Marketplace - American Public Media
The oil boom has brought all sorts of changes to western North Dakota. Billionaire Harold Hamm has had a big hand in it. His company, Continental Resources, is the biggest oil producer there.
Then there's Phil Hamm, who moved to Williston, North Dakota, before the oil industry arrived. He had a few things to say about the changes he's seen, when Todd Melby interviewed for his series "Black Gold Boom."
Todd Melby's series, "Black Gold Boom," is an initiative of Prairie Public and the Association for Independents in Radio.
Steve Jobs established Apple University to teach employees about Apple’s history and culture. Although the courses are not required, Apple’s new recruits usually do enroll.
“This training program is a lot more extensive than pretty much every other corporate training program that I've heard of,” says Brian Chen, technology reporter at The New York Times.
One class instructor compared the 11 lithographs of Pablo Picasso’s “The Bull” to the way Apple builds their devices, as a way to teach the class how to communicate at Apple.
“They like to start out with an idea and whittle it down as much as possible, until it speaks just clearly enough for the consumer,” says Chen. “It’s just a general way that they try to teach employees to think about communicating.”
Listen to the full interview in the audio player above.
Walker and Company CEO Tristan Walker had a hard time shaving. When he was 15, he tried a multi-blade razor and woke up with bumps and rashes on his face the next morning.
So, in 2013, Walker founded a company to solve problems in the health and beauty space for the African American community. Their first product is called Bevel, a shaving system designed specifically for men with coarse and curly hair.
“It’s razor bumps and razor burn. It’s a problem that 80 percent of black men and black women have, and it’s a problem that 30 percent of other races have.”
Bevel works through a multi-step process. You start by applying oil and then shaving cream with a brush, using a single blade razor, and finishing with a moisturizer. The starter kit costs $59.95, and 90-day replenishment kits cost $30 each. That’s a total of $150 for the products.
Tristan Walker knows this is a high price for a shaving kit:
“I reflect back on my experience of going to a retail shop, having to go to the ethnic aisle that’s not really an aisle, that’s really a shelf. Then I have to reach to the bottom of that shelf for a package that’s dirty. Like, that entire second-class citizen experience… it’s not great. Considering how much money we spend on these things, how much need we have for products that work, I think having a respect for the customer is incredibly important.”
Listen to the full conversation in the audio player above.
Twenty years ago, there were just under 2,000 farmers markets in the U.S. Now, according to the USDA, there are more than 8,000.
That’s been great news for many farmers, including Chuck Eggert. He’s the Founder and President of Pacific Foods of Oregon. The operation is one of the most successful operations in the Northwest. Ebbert talked to us about some of the keys to that success, including the need for good soil.
“When you look at conventional soils, there’s very little organic matter, so when you go to pick it up, it’s almost like a dirt clod,” Eggert says.
The key to finding good soil, he adds, is to look for animals scavenging.
“Because they know there’s seeds and bugs there that they can live off of.”
Click the play button above to hear about Chuck Eggert and life on the farm.
The Perseid meteorite showers return on Monday and you may not have realized it, but there are business links with these rocks from the sky.
Here's six things you might not have known about meteorites.
They brought us (some) gold.
Left to its own devices, Earth wouldn't have much of any iron-loving precious metals – gold, platinum, rare earth elements – at its surface. In fact, just about all of earth's original gold and platinum are all locked up in the earth's core, where they sank when the earth was first forming. The only reason we have much precious metal on the earth's surface is because meteorites deposited it from space.
They are different from meteors.
A meteor is the light given off by a piece of space rock as it travels through the Earth's atmosphere. A meteoroid is the actual space rock if it's less than a meter in size. If the space rock is bigger than a meter, it's an asteroid. A meteorite is a space rock that isn't completely burned up on entry and actually makes it to the ground. Read more here.
They are super expensive.
Fragments of the Chelyabinsk meteorite that exploded over western Russia last year sell online for $30 a gram (As of now, gold sells for $40 a gram). Other meteorites can sell for $1,500 a gram.
They can come from other planets.
