Saturday, December 09, 2006

In Praise of Chain Stores, and Sweatshops

From the December issue of "The Atlantic" - an article by former NY Times business columnist, Virginia Postrel titled "In Praise of Chain Stores," here is an excerpt:

"Chains do more than bargain down prices from suppliers or divide fixed costs across a lot of units. They rapidly spread economic discovery—the scarce and costly knowledge of what retail concepts and operational innovations actually work. That knowledge can be gained only through the expensive and time-consuming process of trial and error. Expecting each town to independently invent every new business is a prescription for real monotony, at least for the locals.

Chains make a large range of choices available in more places. They increase local variety, even as they reduce the differences from place to place. People who mostly stay put get to have experiences once available only to frequent travelers, and this loss of exclusivity is one reason why frequent travelers are the ones who complain.

When Borders was a unique Ann Arbor institution, people in places like Chandler, Arizona—or, for that matter, Philadelphia and Los Angeles—didn’t have much in the way of bookstores. Back in 1986, when California Pizza Kitchen was an innovative local restaurant about to open its second location, food writers at the L.A. Daily News declared it “the kind of place every neighborhood should have.” So what’s wrong if the country has 158 neighborhood CPKs instead of one or two?"

MP: And remember, chain stores like Borders don't put small downtown merchants and bookstores out of business, "greedy" consumers shopping at chain stores for low prices put downtown merchants out of business. See my article on "consumer greed"

Last summer NY Times columnist Nicholas Kristof wrote an op-ed titled "In Praise of the Maligned Sweatshop."


Tax Revenues Rising Again

According to the Congression Budget Office's December budget report released this week, federal income tax receipts surged in November, the second month of the government's current fiscal year (FY). Individual income tax revenues are up by 12% so far this FY (October and November) compared to last year, and corporate income tax receipts are up by 55.5% compared to last year at this time.

What tax cut?

Welcome NetPlus MBA Students

Carpe Diem welcomes University of Michigan-Flint MBA students in the NetPlus! MBA program who are taking MGT 551 Business Economics this semester (starting today December 9 until March 2), the P8 and P9 classes!

Any posting with special interest for the MGT 551 class will have a "551" label at the bottom of the post. Click on any "551" label to read all 551 postings.

In the "Links" section of the Carpe Diem website on the right side, there is a link to go directly to Blackboard from this website.

Welcome to Carpe Diem! Read early and read often!


Outsourcing Santa?

Click on cartoon to enlarge.

Music Research in the Infomation Age

Want to find out if your favorite musician or band is on tour, and see their touring schedule? Go to Pollstar and find out, search by "Artist Itinerary." You can also search by "City Schedule" to find all concerts and shows in a certain city, so it's useful when travelling.

Want to do research on your favorite musician, including viewing a complete list of all recordings, all songs written or recorded, and a complete biography? Go to
All Music.

I use both of these websites all the time for "music research." It's reference websites like these that provide us with instant, free information that we now probably take for granted, but think of: a) how much time we save now with instant information on the Internet, b) how much more information we have access to today, and c) how instant access to free and unlimited information contibutes to a significantly higher standard of living that never gets captured or measured by official economic data like GDP.

Without the Internet, think of how much time, money and effort it would take to find the same information that is now available on Pollstar and AllMusic - a trip to the library, buying the AllMusic reference book (which would be outdated as soon as it was printed, given the new music that comes out daily), etc.

Compared to past generations, today we are really "information-rich" and "Information Billionaires."

DJIA Annual Return 2X Historical Average

Dow Jones Industrial Average
One-week return: 0.98% (through yesterday)
One-year return: 14.43% through December 8, 2006 (see graph above)
Average annual return since 1950: 7.51%
One-week return: 0.98%

Ghetto Capitalism

From, a review of Sociologist Sudhir Venkatesh's new book on the mystery of the underground economy - Off the Books: The Underground Economy of the Urban Poor.

