Saturday, March 29, 2008

Forget Canadian Healthcare, Let's Go to Mexico

Mexico Builds Hospitals to Lure Medical Tourists From America

Grupo Empresarial Los Angeles, Mexico's largest private hospital chain, is spending $700 million to build 15 hospitals over the next three years. Oca Hospital, a family-owned company in Monterrey, is building a 200-bed facility there.

"In diverse cities that are attractive to Americans, we can offer hospitals that are very competitive and at a very good price,'' Ramirez said.

Grupo Angeles has a marketing campaign targeting Americans. The goal is for foreigners to make up 20% of patients within two years, up from 5% now. At the company's hospital in Tijuana, Americans accounted for 40% of the 100,000 patients the facility admitted in 2007.

Conventional Wisdom: Ethanol Is A Complete Scam

Time Magazine now joins the Christian Science Monitor, NYTimes, WSJ, IBD, Reason, and Rollingstone Magazine, in coming out against ethanol and biofuels in its most recent issue:

Several new studies show the biofuel boom is doing exactly the opposite of what its proponents intended: it's dramatically accelerating global warming, imperiling the planet in the name of saving it. Corn ethanol, always environmentally suspect, turns out to be environmentally disastrous. Even cellulosic ethanol made from switchgrass, which has been promoted by eco-activists and eco-investors as well as by President Bush as the fuel of the future, looks less green than oil-derived gasoline.

Meanwhile, by diverting grain and oilseed crops from dinner plates to fuel tanks, biofuels are jacking up world food prices and endangering the hungry. The grain it takes to fill an SUV tank with ethanol could feed a person for a year. Harvests are being plucked to fuel our cars instead of ourselves. The U.N.'s World Food Program says it needs $500 million in additional funding and supplies, calling the rising costs for food nothing less than a global emergency. Soaring corn prices have sparked tortilla riots in Mexico City, and skyrocketing flour prices have destabilized Pakistan, which wasn't exactly tranquil when flour was affordable.

But the basic problem with most biofuels is amazingly simple, given that researchers have ignored it until now: using land to grow fuel leads to the destruction of forests, wetlands and grasslands that store enormous amounts of carbon.

Comment: As Reason Magazine points out "You know that something has achieved the status of "the conventional wisdom" when Time magazine finally latches onto it."

Medical Tourism: 92% Savings in India

NEW DELHI--The number of Americans heading abroad for medical procedures is surging as the country's 46 million people without health insurance look for treatment they can afford and cash-strapped U.S. companies struggle to find cheaper ways to provide high-quality medical care to their employees.

India is fast becoming the destination of choice for patients seeking complicated high-end procedures they can't afford or can't manage to schedule with a doctor they trust at home. These include things like heart surgery, organ transplants and orthopedic procedures like knee replacement or hip resurfacing (see price list above).

Several Fortune 500 companies and the West Virginia Legislature are among those considering bonuses — including first-class airfare and four-star hotel stays—for employees willing to undergo medical treatment abroad. And several major insurers already cover treatment programs in Mexico and Thailand.

(Via Taxing Tennessee)

Sticky Home Prices Finally Start to Get Less Sticky

Houses are almost perfectly engineered to trick owners into overvaluing them. For both economic and psychological reasons, there is no asset more conducive to hopeful overvaluation. That means real estate slumps tend to grind on for years, until sellers submit to reality and reduce their prices.

This week’s batch of economic reports suggest that the adjustment is finally starting to happen. The decline in house prices is accelerating, especially in some of the big metropolitan areas covered by the Case-Shiller index released Tuesday, while the number of home sales has recently risen a bit.

From "Be It Ever So Illogical: Homeowners Who Won’t Cut the Price" in the NY Times

Cell Phones for Cubans, But On $10-20 Per Month?

HAVANA--Raul Castro is revolutionizing his brother's island in small but significant ways — the latest in a decree Friday allowing ordinary Cubans to have cell phone service, a luxury previously reserved for the select few.

Many Cubans hope cell phones and new appliances are only the beginning for a post-Fidel Castro government that will improve their lives. Communist bureaucracy currently limits everything from Internet access to home ownership.

The new program could put phones in the hands of hundreds of thousands of Cubans, but they will remain out of reach for most on the island because minutes are billed in convertible pesos — which cost Cubans 24 times the regular pesos they are paid in.

