Twitter has gone public with its plans to go public. We can now take a look at the S-1 form the social media company filed with the Securities and Exchange Commission. Twitter hopes to raise a billion dollars.
So far, the government shutdown has not affected the SEC. With some cash left over, the regulator says it’s still "open and operational." But if the shutdown drags on, things could change.
"As long as the SEC is back at their desks in three weeks, Twitter will be fine," Len Blum says. He is managing partner at Westwood Capital, LLC.
Twitter filed its IPO confidentially a few weeks ago, so the SEC had a chance to review it before the shutdown started. A bigger variable, potentially, is the debt ceiling debate.
"You know, what Washington is doing or not doing these days has an effect on the market," Blum says.
Twitter will begin what’s called a 'road show.' Executives will talk to potential investors and underwriters will get a sense of what the company’s stock price should be.
"You know, if you wait for the congress to stop being dysfunctional, you’re never going to go public," Tim Pollock says. He is the Farrell Professor of Entrepreneurship in the Management and Organization Department at Penn State University Smeal College of Business.
After the road show, and once Twitter gets the SEC's approval, the shutdown may be over. Then, Twitter will have some flexibility to decide when its stock will go on sale.
$1.2 billion. 601,000. $9,200. 500,000: Can you guess what these numbers mean?
Click on the audio player above to play along.
We get a lot of questions after every show from baby boomers asking for advice on managing their investments as they approach retirement age, and this week was no different. So we asked our friend Louis Barajas, a personal finance expert in Los Angeles, to help us answer a few.
Our first question this week came from Leanne, a semi-retired breeder of rare dogs in Rosehill, Kansas. She's concerned about allocation and diversity in her retirement portfolio. Leanne has all of her money, a little more than $115,000, invested in stock funds, and she's concerned about what could happen if there's another stock market crash or recession.
"I was wondering if I should pull it out of there and put it in bonds," Leanne asks. "My fund really took a hit in 2008 -- I lost almost half the value -- and now it's back up to where it was."
Barajas says Leanne's issue is one that many investors are facing now that the stock market has rebounded.
"A lot of people out there have finally gotten their portfolios back," he says. "Having more money, we always have to go back to the basics, which are: What is our goal? What is our timeframe? And what's the risk tolerance that we're willing to take?"
Barajas says that Leanne's inclination to diversify is right. Keeping all of your money in equity means that if equities go down, your entire portfolio will go down. If you want to get an idea of just how much your portfolio could be impacted by a dip in the market, Barajas suggests visiting a fee-only or hourly-rate financial advisor for what's called a Monte Carlo simulation. An analysis of hundreds of thousands of variations measured by standard deviation, a Monte Carlo simulation lets you see what risk you're carrying with your current portfolio.
But Barajas also says Leanne shouldn't just blindly invest in bonds for the sake of diversifying her portfolio. "You have to understand it's like eating fruits and vegetables," he says. "Bonds may be fruits, but there are different types of bonds -- there's short-term bonds, long-term bonds, municipal bonds, corporate bonds. And it's like having bananas, apples, and pears -- if you're only eating apples every single day, and not varying the fruits that you're eating, you may lack some vitamins. The same thing with your portfolio."
Leanne says that she doesn't plan on tapping into the account for about eight years, and hopes to make the money last for about five to ten years after that. Barajas says that long term plan should leave her in good shape for continuing to invest in stocks, even if the economy stumbles again.
"If we do go into a small recession or the market goes down again, always look at it as a great opportunity to buy in when there's a sale on stocks," advises Barajas. "And, especially if you're thinking eight to ten to fifteen years out, it's really important to not get so scared and stay within your original goal, which, in your case, is retirement."
To hear more advice, click the audio player above. This week, we also have questions about setting up a posthumous charitable foundation from a single man in his 60s; how to know whether your investment advisor is giving you the most bang for your buck; and whether or not there is any financial advantage in getting married for a boomer couple.
Every industry has buzzwords. Some of Silicon Valley’s most recognizable include disruption, innovation, and monetization. Big words with sometimes slippery definitions.
One word that has been a perennial favorite in Silicon Valley is meritocracy. It comes up often when tech entrepreneurs describe the culture of their industry. Today, meritocracy suggests a grand set of ideals: that talent trumps all else; that with a great idea and hard work, anyone can succeed no matter where they came from.