If you read "
Freakonomics," you might remember Sudhir Venkatesh - he was a graduate student at the University of Chicago who entered poor black Chicago neighborhoods while studying urban poverty, and it was his research that provided the data for the chapter "Why Do Drug Dealers Still Live With Their Moms?"

He spent years in a 10-square-block neighborhood on Chicago's South Side observing the clandestine work of gangbangers and mechanics, prostitutes and pastors, based on that research he wrote "Off the Books:"

"Beneath the closed storefronts, burned-out buildings, potholed boulevards, and empty lots, there is an intricate, fertile web of exchange, tied together by people with tremendous human capital and craftsmanship," he writes. In this view, even gang leader Big Cat is a "stakeholder" in the neighborhood, with an interest in seeing norms adhered to and order preserved. "It's not a crack house," as an old Onion headline had it. "It's a crack home."


Friday, December 08, 2006

The Virginia Food Police

"Bureaucracy is the most efficient method known to man of turning pure energy into solid waste."

On 20/20 tonight, John Stossel did one of his "Give Me a Break" segments on overzealous food bureaucrats in Fairfax County, Virginia who proved the quote above. Like many churches around the country, churches in Fairfax County serve home-cooked meals to the homeless. But according to Fairfax County health department bureaucrats, that's not safe, and last week there was a crackdown on the churches' lawlessness.

According to the food police in Virginia, churches are supposed to have a $40,000 commercial kitchen to feed homeless people. Did the health Nazis ever think of where the homeless eat when they don't eat at these churches?

"They've never stopped me from eating out of a dumpster or a trash can before," said a homeless man, who seems to have more common sense than the food bureaucrats. Dumpster diving has got to be more dangerous than unlicensed church food.

Due to overwhelming public outrage against the overzealous food bureaucrats, the Chairman of the Fairfax County Board of Supervisors quickly backtracked and exempted churches from food regulations.

"What if the health department had been around when Jesus was feeding the poor?"

"He might have been, you know, cited," the Board of Supervisors Chairman said with a laugh.

Read the original
Washington Post article about the food folly that generated the outrage.

Letterman's Top Ten

Top 10 Questions On Macy's Santa Application

10. "Do you mind checking your gun at the door?"
9. "Have you ever been accused of hiding stolen goods in your beard?"
8. "Can you pretend to be jolly making $6.25 an hour?"
7. "Would your cheeks be red without the scotch?"
6. "Are you prepared to lie about our Playstation 3 availability?"
5. "Reindeer allergies?"
4. "Can you disarm a kid who comes at you with a sharpened candy cane?"
3. "Will your lap support today's obese children?"
2. "Do you own urine-proof pants?"
1. "Are you a cop?"

Steven Levitt on Colbert

UChicago economist and co-author of "Freakonomics" Steven Levitt interviewed on The Colbert Report. In 2003, Levitt won the the John Bates Clark medal, which is awarded biannually by the American Economic Association to an American economist under the age of 40 who has made a significant contribution to economics.

Grape Vodka?

"Distilled from fine French grapes, Cîroc is vodka of the highest order. At the heart of this unique vodka are carefully selected grapes grown high in the Gaillac region of France. Cîroc is distilled five times to produce exquisitely smooth vodka."

When it comes to "nectar of the Gods," it doesn't get any better than Ciroc, I have to agree that it's "vodka of the highest order." Give it a try.

Thanks to Joyce Howe for the tip.

Jobless Rate Falls to 6-Year Low for College Grads

Click graph to enlarge.
The overall unemployment rate increased slightly to 4.5% in November, from 4.4% in October according to the BLS report today. However, the unemployment rate for college graduates fell to 1.7%, the lowest rate in almost six years, since February of 2001. Education pays, stay in school.

Real Wages on the Rise, 2.8% Increase

"With energy prices now sharply lower than a few months ago and the improving job market forcing employers to offer higher raises, the buying power of American workers is now rising at the fastest rate since the economic boom of the late 1990s.

The average hourly wage for workers below management level — everyone from school bus drivers to stockbrokers — rose 2.8% from October 2005 to October of this year, after being adjusted for inflation, according to the Bureau of Labor Statistics."