If a comet or asteroid slams into another planet, it can knock chunks of that planet off and back into space. Sometimes those chunks can fall to Earth, becoming meteorites. That's why we have meteorites from the moon and Mars.
They may hold the key to space mining.
"The Holy Grail of asteroid science is if you can can relate a particular type of meteorite to a parent asteroid in space," says Donald Yeomans, who runs NASA's Near Earth Object Program Office at the Jet Propulsion Laboratory.
If you can understand what types of meteorites contain what types of elements — whether metals or hydrated minerals — and you can figure out their signature, you can use that as a key to understand what an asteroid contains from a distance. That way you can figure out what of value is in an asteroid you're thinking about mining without having to visit it.
They have organic material in them.
Meteorites can even have several percent by weight of organic material — Amino acids, nucleic acids, carboxylic acids.
"How that organic material formed is a big question," says Conel Alexander, a cosmochemist at the Carnegie Institution for Science. "Some people think it formed in interstellar space before the solar system formed. Others think it was created in the disc of gas and dust from which the planets were forming. It raises the intriguing possibility that all solar systems would be seeded with prebiotic soup from which life emerged."
As of Monday, a search for DVD or Blu-Ray editions of the recent hit “Captain America: The Winter Soldier” for pre-order on amazon.com comes up empty. The superhero’s disappearance appears to be part of a pricing dispute between the online retailer and Disney, which produced the movie.
This isn't full-on war; more of a limited skirmish at this point. Captain America is available for pre-order through Amazon’s Instant Video service. Other Disney titles, like Malificent and Muppets Most Wanted, do show up in a search, but they’re not available for pre-order.
Meanwhile, Amazon’s separate, ongoing war with book publisher Hachette has gotten more intense. For months, Amazon has been declining pre-orders on Hachette books, raising prices, and withholding fast shipping. A group of 900 authors took out a two-page ad in Sunday’s New York Times asking Amazon to cut it out. Amazon pre-sponded on Saturday with an online letter of its own, making a case for itself.
Amazon also had a quick spat with Warner Bros. in May and June. For a few weeks, "The Lego Movie" and other Warner titles were not available for pre-order while the two companies worked out a contract.
Colin Sebastian, an analyst with RW Baird, says Amazon’s aggressive tactics suggest that the company is exploring a big question: Who owns the customer? The creators and distributors, or the retailer?
“The media companies and the book publishers and Disney are perhaps afraid of the answer to that,” he says.
He thinks Amazon is following a playbook that Wal-Mart created. “As a supplier, if you don’t negotiate with Wal-Mart, they will not stock your products,” says Sebastian.
Another analyst, Neil Doshi, with CRT Capital, wonders if the Disney negotiations are more complicated than just DVDs: Right now, Netflix has an exclusive deal with Disney for subscription-based streaming of its movies.
Maybe, Doshi says, what Amazon really wants is leverage in a negotiation for that kind of content.
“They are pushing very aggressively on the digital front,” says Doshi. “Digital provides much higher margins than physical goods."
Which could bring the story full circle: Maybe this is why the Captain America movie is still available from Amazon as a download? Incidentally, a Blu-ray of Captain America can be found on Amazon by those who look hard — a Chinese-subtitled Hong Kong edition, available now, not just on pre-order.
The trade publication Home Media Magazine was the first to report the Disney/Amazon story.
This article was updated at 12:37 P.M. on Aug. 11, 2014
Amazon has taken on a new opponent: Captain America. Try to pre-order a DVD or Blu-Ray of "Captain America: The Winter Soldier," and you'll come up empty. More on why the movie is the latest casualty in a pricing dispute between Amazon and Disney. Plus, Brussels, home to the European Parliament, is seeing lots of lobbyists from the U.S. tech industry. They've descended to advocate against new online privacy legislation. And right now, the perseid meteor shower is going on -- The spectacle of shooting stars has long brought a sense of wonder to those who stay up to watch it. It's also brought cash...Sort of.
