Saturday, December 13, 2008

Univ. of Mich. Standard Practice Guide = 290 pages

In a comment on this post, Bob Wright asks: "Mark, how do union contracts compare to the rules that govern tenured professors? Is there a "rule book"?"

The University of Michigan Standard Practice Guide (SPG) is the series of documents that serves as the "faculty/staff rulebook." In the link provided above, there are about 90 different sections listed, none longer than 12 pages, and most 1-4 pages long. Since the SPG applies to faculty and staff, there are many sections that apply only to staff and not faculty (e.g. rest periods, overtime, lunch periods, on-call pay, etc.).

In total, the entire University of Michigan SPG for faculty/staff is 290 pages long (and many of those are partial pages) versus the 2,215 page UAW-Ford contract.

$10 Per Hr. Pay Gap = Billions of Extra Dollars

According to today's Detroit News, "Including benefits and other compensation, UAW workers cost $55 an hour on average [MP: Not counting legacy costs], compared with an hourly cost of around $45 at the transplants."

1. As far as I can tell, GM currently employs about 70,000 hourly workers (after buyouts) and Ford about 50,000. Assuming a 40-hour week and 50-week year, the $10 per hour pay gap would put GM at an annual cost disadvantage of $1.4 billion, and Ford's annual cost disadvantage would be $1 billion.

2. According to the 2008 Harbour Report (see CD post), the Big/Little 3 produce vehicles at a $606 labor cost disadvantage per vehicle vs. the foreign transplants. Assuming GM will produce 3 million vehicles this year, the $606 labor cost disadvantage per vehicle would cost it an additional $1.8 billion vs. its foreign competitors. For Ford's estimated 2 million vehicles produced in 2008, it will cost them $1.2 billion more than if Toyota or Honda produced those vehicles.

Comment: Both estimates suggest that the current pay gap between UAW workers and non-union workers at the foreign transplants impose additional labor costs on GM and Ford in the billions of dollars per year. And that's without legacy costs.

Friday, December 12, 2008

22 Pounds of UAW Work Rules and Regulations

LABORPAINS.ORG -- Ever wondered what a UAW contract looks like? Pictured above is all 22 pounds of Ford’s 2,215 page 2007 master contract. Those 2,215 pages probably don’t include much regarding efficiency and competitiveness. What you’ll find are hundreds of rules, regulations, and letters of understanding that have hamstrung the auto companies for years.

If you’d like to read the contracts for yourself, here they are:

Ford’s 2007 Contract (2,215 pages):

  • Volume 1: Agreements (377 pages)
  • Volume 2: Retirement Plan and Insurance Program (464 pages)
  • Volume 3: Supplemental Unemployment Benefit Agreement and Plan, Profit Sharing Agreement and Plan, Tax-Efficient Savings Agreement and Plan, and UAW-Ford Legal Services Plan (209 pages)
  • Volume 4: Letters of Understanding (934 pages)
  • Volume 5: Skilled Trades Book (231 pages)

  • GM’s 2003 and 2007 contracts:
  • GM’s 2003 contract (Warning: 71 MB, almost 1,000 pages)
  • Changes to GM’s 2007 contract (full contract not available)

    Chrysler’s 2003 and 2007 contracts:
    Chrysler’s 2003 contract (770 pages)
    Changes to Chrysler’s 2007 contract (full contract not available)

  • HT: Ben Cunningham

    A Web of Inefficient Union Work Rules....

    Ford’s 2,215 page 2007 UAW master contract above.

    SLATE.COM -- Why have unionized Detroit auto manufacturers manifestly lost out to their non-union Japanese competitors, even when it comes to building cars in the United States--to the point where Congress is presented with a choice of bailout or bankruptcy? There are some obvious culprits: shortsighted American managers, schlocky designers, an insular corporate culture. Here's another: the very structure of Wagner Act unionism. The problem isn't so much wages as work rules--internal strictures that make it hard for unionized competitors to constantly adapt and change production processes the way the Japanese do.