Read the entire article here from today's NY Times Business section.

Milton Friedman Videos

Video of Milton Friedman on free trade and tariffs (2 minutes).

From 1975, a 30-minute TV
interview of Milton Friedman on "do-gooders" and why minimum wage laws discriminate against workers with low skills and blacks; his views on unions, Social Security, etc.

Thursday, December 07, 2006

US Gas Prices vs. Canada

It could be worse, you could be buying gas in Canada. (Click on graph to enlarge)

US Dollar Graphs

Click graphs to enlarge.
There has been a lot of concern lately about the fall of the USD, see the front cover of The Economist magazine above. Over the last year, the USD has fallen by about 5% vs. the yen, and 11-12% vs. the euro and pound.

The first graph above shows the monthly trade-weighted exchange rate value of the USD vs. a broad group of currencies from 1975. As the graph shows, the USD has depreciated over the last 5 years vs. a broad group of currencies, but it is actually stronger today than during the 1970s, 1980s and 1990s.

The second graph shows the same exchange rate index on a daily basis over the last 5 years. As the graph shows, the value of the USD has been fairly stable in 2005 and 2006 and has depreciated by less than two percent over the last two years (from 110 to 108).

Auto Prosperity and Auto Jobs Shift South

An article in the NYTimes Business section on Tuesday, "As Auto Prosperity Shifts South, Two Towns Offer a Study in Contrasts," contrasts the shifting fortunes of Livionia, MI and Georgetown, KY because of the shift in auto production from heavily-unionized states like Michigan to non-unionized states like Kentucky:

"Their changing fortunes offer more than a tale of two auto cities. They provide a close-up look at the impact of a broader economic shift of the nation’s auto industry from north to south, as Detroit falters and their surging Asian competitors invest in Southern states.

Over the last two decades, for example, the number of automotive-related manufacturing jobs in Michigan has fallen 34 percent, according to By contrast, the number of automotive jobs in Kentucky rose 152 percent over that period." (see graph above, click to enlarge)

What Statistics on Home Sales Aren’t Saying

From today's NYTimes Business Section: "The truth is that the official numbers on house prices — the last refuge of soothing information about the real estate market on the coasts — are deeply misleading. Depending on which set you look at, you’ll see that prices have either continued to rise, albeit modestly, or have fallen slightly over the last year (MP: -3.5% according to the National Association of Realtors). But the statistics have a number of flaws, perhaps the biggest being that they are based only on homes that have actually sold. The numbers overlook all those homes that have been languishing on the market for months, getting only offers that their owners have not been willing to accept."

Quote of the Day

"Apparently Wal-Mart does not pay its employees as much as third-party observers would like to see them paid. But third parties who wax indignant are paying them nothing."

Thomas Sowell

How Rich Are You?

Celebrities, athletes and CEOs get ranked annually by salary or wealth, why can't we? Well, we can. How rich are you, and how do rank globally (from #1 to #6 billion) among the 6 billion people on the planet, who have an average income of $5,000?

Enter your annual salary here at the
Global Rich List and you'll find out. The calculations are based on income figures from the World Bank Development Research Group.

Interesting global income facts:

If you make $47,500 you are in the richest 1%.
If you make $33,500 you are in the richest 5%.
If you make $25,130 you are in the richest 10%.

I found the Global Rich list on Greg Mankiw's blog, who thanks Marginal Revolution for the pointer.

Wednesday, December 06, 2006

Hollywood Economics and Celebrity Salaries

"It is not really news that Hollywood is still producing anti-business movies, but there is a certain irony in it nevertheless.

Although these movies tap a certain envy and resentment of corporate wealth, that large corporate wealth comes from far more modest individual amounts of money from about half the population of the United States, which owns stocks and bonds -- either directly or because money paid into pension funds or other financial intermediaries are used to buy stocks and bonds.

The irony is that the average Hollywood star who is making anti-business movies is far wealthier than the average owners of those businesses, who are half the population of the country."

Read the rest of Thomas Sowell's
column here.

