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How gentrification could hit DC's middle class golfers

Mon, 2014-06-16 09:17

It’s a fine line, the one between economic development and gentrification. A fine line and one that’s wrought with tension, even when it comes to the seemingly rarefied world of golf.

Washington, D.C. is home to three federally owned public golf courses: Langston Golf Course, East Potomac Golf Course, and Rock Creek Golf Course. They’re property of the National Park Service, but run on concessions contracts by a private company.

They’re also affordable, which is why men like Charlie Greene and John Gwinn have been coming to Langston for decades.

“I been playing here for, what, 50 or 60 years,” says Greene, one Friday morning.

Langston, with its long history of African-American golf, is on the National Register of Historic Places. The two men have a regular game here, and Gwinn has been winning lately.

“But that’s gonna change today,” Greene laughs.

The victor may change, but Greene wants everything else about this course to stay the same. Right now he can play 18 holes for 18 bucks.

Though he says he wouldn’t mind better cart paths. And maybe more sand in the sand traps. But that’s it.

“Cause if they make it Augusta,” he says, “they’re gonna price it out of my range.”

He’s talking about an idea proposed by some city councilmembers to study a redevelopment of Langston that would turn it into a PGA Championship Golf Course, with a AAA Four Diamond restaurant and adjoining wine bar. (Not to mention a nearby water park, domed stadium, multimedia soundstage, hotels, and so on.)

D.C.’s lone congresswoman, Eleanor Holmes Norton, thinks all the courses need work.

“It’s like seeing all these jewels on the ground and saying, ‘Why doesn’t someone pick ‘em up and do something with them? They’re valuable,” she says.

Her idea is to transform the East Potomac Course, with its monument views, into a world-class course, with fees to match. She’s introduced a House bill asking for a feasibility study.

“It probably could cater to the lobbyists and the other rich people who come here because the Congress is here,” she says.

They’d fly in. Lobby, lobby, lobby. And at the end of the day, they’d head out and fork out for a round of golf. Norton thinks higher fees at East Potomac could basically subsidize the other two courses, keeping them affordable for middle-class golfers. Right now, capital improvements are paid for by the contractor who runs the courses.

On the putting green at East Potomac, golfer Butch Duvall says he doesn’t think a world-class upgrade would physically work. But he definitely doesn't want to get priced out if it did. Even the new publicly accessible Jack Nicklaus course that just opened in Virginia is too rich for his blood. 

"Love Jack. Love golf," he says -- but not at $95 a round.

Right now these are all just ideas about sustainability and how to use the city’s assets. (Washington’s chief financial officer doesn’t even think the city can afford to study the councilmembers’ redevelopment proposal.)

But beyond all that, does it even make sense to build a trophy course in today’s golf economy?

Jim Koppenhaver of Pellucid Corp, which advises golf clients, says not really.

“We’ve overbuilt what we call premium, penal, and pristine courses in the country,” he says.

In other words, he says there are already too many immaculate, difficult courses that are pricey to maintain and play. Americans are playing 50 million fewer rounds of golf than they did in 2000. So Koppenhaver says supply should be built in line with what the average golfer wants: fun.

“The majority of them, they enjoy golf for the challenge of it, they enjoy it for its outdoors, they enjoy it for the social experience,” he says. “And they somehow tolerate the fact that you’re never gonna be very good at it.”

Unless you spend a lot of time on it. The question for D.C. is how much money golfers will spend along the way.

IMF chief wants U.S. to raise the minimum wage

Mon, 2014-06-16 06:16

Count the International Monetary Fund as another voice in favor of raising the minimum wage in the U.S. 

Christine Lagarde, managing director of the IMF, urged American lawmakers to increase the federal minimum wage, to expand the Earned Income Tax Credit (EITC), to invest more in U.S. infrastructure and for better communication from the Federal Reserve.

In an interview with Marketplace, Lagarde said implementation of such policies would lead to "medium-term fiscal growth" in the U.S. and globally. 

"By identifying a good medium-term fiscal consolidation path, that will improve the level of confidence that needs to take root in the U.S. for the private sector to invest," Lagarde said. "You know, commitments. Commitments that would last beyond one election or one mid-term election."

Lagarde spoke just after the IMF released its annual health assessment of the U.S. economy, lowering estimated growth to 2 percent from its previous estimate of 2.7. Six years after the financial crisis, the organization says it has lingering concerns about "financial stability," and warns that under-regulating the financial sector could threaten the larger global economy. 

"We’re saying this: there is uncertainty on the one hand... when you look at employment numbers, when you look at the participation rate in the job market, when you look at the unemployment numbers and how fast they’ve gone down, you have lots and lots of questions that are not answered," Lagarde said. "At the other end, when you look at the markets, and you talk to market people, they seem to be overly confident and certain of when tapering will happen and how fast, when tightening will take place and how interest rates are going to move up."

So if you're Madame Lagarde, how exactly do you go about suggesting these policies to the Fed Chair? Can you just call up Janet Yellen and ask her to talk over a cup of coffee?

"It was actually over salad that we shared, not a cup of coffee," Lagarde says.

KAI RYSSDAL, MARKETPLACE HOST: Christine Lagarde, good to have you with us.

CHRISTINE LAGARDE, IMF CHIEF: Lovely to be with you.

RYSSDAL: This report, while certainly interesting in what it says, doesn’t necessarily say anything surprising. You guys want better productivity growth out of the state, you want us to get our labor market fixed, you want our public debt to go down. There’s nothing especially astonishing here in what you say we need to do.

LAGARADE: I would disagree with that, actually.

RYSSDAL: Alright, go ahead

LAGARDE: Let’s start with the fiscal. We say two things. We say number one: The medium term fiscal pause has to be identified and anchored which will allow for some short term fiscal benefits to be available in order to support financing in infrastructure and education, among other things. On the monetary front, we suggest that excellent communication be continued and developed further in order to try to match the uncertainty of employment/unemployment numbers on the one hand, and the level of certainty that seems to be enjoyed by markets, and where we see a bit of a discrepancy. And on the jobs and growth front, we are also saying things that you probably haven’t heard or read us saying, which includes the increase in the EITC.