    Now that everyone is criticizing work rules, it's easy to forget that they don't represent a perversion of the collective bargaining process--they are the intended result of that process, and were once celebrated as such.

    That's why Democrats are deluding themselves if they think they can save Detroit by mandating that GM and Ford build high-MPG small cars in the U.S.--thanks to inefficient work rules, they'll be overpriced high-MPG small cars, and badly built high-MPG small cars. That's why Republicans are deluding themselves if they think a wage cut that saves Ford and GM $800 per car is going to make all the difference--it won't, if the trim still falls off and the carpets bunch up.

    Sen. Corker's proposed bailout compromise apparently did try to tackle the issue of work rules. But the UAW balked at the Corker requirements (which would also have cut pay to parity with Toyota and Honda's U.S. factories) and the deal collapsed. That shouldn't be a surprise. A "web of rules" is what adversarial Wagner Act unions were designed to produce.

    Traffic Volume Continues To Decrease in October; New Record Set for Annual Decline of 100B Miles

    The Federal Highway Administration reported today (direct link here) that travel during October 2008 on all roads and streets fell by -3.5% compared to October last year. This drop follows the -4.2% September decline. Further, October marks the twelfth consecutive month of traffic volume decline compared to the same month in the previous year. Travel YTD through October 2008 also fell by -3.5% compared to 2007.

    The twelve consecutive monthly declines (November 2007 through October 2008) in miles driven compared to the same month in the previous year is close to a record, and represents one of the most significant adjustments to driving behavior in history.

    On a moving 12-month total basis, traffic volume in October fell to 2,907 billion miles, the lowest level in almost five years - since February of 2004 (see chart above), and this measure of traffic volume has fallen in each of the last nine months.

    Bottom Line: The moving 12-month total traffic volume in October 2008 (2,907 billion miles) is below the October 2007 level (3,007 billion miles) by 100 billion annual miles driven, the largest annual decline in FHA history (data go back to 1971). At an average fuel efficiency of 20 m.p.g., and an average gas price of $3.39 per gallon over that period (data here), that reduction in miles driven represents an annual savings of almost $17 billion for American consumers and businesses.

    That's in addition to the much larger $350 billion expected annual savings for consumers and businesses from the drop in gas prices from $4.12 per gallon to $1.67 since July (gas price data here), since American consumers and businesses save about $1.42 billion annually for every penny decrease in gas prices (see calculation here).

    Thanks to John Thacker for the FHA update.

    Bailout Nation: Gov't. To Bail Out Christmas: Santa Claus Is Too Big to Fail; Xmas Czarina Winfrey

    WALL STREET JOURNAL -- With the government on the brink of rescuing the U.S. auto industry, we have learned that the Treasury Department is drawing up plans to bail out Christmas. "We have reason to believe," said a person close to the matter, "that without an immediate capital injection, Santa Claus will fail before December 24." Mr. Claus could not be reached for comment.

    Government officials are said to be concerned at the risk that the collapse of Santa Claus could pose to the nation's intricately related system of holiday happiness. Though a failure by Santa Claus poses the largest systemic risk, the government is also prepared to step in to bail out Christmas trees, caroling parties and mistletoe producers.

    Inside Treasury, some officials privately worry that such a precedent could result in the nationalization of Santa Claus, leading to similar calls for help next year from the Easter Bunny and even Valentine's Day. Treasury Secretary Henry Paulson personally concluded, however, that "Santa Claus is too big to fail."

    House Speaker Nancy Pelosi, notwithstanding that she is the mother of five children, has reportedly told Mr. Paulson that Congress will bail out Christmas only in return for a promise from Santa Claus to "go green." Speaker Pelosi said the Environmental Defense Fund has long complained about Santa's eight tiny reindeer and that Mr. Claus would be asked to appear this Tuesday before Rep. Barney Frank's committee with a plan to reduce the sleigh's carbon footprint.