Dayton’s Mad River well-field is on a grassy island in the middle of one of the city’s three major rivers. Phil Van Atta, head of Dayton’s water treatment operation, says the wellfield, where the city pumps up groundwater from the Great Miami Buried Valley Aquifer, is one of his favorite places. The shallow sand and gravel aquifer in some places lies just feet below the ground, and its 1.5 trillion gallons of freshwater is constantly recharging from the rivers and rainfall.
“We’ve got loads of capacity now,” he says. “We would love to see more demand, more industry come in. Not just to increase their demand for water, but also so there are more jobs available to people in this area.”
Dayton’s population has stagnated in recent years due to the foreclosure crisis and loss of industry. In Dayton, both crises hit years before they tore apart the national economy. But now the city may be on the cutting edge again. As states like California face major water shortages, city officials here sense a business opportunity.
Almost all local jurisdictions draw from the Great Miami Aquifer, and Dayton’s water treatment system serves 400,000 in the city and surrounding Montgomery and Greene Counties. The self-filtering, self-recharging freshwater supply, along with the rivers, once made Dayton attractive to water-intensive industries in the 19th century.
Mills, factories, and countless little breweries lined the river before Prohibition, and Dayton was a hub of innovation and wealth. The airplane, the cash register, the self-start automobile ignition, and the pop-top soda can were all invented here. But now, that’s just a distant memory.
“We lost all the GM plants and the Delphi plants and the parts plants associated with those plants,” says Van Atta, turning his truck onto the gravel road that makes a loop around the island.
Tens of thousands of jobs evaporated — the final blow was when GM left in 2008. “That was a big hit on our water demand,” he says.
Now, dozens of out-of-use wells dot this island; Van Atta says they rotate them in and out of use following a reduction in demand of over 25 percent since 2008.
And yet, Dayton is betting that water will be the key to turning things around.
'We're running into limits'
U.S. census numbers reveal that in recent years the population has been virtually flat or shrinking in places like Ohio, Illinois, and Michigan, where there’s tons of water. The biggest areas of growth are in the west and southwest, where water scarcity is a growing emergency. Parts of Texas have seen the worst droughts on record for four years and counting, and California’s facing much the same.
“We’re running into limits,” says Peter Gleick, the head of the Pacific Institute, a nonprofit research organization in Oakland, California. “The Colorado River no longer reaches the sea in an average year because humans use all of the flow. We’re over-pumping groundwater aquifers in the western U.S...In the past we’ve sort of assumed enough water would always be available, and I think we can no longer assume that’s going to be the case.”
The parched conditions affect everything from food prices to energy spending to the intensity of wildfires. Climate change means this is probably just the beginning.
“Some of these southwestern cities that not only have water scarcity problems, but are gonna start to see more and more costs for energy, for cooling, more and more uncomfortable extreme heat days,” he says. “In that kind of situation I think it’s possible that we may see a change in the kind of migration we’ve seen over the latter part of the 20th century, maybe back to some of these population centers in the midwest and in the east.”
“Back to the midwest” — that phrase is music to Karen Thomas’s ears. Thomas is the head of water marketing for Dayton.
“We have an abundant water source,” she says. “We don’t believe that we would have to worry about water.”
The water in the vast underground aquifer is usually out of sight, but it’s up to Thomas to make it visible, and sell it. Efforts in the last few years have included a “Take Back the Tap” campaign to encourage citizens to use Dayton tap water rather than bottled water. Officials have also reached out to companies in water-stressed areas, pushing Dayton as a cheap alternative.
Thomas thinks this is what could put Dayton back on the map.
“Water is a public good, but it’s also a commodity,” she says.
An economic development team in Dayton has conducted talks with several food processors, manufacturers, and beverage makers that could use an inexpensive and abundant supply of water. Companies that choose Dayton would face little of the regulation placed on water diversions in the Great Lakes basin; here, if you can drill a well, you can drain it.
“If they’re looking for water, this would be a great place to relocate to,” says Thomas.
You can't make beer without water
Dayton’s water pitch may sound like something out of a post-apocalyptic sci-fi movie, but it’s not all that far-fetched.