"I'd love one!" said Juan Quiala, a retiree living on a $10 monthly pension. "But how am I going to pay for it?"

The government controls over 90% of the economy, and while the communist system ensures most Cubans have free housing, education and health care and receive ration cards that cover basic food needs, the average monthly state salary is only $20.

Friday, March 28, 2008

Recession Watch: Not In Texas, Jobless Rate Hits Record Low, Even Construction Sector is Booming

DALLAS--The Texas jobless rate dropped to 4.1% in February – a low not seen since the mid-1970s, the Texas Workforce Commission reported Thursday (see chart above).

"Texas has once again reached a prominent benchmark – a more than 30-year record low for unemployment," newly appointed Texas Workforce Commission Chairman Tom Pauken said. "Our falling unemployment, coupled with this month’s significant job gains, indicates the sustained health and vitality of the Texas economy."

Construction continued to add jobs, with 1,900 new positions in February for an annual job growth rate of 4.3%.

Thursday, March 27, 2008

It Won't Be Much of a Stimulus

According to the CNN poll above (click to enlarge), only 21% of the rebate will actually be spent, reducing the potential effectiveness of the fiscal stimulus by almost 80%.

Housing Affordabilty Index Reaches 4-Year High

Update: The chart above shows the National Association of Realtors' Housing Affordability Index (HAI) from 2005 to Feburary 2008 (annual averages for 2005 and 2006, monthly in 2007 and 2008), based on the national median-priced home, median family income, and the 30-year fixed mortgage rate.

The HAI has gone from 103.6 in July 2007 to 135.6 in February 2008. A composite HAI of 135.6 means that a family earning the median family income ($59,967) in February had 135.6% of the income necessary to qualify for a conventional loan (at 5.94%) covering 80% of a median-priced existing single-family home in February ($193,900). This increase of more than 31.6 points in the HAI in just seven months, from both falling home prices and falling mortgage rates, is already starting to have a positive effect on the housing market (February sales increased) and could continue to play an important role in the recovery process for the slumping real estate market.

Housing affordability is higher today than at any time since early 2004. For the perspective of homebuyers, aren't we now in a real estate boom, since affordability is the highest level in four years?

Europe Shows Resilience in Face of U.S. Downturn

FRANKFURT: Europe is shrugging off the thunderclouds in the United States, with new surveys Wednesday showing rising business confidence in Germany, France, and Belgium. The president of the European Central Bank even dampened hopes for a cut in interest rates soon.

Taken together, these developments seemed to turn an old adage about trans-Atlantic economic relations on its head: When the United States catches a cold, does Europe even sneeze?

What Tata Tells Us About Insourcing and FDI

Yesterday Ford Motor Company announced it will sell its Jaguar and Land Rover divisions to India's Tata Group. Upon the closing of this transaction, the many Ford associates currently working in these divisions in the United States will join the ranks of Americans who work at insourcing companies -- i.e., at U.S. affiliates of foreign multinational firms.

Foreign direct investment (FDI) has long been a source of strength for the American economy. In 2005, insourcing companies employed nearly 5.1 million Americans, 4.4% of the private-sector labor force. Beyond their employment, insourcing companies perform large amounts of the crucial activities that make their workers and the overall economy more productive. They invest in physical capital and in research and development, and they help connect the U.S. to the global economy through international trade. The bottom line is larger paychecks. In 2005, compensation per worker at insourcing companies was $66,042 -- 31.8% above the average for the rest of the private sector of $50,124.

American policy makers should strive to make the U.S. a premier location for the dynamic, high-productivity activities of globally engaged companies -- both insourcing companies and U.S. multinationals alike. To truly be such a location would require dramatic progress on many fronts: renewing the president's trade promotion authority; resuscitating the World Trade Organization's Doha Development Round; passing comprehensive immigration reform. But to start such a journey with a single step, let us all pause to appreciate yesterday's good news from Tata.

Matthew Slaughter, associate dean and professor at Dartmouth,
in today's WSJ

Wednesday, March 26, 2008

America Celebrates Tax Freedom Day on Apr. 23

Tax Freedom Day will arrive on April 23 this year, the 113th day of 2008. That means Americans will work nearly four months of the year, from January 1 to April 23, before they have earned enough money to pay this year's tax obligations at the federal, state and local levels.

