment other than to say it made several attempts to reach out to him. Now, Witherspoon is afraid he’ll get an eviction notice.

Witherspoon says he plans to move after the end of the school year, but he’s hoping to avoid being evicted – something that happened to him as a teenager.

“When you’re in high school and you come home and you see your bed outside the house and not in the house – I was totally embarrassed by that,” he says.

Of course, Witherspoon says his current situation is embarrassing, too. But even after the pain of foreclosure, he still wants to – someday – buy again.

Marketplace Morning Report for Friday April 4, 2014 Nancy Marshall-Genzer

Robert Witherspoon has lived in the townhouse for about 10 years.

by Nancy Marshall-GenzerPodcast Title: Delayed foreclosures: Drawing out the agony?Story Type: FeatureSyndication: SlackerSoundcloudStitcherSwellPMPApp Respond: No

Housing's bad month, via the letter 'L'

Tue, 2014-04-01 11:55

Some pretty lackluster news from the housing market today.

Construction spending rose a measly .1% in February. Part of that was because of the wild weather we saw this winter, but economists say that only accounts for part of the lacklusterness. It seems we’re not building or buying homes like we used to. Pending home sales fell in February to their lowest level in more than 2 years. The housing market made big gains last year, but so far 2014 isn’t looking so hot. 

The reason?

Brought to you by the letter "L" (and the number "3").

L is for Labor: The lackluster labor market means people don’t want to make big investments, like buying a house, says Susan Wachter, professor of real estate and finance at Wharton.  "Jobs and affordability of mortgages are the two fundamental drivers of the housing market and they’re both weak right now."

L is for Loans: Namely, it's not easy to get a loan these days. Nicolas Retsinas teaches real estate at Harvard Business School. "The bread and butter of the housing market is first time homebuyers. They continue to have increasing difficulty getting a mortgage, accessing credit."

Those loans have to be a little larger because of the third L...

L is for Lumber: "Costs have been going up. The cost of lumber’s been going up," says Patrick Newport, an economist with IHS. He says demand from China and other elements have lifted lumber prices, making building less lucrative for builders and a lot costlier for buyers.

L is also for : Undeveloped or ripe for development real estate is getting expensive too, especially in urban areas.

And let's not forget the L for Lousy Weather: The winter freeze clamped a lid on the housing market on most of the Eastern Seaboard this year, and sales in the West and South just weren't enough to make up for it.

All of this is a big deal for the overall economy, says Newport, because it is (I know, you may be going into acute sugar shock at this moment) an economic...

L for Lynchpin: "Basically, the housing market has been sideways for the past six months and that’s very disappointing, because housing is supposed to be one of the key lynchpins that will get the economy back on track."

That's largely because it creates a lot of Lucrative construction jobs.

Housing is having a bad month, thanks to the letter "L"

Tue, 2014-04-01 11:55

Some pretty lackluster news from the housing market today.

Construction spending rose a measly .1% in February. Part of that was because of the wild weather we saw this winter, but economists say that only accounts for part of the lacklusterness. It seems we’re not building or buying homes like we used to. Pending home sales fell in February to their lowest level in more than 2 years. The housing market made big gains last year, but so far 2014 isn’t looking so hot. 

The reason?

Brought to you by the letter "L" (and the number "3").

L is for Labor: The lackluster labor market means people don’t want to make big investments, like buying a house, says Susan Wachter, professor of real estate and finance at Wharton.  "Jobs and affordability of mortgages are the two fundamental drivers of the housing market and they’re both weak right now."

L is for Loans: Namely, it's not easy to get a loan these days. Nicolas Retsinas teaches real estate at Harvard Business School. "The bread and butter of the housing market is first time homebuyers. They continue to have increasing difficulty getting a mortgage, accessing credit."

Those loans have to be a little larger because of the third L...

L is for Lumber: "Costs have been going up. The cost of lumber’s been going up," says Patrick Newport, an economist with IHS. He says demand from China and other elements have lifted lumber prices, making building less lucrative for builders and a lot costlier for buyers.

L is also for : Undeveloped or ripe for development real estate is getting expensive too, especially in urban areas.

And let's not forget the L for Lousy Weather: The winter freeze clamped a lid on the housing market on most of the Eastern Seaboard this year, and sales in the West and South just weren't enough to make up for it.

All of this is a big deal for the overall economy, says Newport, because it is (I know, you may be going into acute sugar shock at this moment) an economic...

L for Lynchpin: "Basically, the housing market has been sideways for the past six months and that’s very disappointing, because housing is supposed to be one of the key lynchpins that will get the economy back on track."

That's largely because it creates a lot of Lucrative construction jobs.

PB&J tops the menu

Tue, 2014-04-01 09:54

In Washington, the Commerce Department reports on factory orders for February.

The House Small Business Committee holds a hearing on "Bitcoin: Examining the Benefits and Risks for Small Business."

The Senate Homeland Security Committee holds a hearing titled, "Data Breach on the Rise: Protecting Personal Information from Harm."

"As the World Turns" premiered on April 2nd, 1956. The sudsy drama continued until 2010.

And sandwiched between all the big news is National Peanut Butter and Jelly Day.

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