But when the word first popped up in Silicon Valley in the 1970s, it was used in a much more narrow and "very specific way," says Leslie Berlin, a historian for the Silicon Valley Archives at Stanford.
Back then, she says, meritocracy was mostly used to describe a corporate management style.
"It was used in contrast to what was seen as the more rigid, east coast model," says Berlin. "Unlike older, more stultified companies, where what you earned was directly related to your job title and maybe how many employees you managed and how long you had been at the company, this new model would recognize the contributions of the people who made the biggest difference."
In this new model, rewards were -- at least, ideally -- doled out "regardless of what someone's title was, whether they managed someone, or how long they had been at a company," Berlin says.
It was a management style championed by Robert Noyce, one of the inventors of the microchip. He was a man with a libertarian bent who earned the nickname "Mayor of Silicon Valley." Early in Noyce’s career, he had been frustrated at companies with rigid, top down management structures, so when he started his own company, Intel, in 1968 he tried for something different.
"There is a new management style evolving, looking at human worth rather than the usual autocratic organization of the company," he said in an interview reflecting on that time. "It's much less autocratic, much more democratic."
At Intel and soon, many other tech companies, employees were offered stock options that could increase in number and value the more someone contributed. Bosses often sat in cubicles alongside their workers. And there were the all important Friday "beer bashes," says Berlin. Everyone, from the workers on the manufacturing line to the CEO would show up, she says.
"You know, you stand around and sip a beer and talk to people. It was great," remembers Len Yates, who developed software in the early 1980s at Tandem, a company based in Cupertino that was famous for its beer bashes.
"People would throw out new ideas there, bash around new concepts," he says. Before Tandem, Yates had worked at IBM in Texas. Compared to his old job, Yates says in Silicon Valley "people were much less concerned with status" and much more concerned about "getting the work done -- and watching their stock options grow."
Stock options and beer bashes are still very much part of Silicon Valley today, though they have evolved. For starters, now that most hi-tech hardware is made overseas, there aren’t many folks from the manufacturing line at the parties. Meanwhile, the idea of meritocracy has morphed from a management style to a much bigger, and more contested concept that encompasses ambitious "anyone-with-talent-can-make-it" claims.
Talent and hard work often do trump social status and pedigree in Silicon Valley today, says Berlin. But, she cautions, "I don’t think the tech industry is a magical place, that there aren’t networks and there aren’t connections and there aren’t helpful people to know."
This final note today, in which we learn exactly how important ticker symbols really are.
We told you yesterday that Twitter's gonna trade under the symbol TWTR. Which makes sense.
TWTR, however, is not the same as TWTRQ, which is the ticker symbol for a defunct consumer electronics company called Tweeter Home Entertainment. (Q gets tacked on there when a company files for bankruptcy.)
So, why am I telling you that? Because today 5 million shares of TWTRQ changed hands. It closed up 684 percent, at just over a nickel a share.
It’s a busy Wednesday morning at the private Lowell School in Washington. Teacher Sarah Smith is herding rambunctious seventh graders into their seats for the first class of the day: Humanities. Part of the curriculum: government.
I’m a special guest this morning, here to get the seventh grade perspective on the shutdown. These kids have a front row seat for the shutdown show. When I ask who knows somebody who works for the government, hands shoot up.
One student says, "My dad works for EPA."
"My aunt works in the Senate," another shouts.
These students are paying attention. So when I ask them what their advice for Congress is, they’re ready.
"I don’t know whether this would work but maybe if the government had a certain amount of money for each thing they would want to buy," says Naomi Steinglass. "So they would have a section of money for schools and a section for healthcare."
I tell her that believe it or not, that’s how the government is supposed to work, explaining that Congress didn’t pass the budget bills this year. And the government shut down. I ask the kids for more ideas. Ari Katz has something to say. He’s the one whose aunt works in the Senate.
"I think Congress should allow the government an allowance," he says. And when the money runs out, he says, the spending stops. Heads nod in agreement. These kids know how allowances work. It’s sort of like a balanced budget amendment.
Isabel Albores raises her hand. She’s the daughter of the EPA employee. She takes that balanced budget idea one step further.
"The government should start setting aside like five percent of the money they get from taxes, so that they can start paying off the debt," she says.
With that last little bit of earnest wisdom, class is over. And the kids get back to their world. Of allowances, limits and raising their hands to speak.
