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The Times reports in this article that you can now make an arbitrage profit off of all those pennies and nickels lying around… in theory that is. Increasing metals prices has driven the value of pennies and nickels to more than what you will get for them at the local washeteria. In fact, nickels can be worth up to 7 cents – that’s a 20% premium! (more…)

The New York Times just published an article that could be a great case study for those clamoring towards protectionist policies.

Every time I decide to blog something about this issue I can’t get over how anyone could take issue with unrestricted trade policies. It takes acute short sightedness and a very narrow interest to do so.

What do protectionists want? Well, they want to protect a small group’s interests at the expense of everyone else. For example, GM and Ford workers argue that they are entitled to a job, regardless of whether or not they can work as competitively and cheaply as workers at Toyota or Nissan. Not only do they feel that Ford and GM owe them a job, but they should be paid handsomely for it as well. In the case of GM, if the company has trouble finding people to buy these cars at inflated prices, these prima donna workers are entitled to participate in the Jobs Bank Program, whereby they get to receive full pay and benefits regardless of whether they have work or not. Who do you think is paying the bill?

In a nutshell, protectionists feel that everyone should pay more for a Tahoe or Explorer simply because some workers want to shield themselves from the competitive pressures of the labor market. Protectionists like to use fancy terms like ‘exporting American jobs’ or make one-sided statements like we will hear a ‘giant sucking sound’ as American jobs are moved out of the country, but the truth is that we benefit in many ways.

What gets me is that they are ironically protecting themselves from any form of self improvement. Our economy, and anyone else’s for that matter, depends on increasing productivity gains to raise the standard of living while at the same time staving off inflationary pressures. These productivity gains essentially allow firms to make a product or provide a service at the lowest cost per worker hour.

What protectionists often fail to mention is that many overseas competitors actually create jobs in the U.S. that were supposedly exported. Using the auto industry again as an example, Toyota and Nissan have invested billions in the South to build new plants. What Toyota and Nissan and others like Mercedes Benz are NOT doing is creating these jobs in places up north like Detroit. Gary N. Chaison of Clark University in Worcester, Mass. is quoted in the Times article saying that ‘These international companies want a fresh start — not in a town like Detroit, with a long history in the auto industry, but in an empty field where people appreciate them.”

Toyota must be doing something right because it is now the number 2 automaker and is not far behind GM. Toyota is making a profit and GM is hemorrhaging cash. Toyota makes cars that people want at attractive prices and GM is doling out discounts as incentives to attract buyers. What the two automakers do have in common is that both are unapologetic for their performance. However, if I were Rick Wagoner I would reconsider this.

I’d like to begin a conversation about the outlook for global economic stability over the next decade. Specifically, I have in mind analyzing a group of individual countries and considering the possible outcomes that would result from a severe economic slowdown or failure of each – independently. What would happen if China ran into serious trouble? What impact might the negative national savings rate in the U.S. have on the global economy if it cripples the U.S. economy? (more…)

Lower Gas Prices! Yes! Ok many of us have noticed that gas prices have come down significantly over the last weeks; or at least some of us have noticed that it is costing us between $5 and $15 LESS than usual – depending on whether your car likes to sip gas or knockout a gallon or two every street light.

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I have to take a few minutes from my studying to comment on the recent news about the big three automakers’ sales numbers.

GM, Ford, and Chrysler have all posted significant declines in last month’s sales compared to last year because of higher fuel prices AND higher interest rates. For those of you who do not understand what this means, higher fuel prices mean that consumers want MORE EFFICIENT cars and higher interest rates means that consumers want CHEAPER cars because the more you borrow at higher interest rates, the more is costs you. (more…)

CNN reports that a man in California is putting together a lawsuit against Apple. The lawsuit is claiming that Apple’s iPods are capable of causing hearing loss to those that use it. (more…)

If you want to know why Ford and GM are having tough times right now, you can start by looking at their Jobs Bank program. The program was started back in the 80′s to ‘protect’ workers from layoffs.

Now, there are thousands of workers literally hanging out in rooms doing everything from sleeping, doing crossword puzzles, and offering community service and getting full time pay and benefits. This program is costing GM alone more than $400 million a year! (more…)

I am a dividend yield lover. When I saw GM’s 10% yield earlier this month I was foaming at the mouth. BUT, when I did the math (hmm, $19 stock paying $2 a year in dividends) and considered the fact that this company is in dire straights, I realized that this was a stock to watch, not buy.

I knew that the dividend payout was not sustainable and in fact, any serious investor would agree that to turn this ailing behemoth around, it would need to cut that dividend payout. Yes, saving up to $1 billion a year in dividend payouts would be a start to a more competitive and profitable road for GM.

I only wonder why someone like Krikorian, who is probably GM’s largest shareholder, took so long to ask for this.

Here is the related article.