    With only 13 days remaining for a Santa rescue, Mr. Paulson and Speaker Pelosi are said to be discussing the appointment of a Christmas czar. The leading candidate is Oprah Winfrey.

    Thursday, December 11, 2008

    Falling Prices Stimulate Home Sales in Michigan

    According to the Michigan Association of Realtors, home sales YTD (through October) in Michigan are up by +1.02% compared to last year, from 85,270 houses sold through October 2007 to 86,138 YTD this year. The YTD average home price in Michigan fell by -15%, from $141,681 last year to $120,418 this year.

    For the city of Detroit, home sales are up by a whopping 47% from 6,411 houses YTD in 2007 to 9,420 this year, as the average YTD price fell by 54% to $18,513 this year from $40,011 in 2007 (see chart above).

    DETROIT NEWS -- Metro Detroit home sales rose again for the eleventh straight month, figures released Thursday show, though prices have continued a precipitous slide. According to data released by Realcomp, the Farmington Hills-based multiple listing service, November home sales increased 20.5% throughout the metro area compared to the same month last year; 4,644 homes sold this November, up from 3,853 sold in the same month last year.

    Average prices for the metro area declined 45.4% to $62,800; last November, the average price was $115,000.

    MP: The real estate market in Michigan is apparently in a major recovery process as falling home prices are stimulating home sales in Detroit and around the state. If it can happen in Michigan, it can happen any where.

    HT: Bob Wright

    Without AZ, CA, FL, NV and MI, November 2008 Foreclosures Were Down By -1.10% vs. Last Year

    According to data released today by RealtyTrac, foreclosure filings in November 2008 were reported on 259,085 U.S. properties, down by -7.35% from October (279,636 properties), but up by +28.22% from November 2007 (202,060 properties). November foreclosures were heavily concentrated in just four states: Arizona (13,136), California (60,491), Florida (49,190) and Nevada (13,962), and those four states accounted for 53% of the total foreclosures in November (136,779 out of 259,085 total).

    If you analyze the raw data in the RealtyTrac press release, and take out those four states with the greatest concentration of foreclosures (AZ, CA, FL, NV), November foreclosures in the other 46 states and the District of Columbia actually declined by -10.31% compared to October (vs. the -7.35% reported by RealtyTrac for all states). And compared to November 2007, foreclosures in those other states increased by only +1.61% (vs. +28.22% reported by RealtyTrac for all states). Note: These percentages were not reported by RealtyTrac, they required a separate analysis and calculation.

    Comment: The chart above (click to enlarge) of OFHEO house price indexes for Nevada, Florida, Texas and West Virginia tells part of the foreclosure story. The 2005-2007 real estate bubbles were concentrated in states like Arizona, California, Florida and Nevada (see chart), and it's those states where the foreclosure problems are now most concentrated. States like Texas that didn't experience a real estate bubble in 2005-2007 (see chart) are not experiencing foreclosure problems today. November foreclosures in Texas are down by -21% vs. October 2008 and down by -32% vs. November 2007. In West Virginia, there were only 34 foreclosures in November, down by -62% from October, and down by -31% from November 2007.

    UPDATE: If you take out the FIVE worst states: AZ, CA, FL, NV and MICHIGAN, foreclosures were DOWN by -1.10% in November compared to November 2007 for the other 45 states and D.C.

    Labor Force Has Increased By 41% Since 1981, So Comparing Unadjusted Jobless Claims Is Distorted

    NEW YORK ( -- The number of Americans filing new unemployment insurance claims jumped last week to a 26-year high, surpassing the number of filings economists had predicted. The Labor Department reported Thursday that initial filings for state jobless benefits surged to 573,000 for the week ended Dec. 6. That was an increase of 58,000 from a revised 515,000 claims in the previous week. It was the highest number of jobless claims since Nov. 27, 1982 when initial filings hit 612,000.