Americans will work longer to pay for government (113 days) than they will for food, clothing and housing combined (108 days), see chart above. In fact, Americans will work longer to afford federal taxes alone (74 days) than they will to afford housing (60 days). As a group, Americans will also work longer to pay state and local taxes than they will to pay for food.

Tax Freedom Day had arrived later for the four previous years, but due to an expected slowdown in the nation's economy and a massive one-time fiscal stimulus tax cut passed earlier this year, Tax Freedom Day is projected to arrive three days earlier this year compared to last year.

It Was a Tax Hike On The Rich, Not a Tax Cut

WASHINGTON, D.C. -- The share of federal income taxes paid by the top 1% of households ranked by income increased from 36.5% in 2000 to 38.8% in 2005, recent Congressional Budget Office (CBO) data show (see chart above). Their share of total federal taxes increased from 25.5% in 2000 to 27.6% in 2005, the last year for which data are available.

"Under the 2001 and 2003 tax cuts, the data show that the tax shares of the top 1% increased between 2000 and 2005 to historically high levels," ranking member Jim Saxton of the Joint Economic Committee said today. "Despite the contention that the tax cuts would unfairly reduce the tax burden of the rich, their share of taxes has in fact gone up," Saxton concluded.

Prices of Economics Textbooks

Searchable database for economics textbooks, with retail prices and predicted publication date of next edition. Most Principles of Economics textbooks now sell for $150 to $175.

India Rocks!

1. NEW DELHI--India, which added 8.53 million new mobile users in February, is set to become the second-largest wireless market in the world after China by April 2008. India had 251 million wireless users by the end of February, compared with 256 million in the U.S. and 540.5 million in China. By April, India will pass the U.S.

2. Globe Overturned: India Owns Jaguar, Land Rover: The British empire was turned on its head today: With Ford Motor Co.'s announced sale of Jaguar and Land Rover to India's Tata Motors, the ownership of two of Great Britain's legendary motor marques will pass this year from one former British colony to another. This isn't so much a story of globalization as it is a tale of the globe turned on its axis.

3. Forbes 2008 Billionaires: India now has 4 of the world's richest 8 billionaires, more than the U.S. (only 2 in the top 8). Consider that in 1997 India had no billionaires in the top 100, and in 1998 India had only one billionaire in the top 100, and just barely - Lakshmi Mittal ranked #100.

Barack Obama's Tax Returns: He's Not Tithing

Summary of Barack Obama's Income Taxes, 2000 - 2006

According to Law Professor Paul Caron: What is surprising, given the recent controversy over Obama's membership in the Trinity United Church of Christ, is how little the Obamas apparently gave to charity -- well short of the biblical 10% tithe for all seven years. In two of the years, the Obamas gave far less than 1% of their income to charity; in three of the years, they gave around 1% of their income to charity. Only in the last two years have they given substantially more as their income skyrocketed -- 4.7% in 2005 and 6.1% in 2006. (Of course, it is possible that the Obamas may have made gifts to other worthy causes that were not deductible for federal income tax purposes.)

Comment 1: In 2002, when the Obama's income of $259,000 put them close to being in the top 1% of the richest Americans ($285,000 was the dollar cut-off for the top 1%, so they were certainly probably in the top 2%), they were giving only $20 per week to charity!

According to the Washington Post, "Like Clinton, Barack Obama favors expanding the government's role in delivering health care, and would pay for that by ending President Bush's tax cuts for the rich."

Comment 2: Obama's income in recent years puts him in the top 1% of the richest Americans. If he wants to end "tax cuts for the rich," he clearly wants to end tax cuts for those Americans in his own income group, the top 1%. If Obama really supports ending tax cuts for the rich, he doesn't have to wait for the Bush tax cuts to expire, he can file his own 2007 taxes at the Clinton tax rates before the tax cuts went into effect. Here is the tax schedule for 2000 under Clinton:
(HT: Club for Growth)

Update: According to IRS guidelines, churches are qualified charitable organizations that can receive deductible contributions. Any contributions the Obamas made to their church would be tax-deductible and would be included in their "charitable gifts" reported to the IRS. Any contributions they made to other worthy causes would NOT include contributions to their church.