RYSSDAL: Earned Income Tax Credit.

LAGARDE: Earned Income Tax Credit…coupled with an increase in the minimum wage. So those are fairly important things.

RYSSDAL: Alright, well let’s take those apart. First of all, on fiscal policy: In essence, you say you are heartened that the Congress of the United States has gotten its act together a little bit, but you are not at all sure it can make its policy stick. Is that how I read it?

LAGARDE: Well, yes and no. I would say, ‘Great that at least there was a deal on last year’s budget. That is good. Please continue doing this job. Try to agree amongst yourselves what are the key budget items going forwards. And it may very well include this medium term fiscal consolidation path that should be had.

RYSSDAL: In other words, you want more revenues to improve growth. You want us to fix our tax structure. All those are things that, again, have been said before.

LAGARDE: They may have been said before, but we are going to continue to say it until they happen. It’s not going to make them happen, but hopefully if the voices are strong enough, we keep at it, they will hopefully be a path for, as I said, this medium term fiscal consolidation, short term focus on investment in the U.S. That’s what we’re saying essentially: Invest in the U.S. The productivity is low, and therefore it’s a question of investing in the right places: innovation, education, infrastructure.

RYSSDAL: The problem is, of course, that when you say “investment,” there are those in the U.S., mostly on the Republican side of the aisle, who hear “government spending” and that gets you nowhere in a very big hurry.

LAGARDE: It doesn’t necessarily have to mean exclusively government spending. There can be enough encouragement to private sector funding. When you look at innovation, for instance, there were some interesting tax breaks that were available for innovation. Certainly this one could be reinstated and that would encourage the private sector to invest in the right place. We’re also saying that by identifying a good medium-term fiscal consolidation path, that will improve the level of confidence that needs to take roots in the US for the private sector to invest. And not only invest in buying their own shares, but invest in capital expenditure for instance. That will actually support the growth going forward.

RYSSDAL : When you say medium-term, what do you mean?

LAGARDE: Beyond one year. And things that would actually stick. You know, commitments. That would last beyond one election or one midterm election. And by the way, on the minimum wage, which we are recommending be increased, it’s really based on the observation of numbers. When we look at numbers and we see there are 50 million Americans that are below the poverty line, many of whom are actually working poor, we’re saying two things: increase the EITC, which puts a bit more on the table, a bit more income for people who typically spend income, [who] do not save it, and that’s good for the economy. And, we’re saying, couple that with an increase in the minimum wage, which in the case of the United States, is one of the lowest of all the OECD countries. So it’s not as if we’re proposing something that is revolutionary, but we’re suggesting that more money be put in the hands of those who actually work so they can spend.

RYSSDAL: You know, last time we spoke, which was I guess a couple years ago, I asked you whether you had confidence that the Congress and the American people would figure out the right thing to do. And you said, in essence, ‘I always have confidence in the Americans. The world has confidence in the Americans.’ Do you still believe that?

LAGARDE: Yes, I do. And it’s firmly rooted in Alexis de Tocqueville and many of the writers about the U.S. - Oscar Wilde, amongst others, as well.

Kai: Not an American.

Lagarde: Not an American. No, he was a typical Brit actually. But he said among other things: “Youth is a tradition for the United States of the America.” In the same vein, I would hope that confidence and confidence building is also typical of the U.S. It might take time. But clearly the budget deal that was cut a few months ago is an indication that even when people are at each others’ throats, they can eventually cut a deal and find something they agree upon. Which is good.

Kai: About the Federal Reserve: You want Janet Yellen, the Chair of the Federal Reserve, to have press conferences once a month. You want them to publish quarterly monetary policy reports to make sure that we all know more of what the Fed is thinking. I’m gonna guess that you’ve spoken with Janet Yellen about this over a cup of coffee some place, or are you just publishing this in the report for the first time?

LAGARDE: It was actually over salad that we shared, not a cup of coffee. Clearly what we are prescribing is the best case scenario, and a direction to take. We’re not suggesting she gives press conferences every month from tomorrow onwards. But we’re saying this: There is uncertainty on the one hand. Because when you look at employment numbers, when you look at the participation rate in the job market, when you look at the unemployment numbers and how fast they’ve gone down, you have lots and lots of questions that are not answered. At the other end, when you look at the markets, and you talk to market people, they seem to be overly confident and certain of when tapering will happen and how fast, when tightening will take place and how interest rates are going to move up. We believe that there has to be a reconciliation between uncertainty on the one hand, certainty on the other one. And who best than the Fed Chair can do that? That’s what we’re saying. Continue communicate as well as is done at the moment, but increase the intensity and the level, and the frequency.

RYSSDAL: You still have, the IMF, still has, and this is a quote: “financial stability concerns.” Here we are now six years after the financial crisis, and we’re still having this conversation about stability in the banking sector. It’s kind of amazing.

LAGARDE: No it’s not. The financial sector is a very special one, if only because it is dealing with public good, which is credit, which is the value of the currency. And in the case of the U.S., it’s an international public good given the size of the dollar transactions and the dollar as a currency of reserve. We are acknowledging huge progress that has been made: strengthening of the banks, stronger capitalizations of these institutions, improvement in the supervisions. But we’re also seeing, at the same time, a lot of shadow banks, a lot of intermediaries, that are lightly supervised and lightly regulated. We’re not advocating regulation for the sake of regulations, but we’re saying that in the name of this public good that is available, there has to be a degree of scrutiny and a degree of supervision at that is applying across the system and not just to the banks as defined.

RYSSDAL: Do you worry at all about the IMF being perceived as an organization that is constantly telling others what to do. Being the scold. Saying, “We have to do this so we can get here.” It does seem that you guys spend a lot of time doing that.