    Comment: As the graph above shows, the U.S. labor force has increased from about 110 million in 1982 to about 155 million in 2008, an increase of 41%. That significant increase in the labor force means that an unadjusted comparison of initial jobless claims of 573,000 in 2008 to 612,000 jobless claims in 1982 will be distorted and biased.

    The chart below corrects for the increase in labor force, and shows initial claims as a percent of the labor force. Based on that adjustment, the level of initial claims today is the highest since April 1991, not November 1982. So it's closer to a 16-year high on an adjusted basis, not a 26-year high as reported.

    Cartoon of the Day

    For Sale on Ebay: 1 U.S. Senate Seat for Illinois

    Ebay listing, current bid $2,000,000 (LISTING HAS BEEN REMOVED BY EBAY).

    Description: With this seat, you will be 1 of 2 people who represent the state of Illinois in the Senate. You will have great power with this. You can create laws, take money from lobbyists, or create earmarks to buy virtually anything you want, even really expensive telescopes. You can even bail out failing businesses. Use this seat to jumpstart your bid for the US presidency.

    Update: Andy Roth at the Club for Growth blog estimates the value of a Senate seat at about $6 million.

    The Bigger The Firm, The MORE Vital That It Fail

    This myth begins with the idea that GM, Ford and Chrysler are so huge that if they go belly-up, the livelihoods of a disproportionately large number of workers and suppliers would be affected. At once, the market for their services and products would close. Therefore, the argument concludes, government must prevent any such failures.


    Bankruptcy doesn't make assets -- such as factories, machines, workers' skills -- disappear. If markets still exist for products produced by these firms, Chapter 11 is the best way to discover this. Some workers might lose their jobs and some suppliers might lose their markets, but there would be no industry-wide collapse of the sort portrayed by the bailout's cheerleaders.

    But what if refusal to bail out these firms results in their complete failure? Even then -- especially then -- the case for a bailout crashes. Really big firms such as GM, Ford and Chrysler are really big users of productive inputs, like rubber and steel. Almost all of these inputs have alternative uses and could be used by other firms or in other industries.

    A government bailout of the Big Three keeps huge amounts of productive inputs in firms that can't use them efficiently. Forcing taxpayers to subsidize the continued employment of gargantuan quantities of raw materials, labor and capital goods in unproductive pursuits is a recipe for economic stagnation. The popular and politically convenient myth has matters backwards: The bigger the unprofitable firm, the more vital it is that it be allowed to fail.

    Restructuring under Chapter 11 will oblige Detroit's Big Three to shrink, and perhaps even to merge together or with other automakers. This will unquestionably cause hardships to some workers and suppliers, but hardships no different than those suffered routinely by workers and suppliers in other industries whenever economic change reduces consumer demands for some products.

    If Washington gives no special subsidies to workers and suppliers outside of the auto industry, why treat GM, Ford and Chrysler differently? Are their workers or owners more worthy? Not at all. The jobs and good pay that they've enjoyed were made possible by the very economic openness that now requires significant restructuring of these three firms. Their shareholders, workers and suppliers have no moral or economic claim on special treatment from government.

    It is precisely because the Big Three differ in no essential way from America's other firms that bailing them out runs a real risk of cascading into a march on Washington by countless firms unable to see why they are less entitled to taxpayer funds.

    ~George Mason economist Don B0udreaux in today's WSJ, "Bankruptcy Doesn't Equal Death"

    Wednesday, December 10, 2008

    2007 Profit/Loss GM vs. Toyota: Same # Cars

    GM sales in 2007: 9,370,000 vehicles
    Toyota sales in 2007: 9,366,418 vehicles

    GM profit/loss in 2007: -$38,730,000,000 (-$4,055 per car)
    Toyota profit in 2007: +$17,146,000,000 (+$1,874 per car)

    HT: Larry Kudlow and Sen. Tom Coburn on CNBC's "Kudlow & Company"

    Stats Analysis of TARP = Paying for Type I Errors

    Arnold Kling analyzes the subprime mortgage mess using statistics:

    Null Hypothesis: Borrower applying for a loan will NOT repay it.