Justice for Satellite

Wall Street Journal--Because XM and Sirius are the nation's only two satellite radio providers, the major concern is that a merger would create a monopoly able to raise prices willy-nilly. But Justice concluded, correctly, that "the evidence did not support defining a market limited to the two satellite radio firms that would exclude various alternative sources for audio entertainment."

In other words, XM and Sirius don't compete merely with each other but as part of a huge media marketplace that includes free radio, iPods, MP3 players, Internet radio stations, cable radio services and even cell phones. Mr. Barnett added that "the likely evolution of technology in the future, including the expected introduction in the next several years of mobile broadband Internet devices, made it even more unlikely that the transaction would harm consumers in the longer term."

Tuesday, March 25, 2008

Dr. John and Steve Tyrell

Housing Affordability Jumps 27 Points in 6 Months

The chart above shows the National Association of Realtors' Housing Affordability Index (HAI) from January 2007 to Feburary 2008 (last month estimated, actual data will be available on Thursday), based on the national median-priced home, median family income, and the 30-year fixed mortgage rate.

The HAI has gone from 103.6 in July 2007 to 130.3 in January 2008, and will maybe go even higher in February, given the 3% drop in median home price from $205,000 in January to $198,700 in February. A composite HAI of 130.3 means that a family earning the median family income had 130.3% of the income necessary to qualify for a conventional loan covering 80% of a median-priced existing single-family home in January 2007.

This increase of almost 27 points in the HAI in just six months, from both falling home prices and falling mortgage rates, is already starting to have a positive effect on the housing market (February sales increased) and could continue to play an important role in the recovery process for the slumping real estate market.

Thinking the Unthinkable: What If It's Not That Bad

LONDON (Reuters) - Maybe, just maybe, the financial world is not about to implode.

A Question of Morality?

In Bosque County, 40 miles west of Waco, a crop is being grown in Texas where it has never grown before. Can you guess which crop and why? Find out here.

The Case for a Regressive Tax System: Let's Tax Income the Way We Score Bowling

Under the scoring rules of bowling, you get rewarded, not penalized, for being successful. If you get a spare, the scoring system rewards you by adding the pins from your next ball into the current frame, and if you get a strike you get rewarded by adding your next 2 balls into the current frame.

Under our progressive income tax system with 6 tax rates increasing from 10% to 35%, you get penalized, not rewarded, for being successful, productive and entrepreneurial, because the more you earn, the higher the tax rate you pay. The top marginal income tax rate has been as high as 91% in the 1950s and 1960s, and 70% in the 1970s (see this related CD post).

If we scored bowling the way we tax income, we would subtract, not add pins for a spare or strike, i.e. penalize successful bowling.

If we taxed income the way we score bowling, we would reward success by reducing the tax burden for the most productive workers, not increasing it.

(Recycled from a
CD post last year at this time, during tax season.)

Satellite Radio: Let Consumers Decide

NEW YORK -- The Justice Department gave its OK on Monday to a deal that would put Howard Stern and Oprah Winfrey under the same satellite radio company roof. The announcement boosted XM shares 15.5% to $13.79 and Sirius 8.6% to $3.15 (see chart above).

Now that the Justice Department has stepped aside, Sirius and XM only need to win approval from the Federal Communications Commission before they can close the deal that they struck in February 2007. Both companies are unprofitable and want to cut costs.

Still, opponents plan to push the FCC to stop the merger or at least put conditions on it. "This monopoly will lead to higher prices, less innovation and lousy service," says National Association of Broadcasters (NAB) Executive Vice President Dennis Wharton.

Comment: Satellite radio is less than 1% of the total radio market, according to NAB's website, so why should they care about high prices and lousy service in such a small segment of the market? It seems like that would serve to help terrestrial radio, not hurt it.

And if one company has 1% of any market, is that even a "monopoly?" Mercedes has about 1% of the U.S. vehicle market, and has a "monopoly" on the unique Mercedes features and design, is anybody worried about Mercedes?

When it comes to radio, or just about any other product, consumers can probably decide better than Justice, FCC or NAB what is best for them.

Gas in Europe $3.50-$4.40 per Gallon, FOR TAXES

THE ECONOMIST--Petrol prices have risen as the oil price has increased. But the driver's pain at the pump differs across countries, dependent in part on the proportion of the cost that is paid in taxes. Turks have the most reason to feel aggrieved, closely followed by the British. Americans still enjoy relatively cheap fuel—they pay far less in tax than drivers elsewhere.