LAGARDE: Well, we do. It’s part of the mission of the IMF. We were tasked to do that by the founders back in the mid ‘40s. As we are celebrating the landing in Normandy, and the end of the second world war, we are also celebrating the 70th anniversary of the IMF. We have to do three things. One is do the surveillance that we were entrusted to do -- provide policy recommendations based on empirical research; even-handed analytical work. We have to lend to member countries when they’re in trouble. And we have to provide technical assistance to those to ask. Those are the three missions that we have, and we have to continue doing it. It’s not always pleasant. We are often criticized, we are often regarded as the tellers of the hard truth, but so be it, that’s what we were asked to do.

RYSSDAL : A word very quickly about the changing nature of the global economy. You said in a speech in Montreal earlier this month that you could see conceivably if global growth patterns continue the way they’re going, the IMF being headquartered in Beijing, because of course the IMF statute says the headquarters have to be in the home of the largest shareholder, the largest contributor. And if Beijing grows the way we think it’s going to grow… Could you see the IMF offices in Beijing, perhaps?

LAGARDE: Not under my term, but it could happen. If we apply the articles and growth continues as it does, it could well happen.

RYSSDAL : What is it that keeps you up at night?

LAGARDE: First of all: jobs, jobs, jobs, and the people who are looking for jobs who would like to get a job, who would like to enter the market, and who can’t. That’s first and foremost. Second, the various nests of geopolitical crisis that could hamper the recovery that could really derail what is in train at the moment.

Ukraine, Iraq and the price of oil

Mon, 2014-06-16 05:34

After talks about Ukraine paying its gas bills broke down, Russia began lowering the supply of natural gas flowing to Ukraine on Monday. The Russian state-owned gas company Gazprom said it's open to more negotiations but that it now wants Ukraine to pay up front for this crucial energy.

Western Europe also gets gas from pipes that flow through Ukraine and Gazprom's CEO said this morning that he see's what he called "not insignificant" risk for gas heading for the European Union. Remove the double-negative and what you get is a "significant risk" for Europe's supply.

Add to those risks the concern over oil exports from Iraq, and analysts have started to worry about high gas prices impacting economic growth in the U.S. 

"I ask myself, 'What gasoline price would actually start to cause problems for the U.S. economy?' and the number that came out is quite high. About $5.15 per gallon or $5.25 per gallon," says Carl Riccadona, senior U.S. economist at Deustche Bank Securities. "That would be the level, if sustained, that would cause growth to break down."

Plus, Starbucks announced a new perk on Monday called the Starbucks College Achievement Plan. It's partnering with Arizona State University to pay for its workers to do online college classes. 

How Comp-Sci went from passing fad to must-have major

Mon, 2014-06-16 02:30

The demand for computer science majors is booming. Even students at liberal arts institutions are itching to learn how to write code and develop artificial intelligence.

It's hard to believe that the field wasn't considered a serious academic discipline back in the 1960s.

Joel Moses has been teaching computer science at the Massachusetts Institute of Technology for 47 years. But when he first arrived on campus in 1963, it was to be a founding member of Project MAC.

"Machine Aided Cognition, which is another way of saying artificial intelligence. And Multi Access Computers, which is another way of saying time sharing," Moses explained.

Project MAC marked the beginning of the formal study of computer scienceAt first, administrators were skeptical. They viewed computer science as just a passing fad.

"We had to prove ourselves,” Moses said. “And we did!”

Not only did Moses and his colleagues create time sharing, they automated calculus problems.

“People were pleasantly surprised that a computer could do that as well as humans," Moses said.

Then, in the 1970s, MIT's Lab for Computer Science was born. MIT researchers developed some of the basic programming that led to fax machines, e-mail, and the complex operating systems we all take for granted today. Computer science was finally making its mark.

“There was a turning point,” Moses said. “Sometime in the 80s I thought it was OK to major in computer science."

Today, one-third of all MIT engineering students are computer science majors. And the number of undergrads taking advanced courses in the field is growing.

We have to reach further with equipment and we can only do this with computer science," said PhD candidate Dehann Fourie.

Inside the lab, Fourie is working to program a robot that can both explore the deepest reaches of the ocean and be smart enough to know what it's found.

Ten thousand meters down, you are sort of in this dark abyss,” Fourie said. “Now you have to go do something useful and that doesn't just happen by itself."

"All these things people have talked about for decades are coming to fruition and the computers are getting better and better," said Moses. 

But he admits it's still early days: computer science is just beginning to really tackle speech and facial recognition and to advance artificial intelligence by figuring our how the human brain works.

Listen to Kirk’s extended interview with Joel Moses:

MIT is celebrating 50 years of computer science and the birth of a new field. To commemorate the ocassion, the university has compiled a list of 50 ways Project MAC transformed computer science.

 

How Comp-Sci went from passing fad to must have major

Mon, 2014-06-16 02:30

The demand for computer science majors is booming. Even students at liberal arts institutions are itching to learn how to write code and develop artificial intelligence.

It's hard to believe that the field wasn't considered a serious academic discipline back in the 1960s.

Joel Moses has been teaching computer science at the Massachusetts Institute of Technology for 47 years. But when he first arrived on campus in 1963, it was to be a founding member of Project MAC.

"Machine Aided Cognition, which is another way of saying artificial intelligence. And Multi Access Computers, which is another way of saying time sharing," Moses explained.

Project MAC marked the beginning of the formal study of computer scienceAt first, administrators were skeptical. They viewed computer science as just a passing fad.

"We had to prove ourselves,” Moses said. “And we did!”

Not only did Moses and his colleagues create time sharing, they automated calculus problems.

“People were pleasantly surprised that a computer could do that as well as humans," Moses said.

Then, in the 1970s, MIT's Lab for Computer Science was born. MIT researchers developed some of the basic programming that led to fax machines, e-mail, and the complex operating systems we all take for granted today. Computer science was finally making its mark.

“There was a turning point,” Moses said. “Sometime in the 80s I thought it was OK to major in computer science."

