Facebook is experimenting with a new service called “Autofill with Facebook.” The idea is if you want to buy something on an app, instead of having to enter in all your payment info, you just log in with Facebook. And zap, everything is filled out.
Right now, the social media giant has only partnered with two apps. But, more importantly, Facebook is making a move into what's known as “frictionless payment," which has become the holy grail of online retail. To understand “frictionless payment,” it’s worth remembering what it used to be like to shop on, says Rebecca Lieb, an analyst at the Altimeter Group.
She says in the early days, before eBay bought PayPal, “When you purchased something on eBay, you then had to navigate over to PayPal, sign into your PayPal account, find the auction you just won...”
If Lieb's sheer explanation is enough to make you tune out, you can imagine how the shoppers felt! eBay eventually bought PayPal and now, everything’s just a couple clicks away.
If you've ever bought anything on Amazon or iTunes, you know they are masters of frictionless payment.
“They make transactions faster and easier and also more impulsive,” says Lieb.
And don't I know it. I look at half the songs I have downloaded from iTunes and wonder where they came from. Then I remember the party where everyone was asking if I had this song and that song. That was all it took. Click!
“They’re trying to attract more advertisers to their platform,” Yeager said. “They want to be able to prove that if somebody sees an advertisement within a few clicks they can have a very seamless path to purchase.”
Yaeger says Facebook and Twitter are a long way off. But, he says, if they can make it super easy on to click an ad and buy, especially on a a mobile device, then they'll have a huge advantage over print and TV with advertisers.
The latest Case-Shiller housing index report is out. Long story short, housing prices are going up, but slowly. Interest rates are also on the rise. Not good news for buyers and lenders. Citigroup just announced that it laid off 1,000 employees, all of them from its mortgage division. Several of the country's biggest banks are trimming their mortgage operations. It's the result of big changes happening in the world of refinancing.
If you go back about 20 years and look at mortgage applications, you would find that the vast majority, 80 percent, were new home purchase loans and the rest were refinancings. Today it's nearly the opposite. Only about 30 percent of all mortgage applications are new purchase loans.
"We've had this prolonged refinancing boom because mortgage rates just continued to hit new lows, and a lot of people kept refinancing over and over again," says Greg McBride, a senior analyst with Bankrate.com.
The result of the refinancing boom was that banks hired more employees, and over time the mortgage divisions generated a larger portion of the banks' profits. "Think of it almost like a seesaw in the respect that when rates are really low, refinancing takes off," says McBride.
And now that interest rates are rising, the demand for refinancing is dropping, says Jed Kolko, chief economist at Trulia. "And typically when you have a mortgage rate spike of half a point in a month, which is a big increase but that's what we've had in May and June, refinancing rates tend to drop by almost half."
So what does all this mean for the housing market? For homeowners, it means that refinancing will save them less. For banks, it means they will be looking for ways to make up for the decline in revenue in their mortgage divisions. "I expect we are going to see some banks increasing their home purchase lending, making it easier than it has been to get a mortgage for people that are looking to buy a home," says Kolko.
According to the new Case-Shiller report, that home will cost about 2 percent more than it did last month.
World leaders are gathering for the U.N. General Assembly in New York this week and questions continue to swirl around a possible meeting between President Barack Obama and his Iranian counterpart, Hassan Rouhani. The U.S. and Iran have had icy relations for years, but Rouhani has hinted, however tentatively, that a thaw may be possible. Analysts say U.S. sanctions on Iran, including a trade embargo that bans many Iranian companies from doing business in the U.S., have hit Iran's economy hard. Companies that flout the embargo risk having their assets seized.
Last week, a federal judge in New York said the government can seize a 36-story Fifth Avenue Manhattan skyscraper that is partly owned by The Assa Corporation. The judge called Assa a front for Iran's state-owned Bank Melli.
The U.S. government can seize anything from racehorses to sports cars, said Charles Intriago, president of the Association of Certified Financial Crime Specialists. Typically, he said, U.S. Marshals are assigned to watch over those assets, though in some cases the work is contracted out.
"There have been racehorses seized, for example," he said. "The marshals may not know much about keeping thoroughbred racehorses. They will hire some folks to make sure those horses are maintained in top condition."
That a company with links to Iran might attempt to conduct business in the U.S., given the tensions between the two nations, might strike some as surprising, but Patrick Clawson of the Washington Institute for Near East Policy, says it may be more common than assumed.
"There have been some stunning bank accounts," Clawson said. "You have to go -- what was crossing their mind when they opened that bank account. People aren't very bright."