“You know people turn on the tap and they think water’s free, they just assume it’s gonna be there,” says Peter Kruger, master brewer at Bear Republic brewery in California, north of San Francisco.
“There was a period in early February where the governor listed 17 cities in California that were within a hundred days of running out of water,” he says, “and our brewpub in Healdsburg was one of those towns, and our production brewery in Cloverdale was another.”
In the brewing industry, water isn’t negotiable — most of it is used for cleaning equipment and of course for the beer itself, which is why Kruger is nervous. I called him to hear about the work they’re doing to conserve, but he says they are actually considering a move.
“We have talked about other locations for a brewery that are not as water-stressed as California is.”
They’ve looked at Pennsylvania, Wisconsin — and yes, even Ohio.
But Karen Hobbs, a senior policy analyst with the Natural Resources Defense Council, is not on board with the idea.
“These are difficult economic times. But the troubling part about marketing water resources I think is that it tends to devalue that asset,” she says.
Hobbs thinks clean water in the Great Lakes region comes too cheap. Where she lives in Chicago, almost 2 billion gallons of water a day leave Lake Michigan for use in homes and industry, and drain into the Chicago River, never to be returned or recycled.
Plus, the midwest is not immune to the effects of climate change, like drought or huge storms and floods, which can affect water quality as well as quantity. She says before companies just move to where the water is, they should work harder to reduce, reuse, and recycle.
“There’s lots, lots of low-hanging fruit in terms of improving water efficiency and increasing conservation that companies and individuals can take,” she says.
But Peter Kruger says Bear Republic Brewery is doing a lot of that already.
“Traditionally breweries have used anywhere from 10 to 15 gallons of water to make one gallon of beer,” he says. “Our ratio now is down to 3.5 gallons of water to make a gallon of beer.” They get their water from the Russian River, which has been dramatically low; the company is now putting its own money into sinking a well to access groundwater at the edge of town.
Still, the brewery's water use may not be sustainable in the long run. Kruger says he’d hate to leave beautiful sunny California, but this year has been a reality check.
“Water is really gonna be the challenge our kids and grandkids deal with,” he says. “As there are more people there’s not gonna be more and more water, there’s gonna be less and less clean water. That’s anywhere. That includes Ohio or, you know, the wettest place in the world.”
Betting on a future where water is king
Some people in Dayton believe they’re walking on a liquid gold mine: people may have lost jobs, people, and whole industries, but the Great Miami aquifer is still here.
Though not entirely unthreatened: In the 1980s, the drinking water in Dayton was found to be contaminated with dangerous levels of industrial chemicals. A 1987 fire at a Sherwin Williams paint warehouse had to be allowed to burn for days on end to avoid dousing the plant’s chemicals directly into the aquifer near the wellfield.
Following the fire, Dayton and the surrounding municipalities that use the water system passed stringent drinking water protections that incentivize industry to keep chemical contaminants away from the wellfields. Still, today the city sometimes cleans up industrial chemicals including trichloroethylene (TCE) from the water before it’s sent to the tap.
Now, a handful of local manufacturers are pushing to reduce some of those protections, saying the chemical limits treat smaller businesses unfairly. The city says reduced demand on the wellfields has shrunk the area in need of active protection, and has put forth a controversial proposal to reduce that area by 40 percent.
Even as a public debate over water gets underway, Dayton leaders aren’t concerned about the future water supply. Karen Thomas’s message for master brewer Peter Kruger? Come and get it.
“To be able to turn the faucet on, to get a cup of coffee, to flush your toilet, to take a shower, and the water’s there and it’s clean, why not love water?” she says. “Especially Dayton water!”
Lewis Wallace is WYSO’s economics reporter and fill-in morning host. Follow him @lewispants. A version of this story was originally produced for WBEZ Chicago's Front and Center, which is funded by the Joyce Foundation: Improving the quality of life in the Great Lakes region and across the country. For more stories on regional and global water scarcity, go to WBEZ's After Water tumblr.