For Americans, it could be a lot worse. Just the gasoline tax in Turkey, U.K., Netherlands, Germany, S. Korea and France ranges from about $4.40 in Turkey to $3.50 in France, which is more than gas costs here INCLUDING all taxes!

Monday, March 24, 2008

Interesting Olympic Facts of the Day: India vs. USA

Total all-time Olympic medals won by India: 17

Total all-time individual GOLD medals won by India: 0

Total all-time Olympic medals won by US: 2,407

Total all-time individual GOLD medals won by US: 896


Wal-Mart and Waltons Gave Almost $600M in 2007

Top 10 Organizations for Annual Giving, 2007
(Source: Annual Reports)
BENTONVILLE, Ark., Feb. 25, 2008Wal-Mart announced that the company and its Foundation gave $296 million in 2007 – $5.6 million per week – benefiting more than 4,000 U.S. communities. Donations last year reflected a $23 million increase over giving in 2006.

Additionally, Wal-Mart customers and associates again proved to be some of the most generous in the nation, donating $106 million through individual contributions and company-sponsored fundraisers, bringing total 2007 U.S. giving to more than $400 million. For the last two years, Wal-Mart has been recognized by the Chronicle of Philanthropy as the largest corporate cash contributor in America. The company expects that today’s announcement will confirm this position for Wal-Mart for the third consecutive year.

How does $402 million in annual giving compare to the annual giving of the most generous U.S. foundations? Well, as shown in the chart above, Wal-Mart gives more than all but five charitable organizations, and ranks #6 for annual giving.

In addition, the
Walton Family Foundation gave $189 million in 2007. Add that amount to Wal-Mart's $402 million, and Wal-Mart and the Walton Family gave almost $600 million in 2007, second only to the Gates Foundation. Wal-Mart is one of the most generous organizations on the planet.

Good News: Home Inventories Are Falling

HOUSING WIRE--In perhaps a bit of good news, sales of existing homes increased in February, trumping most analysts’ forecasts. The National Association of Realtors reported today that existing home sales surprisingly rose 2.9% to a seasonally-adjusted 5.03 million unit rate last month, up from a 4.89 pace in January — soundly beating some pretty glum analyst forecasts.

Total housing inventory fell 3.0% at the end of February to 4.03 million existing homes available for sale, which represents a 9.6-month supply at the current sales pace, down from a 10.2-month supply in January. Most housing experts look at inventory in assessing the overall health of the housing market, particularly in times of market stress.

According to Brian Wesbury and Bob Stein at First Trust Portfolios, "The best news in today’s report is that the inventory of existing homes is declining."

Comment: After rising for nine consecutive months in 2007, the important variable "months supply of houses at the current sales rate" has declined in three out of the last four months (see chart above), suggesting an improvement in the balance between homes available for sale and buyers in the market for homes.

St. Wal-Mart Deserves the 2008 Nobel Peace Prize

BENTONVILLE, Ark., Mar. 14, 2008In an address to the Council of Teaching Hospitals in New Orleans later today, Wal-Mart’s senior vice president and president of health and wellness, Dr. John Agwunobi will confirm a major milestone for the company’s $4 prescription program. Since its launch in September 2006, the program has now saved Americans more than $1 billion ($1,032,573,012.61 as of March 10, 2008).

And that was $1 billion in only 18 months!! So while politicians and pundits in Washington fret about 41 million Americans without health insurance, and dream up the next grandiose government-based health care reform, the most effective health care solutions may be right around the corner at your local Wal-Mart, which offers affordable $4 prescriptions and affordable
health care clinics (now in 12 states).

And as
Steve Horwitz points out, the savings to consumers actually exceed $1 billion because Wal-Mart's $4 drug plan was matched my many of its competitors (Kroger and Publix, etc.).

Here's a
case for Wal-Mart getting the 2008 Nobel Peace Prize (via Austrian Economists), for lifting so many people out of poverty, benefiting so many poor people with "everyday low prices," selling prescription drugs that are almost free ($4), lowering inflation, and creating more than a million jobs.