Today, one-third of all MIT engineering students are computer science majors. And the number of undergrads taking advanced courses in the field is growing.

We have to reach further with equipment and we can only do this with computer science," said PhD candidate Dehann Fourie.

Inside the lab, Fourie is working to program a robot that can both explore the deepest reaches of the ocean and be smart enough to know what it's found.

Ten thousand meters down, you are sort of in this dark abyss,” Fourie said. “Now you have to go do something useful and that doesn't just happen by itself."

"All these things people have talked about for decades are coming to fruition and the computers are getting better and better," said Moses. 

But he admits it's still early days: computer science is just beginning to really tackle speech and facial recognition and to advance artificial intelligence by figuring our how the human brain works.

Listen to Kirk’s extended interview with Joel Moses:

MIT is celebrating 50 years of computer science and the birth of a new field. To commemorate the ocassion, the university has compiled a list of 50 ways Project MAC transformed computer science.

 

Will the instability in Iraq flow to the pump?

Mon, 2014-06-16 02:17

Oil traders are among the many people keeping a close watch on growing violence in Iraq.

They’re gathering a kind of intelligence, says Phil Flynn, with The PRICE Futures Group in Chicago: “You kind of price in the worst-case scenarios, and then you wait and see if that really happens,” he says.

Traders are worried about what would happen if the world were to lose access to Iraq’s oil, about two million barrels a day, according to Jim Burkhard, head of global oil market research for IHS.

That has traders worried about “spare capacity,” which Burkhard says is like “our emergency supply, in case there is a disruption.”

Right now, total spare capacity worldwide is roughly equal to what Iraq exports.

Paul Sullivan, who teaches courses on energy security at the National Defense University, sounds a note of caution: “The oil is coming out of Iraq without much disruption, except for psychological disruption.”

Still, when it comes to the price of oil, that can be powerful. Even though it takes several weeks for oil to get from the Persian Gulf to U.S. refineries, gas prices are already going up.

According to the U.S. Energy Information Administration, here's what makes up the cost of every gallon of gas pumped at the service station:

$3.66

The average national gas price according to AAA is $3.66 a gallon. If you split that out according to the EIA, that price is made up of costs from crude oil, refining, distribution, marketing, retail costs and taxes. While dependency on foreign oil has decreased, 40 percent of crude oil and petroleum products consumed by Americans is still imported from foreign countries.

$2.45

"The biggest portion of the cost of gas goes to the crude-oil suppliers. This is determined by the world's oil-exporting nations, particularly the Organization of the Petroleum Exporting Countries (OPEC)," according to Kevin Bonsor and Ed Grabianowski of How Stuff Works. Two-thirds of the retail price of gas is from the actual crude oil, and at today's prices that equates to $2.45.

$0.44

Twelve percent of your $3.66 per gallon goes towards refining costs and profits. That's approximately $0.44 cents that goes towards refining the oil and other terminal operations, including crude oil processing, oxygenate additives, product shipment and storage and brand advertising -- as well as profits. This also includes the cost of any oil spills.

$0.33

Gas consumers, you and I, also help cover the cost of franchise fees, rents, wages, environmental fees, credit cards fees and insurance costs. This includes billboard, TV and newspaper ads. These, among a few other costs, are all encompassed in the distribution, marketing, and retail costs and profits, or 9 percent of the retail price for a gallon of gas.

$0.44

And another 12 percent of the retail price goes towards taxes, including, among others, state and federal. Federal taxes averaged around 18.4 cents per gallon and state taxes averaged 23.52 cents per gallon according to the U.S. EIA.

Horseshoe crab blood (and, why conservation pays)

Mon, 2014-06-16 02:00

Quite possibly, the gentle horseshoe crab has swum ashore during the full and new moons of May and June to spawn for 445 million years. 

Horseshoe crab-like creatures were here when the dinosaurs appeared, and they were here after the dinosaurs disappeared. They survived ancient global warming and ice ages alike. And then people happened. 

“Over a hundred years ago, they were ground up and put on land as a fertilizer,” says Eric Hallerman, professor of fish conservation at Virginia Tech. In places like the Delaware Bay, 90 percent of the crab population was wiped out, and not a great many people cried about it. 

Then in the '70s, people discovered that they need the crabs for something much more valuable.  

“Every human on the face of the earth, if they’ve ever been given an injectable medicine, has been touched by LAL,” says Allen Bergenson with biomedical firm Lonza. 

LAL – Limulus Amebocyte Lysate – is a test for bacterial contamination made from the crab’s blood (usually made without killing the crabs). Lonza is one of four companies that manufacture it. The test is used throughout the medical industry to ensure medical instruments and materials don’t cause fever or complications when introduced to the blood.

It’s among the reasons that, gradually, people and governments started to care about the crab. 

“We’ve created laws that make sure the animals are returned to sea, that require them to be harvested by hand,” says John Dubczak, general manager with biomed company Charles River Endosafe in South Carolina. In that state the industry lobbied to ban fishermen from harvesting hundreds of thousands of crabs to use as bait for sea snails and eels. 

The Atlantic States Marine Fisheries Commission intervened in 1998 to relieve pressure on the crab from the bait industry. 

Now, the biomedical industry is competing within itself to see who can use the fewest crabs. 

Charles River has developed a highly sensitive test that only uses one twentieth the normal amount of horseshoe crab’s blood. Lonza has a synthetic version that doesn’t use any crab’s blood. The firms argue, sometimes bitterly, over which product is better. The synthetic version doesn’t have the same regulatory standing as the crab-based version (it’s not currently listed in the United States Pharmacopoeia, an official list of sanctioned drugs and uses), and for now that has dissuaded the pharmaceutical industry from embracing it.

Whatever the result, the competition raises a different way of thinking about nature.

“Instead of nature for nature’s sake, nature for people’s sake,” explains Janet Ranganathan, Vice President for Science and Research at the World Resources Institute. She’s referring to a concept called “Ecosystem Services.” When people realize the value in nature, and then pay to maintain it, everyone wins. 