A couple years ago, Ben Davis was flying home from Christmas with his family and came across an early version of a smart watch in the SkyMall catalogue. He was intrigued by the bluetooth connection that allowed the watch to receive calls, but the men’s version was too traditional. It looked like any other watch.
“The ladies version was kind of a far-out, kind of spacey bangle,” says Davis, an art critic in New York. “You couldn’t tell exactly what it was when you looked at it.”
So he bought it. Like the Prius owner who wants people to know they’re driving a hybrid, Davis wanted people to see and talk about his cool new toy — and he says it worked. He used to demo the watch at parties.
As tech companies build up hope that “wearables” – smart watches, fitness trackers, and the much-hyped Google Glass – will become an integral part of consumers’ everyday lives, they’re realizing the devices are in need of a makeover.
“If you’re not a techie or an early adopter, people are very discerning about what they’re willing to wear every day,” says Dan Ledger, a principal with Endeavour Partners.
Google has tapped designer Diane von Furstenberg to design frames for Google Glass and Tory Burch recently created jewelry to disguise the Fitbit. Apple hired a former Burberry executive ahead of the launch of its long-rumored iWatch. Intel has similar plans for a fashionable smart bracelet, produced in collaboration with Barneys New York, The Council of Fashion Designers of America, and fashion retailer Opening Ceremony.
“I think the companies who are really succeeding in this are saying let’s start from scratch and let’s design a product that doesn’t look like a gadget,” says Ledger, citing products like the Activité.
After design, the next problem for device makers will be figuring out how to keep people using the product. In a recent report, Endeavour Partners found a third of people abandon their wearable device after six months.
Davis doesn't wear his watch much any more. It never really worked like he'd hoped.
Brussels is home to the European Parliament, but it's also hosting lots of lobbyists for the U.S. tech industry.
Walk down the street near Parliament and you'll see office blocks that are home to lobbyists representing the likes of Facebook, Google, and other tech companies.
They've set up shop because many U.S. tech companies oppose strict new online privacy legislation that members of the European parliament are considering.
"It's gotten a bit out of hand. Very, very emotional," says Jean-Marc Leclerc, director of the digital economy policy group for a trade association called Digital Europe. Among its members: Apple and Microsoft.
Leclerc says there were "thousands of amendments, night votes. It really went crazy."
Why was it so crazy? The EU is considering an online privacy bill that would give consumers the right to have personal data erased. There would also be new limits on online profiling.
The tech lobby says the legislation would hurt commerce and innovation on the Web, and would also create mandatory data reporting requirements that would be a burden for business.
But all this tech lobbying leaves privacy advocates in Brussels feeling outgunned.
"I think it's the second biggest center of lobbying in the world outside Washington, D.C.," says Joe McNamee, executive director of European Digital Rights.
He says members of the European Parliament don't quite know what to make of the U.S. tech lobby muscle: "It was quite new in the European context and policy makers in the European Parliament were taken by surprise."
Some members of Parliament say they understand U.S. tech companies have to lobby here because they have a lot at stake.
"I think it's inevitable that business will lobby," says Claude Moraes, a member of the European Parliament representing London.
He says bring it on. We're not naive. We can handle it. But he does draw a line. Moraes says some of the 4,000 amendments to the privacy legislation were taken word-for-word from lobbyists.
"There were certainly accusations of amendments being cut and pasted and I think that's where the line is crossed," he says.
Moraes can expect even more lobbying this fall, when members of the European Parliament return from their summer break to continue working on the online privacy legislation. Final votes aren't expected until next spring.
Graphic by Shea Huffman/Marketplace
The history of film is full of efforts to enhance the narrative experience. In 1960, the film Scent of Mystery featured the first use of the infamous “Smell-ovision” technology. It also was the last.
At the time, the New York Times film reviewer wrote, “As theatrical exhibitionism, it is gaudy, sprawling and full of sound. But as an attempt at a considerable motion picture it has to be classified as bunk.”