Ireland is voting on a potentially money-saving proposal on Friday to abolish the upper house of the country's parliament.
The chamber in question has relatively weak power, says Austin Hughes, chief economist at KBC Bank. The amount of money that would be saved is quite limited -- about 10-20 million euros a year -- and Hughes says the savings would just cause a small dent in the country's deficit.
"In the context of a government deficit that this year is around 12 billion euros, arguments about 20 million euros seem very, very unimportant."
Austin Hughes, chief economist at KBC Bank, joins Marketplace Morning Report host David Brancaccio to discuss.
Twitter has made public its papers for an S-1 Initial Public Offering.
It is not 140 characters long, though the company did send out a tweet before releasing its plans to the SEC.
We've got new details on the inner workings of the social network known for brevity. For one, Twitter wants to raise a cool billion dollars -- at least -- when it opens its doors to Wall Street. A nice big number considering the fact that like so many tech companies, Twitter isn't profitable yet.
The IPO documents were made public on the Securities and Exchange Commission web site on Thursday, and in the documents we learned that the company intends to trade under the ticket symbol "TWTR". But, in one of the most closely watched decisions, Twitter declined to select an exchange: Either the Nasdaq or the NYSE.
There's been talk for months about whether the popular micro-blogging site would go public. But Twitter's filing was a bit unconventional.
The company filed for an initial public offering of stock with the help of a provision in the JOBS Act.
Click here to listen to more about Twitter's news.
We're in Partial Government Shutdown: Day 4. West Point cadets are now being taught by fill-in officers because civilian faculty members are on furlough. Some FEMA and National Hurricane Center workers, meanwhile, have been 'un-furloughed' to deal with Tropical Storm Karen in the Gulf of Mexico.
The furlough of roughly 800,000 federal workers -- those deemed non-essential -- is beginning to affect the real economy of consumer spending and income. Sam’s Club says its sales are off in some markets. And manufacturers like United Technologies and Boeing, which depend on government workers to do inspection and certification work as well as depending directly on government contracts, are warning of layoffs if the shutdown continues.
The shutdown is costing approximately $155 million per day in lost wages, or 0.3 percent of GDP on an annualized basis, according to Capital Economics. But the shutdown won’t really start to bite until half-empty paychecks hit workers’ bank accounts around October 15th. The payday scheduled for the end of October will be barren for federal workers.
EPA inspector Natasha Greaves in Seattle has already delayed a home remodel, and she’s holding off on travel reservations for the Christmas holidays. Greaves is 42, married, and helps to support an elderly parent.
“Over time, it will become much worse,” says Greaves, “just not knowing. Are you going to be able to do the things that you’ve done, to support folks, to pay all your bills?”
Rutgers University public policy professor Carl Van Horn at the John J. Heldrich Center for Workforce Development says a mass federal furlough is better than a mass layoff, where workers aren’t sure they’ll ever be called back.
“The past history has been that workers that were furloughed eventually get paid anyway,” says Van Horn. “But the more cautious ones will not be sure that that will happen again.”
After government shutdowns in the 1990s, federal workers got back pay. But that may not be in the playbook this time around.
"Runner Runner" stars Justin Timberlake as a grad student caught up in Ben Affleck’s nefarious online poker operation. How nefarious? At one point, Affleck shoves Timberlake into a pool of hungry crocodiles.
The Association’s director, Geoff Freeman, says that even though online gambling is illegal in the U.S., it’s a $3 billion industry.
"It’s here," Freeman says. "The question is, are we going to regulate it and create the right framework for this, or are we going to allow the black market to thrive."
But Freeman’s true opponents aren’t handsome, crocodile-owning thugs, says Richard McGowan, a professor at Boston College’s Carroll School of Management.
The opponents are actually -- wait for it -- state governments. "If I’m a state governor or a state treasurer, I am not amused by the thought of federal regulation here," says McGowan.
Because in that case, the feds would collect taxes and fees, and the states would face more competition for their own gambling franchises -- lotteries.
Calling it "high-end" doesn't quite do the Jimmy Choo brand justice. You can spend $1,000 for a pair of shoes or $2,000 for a handbag.
Tamara Mellon co-founded Jimmy Choo with those kinds of prices firmly in mind almost 20 years ago. Her new book on the experience is called “In My Shoes.”