Clawson's awareness of those accounts stems from his service as an expert witness in the court cases of Americans who have been victims of terror attacks that are proven to have ties to Iran, such as the 1983 bombing of the U.S. Marine barracks in Beirut, Lebanon. Since the mid-'90s, the U.S. government has allowed victims to sue, to claim some part of the billions of dollars in seized Iranian assets.
"Increasingly," Clawson said, "the courts have ordered the banks to hand that money over to these victims of Iranian-sponsored terrorism, who have now collected hundreds of millions of dollars. And the Iranian government is not happy about this process."
This week, the Chinese government will open the country's first 'free trade zone' in Shanghai. It will be an area of deregulation where foreign companies will be able to sell products and services without import duties or taxes. Marketplace's China Bureau Chief Rob Schmitz says the move has those in the foreign buisness community optimistic -- but they know it won't make business in the region a cake walk.
"There is a lot of skepticism because nobody knows the specifics of how exactly this is going to make selling your products easier in China," he says.
Schmitz says China may utilize this free trade zone to give global financial markets a go at determining the value of its currency -- something U.S. lawmakers have been pushing China to do for years to allow American products to better compete with Chinese products. But Schmitz says, don't hold your breath.
"China has always been very, very cautious about loosening control on its currency for fear that it would have a broad, negative impact on its economy."
Marketplace China Bureau Chief Rob Schmitz joins Marketplace host David Brancaccio to discuss.
This final note on the way out, which
- Gets us to the political news of the day, and;
- Appeals to the history geek in me.
Today is the 96th anniversary of the Second Liberty Bond Act, which in 1917 helped finance the American entry into World War I, with $3.8 billion worth on bonds at a yield of 4 percent.
But that's not the important part.
You know what else was in the Second Liberty Bond Act of 1917? The first ever federal debt limit.
The Russian government is privatizing gunmaker Kalashnikov, selling off its stake in the maker of the AK-47 rifle for about 40 million dollars. The BBC's Famil Ismailov joins Marketplace Morning Report host David Brancaccio to discuss.
After Chrysler's bankruptcy, the United Auto Workers union ended up owning a large stake in the company. Chrysler's largest shareholder, Fiat of Italy, wants the union's stake, but they're arguing over money. Representatives for the union have now filed papers to sell the union's stake to the public in an intial public offering and Fiat is not too pleased about the action.
Micheline Maynard, Forbes contributor, says the UAW is filing for an IPO as a bargaining tactic.
"I think this is a way to let the markets set the price on Chrysler. It's a big gamble though," she says.
Micheline Maynard, Forbes contributor, joins Marketplace Morning Report host David Brancaccio to discuss.
The beauty of a footnote in a book or an article is finding that getting to the original source only requires a trip to the library. But as more and more literature lives -- and is born -- online, there's a growing problem. Big enough that some of the most prestigious institutions in the country are banding together to try to better preserve that literature with a new project called Perma.
Jonathan Zittrain, professor at Harvard Law School and co-founder of Harvard's Berkman Center for Internet & Society, joins Marketplace Tech host Ben Johnson to discuss.
Microsoft launched the Surface 2 tablet in New York yesterday. The company says the new tablet lasts longer without charging and is more powerful, too. Brett Ostrum is the general manager of development for the Surface tablet. He says Microsoft users have come to expect productivity from their computers and tablets. But a survey by Gartner research says tablet owners spend 50 percent of their screen time on entertainment and only 15 percent of the time working.
The United Nations General Assembly kicks off later this morning with a speech from President Obama. One item on the agenda for global leaders this week? Discussing progress in reaching the so-called Millennium Development Goals, which were set in 2000 to be met by 2015.
“The UN General Assembly will discuss these eight goals and ask how much progress have we been making in areas like poverty and maternal mortality and child health and so on,” says Charles Kenny, senior fellow at the Center for Global Development in Washington D.C.
Kenney says a fair amount of progress has been made. “Look at the first development goal on the number of people worldwide who are living on $1.25 a day,” he says. “Back in the 90s, that was around half the population, now it’s about 20 percent.”
Other goals, like reducing infant mortality have been slower going.
“A lot of the information we found in analysis of this millennium development goal issue is that progress has been great but uneven,” says Johanna Mendelson Forman, scholar in residence at American University’s School of International Service.
The financial crash took a major toll on meeting the goals, says Forman. There’s still a lot of progress to be made in areas like fighting HIV and reducing greenhouse gas emissions.