Now, Oculus Rift, the virtual reality company purchased by Facebook, is pitching its technology to studios. As the TV critic for New York Magazine and Vulture.com, Matt Zoller Seitz thinks a lot about entertainment and its potential to evolve.
Seitz argues that virtual reality is incongruous with what we see a film as today, and that simply inserting the capability into film would not be useful to the audience.
“I honestly can’t see how this can enhance narrative as we know it,” he says.
In his view, the value in virtual reality for films would be in exploring the environment without the tether of the narrative.
“The point of a story is that you surrender to it,” he says, pointing out that the point of a video game or virtual reality is the perception of uninhibited exploration of the virtual world.
A buddy of mine in California somehow stumbled across a vintage piece of business history: a copy of Fortune magazine from 1948. A piece about Business and Ethics stood out for him, and instead of sending me a scan of the article, my pal located a second copy of the old magazine and sent the whole thing.
Lucky for me. That 66 year-old Fortune is a striking document. First of all, the ads: loads of farm equipment for sale in an economy where agriculture still dominated. More than a half century before Amazon, there's the Sears catalog, which, an ad reveals, offers the option of buying a Kaiser automobile mail order. There is a half-baked idea from a famous economist for a "Magic Circle": a spot toward the middle of the United States — think Missouri and Oklahoma — where factories could be relocated to keep them the furthest away from Russian nuclear bombs. The Fortune editors, even in real time, were skeptical.
I shared the old magazine with Marketplace's economics expert, Chris Farrell, who was equally fascinated. Chris noted how a big chunk of its content addressed issues surrounding labor unions that played such a greater role in the US economy in the immediate post-war years than they do now. Chris also noted the near-absence of women in this publication for businessmen.
Click the media player above to hear Marketplace economics correspondent Chris Farrell in conversation with Marketplace Morning Report host David Brancaccio.
It was, however, that business ethics piece that stood out as so oddly quaint and prescient at the same time. Its author was a British-born academic, William Orton of Smith College, who tried to demolish what must have been a pervasive view that business is business and ethics is a subject for Sunday sermons. These days we call it "fiduciary responsibility" or "shareholder value," but that forced separation isn't hard to find in boardrooms to this day. While many business professionals have the impulse to act ethically, Orton wrote, they may be worried that stockholders or banks see ethical/moral considerations as "unbusinesseslike" and would "kick," meaning put up a fuss if ethical issues were added to the mix.
Orton sounds like he could have been writing today in other ways. He brings up inequality and notes a division in the economy between the "makers" (the manufacturers and innovators) and the "takers" who consume these creations or serve as middlemen.
My colleague Chris was especially taken by a point Orton makes about the need to be sure that what makes sense from a business or economics point of view also makes sense from the perspective of right and wrong. Orton uses this example: Say an orchestra comes to town for some performances but a schoolteacher isn't paid enough to afford the tickets. This, Orton argues, is not a good economy and is not a good society. Ethics and business cannot be separate.
Before we put down this 1948 copy of Fortune, one last highlight. The magazine included a feature story about what one might regard as America's first hipster or boutique hotel. It was just being opened in Cincinnati at the time of publication and was described as a triumph of mid-century design. This hotel, judging from the pictures, was the Fifties before the Fifties actually occurred. Among its Modernist touches, it featured an original mural by the artist Joan Miro and a big mobile by Alexander Calder. I wondered how the hotel was doing now, in 2014.
Not well. The hotel closed in 2008 and although some historic preservationists in Ohio would love to save it, much of its Modernist coolness had long ago been stripped away. I was shocked to see the Miro had been removed from the premises, replaced by wood paneling. At least that had a decent outcome: the 30 foot-wide piece is now in the custody of the Cincinnati Art Museum, along with the Calder. Sadly, during this era of hipster hotels, the Terrace Plaza is regarded as too big to be "boutique."