From the Forbes Celebrity 100 list for entertainment income, June 2005 to June 2006:
1. Steven Spielberg $332m
2. Howard Stern $302m
3. George Lucas $235m
4. Oprah $225m
5. Tiger Woods $90m
6. Tom Cruise $67m
7. Dr. Phil $45m
8. Simon Cowell $43m
9. 50 Cent $41m
10. Paul McCartney $40m
11. Denzel Washington $38m
12. Michael Jordan $32m
13. Tom Hanks $29m
14. Adam Sandler $29m
15. Jodie Foster $27m
16. Leonardo DiCaprio $25m
17. Nicole Kidman $22

Average CEO Pay for S&P500 firms $13.5m

Real Compensation UP

From a report today from the Bureau of Labor Statistics, hourly compensation (including wages and benefits) for US workers increased by 4.4% on average over the last year in nominal terms, and 1.1% in real, inflation-adjusted terms.

Milton Friedman Shovels vs. Spoons Story

While traveling by car during one of his many overseas travels, Professor Milton Friedman spotted scores of road builders moving earth with shovels instead of modern machinery. When he asked why powerful equipment wasn’t used instead of so many laborers, his host told him it was to keep employment high in the construction industry. If they used tractors or modern road building equipment, fewer people would have jobs was his host’s logic.

"Then instead of shovels, why don’t you give them spoons and create even more jobs?" Friedman inquired.

The Moral Case for Free Trade

From the WSJ last week, an article about Haiti's (the poorest country in the Western hemisphere) textile exports to the U.S. and the growing anti-free-trade climate in Washington ("Haiti's Trade Push Hits New Political Head Wind: Lawmakers Look Askance At Effort to Ease Tariff Rule Amid Globalization Concern"):

"Haiti's struggle to persuade Congress to help its apparel makers underscores a new reality: In the political climate on Capitol Hill, even small trade gestures face big hurdles. Haiti is trying to secure passage of an initiative that would allow the Caribbean country to use non-American-made material in garments destined for the U.S., while still qualifying for duty-free access. Currently, Haitian garments must be made from material produced in the U.S. to get duty-free treatment. Using foreign-made fabric, such as from China, could significantly lower production costs for Haitian garments makers and make their goods more competitive in global markets." (MP: Translation - less expensive for American consumers.)

Now who could possibly be opposed to: a) helping the poorest country in the Western hemisphere's textile industry, and b) lower prices at the same time for US consumers? Well, the US textile industry of course, and enabling politicians from textile-producing states.

"We can stop it," pledged Cass Johnson, president of the National Council of Textile Organizations, the largest U.S. textile-industry group. "If Vietnam shows anything, it will fail."

University of Illinois law professor Andrew Morris responds in
today's WSJ:

"What right does Cass Johnson have to interfere with voluntary trade between consenting adults? The question that needs to be asked in Washington is: Why are Mr. Johnson and other representatives of special interests even consulted about the trading practices of others?"

"Free trade between Americans and Haitians (or Americans and Mexicans, Chinese, Laotians, Guatemalans, Poles, Ugandans or anyone else you care to name) is not only none of Mr. Johnson's business, it is none of anyone's business except those doing the trading. And, as the case of trade with Haiti makes abundantly clear, free trade isn't simply an economically sensible policy, it is a moral policy. How dare these people attempt to stop Haitians from bettering themselves through offering to trade with others."

If the Haiti trade bill fails, both Haiti and the US will be worse off.

Tuesday, December 05, 2006

24 Bowl Teams Fail Academic Standards

More than a third (38%) of the 64 college football teams headed to bowl games this season have failed to meet academic standards set by the National Collegiate Athletic Association, according to an annual report released on Monday by the Institute for Diversity and Ethics in Sport at the University of Central Florida. Last year, more than 40 percent of bowl-bound teams failed to meet the same NCAA standards.

Under an NCAA measurement called the Academic Progress Rate, teams are scored on a scale of 1 to 1,000 based on whether their athletes stay enrolled and make adequate progress toward their degrees. Teams that do not achieve a score of at least 925, which equates to roughly a 50-percent graduation rate, may lose scholarships.