In many cases, this approach has saved entire ecosystems.

“In the '80s, water quality was degrading in NYC because of development in the Catskill and Delaware watershed,” she says. Instead of building a $6 billion water filtration plant the city spent a fraction of that ($1.5 billion) just protecting the forests that purified water by paying landowners to maintain and restore it. 

It doesn’t always work, of course. Upstream agriculture on the Mississippi causes dead zones downstream that negatively affect fishermen, Ranganathan gives as an example. “You have one industry trumping another,” and polluters don’t have to pay for the disruption in services that nature provides. 

But things appear to be working out somewhat for the horseshoe crabs. Overall, the pressure on their population appears sustainable, according to the ASMFC, though there are troubling declines numbers in certain regions.

In some cases, making money off of nature can be a good way to protect it. 

Airbus just can't take flight

Mon, 2014-06-16 01:00

The A380 was supposed to change aviation as we know it. The plane can hold more than 500 people -- Airports around the world even remodeled to accommodate the huge jet.

But apart from Emirates Airline, the double decker jet hasn’t sold well.

Robert Mann, a former airline executive, says the reality is there are only a few airlines and airports in the world where the A380 makes sense.

“The A380 is a niche airplane," he says. “Anybody who had a need for them, or could conceive a need for them has ordered them.”

That’s left an opening for Boeing.

Richard Aboulafia, an aviation analyst at the Teal Group Corporation, says most airlines are interested in long haul, twin engine jets that can seat between 250 and 400 people.

“That’s where the action’s act,” he says.

Aboulafia says that fits nicely with what Boeing offers with the Dreamliner and its redesigned 777X. He says it “puts Airbus at a competitive disadvantage.”

Airbus is trying to answer Boeing with a slightly smaller jet: the redesigned A350XWB. Though, the company is having difficulty getting the planes off the ground -- Last week, Emirates Airline canceled its order for 70 of those planes.

Don’t just get mad, decode the system

Mon, 2014-06-16 00:40

Here is the latest menu item on my "Get Smarter in 90 Minutes A Week" media diet: The other night I watched How to Survive a Plague, a film about ACT UP and its activism to fight AIDS. I am not sure why I chose to view the documentary from 2012 now; maybe it is that I just came off a seven-day bike ride in California to raise money and awareness in the fight against HIV/AIDS, during which I had a number of conversations during the ride about the progress against the disease, and the many remaining challenges.

What I did not realize until after the fact is that I was watching the film on the 25th anniversary of one of the film's key moments. This week in 1989, activists were able to shove their way into the International AIDS  Conference in Montreal. As the film shows, the insurgents were there to make much more than just a ruckus in support of speeding up the testing of new treatments for the disease. Members of ACT UP had the smarts and focus to study and decode the Food and Drug and Administration's system for drug approval. The activists forced their way into that meeting with more than banners, placards, and slogans: They had drafted a smart action plan that would radically change the fight against AIDS.

Activists had come up with the now-famed National AIDS Treatment Agenda: 15-pages long and printed with a yellow cover. This agenda proposed — demanded, really — a series of changes to the drug approval process to make clinical trials of new medicines for AIDS, and the opportunistic infections that are associated with the disease, better meet the needs of patients. It was the product of some very smart systems analysis from people without a formal background in this area of medical research and drug regulation. These activists applied intellectual rigor to figure out how the federal system worked and what it might need to get drugs to desperate people more quickly.

As the film shows, thoughtful medical statisticians got a copy of the agenda that day 25 years ago and took seriously many of the recommendations. Eventually, activists, patients, researchers at the National Institutes of Health, members of Congress, and officials at the FDA would come more closely into line in the fight against the disease.

One of the activists who figured out the AIDS drug process was broken and contributed to new thinking on ways to fix it is Mark Harrington, who won a MacArthur "Genius" fellowship in 1997 for his work in this area. Although Harrington doesn’t have an MBA, he was acting on a lesson from business: He understood the power of a deep systems analysis to diagnose something big that was broken.

Another star of the doc I watched last night is still working hard in the fight against the disease. Peter Staley wrote a column just the other day calling for a new set of changes to America's HIV prevention efforts.

On the 25th anniversary of the original agenda, he points out that 50,000 people a year still get infected every year — and that figure is just for the United States.

What's the biggest time suck in digital teaching?

Fri, 2014-06-13 14:28
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Priceline negotiates reservations

Fri, 2014-06-13 13:57

Travel website Priceline just bought OpenTable for $2.6 billion. OpenTable, if you don’t know it, is an online restaurant reservation site. That might sound like kind of an odd move for Priceline, but it’s all about the future of travel… or, actually the past.

Remember travel agents?

You'd go to them before you booked at trip and they'd help you plan your itinerary and be able to give you insider tips, like the cool neighborhood to stay in or a cute bistro you should try. "The travel agent is making a comeback," says Steve Cohen, Vice President of Research at MMGY Global. Cohen says baby boomers and millennials are gravitating back to travel agents and away from DIY online bookings, because they're putting convenience and expertise ahead of pure price consideration.

To compete now, says Cohen, travel sites have to be a place where customers can research and plan their entire trip. "A very large percentage of travelers like to have most of their vacation planned before they ever get there," he says.

Right now on most travel sites, you can book a flight, hotel and rental car, but that’s still missing most of the trip and the money. "As much as 60 percent of a traveler’s  budget is spent in their destination," says Henry Harteveldt, founder of Atmosphere Research Group. "Dining, shopping, entertainment, things like that. The online travel companies are saying, 'We've done a pretty good job tackling that 40 percent, let’s see how much of the rest of the budget we can sink our teeth into."

And they’re well positioned to do exactly that. Priceline already knows where its customers are going and when. With OpenTable, it will know what they like to eat. "They can start to make recommendations," says  Douglas Quinby, Vice President of Research at PhoCusWright, a travel industry research group. "Well, we see that you like Italian, there's a fantastic 4-star Italian place that's got seating available on this night and we know you’re going to be in New York."