As floodwaters recede from the plains of Colorado, farmers are assessing the damage to their crops. Agriculture contributes $40 billion to the state’s economy. There could be some long-term benefits from the flooding recharging the soil with nutrients, but those hopes are tempered by worries about contaminated flood waters.
Norm Dalsted teaches agricultural economics at Colorado State University. He’s been touring flooded farms, most of which grow corn and hay to feed livestock. He says even if those crops survive to harvest, it may not be safe to feed them to livestock because of contamination.
“Basically the wastewaters that were flowing in the river as a result of breached sewage treatment plants. Also there was some crude oils spillage.”
Brian Werner at the Northern Colorado Water Conservancy is less worried about this year’s crops than next year’s. That’s because of damaged irrigation systems.
“The farmer’s irrigation canals and ditches and head gates were totally compromised,” Werner says.
It’s unclear just how big the hit to the agriculture economy will be, but there is a silver lining, Werner says. Soil moisture should be much higher than usual next year. That’s great for dryland farmers -- those that don’t use irrigation. But if irrigation and transportation infrastructure isn’t repaired quickly enough, much of that perfectly moist soil will be useless.
In a little over a week, an important part of Obamacare will be rolled out across the country. The health insurance exchanges open for business on October 1.
Except "most people don't understand Obamacare" says Peter Ubel, a professor at the Duke School of Public Policy. He says "uncertainty can be a very powerful emotion."
And emotion has been a constant theme in advertisements about the health care law.
"I think both sets of ads on pro-Obamacare [and] anti-Obamacare are working off fear," says Ubel.
Ads like the much lampooned Uncle Sam giving a prostate exam are one example:
Could these ads actually stop people from signing up for health care? Ubel says "it will scare people and that will work." Some will be too scared of the government to sign up. Others will be too scared of high health care costs not to.
By now, what went wrong in Ireland is a familiar story -- a burst housing bubble, a bailout, an economic crisis and record unemployment. But on the banks of the Liffey, the river that runs through Dublin, is a burgeoning technology sector that many people in Dublin hope can help pull the country out of its doldrums.
John Dennehy, the founder of an Irish tech company called Zartis, is one of them. On an unusually sunny day for Ireland, he guides me through what’s come to be known as Dublin’s “Silicon Docks.” He stands in front of a row of bustling, waterside cafes and restaurants and points to buildings that house hundreds, if not thousands of employees for Google and Facebook. Twitter's new digs are just down the road.
Many of the world’s largest -- mostly American -- tech companies have their European headquarters in Dublin to take advantage of Ireland’s super low, 12.5 percent corporate tax rate. The list includes LinkedIn, PayPal, DropBox and Microsoft, to name a few. Dennehy says 90,000 people work in the country’s tech sector, and the scene here is unlike everything you’ve heard about Ireland over the past few years.
“It’s almost like we live in two different universes,” says Dennehy. “One is, you know, the newspaper headline of unemployment hitting record levels. And the other one is towering blocks of offices filled with really high-value jobs, with highly paid people, and it feels like a different world.”
In fact, Dennehy says there aren’t enough qualified developers and multi-lingual salespeople in Ireland. By his estimates there are about 4,500 unfilled positions. Dennehy heads a campaign called “Make IT in Ireland,” established to attract more talent from overseas, but he struggles to overcome Ireland’s reputation as a country in crisis.
“If you take a 24 year old who’s coming out of college, all he’s heard for the last four years is a bad news business story about Ireland,” says Dennehy.
Take Simon Dempsey. I met him pitching his web-based travel app, LikeWhere, at a showcase in Dublin for tech startups. In his words, “LikeWhere essentially shows where to go in a new city based on what you like in cities you already know.”
Dempsey is one of the few who’ve actually moved home to Ireland at a time when many young people are emigrating to find work.
“You know you just heard story after story of people struggling,” Dempsey says. “There was statistics of a thousand people leaving Ireland a week.”
What lured him back was money. Last year, the Irish government sank more than $40 million into tech startups like his in the hope that one turns into an Irish success story.
“You struggle to find somewhere else in Europe where the government are so actively involved in pouring money into early stage companies,” says Dempsey. “And that’s really great."
It’s thought Ireland is home to around 500 tech startups. But Constantine Gurdgiev, an economist at Trinity College Dublin, says they can’t compete with the likes of Google and Facebook when it comes to paying top dollar for developers and engineers.
“Startups simply cannot afford the workforce that they require precisely because the multinationals are effectively hoovering it all out,” says Gurdgiev.