Twenty-four of this season's 64 bowl teams scored lower than 925. Of the teams that scored below 925, more than half came from the largest six conferences.

See the complete list of the 64 teams' Academic Progress Rates.
See the
full report here.

From the report, graduation rates for the 64 NCAA Bowl teams:
White football student-athletes: 74.3%
African-American student-athletes: 55.7%

It's Not Just the Democrats Who Oppose Trade

From Sunday's Washington Post, a good article ("Grand Old Protectionists") about how it's not just the Lou Dobbs Democrats who oppose free trade, the Republicans also often oppose free trade. It's always about the politics of trade, and never about the economics of trade.

"It's not a left-right split. Since 2000, Bush Republicans have done as much as Democrats, if not more, to erect trade barriers and tariffs. Republicans have done great damage to the cause of free trade in the past several years. Republicans have done great damage to the cause of free trade in the past several years. For example, in March 2002, Bush proudly passed tariffs of 8 percent to 30 percent on most steel imports for three years."

Steel tariffs were purely 100% politics, to advance the Republican cause in formerly Democratic strongholds of Ohio, Pennsylvania and West Virginia at the expense of the companies and workers in industries nationwide that consume steel. The WTO ruled the tariffs illegal, and Bush was forced to end steel tariffs early in December 2003.

From the Wash Post article, "Today, the protectionist gene may no longer be dominant among Republicans, but it's still an important part of the GOP's DNA."

From P.J. O'Rourke: "When buying and selling are controlled by legislation, the first things to be bought and sold are legislators."

It seems like the Republican politicians can be "bought and sold" by the special interests of domestic industries (e.g. steel) to impose protectionism just as often as the Lou Dobbs Democrats can. When it comes to buying votes with protectionism, politicians are politicians.

Less Spending Inequality Than Income Inequality

According to the 2005 Consumer Expenditure Survey, just released by the Bureau of Labor Statistics, there's a lot less spending inequality than income inequality.

In 2005, the lowest income quintile (bottom 20%) spent an average of $11,247 per person, compared with $15,843 for middle income quintiles, and $28,272 for the top quintile (top 20%). The top group is spending only 2.5 times as much as the bottom group, and 1.8 times as much as the middle classes. That is not major inequality.

The differences between per person spending are even smaller for food and housing. Those in the top 20% of income earners spend $3,141 on food per person and those at the bottom 20% spend $1,792, i.e. the top group spends less than twice as much. Middle quintiles are somewhat in between.

With health care spending, an area where conventional wisdom holds that the poor are falling behind, the top group spends about 1.5 times the lowest group. For clothing, the top group spends just over twice the amount as the bottom group.

Why is spending inequality per person less than many popular measures of income inequality?

The average number of people for a household in the lowest quintile is 1.7. It increases to 2.5 people for the middle quintile and reaches 3.2 people for the highest quintile. If a larger amount of income is divided among more people, the spending per person falls.

Also, the top group has more earners. The top quintile averages 2.1 earners, compared with 1.4 earners for the middle quintile, and half an earner for the lowest quintile.

And per-person spending over the past 20 years shows that all groups are spending more in real terms.

The lowest quintile is spending 14% more in 2005 than it was in 1985, the second quintile 16%, the third quintile 11%, the fourth 13%, and the top quintile is spending an additional 16%.
There's no striking inequality there, especially since people don't just stay in one quintile. Many have moved up to other quintiles in the 20-year time period as they get older and more experienced and marry other earners.

Read more here.

Monday, December 04, 2006

Holiday Shopping?

Best caramels on the planet from the Trappistine nuns at Our Lady of the Mississippi in Iowa.

Best deep-dish pizza on the planet from Lou Malnati's in Chicago, next-day delivery to your doorstep.