Jimmy Choo is a real person. He was a cobbler in London. The two went into business together after Choo worked for Mellon while she was a fashion editor at Vogue Magazine. He would set up photo shoots for her.
“I would go down to his studio and I would tell him what to make. I’d photograph and give him a credit in Vogue," said Mellon. "So I thought, ‘what a great platform to start a business.'"
Mellon said she knew the brand was special after their first big sale from Saks Fifth Avenue.
“When we saw the sell-throughs at Saks, we were having 95 percent sell through,” said Mellon.
That means that 95 percent of the 3,000 shoes ordered sold at full price, which Mellon said is unusual for the fashion industry. She said usually shoes see a sell-through of around 65 percent.
Mellon said the company’s biggest moment was its mention on "Sex and the City."
“I didn’t even know it was coming. I got a call from a friend that said ‘Hey did you see 'Sex in the City'?’ I was like ‘no,’" said Mellon. “She goes, ‘there was an amazing scene where Carrie Bradshaw says 'I lost my Choo.’”
When asked why she put Choo’s name instead of hers on the brand, Mellon said Choo was originally supposed to design the shoe.
“When I realized that Jimmy wasn’t going to be designing the collection and that I was the one that was going to have to step up to the plate. We’d started, we’d opened a store, his name was above the door and I thought ‘let's just carry on with it.’"
Wherever you go in the coastal city of Wenzhou, you hear the sounds of people working, spilling out of thousands of small factories which line the streets. One neighborhood makes most of the world’s metal cigarette lighters. A couple of miles away, there's a neighborhood devoted to shoe soles. The district beyond that? Felt tip pens.
Nearly all of them are small, privately-owned businesses getting zero help from the government. According to Wenzhou businessman Huang Fajing, this -- combined with the city's geography -- has created some of the keenest businessmen on the planet.
"We’re a coastal city near Taiwan. The government was always scared Taiwan would bomb or invade us. So the government never bothered to invest any money in our infrastructure," says Huang, pausing to take a drag on his cigarette. "They left us alone."
Some here say the government got out of the way -- allowing the capitalist-minded people of Wenzhou to develop their own economy, complete with a lending system that predates banks. A place where a loan is simply a pile of money pooled together by friends and family.
"I began making cigarette lighters 20 years ago," continues Huang. "Four of my family members each put in $1,500 and lent it to me without interest. That’s what we call a Wenzhou loan."
Thanks to his Wenzhou loan, Huang Fajing made a fortune selling cigarette lighters–Chinese media now call him the ‘lighter king.’
On his road to cigarette lighter fame and fortune, the Lighter King watched on as more money flowed into Wenzhou. Over time, loans were no longer limited to just family and friends. The ‘Wenzhou loan,’ says Huang, became a lot less innocent.
"Bigger groups of lenders began to form. They pooled money together and took turns taking out loans. Then they started lending money with very high interest rates - to strangers."
This system of lending -- in all its variations -- is called shadow banking. It’s now popular throughout China. In a report earlier this year, JPMorgan Chase estimated China’s shadow banking industry could be worth up to 70 percent of the country’s GDP. China’s central bank has become so worried about this that in June it essentially froze lending between the country’s banks, sending global markets into a freefall. The big concern here is that if China’s economic growth continues to slow down, all these off-the-books loans won’t be paid back.
Along a busy thoroughfare in Wenzhou simply called ‘shoe street,’ shoe factories that export to Europe are now-- like the EU -- suffering.
Shoe factory owner Gao Shenyi sits inside his storefront sipping tea and smoking cigarettes with his friends. He wears a silver chain around his neck, bright red shoes, and a tight t-shirt filled with random English words: "staple text," "free floral decorative pack," "January," and so on. The shirt’s tucked into bright white chinos, showing off a sparkly rhinestone belt buckle.
His friends are dressed like Chinese gangsters, too. There’s a reason for that.
"My friend lent some money to a businessman who agreed to pay it back with interest in 60 days," mutters Gao, "But then the guy disappears. We’ve been looking for him, but he ran away."
This has become common in Wenzhou. Private loan defaults have soared over the past two years. Dozens of Wenzhou businessmen unable to pay back their loans have gone missing or been found dead. Yin Zhichao, deputy director of the China household finance survey, has studied China’s shadow banking sector for years. He fears these types of defaults could lead to social instability throughout China.