Demographic Data By Zipcode

Demographics on education, income, race, occupation, marital status, etc. are available by zip code from the Zipskinny website. You can also view various charts and maps on zipcodes, and can compare up to 20 different zipcodes. Note: The zipcode data from Zipskinny are based on the 2000 Census Bureau data, so might be a little bit outdated, but it still seems like a useful website for basic demographic information by zipcode.

(HT: Grant Leonard)

What Economic Slowdown? Not In 30 States

15 States with the Lowest Jobless Rates, January 2008

NEW YORK CSMONITOR---Don't look for an economic downturn in North Dakota: In fact, the state is holding job fairs in other states to try to fill 13,000 open jobs. "We don't see any sign of recession in our economy," says the commissioner of North Dakota's Department of Commerce.

The slump hasn't hit Chattanooga, Tenn., either. There, pent-up demand is so strong that a large back order exists for major connections to the municipal electrical grid. Even if builders are hanging up their hammers in a lot of cities, they are still building subdivisions in Mobile, Ala., which is expecting an onslaught of thousands of new workers at a new steel mill.

Amid concern that the US economy is slipping and sliding into a recession, some states and many cities expect to continue to grow. In some cases, the growth is the result of having the right industries or resources at the right time. In other cases, it is the result of savvy and diversified economic development that appears to be shrugging off the recession blues. In virtually all cases, areas of growth appear to have avoided the huge run-up in housing prices and subsequent collapse.

According to a January report by Moody's, 30 states still showed signs of economic expansion, 15 were at risk of sliding into recession, and five had already entered a downturn (see chart above showing 15 states with unemployment rates below 4% from
BLS data).

(HT: Ben Cunningham)

Sunday, March 23, 2008

Upside of the Slow Economy: Haggling is OK

SAN FRANCISCO Shoppers are discovering an upside to the down economy. They are getting price breaks by reviving an age-old retail strategy: haggling.

A bargaining culture once confined largely to car showrooms and jewelry stores is taking root in major stores like Best Buy, Circuit City and Home Depot, as well as mom-and-pop operations. Savvy consumers, empowered by the Internet and encouraged by a slowing economy, are finding that they can dicker on prices, not just on clearance items or big-ticket products like televisions but also on lower-cost goods like cameras, audio speakers, couches, rugs and even clothing.

Nod to Taxing Tennessee.

Which Country Has Most Sex Change Operations?

At least the most taxpayer funded sex change operations? You'll be very surprised.

Global Warming/Cooling Updates

ANN ARBOR, MI--This has been the snowiest winter ever in the Ann Arbor area, or at least since 1880 when record-keeping started. And it's not over yet. That's because we're not even into April, a month that normally averages almost 2.5 inches of that pesky white stuff.

NATIONAL PUBLIC RADIO--80 to 90 percent of global warming involves heating up ocean waters. They hold much more heat than the atmosphere can. Some 3,000 scientific robots that are plying the ocean have sent home a puzzling message. These diving instruments suggest that the oceans have not warmed up at all over the past four or five years. Since the system was fully deployed in 2003, it has recorded no warming of the global oceans. "There has been a very slight cooling, but not anything really significant."

Washington State Economy Has Never Been Better

SEATTLE--Washington's unemployment rate last month remained at 4.5%, unchanged from January, according to Employment Security Department numbers. The 4.5% rate is just 0.1% above the record low set in March 2007. February's results mark the 13th consecutive month of unemployment under 5% (see chart above).

"One reason we have low unemployment is because businesses are still creating jobs, and they're finding the right type of workers to fill those jobs," Employment Security Commissioner Karen Lee said.

Employers added 3,500 seasonally adjusted jobs in February, the agency said. Industries with the largest seasonally adjusted job growth last month were retail trade, with 1,000 new jobs; leisure and hospitality, up 900; and professional and business services, with 600 new jobs. Construction employment is robust thanks to added growth in Eastern Washington, and manufacturing payrolls are up 5.4% over last year.

Obama: 4 to 1 Favorite Over Clinton

According to actual trading on

French & German Are Out, Hindi & Mandarin Are IN

MUMBAI--Hindi is the new Mandarin. Just as Mandarin is being learned by youngsters all over the world to give them a strategic advantage with the emerging China, Hindi too is being sought after as the language of the other Asian tiger. Some schools in the U.S. have decided to introduce Hindi as a foreign language with staples like French, Spanish and German.