Best low-fat organic pork on the planet, order online from Dan Tollefson in Minnesota, his pigs are special - they listen to classical music, get massage therapy and pedicures, aromatherapy, empowerment counseling, motivational speakers, organic food, etc., they really live the good life.... just for your eating pleasure. You'll become a porkaholic if you try Dan's pork. Only available at the Minneapolis Farmer's Market, and now online direct from his farm in Minnesota.

Best two-ply cashmere on the planet from Land's End, it doesn't get any better than a Land's End cashmere sweater for winter comfort, style and fashion.

Best FWIs (fine-writing instruments) on the planet from Fahrney's Pens, get them engraved for somebody special.

Suggestions compliments of Santa Perry.

Interesting Facts of the Day

Fact 1: Agriculture accounts for only 20% of India's output, but it employs 60% of the country's workers.

Fact 2: The last time that 60% of the U.S. labor force worked on farms was around 1850.

Fact 3: Current percent of the US workforce in farming: 1.5% (2.21 million farm workers out of 145.3 million total employment).

Fact 4: The tractor was one of the greatest labor-saving inventions in history, and reduced labor requirements by almost 2 million farm workers and 23 million draft animals in the US.

Not All Call Centers Are in Bangalore

The invisible hand at work... the relentless pursuit of efficiency.....

The next time you place an order for fast food at a Wendy's or McDonald's drive-through window, the person on the other end taking the order might be 3000 miles away at a fast-food call center.

A Massachussets company called Exit 41 has patented technology called "Order Perfect" that allows call centers to take fast-food orders in drive-through lanes. "You have people in a remote area, all they do is take orders, they're very good at it," said the founder of Exit 41, a restaurant ordering center. "Inside the store, they focus on production and delivery."

Here's how it works: You place your order like you always do, but the order is taken by specialized agents at a remote order center, possibly thousands of miles away. The order is entered in real-time and sent electronically to the restaurant as it is received. A picture is taken of the customer and it follows them along through the entire process. As soon as the order is delivered those photographs of the drivers are destroyed.

Bottom Line: Because of call centers, there is a) increased order accuracy because of specialization, b) 50% increase in drive-thru transactions because of increased efficiency (125 per hour using call centers vs. 85 per hour), and c) reduced food costs by capturing all orders at the Order Center.

Exit 41 company link.

Yahoo Finance news story.

Another News item.

Sunday, December 03, 2006

Airline Pricing

When checking the return segment of flights on NWA from Minneapolis to Flint, Michigan on January 2, I found the following round trip fares:

Leaving Mpls for Flint on January 2 at:
6 a.m. $411
9 a.m. $543
10 a.m. $618
1:10 p.m. $931
1:11 p.m. $881

I guess I can somewhat understand the early morning-late morning-afternoon price differentials. Being the holiday season right after New Years Day, with a lot of non-business tourist/leisure travellers, who wants a 6 a.m. flight? Low demand, low price vs. a more leisurely time of say, 10 a.m. And you want to sleep in, relax, and get to the airport for an early afternoon departure at 1 p.m.? Well, it's going to cost you about $500 for that extra time!

What I don't understand is the $50 difference in flights that leave Mpls for Detroit only one minute apart! I think I'd book the 1:11 flight and save $50 for that extra minute, that's $3,000 an hour!

Bottom Line: Airlines are the masters of price discrimination, and they are trying to: a) charge whatever the market will bear for each seat, and b) fill the planes to capacity with passengers as often as possible (hence the overbooking strategy). As flights approach capacity, they raise the ticket prices for the remaining seats. If there are a lot of empty seats available, lower the prices until the plane is full, or at least don't raise prices.

Also, because the marginal cost of each additional passenger is zero, or close to zero, the airlines face a "pure selling problem" and just try to maximize revenue on each flight.

Puzzle remains: If airlines price discriminate, why don't movie theaters?

Mpls Mansion, FL Island, LV Penthouse on Ebay

A mansion in Minneapolis ("Mill City") is being auctioned on Ebay, check out the listing here. The 12,000-square-foot home, with turrets, 10 fireplaces and a third-floor ballroom, was built by grain magnate George Van Dusen. In 1994, the mansion had been abandoned for more than a decade and was within weeks of being demolished when Wisconsin businessman Bob Poehling bought it and restored it. The bidding started at $500,000 and now, 29 bids later, the price is currently at $3,550,300 (Tuesday).