Perhaps most importantly profit-potential-wise, travel sites know where you live during the rest of the year. "It really turns them into this lifestyle utility that also could be used at home," says Harteveldt. "Something like, here’s a great new store that opened in your city."

Harteveldt points out we travel, on average, three times per year, but we explore the cities and towns we live in all year.

By Max Bernstein

With Friday's announced $2.6 billion acquisition of OpenTable, Priceline adds another frontier to its vast booking empire. Priceline Group already owns booking websites kayak.com, booking.com, rentalcars.com, agoda.com, and, of course, priceline.com (well known for its commercials with William Shatner.)

When one company in an industry is purchased by an outsider, it can sometimes lead to interest or inquiry into the potential acquisitions of rivals. Here are some companies who 1) saw their stock prices initially boosted by Priceline's announced purchase of OpenTable, and 2) also have the financial muscle behind them to snap up some competitors:

Online review sites

Yelp is the 800-pound gorilla of review sites, valued at $4.5 billion since going public last year. But it has competitors like TripAdvisor, Citysearch and Local.com that all perform similar functions, but are not nearly as popular.

Some analysts suggest Yelp should consider buying one of them. Especially since Priceline's snatching up of OpenTable makes it less likely that Yelp will be acquired by a bigger company. Not that Yelp's finances were hurt by the news: shares in the company were up.

Coupon and deal sites

Same goes for Groupon, the massive discount coupon site. But Groupon has competition from smaller players like LivingSocial, ScoutMob, Savored and Happy Hours.

Electronic payment services

PayPal also saw an uptick in stock price after the OpenTable acquisition was revealed. The peer-to-peer payment system owned by eBay used to be the only one on the block, but now PayPal has a rival in Square. Smaller competitors like PayDragon, TabbedOut and BarTab are making inroads as well.

Food delivery services

Who you order your food from could be considered as personal as, well, food. A merger of big players already occurred in this business in May 2013, when GrubHub and Seamless announced that they were merging. That company's stock was initially way up on the news and is a giant among similar services like Delivery.com and Eat24.

[h/t Mashable] 

ISIL gets rich in attack on Iraq's cities

Fri, 2014-06-13 13:57

 

 

The insurgent group ISIL (the Islamic State of Iraq and the Levant) has been wreaking military havoc across Northern Iraq. In recent days the Sunni group has taken the major oil-trading hub of Mosul, Iraq’s second-largest city, as well as Tikrit, and is moving south toward Baghdad.

All of that military action is causing jitters in financial markets around the world, as well as driving up world oil prices. Another financial impact from ISIL’s rapid advance—the group is getting a lot richer.

Reports from the region, quoting the Iraqi provincial governor, say ISIL fighters raided Mosul’s central bank as they took the city. They may have stolen $425 million or more. They reportedly looted other banks’ vaults of cash and gold bullion as well.

“For this organization, this is a major windfall,” said Rick Brennan, a retired Army officer and senior political scientist at the RAND Corporation. Brennan said that will buy a lot for ISIL: “arms, ammunition, paying for foreign fighters, increasing salaries. It enables them to transform themselves from just an insurgent group, to almost having a small army, which is something that we haven’t seen before.”

ISIL is rumored to pay its fighters well, to provide death benefits to the families of fallen soldiers, and to pay both more, and more regularly, than the armies of Iraq and Syria, said Austin Long, a professor at Columbia University's School of International and Public Affairs, who was an advisor to the U.S. military in Iraq.

“Every war takes finance, and they’re quite good at extracting finance to fund their war,” Long said of ISIL, whose activities he’s been following since the mid-2000s.

“These guys are good businessmen, they made a lot of money from seizing various legal and illegal enterprises,” said Long. “They kept very good, detailed records. They had very sophisticated ways of not only taxation, but also stealing cars and reselling them in Kurdistan, where they knew they could get better prices.”

ISIL forces have overrun oil pipelines and export facilities in Iraq and Syria, and smuggling that oil is one source of revenue for the group. But ISIL is still not considered capable of attacking or seizing Iraq’s major oil fields, which are defended by the Iraqi government in the South, and the Kurds in the north.

And Raad Alkadiri, senior director at UpStream Research/IHS Energy, says that even with hundreds of millions of dollars at its disposal, ISIL would be hard-pressed to actually operate oil production facilities, or find the technical workers it would need to do so. And even if ISIL could get significant oil-pumping and refining underway, the group would not easily find customers in the region or outside it, who would be willing to transport or purchase any oil it tried to export.

Weekly Wrap: Conflict in Iraq

Fri, 2014-06-13 13:50

The Wall Street Journal's Sudeep Reddy and Redfin's Nela Richardson sit down with Kai to discuss this week's events for our Weekly Wrap:

Conflict in Iraq

"The makrets clearly don't care. The markets clearly haven't cared about a whole lot for a while... They're certainly on the watch for any trouble out there. You've seen potential trouble in Iraq, you've seen potential trouble in Syria, you've seen potential trouble in Russia and Ukraine, and the markets have been able to brush that off pretty easily...though it's clear that this situation is worse and doesn't have a very clearly outcome any time soon," says Reddy.

Rising oil and gas prices:

"We've seen gas prices be basically pretty stable and high and now with this uncertainty they're about to become unstable and higher," says Richardson.

Eric Cantor's defeat:

"The environment is certainly marginally worse. The big question is whether anything will get done in 2015," adds Reddy.

Debt limit:

"We lost a deal maker... There are three potential scenarios: there's a 'good' solution where the debt ceiling is extended with the budget, there's a 'will do' sollution where it's just extended for short term, and then theres this catastrophic -- not a solution -- where you see this kind of thing where markets go crazy and we don't know what happens next," says Richardson.

Future of price-rises:

"Growth. It takes growth to produce some price increases and we just haven't seen it," adds Richardson.