    Alternative Hypothesis: Borrower will repay the loan.

    Type I Error: Rejecting the null hypothesis when it is actually true, in this case approving a loan that eventually goes into default.

    Type II Error: Accepting the null hypothesis when it is in fact false, in this case denying a loan to a borrower who would actually repay the loan, or making an "error of excessive skepticism," i.e. having credit standards that are too strict.

    Other things equal, if a bank tries to make fewer Type I errors by imposing strict credit standards, it will make more Type II errors (rejecting good loans).

    Other things equal, if a bank tries to make fewer Type II errors (by lowering credit standards), it will make more Type I errors (accepting bad loans).

    In 2004-2007, Freddie Mac and Fannie Mae lowered their lending standards. This meant approving loans with lower FICO scores, along with other methods (mortgage underwriting is based on a number of factors). At the hearing, Congressmen were asking (not in these words), why did you succumb to pressure to reduce Type II errors and increase Type I errors? (MP: By relaxing underwriting standards).

    The CEOs said that the market was changing. In the past, when they made Type II errors, nobody saw them. If Freddie and Fannie denied a loan, then the loan was not made. Wall Street was now making loans to borrowers with lower FICO scores, and these borrowers were not defaulting. The Type II errors that Freddie and Fannie were making were more visible than they had ever been before. This made the CEOs question their own credit policies, and they decided to loosen up.

    As it turned out, the success of Wall Street's looser lending policies had been due mostly to luck--rapidly rising house prices. Once house prices stopped rising, Wall Street's loans started defaulting. The large number of Type I errors had been exposed. Meanwhile, Freddie and Fannie had loosened up at just about the worst possible time--just as house prices were reaching their peak. They made a lot of Type I errors, for which we as taxpayers are going to pay a steep cost.

    HT: Club For Growth

    The Bailout. Coming This January.

    Click to enlarge.


    Cars vs. Pianos: What if FDR Had Bailed Out The Piano Industry in the 1930s As Demand Declined?

    In 1960, we began to see the first major international challenge to what was left of the US piano industry. By 1970, Japan's production outstripped the United States, and it has been straight down ever sense. By 1980, Japan made twice as many as the United States. Then production shifted to Korea. Today China is the center of world piano production.

    And what happened to the once-beloved American piano industry? Only Steinway survives to make luxury instruments that few can afford. The rest moved overseas under new ownership or were completely wiped out. Does anyone care that much? Not too many. Have we been devastated as a nation and a people because of it? Not at all. It was just a matter of the economic facts. The demand went down and production costs for the pianos that were wanted were much cheaper elsewhere.

    In the same way, many people will bemoan the loss of the US car industry and wax eloquent on the glory days of the 1957 Chevy. But we need to deal with the reality that all that is in the past. Economics demands forward motion, a conforming to the facts on the ground and a relentless and realistic assessment of the relationship between cost and price, supply and demand. We must learn to love these forces in society because they are the only things that keep rationality alive in the way we use resources. Without them, there would be nothing but waste and chaos, and eventual starvation and death. We simply cannot live outside economic reality.

    Let's say that FDR had initiated a bailout of the piano industry and then even taken it over and nationalized it. The same firms would have made the same pianos for decades and decades. But that wouldn't have stopped the Japanese industry from taking off in the 1960s and 1970s. Americans would have far preferred them because they would have been cheaper. American pianos, because they would be state owned, would fall in quality, lower and lower to the point that they would become like a Soviet car in the 1960s. Of course you could set up tariff barriers. That would have forced American pianos on us.

    In the end you have to ask, is it really worth trillions in subsidies, vast tariffs, impositions all around, just to keep what you declare to be an essential industry alive? Well, eventually, as we have learned in the case of pianos, this is not essential. Things come and things go. Such is the world. Such is the forward motion of history in a world of relentless progress generated by the free market. Thank goodness that FDR didn't bother saving the US piano industry! As a result, Americans can get a huge range of instruments from all countries in the world at any price they are willing to pay.