Other expensive items for sale now on Ebay? A Florida island for $9.5 million and a spectacular Las Vegas penthouse for $9 million.

Look and Shop for the Foreign Label

Given the growing backlash against free-trade and globalization, e.g. the House defeat in mid-November of the bill to normalize trade relations with Vietnam (WSJ editorial on November 17: "...Communist Party is more intent on free trade than the current U.S. Congress."), it was rather surprising and refreshing to see such a spirited defense of free-trade in a recent column by Cokie and Steve Roberts (aren't they both Democrats?). Check out this excerpt from their column "Look for the Foreign Label,"

"A TV commercial 20 years ago, urging shoppers to buy American-made clothing, contained the memorable refrain: "Look for the union label." That era is long over. Buying only domestic garments would leave your kids shivering this winter.

But here's a heretical suggestion for the holiday season: As you purchase sweaters and games and bikes to put under the tree, look for the foreign label. Notice how many of your gifts are made abroad, and take a moment to realize you are benefiting from globalization and free trade.

Even though free trade creates far more winners than losers, the losers tend to be louder and more visible. It's easy to put a picture on TV of a shuttered factory or an unemployed worker. It's much harder to show a family who earns more from expanding exports, or pays less because of inexpensive imports.

Free trade is in America's national interest. That's why you should look for the foreign label this holiday season."

Milton Friedman couldn't have said it any better himself.

Here is a link to the full article.

Copper Prices Up, So is Copper Theft

The graph above show copper prices on the London Metal Exchange, in USD per ton. Copper prices have just about tripled over the last few years, due to a worldwide surge in demand for copper, largely from construction booms in China and India.

the NY Times, a recent article With the Price of Copper Up, the Plumbing Can Go Missing:

"Though the news media has reported thefts of copper wire from streetlights, electrical substations and cellphone towers across the country, most of it is taken from abandoned homes or homes under construction, usually by drug addicts looking for quick cash. The theft from Mr. Roscoe’s houses was among eight similar thefts in Pittsburgh over a few days this month. About 250 such thefts have been reported in the last year, compared with perhaps a dozen last year, the police said."

Also, the
Detroit Free Press ran an article about how the theft of copper plumbing in September led to the closing of Detroit's world-famous boxing gym Kronk Gym. Sylvester "Rocky" Stallone attended a charity screening of his new movie Rocky 25, I mean Rocky 6, in Southfield Michigan, and benefits go to Kronk Gym.

This Week's Economic Highlights

The most important economic news this week was a strong GDP report, which showed the U.S. economy continuing to grow at a modest pace, despite a slowdown in the housing market. Although sales of new homes fell in October, existing-home sales rose slightly. Among the week's other reports: personal incomes and spending rose, consumer confidence dipped, and a gauge of manufacturing activity (ISM index) dropped. For the week, the S&P 500 Index fell 0.3% to 1,397. The yield of the 10-year U.S. Treasury note fell 12 basis points to 4.43%.

Third-quarter GDP growth stronger than expected: U.S. real GDP—a measure of all goods and services produced in the U.S. economy—rose at an annualized 2.2% rate in the third quarter (see graph above). This "preliminary" reading was higher than October's "advance" estimate of 1.6%. The upward revisions to third quarter GDP were mainly the result of a downward revision in imports and stronger inventory buildup by businesses. Consumer spending—which represents 2/3 of the nation's economic activity—was also revised downward, although it was higher than in the second quarter. The biggest detractor to economic growth in the period was the housing sector's cooldown. Investment in homebuilding fell at an 18% annual rate, the greatest decrease in 15 years.

Upcoming this week: Friday's report from the BLS on November payroll employment and the November jobless rate (expected to be 4.6%) will headline this week's economic reports.

Also coming up the following week is the FOMC meeting on December 12.