Monday, November 19, 2012

Unbelievable! Cockatoo Sings Gangnam Style!

Stepping aside from politics for a moment, let have a look at a Cockatoo, singing Gangnam Style!  I wish my bird could do this!

Friday, November 16, 2012

Wal-Mart Black Friday Strike

Who wants to make a bit more money? I think we can all agree, if all we had to do for a raise is ask our boss, a lot of us would be in our bosses office every Friday! The reason we cannot do that is if we were to demand more money then the company feels we were worth, then they would simply let us go.

Enter collective bargaining. This is the principal, in which if everyone, or a large portion of the workforce asks for a raise, the company either has to go through the cost of hiring and training ALL new employees, or simply give the raise. Sounds like a great idea right, sort of like an ultimatum. The problem with this situation is it is artificial, the end result is influenced not by the value of the worker, but by the ultimatum itself.

This is what the Wal-Mart Strike is attempting to do.

On Friday night your girlfriend says she wants to go out with you for the evening and you say, “honey, I am going to the bar with friends or I will leave you.” She may agree, but it is not because she wants you to go to the bar. Demand this ultimatum a few more times, and you will find yourself without a job, I mean girlfriend.. This is especially the case if you are not that “skilled” of a boyfriend in the first place, and to be honest most Wal-Mart workers are “unskilled”. "Unskilled does not meant they lack any talents, they could be Lawyers, Doctors, Musicians, but if they are doing a job which a high school dropout can do then that is why they make such low wages.  If they ask for more, someone else will do it for less!

Some would say, Wal-Mart can afford higher wages, I mean they did make $447 Billion Dollars last year right? Well, no not actually. They really made $26.5 Billion before taxes on $447 Billion is sales, and after they paid $9 Billion to Uncle Sam, they only earned $15.5 Billion.

$15 Billion dollars is still a lot of money right?

Well, yes it is certainly, but in comparison to their revenue it's only about 5%, so for ever dollar they sell they earn $.05. When you go buy some flowers and chocolates for your girlfriend to make up for your ultimatum you offered her earlier, they make $2.50 off that $50.00 you spent.

But certainly they could increase wages just a bit right?

Well seeing as Wal-Mart employs over 2.2 Million employees, if we assume an average work week of 32 hours, increasing wages just $2 an hour would cost $7,321,600,000.00. It should also be said, most of these workers who are striking do not just want more money, they want better health care, and more employees to reduce their workload as well.

The more complicated aspect is how the Wal-Mart Strike affects Wal-Mart stock, and their ability to continue their business. Hate it or love it, we live in a capitalist society, this means investors put their money where it will benefit them the most. If because of this Wal-Mart Strike, Wal-Mart chooses to reduce its earnings by 7 billion dollars, investors will simply invest in Target, Macy's, K Mart, CVS, Rite Aid, or Dollar Tree. All of which have very similar labor practices as big bad evil Wal-Mart.

As we approach Christmas Season, this “Wal-Mart Strike” could seriously affect Wal-Mart's bottom line, however it will also affect Target's bottom line as well, in the opposite way! If you are looking for a place to put your money, might want to look at some other retail chains.

I understand these workers want better benefits and more money, but honestly if they really feel they deserve them, they are free to apply at many other companies nationwide. However if they lack the ability to do those other jobs, they really shouldn't blame their situation on Wal-Mart.

Thanks for reading!

Thursday, November 15, 2012

What is the "Fiscal Cliff" and what does it mean to you Part I

This Fiscal Cliff has been mentioned in the news quite a bit lately, but most Americans barely have an understanding of what it is or what it means to them. This is mostly because the news uses economic jargon and many of the articles are difficult to read. Here I will make an attempt to explain it is a way most readers should be able to understand and relate to.

I will start with an example:

Imagine a family who has a household income of $40,000. Now imagine they want to increase their standard of living a bit, have a nice vacation, and maybe buy some new furniture. They choose to accept an offer from their bank for a $10,000 credit card and they use the whole thing in one year. They have now lived for one year as if they made $50,000.

The next three years they do the same thing with another bank each year, again, living on $40,000 and +$10,000 in borrowed money each year, they choose to not give up the lifestyle, in exchange for a little more debt each year.

Year 4 however they now have the same $40,000 income, but they owe $40,000 in debt. The credit card payments add up to $15,000 which brings their disposable income DOWN to $25,000. If they want to live like they make $50,000 a year, now they would need to borrow $25,000 more each year.

In this situation the “Fiscal Cliff” is the moment that the family MUST choose to begin paying off their debt. They need to reduce their borrowing, AND at the same time, find extra income AND reduce their spending. They MUST do all three things if they wish to maintain a similar standard of living AND avoid a bankruptcy scenario.

Okay hopefully you understand that story. People obviously cannot continue to increase there debt forever without paying it off or balancing their budget. And that is precisely where the US is right now.

That DANGER of the fiscal cliff comes from how weak our economy is right now, and how the combination of tax increases, spending cuts, and a slice of our GDP going to reducing the deficit is what worries many economists.

I will go into more detail about these pieces in part II, but to sum it up, Growing the Economy means Growing Gross Domestic Product (GDP). GDP is (Exports – Imports) + Government Spending + Investment + Private Spending. By raising taxes, you move money out of private spending and investment and traditionally move it into Government Spending. However in this special case, we are ALSO reducing Government Spending. it is feared we will actually shrink our GDP, when we really need to be growing it.

Back to our example, if you look at this families contribution to society as the original $40,000 in income they made in year one. In year two through four, they contributed $50,000 to society because they borrowed money. In year five, they can only contribute $25,000 to society because they MUST pay $15,000 to their debt.

It is difficult in this example to illustrate taxes, but essentially imagine their neighbors gift them some money ($10,000). This money is $10,000 less that their neighbors are contributing to society, and it is also not being contributed to society by our example family because is its instead being used to reduce their deficit.

Political partisanship aside, this is a serious issue which needs to be resolved in our country. Our current interest payments on our debt make up almost half of our yearly budget. All of those payments do nothing to improve growth and are essentially wasted dollars.

Families in America are bound by laws which require them to live within their means, if they stray too far they face legal action, and bankruptcy. Right now and for the past 12 years our government has lived far outside its means, and this “Fiscal Cliff” is the first in a long struggle to get us back on the right path.

Thank you for reading and I will post again soon!