    ~Jeffrey Tucker of the Mises Institute, "The End of the U.S. Piano Industry"

    Why The Big 3 Bailout Won't Work: $1.67 Gas

    LA TIMES -- Am I the only one insulted by the charade of the Big Three chief executives pleading their cases before congressional leaders who don't even understand that investment in green technology and measures to avoid financial collapse in the short run are completely at odds? How exactly is investment in high-mileage vehicle production going to cut operating expenses and increase revenues now?

    Sadly, congressional concern is less about the well-being and endurance of the companies and their workers per se than it is about keeping those companies afloat to serve their own political objectives. Half the congressional Democratic caucus wants to compel the automakers to pump out green cars, regardless of the fact that they are money losers for Detroit. They're still too expensive to produce, and Americans are even less keen on consuming them as gas prices continue to plummet.

    ~Cato Institute's Daniel J. Ikenson

    WALL STREET JOURNAL -- Leave it to Bob Lutz, GM's voluble vice chairman, to puncture the unreality of the auto bailout he himself has been championing. In an email to Ward's Auto World, he notes an obvious flaw in Congress's rescue plan now taking shape: The fuel-efficient "green" cars GM, Ford and Chrysler profess to be thrilled to be developing at Congress's behest will be unsellable unless gas prices are much higher than today's.

    "Very few people will want to change what has been their 'nationality-given' right to drive big and bigger if the price of gas is $1.50 or $2.00 or even $2.50," Mr. Lutz explained. "Those prices will put the CAFE-mandated manufacturers at war with their customers -- and no one will win in that battle."

    Translation: To become "viable," as Congress chooses crazily to understand the term, the Big Three are setting out to squander billions on products that will have to be dumped on consumers at a loss.

    ~Holman W. Jenkins, Jr.

    Tuesday, December 09, 2008

    Gasoline in Free Fall

    $1.23 in Kansas City.

    Math Scores vs. Self-Esteem

    It's A "Man-Cession" in the Lipstick Economy

    (CEP News) - It's not a recession, it's a man-cession. And the lipstick economy may have only just begun.The U.S. recession has been a catastrophe for men, but merely a downturn for women. According to Friday's payrolls report, eight out of every 10 pink slips in the past year have gone to men.

    Mark Perry, a professor of finance and business economics at the University of Michigan-Flint, has written about the phenomenon.

    Update: Over the last year from November 2007 to November 2008, the U.S. economy lost 2.352 million jobs, and 82% of those losses were male jobs (1.932 million) and only 18% female jobs (430,000). Stated differently, for every female job lost, there were 4.5 males jobs lost over the last year. How does that compare to the last two recessions?

    1. Between January 2001 and January 2002, there was a loss of 2.076 million jobs, and 57% of those jobs were held by males and 43% by females.

    2. Between May 1990 and May 1991, there was a loss of 1.711 million jobs, and 70% were male jobs and 30% female jobs.

    Real Gas Prices @ 6-Yr Low = $346 Billion Savings

    The cheapest gas in the country can be found in Kansas City for as low as $1.25 per gallon, and the national average retail price for gas is now down to $1.69 per gallon. Without the high-priced states of Alaska ($2.60) and Hawaii ($2.57), the national average for the other 48 states is down to $1.65 per gallon, and the average price is below $2 in every state except for New York, Hawaii and Alaska.

    Using real gas prices from the EIA (in December 2008 dollars), the chart above (click to enlarge) shows how today's gas prices compare to past prices. The last time real gas prices (national average) were as low as $1.69 per gallon was six years ago in December of 2002, and the last time real gas prices (national average) were as low as $1.25 per gallon (current Kansas City low price) was almost ten years ago in February of 1999 (see chart above). Gas prices in Kansas City are within 4 cents per gallon of the lowest-ever (national average) real gas price of $1.21 per gallon in February of 1999.

