WASHINGTON (MarketWatch) - U.S. households socked away most of the extra income they got in January from annual cost-of-living raises, boosting the personal savings rate to 5%, a 14-year high (since March 1995, see chart above, ), the Commerce Department reported today.
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Monday, March 2, 2009
Savings Rate Rises to 14-year High in January: 5%
WASHINGTON (MarketWatch) - U.S. households socked away most of the extra income they got in January from annual cost-of-living raises, boosting the personal savings rate to 5%, a 14-year high (since March 1995, see chart above, ), the Commerce Department reported today.
Bankruptcy Could Actually Save GM
GM continues to argue that it couldn't survive a Chapter 11 proceeding, but the truth is that bankruptcy could boost its ability to survive. As the Obama administration considers its response to GM's request for more cash, it should be mindful of the advantages of bankruptcy that haven't been highlighted -- certainly not by GM's management.
GM executives have been saying that in Chapter 11 its network of suppliers would collapse, dragging down the rest of the auto industry with their company. But Chapter 11 has well-established procedures to deal with this concern.
Bankruptcy may be the only way for GM to fully confront its operational problems, deal with its legacy costs, reconfigure its dealer network, and achieve a viable labor agreement.
But one issue that has not been discussed much is that bankruptcy usually leads to a sharp change in management. There are turnaround teams expert at restructuring troubled companies, and they may well be more effective than GM's current management. It's no surprise GM's management isn't advertising this fact, but taxpayers and the government should know about it.
In the end, the administration needs to keep in mind that vital elements in GM's restructuring -- recapitalizing its large bond debt and keeping what cash it has flowing to key suppliers -- are often dealt with successfully by bankruptcy courts. A bankruptcy could save GM -- though maybe not its management.
Harvard Law Professor Mark Roe in today's WSJ
GM executives have been saying that in Chapter 11 its network of suppliers would collapse, dragging down the rest of the auto industry with their company. But Chapter 11 has well-established procedures to deal with this concern.
Bankruptcy may be the only way for GM to fully confront its operational problems, deal with its legacy costs, reconfigure its dealer network, and achieve a viable labor agreement.
But one issue that has not been discussed much is that bankruptcy usually leads to a sharp change in management. There are turnaround teams expert at restructuring troubled companies, and they may well be more effective than GM's current management. It's no surprise GM's management isn't advertising this fact, but taxpayers and the government should know about it.
In the end, the administration needs to keep in mind that vital elements in GM's restructuring -- recapitalizing its large bond debt and keeping what cash it has flowing to key suppliers -- are often dealt with successfully by bankruptcy courts. A bankruptcy could save GM -- though maybe not its management.
Harvard Law Professor Mark Roe in today's WSJ
Sunday, March 1, 2009
Chart of the Day
Real GDP growth, percent change from year ago, click to enlarge.MP: Calculating real GDP growth from the same quarter a year ago, the fourth quarter of 2008 isn't as bad as most other post-WWII recessions.
Despite Downturn, The Movie Industry is Booming
LOS ANGELES — Hollywood could get used to this recession thing. While much of the economy is teetering between bust and bailout, the movie industry has been startled by a box-office surge that has little precedent in the modern era. Suddenly it seems as if everyone is going to the movies, with ticket sales this year up 17.5%, to $1.7 billion, according to Media by Numbers, a box-office tracking company.
And it is not just because ticket prices are higher. Attendance has also jumped, by nearly 16%. If that pace continues through the year, it would amount to the biggest box-office surge in at least two decades.
And it is not just because ticket prices are higher. Attendance has also jumped, by nearly 16%. If that pace continues through the year, it would amount to the biggest box-office surge in at least two decades.
Undergraduate Economics Sees Popularity Surge
National Public Radio -- At Ohio's Oberlin College, registration in undergrad economics classes is up 25% this year, and the chair of the department says he's never seen anything like it. Host Robert Smith finds a similar surge in the classrooms of American University and across the country. So is undergraduate economics getting sexier? In a word: yes.
How Does Your State Compare?
The Tax Foundation has released its 2009 version of Facts and Figures: How Does Your State Compare?, a pocket-size booklet comparing the 50 states on 38 different measures of taxing and spending, including individual and corporate income tax rates, business tax climates, excise taxes, tax burdens and state spending.
Quote of the Day: Becker on China-Bashing
China bashing during the past decade is reminiscent of the Japan bashing that occurred during the 1980s. It turned out that Japan's substantial export surplus with the US, its extensive accumulation of US Treasury bonds, and its purchases of assets in the US did not hurt the United States, but were for the most part foolish actions on the part of the Japanese government and businesses. I believe that similar conclusions will be reached about the parallel Chinese practices.
~Nobel economist Gary Becker
~Nobel economist Gary Becker
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