"They have a sudden, far-reaching impact on everyone who's lent that money," says Yin. "From my point of view, China’s biggest economic risk isn’t from the existing banking system, but from this type of shadow banking."
And now China wants to bring this sector out of the shadows. A year ago, it chose Wenzhou to start a pilot program to legalize shadow lending networks. It built a center where people can apply for these loans, with more tightly regulated oversight.
But here at the Wenzhou Private Lending Registration Center on a recent weekday, there isn’t one customer. Rows of chairs sit empty and dozens of staff pretend to look busy, surfing the Internet.
“It’s always this empty,” says Zhou Xiang, a loan officer who works here.
Zhou sits under a poster depicting a smiling elderly couple lying on their stomachs in a verdant meadow of wildflowers, admiring a butterfly collecting pollen. The sky is blue, and in the background, skyscrapers rise from the pasture. It’s a landscape that doesn’t exist in China, promising loans nobody seems to want.
"Most businesses that come here don’t have a credit history," admits Zhou. "They just don’t qualify for a loan."
Which is exactly how shadow banking started here in the first place.What is shadow banking? The shadow banking system is a key component of the U.S. economy. Paddy Hirsch explains what it is. Watch the video
"It's been a faith journey."
That's how the Reverend Heywood Wiggins sees Camden's struggle toward affordable healthcare.
It's Day One, and the healthcare exchanges have just opened across the country. Wiggins is preaching passionately to a motley congregation under a baking noon sun. Hospital executives in suits and shades mingle with baseball-cap-clad residents. Primary-colored banners championing reform wave in the crowd.
They've gathered outside the Vision of Hope Center on dusty Atlantic Avenue to celebrate opening up healthcare to thousands here.
A reverential hush descends.
The Camden pastor steps up to the makeshift podium. "Today is a day of rejoicing… This day begins the process of liberty and healthcare justice for all."
Cheers of agreement ring out. You don't have to be a church-goer to feel the sense of communion here.
The groups behind the rally – the Camden Coalition of Healthcare Providers and Camden Churches Organized for People, among others - are heavily invested in seeing the sign-up succeed.
"This means a lot to me," says Patricia DeShields from Project HOPE, a community health center for the homeless. "There are a lot of faces that I see that… are going to have the opportunity to manage their health problems."
That wasn't always the case. After a decade of working together and sharing data, Camden's providers made some painful discoveries.
Nearly half the city's residents visited the ER in one year alone. The most common diagnoses? Colds, sore throats, earaches and viral infections. Ninety percent of Camden's healthcare costs were being spent on just 20 percent of patients.
Something had to give.
But those in the health business here insist the collaboration isn't driven purely by dollars.
"It's not just the money that it costs us as a provider," says Patient Access Director at Lourdes Health System, Joan Braveman. "It's [also about] the quality of life for the patient."
The "journey" to bring affordable care to one of America's most impoverished cities has been long. Too long says the Coalition's founder Jeff Brenner.
"I'm sick and tired as a front-line provider of taking care of people who lose their insurance. It's a tragedy."
A primary care doctor and community icon, we recently spoke to Brenner about winning a McArthur "Genius" Grant for his work in Camden. He says there's still some way to go.
"We can't give up… We've got a lot of work to do to get this thing over the finish line."
And what of the doubters? Volunteer Shirley Bush says they need some big ideas of their own. "They know that our current system is broken. But they have nothing to bring to the table."
Something else there's talk of here is hope.
Two young guys loitering by the information desk, looking to sign up, stop to talk. One of them – Bert – calls it a blessing that he can finally be part of the system. His friend, Asbah, works part-time, but hopes insurance will bring a better future. "I feel like it's an opportunity… We don't get these opportunities that much."
Brenner is keeping the faith too.
"My hope is that every American… gets incredible healthcare. And we can do that. We're America for God's sakes."
It is now day three of the government shutdown. Among the 800,000 federal employees furloughed are the people who run this country’s national parks, which are closed.
So if you were planning on flying to Arizona this weekend to take a donkey ride through the Grand Canyon, or maybe jet off to Wyoming to watch Old Faithful do its predictable dance in Yellowstone, you might want to call the airline. Some are offering refunds in the form of vouchers.
“It just allows the customer to take the trip later without getting gauged for a change fee. But the airline still keeps the money,” says Michael Boyd, an airline consultant with the Boyd group.