For drivers in Southern California, drivers will be reminded over and over again they are living through a drought. On radio, there are ads urging people not to wash their cars or water their lawns, along with billboards telling people to be on the lookout for water wasters. Meanwhile, electronic road signs used for Amber Alerts and accident warnings have defaulted to reminders the state is in severe drought warnings.Justin Sullivan/Getty Images
An electronic sign near the 280 freeway warns of serious drought conditions and encourages people to use less water in San Francisco, California. The message is part of a statewide educational campaign that the California Department of Transportation. Now in its third straight year of unprecedented drought, California is experiencing its driest year on record dating back 119 years, prompting California Gov. Jerry Brown to declare a statewide drought emergency last month.
How bad is it in California? Well, agricultural groups estimate some $5 billion will be lost this year because of the dry conditions.
But dry conditions and water shortages are happening on every continent except Antarctica, and that’s presenting a serious global challenge for small and big companies, according to Financial Times Environmental Correspondent Pilita Clark. She recently wrote a series called a World Without Water, and she says mismanagement and dry conditions are causing a significant crisis around the globe.
“In other words, water is really poorly distributed,” Clark says. “And then, it’s long been taken for granted … it’s been polluted. So what we’re seeing in country after country is growing competition between farmers and industry. And that growing competition between two groups is becoming more and more intense.”
Of course, a crisis can create opportunity. In Las Vegas, a public-private partnership is looking to take their expertise in handling drought. The Las Vegas Global Economic Alliance is looking to sell that knowledge to other governments and groups around the world.
“What this is a unique partnership, taking all of the research and all of the technology, and turn it into a commercialization opportunity,” says LVGEA CEO and President Tom Scancke. “This is a whole new marketplace that hasn't been looked at or inspected properly.”
This week, Lizzie O'Leary sits down for brunch with New York Magazine contributing editor Jessica Pressler and Business Insider's Executive Editor Joe Weisenthal to discuss the economic news of last week and what's on their plate this week (get it?).
People with lots of unpaid medical bills could be getting a break on their credit scores.
Fair Isaac Corp., otherwise known as "FICO", says it is changing its calculations to ease the impact of medical debt that’s gone to collection.
So what is it about medical debt that makes it different from all other kinds of debt?
“When you go to the Gap to buy jeans, you ultimately know at the time of purchase exactly what the cost of that is going to be,” says Ken Brevoort, senior economist with the Consumer Financial Protection Bureau. When you pay for your "1969 ultimate panel cuffed always skinny jean," you are the only person paying the bill.
When you go to the doctor – usually – it’s you and your insurance company.
“When you have the insurance involved, you don’t necessarily know what’s going to be your portion and what’s going to be the insurance’s portion,” says Brevoort.
Here’s the thing: paying medical bills is so complicated sometimes the consumer doesn’t even know when they still owe money. FICO senior consumer credit specialist Anthony Sprauve says ignorance isn’t a good reason to give someone a lower FICO score.
“We recognize that it’s not an indicator of a person struggling in most cases when it’s happening by itself,” he says.
The federal government estimates about 7 percent of consumers have unpaid medical bills that have gone to collection agencies. Those consumers could see a 25 point or better score under FICO’s changes, says Sprauve.
“They are going to have access to more credit and they are going to be able to get credit as a lower price,” he says.
That’s the good news. The bad news is more and more consumers must wade into the byzantine world of healthcare billing.
Which means if you want to make sure you’re up to date on your bills, it’s still on you.
Here's a pet peeve about how I sound on the radio: When I listen back to myself in interviews, I'm struck by how often I say "uhhh" as I'm putting together a question. I think it makes me sound stupid, but it's how I talk, so I roll with it.
Turns out I'm completely normal.
A post at the Atlantic quotes a linguist at the University of Pennsylvania, who says men use "uh" more and more as they get older.
Women tend to say"um," but that decreases with age.
The biggest banks in the U.S. were made to write living wills, so that in the event of another crisis, like the one in 2008, the economy wouldn't go down with them.
But this week, they basically flunked their checkups with federal regulators.
“Banks weren’t expecting this kind of pushback, they’ve been submitting these living wills for the last several years, like three years in a row, starting in 2012, and they kept on falling short,” says Paddy Hirsch, Marketplace editor and host of The Whiteboard. “But nobody’s really pushed back on them. This time, the regulators pushed back really hard. And it’s taken the banks a little bit by surprise.”