He warns Ireland is relying too much on big, foreign technology companies for growth, just like it relied too much on buying and selling property in the past. And we all know how that ended.
“This will come to an end as well,” Gurdgiev says. “There has to be slow down. There will be a slow down.”
Besides, he says, Ireland’s European neighbors are determined to strip the country of the low tax rate that’s attracted the likes of Google, Facebook and Twitter. The question is, will those companies leave once the tax perks are gone.
UPDATED Sept. 23, 2013, 11:21 a.m. PT: BlackBerry announced today that Canadian investment company Fairfax Financial has offered a $4.7 billion plan to acquire the former communications juggernaut. Fairfax already owns 10 percent of BlackBerry. And while the deal is not yet final, analysts believe they might just break up the smartphone maker and sell it piece-by-piece. The company has $2.6 billion in cash on hand and many believer their patent holdings could be worth $1 billion or more.
If the Blackberry saga were a movie, it could be "Rocky II." RIM spent years developing the Blackberry 10, hoping to ride that new phone to success.
"The new Blackberry, the screen is very reactive and it's easy to use," says Phillip Redman, an analyst at Gartner. He's seen the 10 and says it's a lean, mean smart phone machine that rivals the iPhone 5. "It holds its own to any of the smart phones out there."
Rocky Agrawal, a consultant for reDesign Mobile, says a comeback is unlikely because great hardware isn't enough.
"The problem with mobile is you have an ecosystem problem, you need to have apps," Agarawal says. "That's what people care about."
Blackberry says it has about 70,000 apps. But the iPhone has more than million apps, and Android is catching up.
With the smart phone market expected to hit 2 billion users in 2015, Agrawal says if Blackberry can get a sliver of the market, it will stay in the ring -- it'll just have to compete as a lightweight.
Lead has been banned from paint in the U.S. since 1978, but lawyers are still going at it over who should pay to remove the potential health hazard from homes.
The latest attempt to hold the paint industry liable is coming to a head in a California state court. Lawyers made final arguments on Monday in a 13-year-old lawsuit by a group of California communities against five paint manufacturers: Sherwin Williams, DuPont, ConAgra, LM Industries, and Atlantic Richfield.
The California cities want between $1 billion and $2 billion for clean-up costs.
Unlike anti-tobacco litigation, where industry executives denied cigarettes were addictive, no one questions the health hazards posed by lead paint.
“Everyone has agreed that lead is bad for you and lead in paint is a public health threat,” says attorney Kenneth McLain, who has represented plaintiffs in class-action lawsuits.
But while tobacco and asbestos companies have paid out billions of dollars in damages, the paint industry has never been held financially liable for health problems related to its products.
One of the problems with suing paint makers, at least so far, has been tying 40-year-old lead paint to them.
“Unlike Asbestos,” McClain says, “most people don’t remember the paint that was used. They don’t have any accurate information about what they were exposed to.”
Another obstacle is just who is doing the suing. In asbestos lawsuits, the plaintiffs were people who got cancer, says Elizabeth Burch, a mass torts expert at the University of Georgia School of Law. Sick smokers took on Big Tobacco, and so did state governments, which sued to recover increased healthcare costs.
But in the case of lead paint, local governments are suing and they’re making a legal argument that lead paint is a “public nuisance,” that it’s like pollution. Burch says “public nuisance” has traditionally applied to problems that infringe on some kind of public right.
“If someone polluted Lake Michigan, for example,” she says, then a state attorney general might sue on the basis of public nuisance. Or, for example, if a saw mill let logs clog up a river and prevented commerce.
But, Burch says, courts have said this theory doesn’t apply to lead paint. “You have concerns from the courts about expanding that public nuisance doctrine,” she says.
Public-nuisance claims against paint companies have failed in seven states. In one of them, Rhode Island, the legislature assigned responsibility for lead-paint remediation to landlords. In some lawsuits, public housing authorities have been held liable.
But so far, the manufacturers have not.
Getting away with fake online reviews is getting trickier. The time is past when you asked friends to sing your praises. Now you can hire a company to do it.
The New York Attorney General has just announced a settlement with 19 companies, accusing them of writing, and hiring freelancers to write, fake reviews.
But the lawsuit isn’t going to shut the review writing industry down.
I, for example, was able to get a glowing review of this story today.
Before I’d written a word.
If ever a story could transform the very fabric of your existence, this is it. Whimsical. Exhilarating. Mind-blowing and mind-altering. Your story has changed my life, so kudos to you, Adriene. Kudos to you.