It’s unlikely that that airlines will see a substantial loss in revenue because there aren’t a lot of tourists traveling this time of year. The exception is Washington D.C. airports. Boyd says a prolonged shutdown could cause a 20 percent drop in D.C. air traffic.
“That’s the gateway to get inside the beltway. Since the beltway is closed, you are going to have people canceling trips,” says Boyd.
On the other side of the country, just outside of Yosemite National Park, Peggy Mosley is the innkeeper at the Groveland Motel. She says business is slower than normal because of the shutdown. “Our employees don’t get paid when we don’t have guests.”
Mosley had seen her business drop dramatically after the August Rim Fire. Many of her employees had to file for unemployment as a result. She was expecting a rebound, as tourists came to see huge fields of wildflowers that typically bloom after a fire.
Instead, with the park closed, she has fewer hours to offer her employees.
“They are eating out of the local food bank. Their water and their propane are getting turned off. It is an incredibly difficult time for our employees right now,” says Mosley.
The national parks themselves are offering refunds to park visitors.
The U.S. Office of Travel and Tourism was unable to respond to my request for an interview. It's closed as a result of the shutdown.
Dr. Jim Yong Kim is a doctor by training, but has been the president of the World Bank for about about a year and a half. Earlier this week, he gave a speech setting up his goals for the bank for the coming year.
In it, Kim explains why poverty was "the defining moral issue of our time," and could be eradicated by 2030.
On his plans to eradicate poverty:
"It's easy to say, and we've been talking about ending poverty for a long time. But this is the first time we can actually see the end. This is the generation that can end poverty. If the poor countries perform as they have over the last 20 years, they're gonna get to about 6 or 7 percent poverty. We have a job to do. What we need to do, is to figure out what they were doing when these economies were growing at their best. And then try to .. re-create some of that magic. It's easy to say, it's morally extremely compelling, but it's going to be hard to do. And we have a lot of work ahead of us.
On focusing on conflict zones:
“We really believe that if you can bring the peacemaking process together with development, you have a much greater chance of having a sustained peace. I think we’ve always known that that’s the case, but the way we’ve been working, we sort of wait until the peacekeeping process sticks. We’re not doing that anymore…we’re going to put on the table real development solutions that will make the peace last.”
On the World Bank's willingness to fail:
“Not only am I comfortable with failure, I come from a profession where we have a very systematic way of dealing with failure. We took some of our most spectacular failures, put them in front of the whole team, and said, ‘look, this is a great lesson.’ I’m really trying to shift the mentality from a risk-averse culture to one that says, ‘let’s take smart risks,’ and the only thing that can go wrong is if something fails and we don’t learn from it.”
You could call Target is the ultimate team player. It has paired up with big names in fashion like Phillip Lim and Jason Wu. It has struck deals with interior designers and celebrity chefs.
Now it’s entering in a new partnership -- and it’s a lot more about finance than fashion.
The retailer said today it’s getting into the pre-paid phone card business, with a new service called Brightspot. And Target’s partner this time is T-Mobile.
The wireless carrier has been making its name as a company that requires no commitment. If you don’t want be tied down with a two-year contract, and last year’s phone? No problem. T-Mobile won’t hold you to one.
And that’s what the Target deal is all about. With Brightspot, consumers can get a pre-paid plan for $35 a month to talk or text, or $50 a month if there’s a data plan in the mix.
Analysts say the partnership with T-Mobile will let Target cash in on the movement among consumers to cut the phone-contract cord. The deal will also help the giant retailer bring in new users, who’d rather pay as they go.
“Customers, can buy these pre-paid phone cards at a variety of locations,” said analyst Jeff Kagan, adding that Target competitor Walmart has built up a big pre-paid card business.
“The question is, ‘Why hasn’t Target gotten into this space?’” said Kagan.
The pre-paid phone card business is worth several billion dollars a year in the U.S., says Burt Flickinger, managing director of Strategic Resource group. He says it’s also a way for Target to expand its market, and “keep its guests or shoppers away from competitors.”
Flickinger says Target gets most of its revenue from apparel and accessories -- and those customers only shop so much. By selling pre-paid phone cards, Target can “get more and more consumers who are cash and credit constrained to come in their stores on a monthly basis instead of a quarterly basis,” he said.
Although the cards carry fees, consumers like their flexibility and the ability to pay for them month by month. Not to mention that Target is offering a $25 gift card to customers who stay with the plan six months in a row.