And if banks don’t cooperate, banks could face additional regulations.
“I think it’s in the back of everybody’s minds that [the 2008 crisis] is a possibility. And what the regulators are trying to do, is get to a place where it’s as remote a possibility as possible. And for the most part, the people who are running the banks absolutely don’t want to be in a position where they are a bank that’s ‘too big to fail.’”
So, what happens next?
“What they might actually do is start changing their legal structures to make them less complex,” Hirsch says. Financial derivatives contracts and other structures could be simplified to comply with new and additional regulations.
According to a study from the Urban Institute, an estimated 1 in 3 adults, or around 77 million people, are so far behind on their debt that their account has been placed in collections.
“Being indebted is like being in shackles, or like wearing one of those cartoon ball and chains. And that can be not just a financial obligation, but an emotional or intellectual obligation as well, because it’s hanging over you," consumer columnist David Lazarus say. "It’s coloring virtually every decision you’re making in life.”
And it also takes a toll on your credit score, too. That could make an impact down the line. “If your credit score takes a hammering. Any future borrowing you’re doing is going to be at a much higher interest, if you can get the loan. More over, if you get a black mark on your credit score, it can take about 7 years to get that off.”
But, as David Lazarus notes, the worst thing you can do is ignore the calls. Instead, be aggressive, and "a key thing to remember for consumers is you have rights," Lazarus says. Debt collectors can't harass or abuse you, they can't call you early in the morning or late at night, and they can't threaten to imprison you.
You should also keep in mind that past due debt carries a statute of limitations, depending on your state. “It doesn't mean the debt goes away," Lazarus says, "they can still keep trying to collect, but they can’t take you to court. They can’t sue you”
Next week, the London-based system for setting the price of silver – which is more than a century old – will be scrapped in favor of a new electronic, auction-based method.
The move has raised another big question mark over the future of an even more important price-setting mechanism: the so-called "gold fix." Since 1919, the value of the yellow metal has been set daily in London, but after a series of benchmark rigging scandals, the gold fix is looking more than a little tarnished.
The name doesn't help. These days, the word “fix" hardly inspires confidence in the integrity of the system – especially since banks are involved .
“People don’t trust banks,” says Brian Lucey, Professor of Finance at Trinity College Dublin. “The fix is not a transparent process, and therefore it inevitably gives rise to conspiracy theories and concern.”
Four banks – including Barclays and HSBC – get together on the phone twice a day to deal in gold bullion. The price they strike becomes the latest "fix" or global benchmark for the yellow metal. Details of the conversation between the four banks are not immediately made public, and that provides scope for rigging.
Alberto Thomas of market consulting firm Fideres Partners testified before a parliamentary committee this summer and warned of the danger of abuse: “Effectively you've got a massive potential for insider trading in that market, and market manipulation... It doesn't mean it happens every day, but the opportunity is there. Our analysis shows that between 2010 and 2013, up to 30 percent of the fixes showed signs of rigging."
Adrian Ash of BullionVault.com, an online gold and silver exchange, is not convinced there has been such widespread abuse. But he concedes there has been at least one case of gold fix manipulation.
“Barclays Bank were recently fined 26 million pounds for a trader at a separate, precious metals desk at their bank, who put in a false order at the fix to try to push the price a little bit lower," says Ash. “The trader stood to get a bigger bonus if the gold price fell below a certain level.”
This is not the biggest banking scandal to hit London - the rigging of the LIBOR interest rate benchmark was far more serious, since it was used as the basis for trillions of dollars worth of financial transactions.
But Ash worries that the doubts swirling about the London gold fix could be harmful: “I think there is a danger of the reputation of the London bullion market being damaged by the current fuss around the fix,” he says .
Without greater transparency and independent oversight, the fix could wither, and London could lose more business to the burgeoning gold market in Shanghai.
When the silver fix is reformed next week, gold may not be far behind.