Thank you, trusty reviewer. Here’s your $30.
“This is incredibly widespread,” says Harvard Business School’s Michael Luca. He guesses somewhere in the neighborhood of 20 percent of online reviews are fake. “It means that out of every five reviews you see online, one of them was probably written by the business, or by a friend of the business, or by one of these companies that you can hire to leave fake reviews,” Luca says. Or, by a freelancer like the one I hired.
These days, you can outsource this kind of thing and don’t have to do it yourself, says Dina Mayzlin, a professor at USC’s Marshall School of Business.
And, she says, a lot of that outsourcing goes to workers overseas. “If you are a company based in another country, the laws are perhaps not as strict,” she says.
There has been a boom in gun buying for almost a decade now.
“It waxes and wanes here and there, but generally it has been up and to the right,” says Andrea James, an analyst with Dougherty & Company.
Stock prices for the two publicly traded firearms manufacturers in the U.S. -- Sturm, Ruger & Company and Smith & Wesson -- have followed the same trajectory. They have been up over the long term, but they were down last December, after the shooting at Sandy Hook Elementary School. (See: RGR and SWHC since last December)
But that didn’t happen that way after last week’s shooting at the Washington Navy Yard.
Sturm, Ruger & Company since Sept. 16, 2013. Source: Google Finance
Smith &Wesson Holding Corp. since Sept. 16, 2013. Source: Google Finance
That’s because investors seem to be less worried incidents like these will lead to gun control legislation that would affect sales, James said.
“I think that everyone is kind of coming to the understanding that major gun control legislation is not going to get the political support that it needs,” she says.
President Obama said as much last night, at a memorial for the victims of the Navy Yard shooting.
The shooting in Newtown affected everyone, says Neal Dihora, an equity analyst with Morningstar. “If we couldn’t get Congress to do something at that time, it is just hard for me to believe that other shootings will do it,” he said.
Among the proposals that failed to gain traction in the Senate was a stiffer background check measure that had wide public support. In the week since the Navy Yard shooting that left 12 people dead, there hasn’t been the usual hue and cry, or any new legislation proposed.
But Dihora says something else may be at work too: “It just seems like there is a lot of other stuff going on right now.”
Investors have been focused on the Middle East and on the Federal Reserve, and also on the budget battle in Washington.
So, shares in gun makers continue their upward march. Sturm, Ruger & Company’s stock price is almost 10 times what it was just five years ago.
The Big Apple is cracking down on fake online reviews. Today, regulators in New York are unveiling settlements reached with more than a dozen companies, totaling $350,000 for writing fake reviews -- giving themselves raves or falsely slamming the competition.
"We’re in the stage where a customer doing a review has way more power in many cases than professional critic reviews," says entertainment analyst Robert Galinsky.
A 2011 Harvard study found an extra Yelp star raised a company’s revenues by up to 9 percent. "When you have a bad review and you lose a customer," says Galinsky. "You lose some income, that’s not good for business."
Or the city, which could be why New York’s Attorney General is taking this step says Aram Sinnreich, a media analyst at Rutgers University.
"I’m from Brooklyn, I know whether Junior’s cheesecake is good or not," says Sinnreich. "But someone who is traveling here from Italy or from Hong Kong might have no idea."
Still, says Sinnreich, policing sites like Yelp won’t be easy because businesses get crafty with so much money at stake. In some cases, they bribed customers with freebies to write good reviews.
How will the markets react to another government shutdown deadline?
The death toll rises after terrorists attack a symbol of commerce in Kenya.
New York's Attorney General has slapped 19 companies with fines for writing fake online reviews.
There's a special category of assets called 'passion investments.' This includes fine art, wine and other collectibles. It's high glamour, high cost and also high risk, which is why it's mostly the realm of the super-rich. Jason Karaian, senior Europe correspondent at Quartz, says there are some interesting new trends in this arena. Classic cars are fetching a lot of money right now, and coins and stamps are doing especially well -- better than fine art, wine and jewelry. He says the shift could point to a number of things, but it's worth noting that these items have a more 'geekier' image associated with them.
"We billed it as a bit of a ‘revenge of the nerds’ scenario," says Karaian.
Karaian says that although these 'passion investments' can be more fun and interesting, they tend to only be about 3 to 5 percent of the super wealthy's portfolios so in comparison to traditional investments like bonds, stocks and property, they're not a one-way ticket to wealth.
Jason Karaian, senior Europe correspondent at Quartz, joins Marketplace Morning Report host Mark Garrison to discuss.