    The $2.43 per gallon drop in gas prices from the peak of $4.12 per gallon in July to the current price of $1.69 represents $346 billion in annual savings for American consumers and businesses (1 penny fall in gas prices = $1.4235 billion annual savings, calculation here).

    Cartoon of the Day

    Monday, December 08, 2008

    GRE Exams, Grad School Applications Down

    INSIDE HIGHER ED -- When the economy tanks, graduate school applications go up. That’s one of the few bits of good news in which educators could have reasonably taken comfort this year. No more.

    The number of students taking the Graduate Record Examination will decline in 2008, the first time ever that the GRE has seen a fall in test-taking during an economic downturn (see chart above). Because the GRE is required for the vast majority of graduate school programs, its numbers closely correlate with trends in applications.

    On Friday, David G. Payne, associate vice president of ETS for college and graduate programs, said that the “current hypothesis” is that the credit crunch is discouraging some people from considering graduate school, especially if they think they will not receive substantial financial support from the programs they might consider.

    Payne noted that the projected decreases this year come both from the United States and the rest of the world. Volume in the United States is expected to fall to 449,000 from 456,000. Volume outside the United States is expected to fall to 172,000 from 177,000. Looking outside the United States, the shifts are not consistent. The two countries with the largest volume of GRE test takers — and of foreign graduate students in the United States — are China and India. Both have seen their GRE numbers rising steadily, and China will still go up this year, but India will see a sharp decline.

    However, the number of people taking the Graduate Management Admission Test (GMAT) is up this year — both in the United States and abroad.

    Harbour Report:$606 Per Vehicle Cost Difference

    The chart above (click to enlarge) is from the 2008 Harbour Report on automotive manufacturing productivity, showing the $606 per vehicle labor cost advantage for Toyota vs. the Detroit 3 in 2007, because of the average hourly labor rate of $75 for the Detroit 3 compared to the Toyota hourly rate of $47. Looking forward, Harbour predicts a labor rate of $54 per hour by 2011 for the Detroit 3, and only a $97 per vehicle cost disadvantage per vehicle.

    Sunday, December 07, 2008

    3-Month T-Bills: From 15% in 1981 to 0% in 2008


    CD Breaks Into the Top 10 Econ/Business Blogs

    According to the latest ranking (December 2) from, based on average daily visits for blogs that have publicly-available traffic logs.

    Inside The Influential New World of Econobloggers: First Economic Crisis Hashed Out in Public View

    BOSTON GLOBE -- Though it's still unclear how much credit the blogs can take for shaping Washington's response to the crisis, it's already evident that policy makers charged with monitoring and fixing the markets are no longer operating alone. A fast-moving, highly informed economics blogosphere now tracks and critiques their every move. The result is that this may be the first national crisis to be hashed out by experts in full public view.

    The blogs offer a rolling crash course in economics as authoritative as any textbook, but far more accessible. It's a conversation that's simultaneously esoteric and irreverent, combining technical discussions of liquidity traps and yield curves with profane putdowns and heckling headlines. In the process, the bloggers have helped to democratize policy making, throwing open the doors on the messy business of everything from declaring a recession to structuring the most expensive government bailout in history.

    What Took 6 Yrs. in 1980s Took Only 6 Mos. in '08

    To put the recent fall in gas prices in perspective: It took more than six years for real gas prices to fall from about $3.50 per gallon in the early 1980s to $1.72 in early 1986, and it took only about six months for real gas prices to fall from about $4 in June 2008 to $1.72 in December 2008.

    Toyota Started in 1936, Why No Legacy Costs?

    WASHINGTON POST (2006) -- GM refuses to provide legacy costs for its 2005 vehicles. But by my estimate, they were $1,850 for health care, $700 for pensions. Total: $2,550. Numbers Toyota gave me indicate its U.S. health care costs stayed at about $200 a vehicle. And let's use the same, probably-too-high $50 for 401(k) costs.