The government shutdown is only three days old, yet a bigger battle already looms: raising the debt ceiling.
The Treasury Department on Thursday released a report warning that breaching the borrowing limit on October 17 could have dire economic consequences. The last time the U.S. government squabbled its way towards even the possibility of defaulting, it stung the economy.
“The stock market went down, it got more volatile, there were effects on consumer confidence,” says Alice Rivlin, a senior fellow at the Brookings Institution.
The S&P 500 fell 17 percent, U.S. debt was downgraded and job growth slowed. It took months to recover.
“It was a serious situation even though we didn’t default, we just talked about it,” Rivlin says.
But it’s hard to say that that same thing will happen again, because other stuff was going on at that time.
“The thing that people lose track of a little bit is that that’s really kind of the time when the eurozone starts falling off the cliff,” says Bill Stone, chief investment strategist for PNC Wealth Management.
That also may have hurt the stock market. On the flip side, though, Europe looked so bad compared to the U.S. that investors flocked to Treasury bonds, even after they had been downgraded following the the debt-ceiling battle.
And investors are doing the same these days. So if people take the possibility of a default seriously, says Stone, “It’s odd that the flight to safety flies to the thing that people are worried about. Treasury yields are actually down.”
That’s because investors can’t fathom that Congress would do something so insane as to let the U.S. default on its obligations, says Steve Blitz, chief economist with ITG.
“Every financial institution in the world has their capital in U.S. Treasuries,” he says. “This thing runs through everything.”
Brookings’ Rivlin says while the current economic situation may be better, the political situation is worse.
“The consequences are even more dire than 2011 because the government is shutdown, the atmosphere is so bitter and financial markets might take more seriously that the United States is seriously flirting with not paying its bills,” she says. “I don’t think the world took us very seriously in August of ‘11. At some point we will be taken seriously and then the crisis could be dire.”
Even if it doesn’t come to that, there is still a risk.
“The real issue is: What does the deal look like that gets government back to work, that raises the debt ceiling,” says ITG’s Blitz.
There could well be some kind of brutal compromise that cuts government spending deeply or randomly, like last time around.
“That’s the critical thing. That’s what we’re going to live with,” Blitz says. “If it is a deal that is a little bit too draconian, it’s going to slow the economy.”
So not only would failing to raise the debt ceiling by October 17 hurt the economy, and not only might arguing over raising the debt ceiling hurt the economy, but even resolving the debt ceiling problem could hurt the economy.
It's all coming full circle: The social network that famously began in a dorm room is now essentially thinking about buildging dorms on its own office campus.
According to the Wall Street Journal, Facebook said it's in talks with a developer to build a $120 million, 394-unit housing community called Anton Menlo that'll be within walking distance of its offices. Amenities of the 630,000 square-foot rental property would include a pet spa with doggy day care, an indoor/outdoor wellness and yoga studio, a bike repair shop, a convenience store and a sports bar. At this point, there'll be space for only about 10 percent of Facebook employees.
The old-school idea of a company town, like those of the coal mining regions of the early 20th century, could be an ideal situation for those working in Silicon Valley, where real estate prices are skyrocketing amid a housing shortage in the Bay Area.
On the other hand, the ever-in-flux mindset of the tech community is completely contradictory to the idea of living where you work. Younger tech employees don't necessarily feel tied to their companies, and having to sign year-long leases with your employer might feel something equivalent to a death-sentence commitment.
How would you feel about living so near work, or about living in a space owned by your employer? Would it be a benefit, or a downside?
Weekly jobless claims rose slightly to 308,000, but still a bit lower than expected.
Meet Jeremy Feador, a 27-year-old part-time worker in Cleveland, Ohio who has been struggling to find full-time employment.
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The government shutdown has forced many federal employees out of work. But many private workers and small business are suffering as well.
Taylor Phillips owns Eco-Tour Adventures in Wyoming, which normally takes visitors on wildlife tours in Grant Teton and Yellowstone National Parks. Although his small business is separate from the government, he is a permitee of the national park -- which means he is required to shut down operations as well.
"The spotlight is on government employees, but there's a huge private sector being impacted," he says. "We rely on the tourism industry and people come here for the parks."
Taylor Phillips, owner of Eco-Tour Adventures in Wyoming, joins Marketplace's Mark Garrison to discuss. Click the audio player above to hear more.