Online poker could get a second chance in U.S.

Fri, 2014-06-13 13:01

Amaya Gaming, a Canadian company, is buying Oldford Group, the parent of popular sites like PokerStars. Amaya is the smaller of the two, but it’s the acquirer. And, one of the biggest selling points for the $4.9 billion deal is that many top officials from Oldford will be leaving the combined company completely. 

This could bring sites like PokerStars back to the U.S., and bring back memories of the era from the mid-1990s to the mid-2000s, when online poker was a free for all, and sites like PokerStars were making players like Chris Carlson rich. 

“I started making so much money from playing online that I left my really paying, secure job to play professionally. And, I played most of my hands at PokerStars,” he says. 

But in 2006, the Justice Department said a 1960s era law banned many online gaming transactions. Sites like PokerStars started operated in a kind of gray market. And, started crossing some lines, such as, “incorrectly coding the transactions so they were not obvious to the credit card issuers as gambling transactions,” says Mark Hichar, chairman of the gaming law practice group at Hinckley Allen.

PokerStars allegedly labeled some as golf purchases. There’s another way to put this, he says, “Fraud and money-laundering.” 

That was the accusation against top officials at PokerStars and other sites on a day in 2011 that became known as Black Friday. PokerStars quickly left the U.S. Popularity in online poker plummeted. 

Later that year, the Justice Department ruled that states can legalize online gambling, after all. New Jersey, Delaware and Nevada did, but kept PokerStars out, while its officials remain indicted or under suspicion. That’s why it’s a big deal they’re leaving the combined company.

“Given that this deal basically results in the removal of all those entities from PokerStars as a corporate entity, it seems as if New Jersey regulators won’t have any objection to PokerStars now entering the market,” says Christopher Grove, editor of Online Poker Report, who adds this deal could be the start of a new era of online poker in the U.S.

Fido, your big day at the office is here

Fri, 2014-06-13 12:34

Here's an extended look at the Marketplace Datebook for the week of Jun 16:

We begin with Monday, everyone's favorite day of the week. In Washington, the Federal Reserve reports on industrial production for May.

The State Department hosts a two-day "Our Ocean" conference on protecting the vast bodies of water that cover almost three quarters of our planet.

And in Michigan on June 16th, 1903, Ford Motor Company was incorporated.

Start thinking about broccoli, beets and carrots. Tuesday is Eat Your Vegetables Day. Don't argue with me.

The Commerce Department tells us how many new homes were built in May.

On Wednesday, a Senate Committee holds a hearing on "Aggressive E-Cigarette Marketing and Potential Consequences for Youth."

The Federal Reserve wraps up a two-day meeting on interest rates and the economy.

Then we slow down on Thursday ... maybe wear something fetching for World Sauntering Day.

Just in time to ruin your summer fun, "Jaws" was released to movie-going audiences June 20, 1975.

And finally, Friday is Take Your Dog to Work Day. Yeah, do that. (And don't go into the water.)

"Ivory Tower" and the crippling cost of college

Fri, 2014-06-13 12:10

College tuition is more expensive than ever. In fact, the cost of tuition has risen 1,120 percent since 1978. That's higher than any other good or service during that time. Nevertheless, just under 70 percent of 2013 high school graduates started attending some form of college this past fall.  

Andrew Rossi is the director and producer of a new documentary called "Ivory Tower" that examines the cost of higher education in America. He says the reason college is so popular even though the sticker price keeps rising is that for now, it's keeping its financial promise.

"Higher education is still an engine of social mobility, even as it has grown so expensive. Those who have a college degree actually make in their median lifetime earnings about a million dollars more than those who just have a high school diploma. And that's a really powerful statistic that helps drive the continued demand."

But the average student now graduates with more than $25,000 in loans to pay off, and the nation's graduates owe a cumulative $1.2 trillion. Rossi says the cost is unsustainable, and its a symptom of the corporatization of higher education.

"In an effort to compensate for a reduction in state funding, in an effort to bring students and their student loan dollars to their campuses, many institutions are behaving like big businesses rather than treating their students as pupils. " 

Many of the subjects in Rossi's film argue that the system is unsustainable and headed for a crash, and it could bring down much more than colleges. 

"One of the most devastating consequences would be a sort of macroeconomic one. When young people are saddled with that kind of burden they decide not to form a family, not to buy a house, not to buy a car. It's not just about the constriction of life choices in terms of career and happiness, but it has broader macroeconomic effects on the country."

To hear the full, unedited interview, visit Marketplace's education page "Learning Curve."

How to pronounce 'GIF'

Fri, 2014-06-13 10:48

President Barack Obama, as you might have heard, did a town hall thing on Tumblr this week. In the process he met Tumblr founder David Karp and they, it seems, did a fist-bump of which a gif was created. Except when the president mentioned it, he did so mistakenly. 

Here at Marketplace, we've already settled the burning question of how you pronounce these three little letters: G I F.

The guy who invented the graphics interchange format, which lets images on your computer screen move, kind of like animation, got a Webby lifetime achievement award in May of 2013.

Steve Wilhite is his name. He's had a stroke, so he can't speak. But you can check out the video of his acceptance presentation last night, in which he laid down the law.

It's 'jif,' people, like the peanut butter.  Speaking of which, even the peanut butter maker got in on the debate.

Soccer stickers: "I have a lot of Greece but I need Nigeria."

Fri, 2014-06-13 10:37

Of the millions of fans around the world now glued to the World Cup, my favorite is an endlessly mischievous 4-year-old in Brooklyn. My godson. He and his equally impish 7-year-old brother have been so excited for the World Cup that a game of full-speed kids vs. grownups soccer (pardon me: football) nearly had me wobbling for days after.

The boys are American soccer nuts with a Colombian dad, a mother with Brazilian relatives and a grandmother who grew up in Messi's hometown in Argentina. So they could be loyal to any of those teams.