    GM's crippling financial burden and huge competitive disadvantage comes from its significant legacy costs: 4.61 retired members and surviving spouses (receiving pensions and health benefits) per active worker.

    It's true that Toyota hasn't been burdened with the same legacy costs as GM in the U.S. because it hasn't operated here as long. But it's also true that Toyota Motor Corporation has been producing automobiles since 1936, so it's been around for more than 70 years; certainly enough time to be burdened with some legacy costs, at least in Japan. But if it does have any legacy costs in Japan, it apparently isn't being crippled and remains quite profitable.

    What's the difference? Socialized medicine in Japan? No UAW in Japan? Comments welcome.

    So What Are Domain Names Worth?

    The answer is that it depends. Like a lot of intellectual property, the vast majority of domain name sales bring prices in 3, 4, 5, or 6 figure range. Nevertheless, there have been roughly sixty seven transactions of a million dollars or more (see top 20 above).

    This year (2008) at just under $10 Million tops the list so far. went for $2,605,000 while reportedly sold for $1,659,000. Domain Name Journal reports that has sold for $1,015,000. Link.

    More on the $70 Total Labor Cost Per Hour for GM

    FLINT JOURNAL -- The UAW said last week that it would review its contracts with the automakers and was open to making modifications in them to help the automakers secure needed government loans. Analysts and industry insiders have long said that GM needs to cut its hourly cost per worker down to levels on par with foreign automakers to be successful.

    Factoring in retiree health care and legacy costs, GM's wage and benefit cost for a UAW worker is about $70 an hour, while Toyota's cost per hourly worker is about $48, said Erich Merkle, lead auto analyst with Crowe Horwath in Grand Rapids. Zuckschwerdt said that number actually already is lower, closer to the low $60s per hour."That gap has to be zero," he said.

    MP: According to The Canadian Press:

    GM, which negotiated the four-year deal that serves as a template for UAW deals with Chrysler and Ford, says its total hourly labour costs dropped 6% this year from pre-contract levels, from $73.26 in 2006 to around $69 per hour. The new cost includes wages of $29.78 per hour, plus benefits, pensions and the cost of providing health care to more than 432,000 GM retirees, GM spokesman Tony Sapienza said.

    The total cost will drop to $62 per hour in 2010 when the linchpin of the contract - a UAW administered trust fund - starts paying retiree health care costs.

    Bailout Smackdown: Peter Schiff vs. Lansing Mayor

    Part 1.

    Part 2.

    Other Side of the Bailout: VW, Nissan, Kia, Honda

    1. VW Ramping Up Plant Construction in Tennessee (link): Amid a sluggish national economy and angst in the American auto industry, Volkswagen is ramping up construction of its $1 billion assembly plant in Chattanooga. Despite a slowing American auto market, Mr. Fischer said VW’s board is dedicated to the Chattanooga project, which is to start vehicle production by 2011 and employ 2,000 people.

    2. Nissan's Mississippi Plant Retools For the Future (link): Nissan released its first image of a concept trade van as contractors prepared for an $118 million expansion and retooling at the company's Mississippi plant that will make way for a line of three light commercial vehicle models.

    3. Kia Comes to Georgia (link): The US auto industry is throwing bolts, but here in Georgia's Chattahoochee Valley a South Korean car company is building a massive new manufacturing plant along the new Kia Parkway, replacing abandoned textile mills. The massive Kia manufacturing plant will turn out its first model in about a year, and some 43,000 people applied for 2,600 positions.

    4. Honda plant brings hope to Indiana town (link): With the domestic automotive industry teetering on the edge of bankruptcy, the recent grand opening of Honda Motor Co.'s Civic assembly plant in Greensburg was a dream come true for this town of 12,000 and for a state that has been hit hard by manufacturing job losses similar to those faced by Michigan.