But the real object of their devotion is a book of stickers that lists all the players, stadiums and even mascots.  They are on a mad dash to collect all the stickers and fill their books. Every morning, almost the first thing that comes out of their mouths is what stickers they need, and whether there's any possibility to get them that day.

"See? I have a lot of Greece," the 7-year-old explains to me. "But I need Nigeria. Don't have a lot of them."

Long pause with studied, plaintive gaze directed at his mother, "When can we get more?"

The Panini sticker book album has become the must-have item for kids (and a LOT of adults) who are following the World Cup. With spots for players, stadiums and mascots, it would take 640 stickers to complete your album… if you magically bought packs of stickers with every player you needed. But of course it never works that way (as my godson with multiple Lionel Messi stickers can attest).

In the U.S., a pack costs $0.99, but of course, you probably need somewhere close to 1,400 packs to get a complete set. Why?

Well, The Economist broke down the amazing "stickernomics" recently, explaining just how nuts people can get about securing the ones they need (a note to that correspondent: I know a child who will trade you a Messi).

There's a rapid sticker trade on the internet, and in stores that sell Panini stickers, too.

Upper 90, a store in Brooklyn devoted to soccer, is sticker central. You can bring in your "extras" – that is, the players you already have – and trade them for the extras they have on hand. My two favorite fans have done it twice, "with great success," reports their mother.

The stickers are such a hot item that the Guardian reported a heist of 300,000 stickers in Brazil.

Mind-boggling, when you think about all the other economic stories around the World Cup.

But I can assure you, that to two small boys I know, a complete set would be absolutely priceless.

LUIS ACOSTA/AFP/Getty Images

A peddler shows Panini's collectible stickers for the FIFA World Cup Brazil 2014 album, in Bogota, on April 28, 2014.

 

Donald Rumsfeld on Iraq

Fri, 2014-06-13 10:31

Following a series of attacks in which the radical Islamist group "Islamic State of Iraq and the Levant," seized major cities in Iraq and threatened the country's capital of Baghdad, President Obama aknowledged in an address Friday that the situation demanded U.S. assistance for the Iraqi government.

In light of the situation, we are reminded of our 2013 interview with former Secretary of Defense Donald Rumsfeld, who oversaw military operations for the Bush Administration for much of the Iraq War.

Original interview posted May 16, 2013:

Former Secretary of Defense Donald Rumsfeld published his memoir, “Known and Unknown” in 2011. His latest book, “Rumsfeld’s Rules” suggests he still has lessons to share after a lifetime in politics and business.

The book is a collection of advice that he started collecting through a habit taught to him by his schoolteacher mother. He has about 300 or so in the book.

“If I didn’t know a word she’d say, 'Well write it down and look it up,'" he says. "Then I started writing down various other thoughts and rules and anecdotes.”

The anecdotes Rumsfeld recounts are pulled from his time in office with the Bush, Reagan and Nixon administrations.

Here are three of many Rumsfeld Rules you can find in the book, and the stories behind them:

It’s easier to get into something than it is to get out.

“I thought of that when I was President Reagan’s Middle East envoy and we had 241 Marines killed in Beirut, at the airport. And I concluded then that the United States has to be careful about putting ground forces in because we’re such a big target. And I also, over the years, came to the conclusion over the years that the United States really wasn't* organized, trained and equipped to do nation-building.”

Rumsfeld says this was on his mind as the United States entered Afghanistan and Iraq, but there was "mission creep."

“When you do something, then someone wants you to do something else and then something else and over time, the mission, historically, creeps into something else that was initiated at the outset.”

But in the end, “it’s not easy for countries to evolve and grow, but I think that both of those countries are a whale of a lot better off today than they were before.”

“I’ve been mistaken so many times, I don’t even blush for it anymore.” – Napoleon 

“You see things that don’t turn out the way you hoped.”

Monitor progress through metrics.

“I think that history over time will probably be a better judge than you or I, but I’ve been struck by the amount of criticism that the Bush administration has received and President Bush personally and the attempts to assign blame to him and I think it’s probably not going to sort out that way.”

He says President Bush’s decision to enter Iraq is “something that over time will be better understood.”

 

AUDIO EXTRA: Kai Ryssdal asks Donald Rumsfeld about a reputation for not tolerating dissent.

Marriage and money: Tips before you walk down the aisle

Fri, 2014-06-13 09:05

We often hear about how money issues in a marriage can be a major catalyst for divorce. Whether it's differences in spending habits, debt loads or credit scores, diverging beliefs and habits can be a huge red flag in a relationship.

A 2009 study by Jeffrey Dew, faculty fellow at the National Marriage Project and an assistant professor of Family, Consumer, and Human Development at Utah State University, found that couples who argue about money once a week were 30 percent more likely to  divorce over time than couples who reported disagreeing about finances just a few times per month.

"The best time [to talk about money] is when you're getting along, when you're in the romantic stage, " says relationship expert Andrea Syrtash "[That's] the very time when you should broach it because you'll probably be more open to listening to each other."

Skirting the issues is a big no-no according to Syrtash.

"Put everything on the table because so much of effective relationships is about managing expectations. You need to go in with your eyes wide open," she says. She says, adding that addressing financial differences also means not skimping on the details. "That doesn't just mean learning about your partner's history and partner's finances.  It's about exposing your own vulnerabilities around this."

Once you have gone through the exercise of coming clean, you may find that you and your partner think differently about money. But, she says that compromise is key.

"That's what partnership is about. You come in with different perspectives and you find common ground," she says. "And where you don't find common ground, the hope is that you'll have ultimately the same core values."

As far as protecting oneself from financial ruin caused be a future spouse, there's always a prenuptial agreement. Syrtash says that while they're not for everyone, prenups are not reserved for the rich and famous.

"For many people, if you earn wildly different salaries [or] if you come from a broken home and marriage feels a little bit overwhelming, they feel more secure having this practical approach should, god forbid, things not work out," she says.

In the end, as with most things concerning love and money, it all comes down to communication and cooperation.

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