Due to Dodd-Frank, the Fed capped fees merchants pay credit card companies (CCCs) on debit cards (DCs) to about 21 cents from about 44 cents. When the fee was 44 cents, CCCs often reduced DC fees on small transactions; less than $5 or $10. Because the fee was lowered, CCCs now want the full 21 cents even on small sales and stores are raising prices to compensate. Did you anticipate this?
All posts by Elliot
Udder Nonsense
Eager to take advantage of fat margins dairy farmers around the world ramped up production in response to high prices. But, those same record prices weakened consumer demand for milk (down 4%), cheese (1.5%) and butter (2.5%). Now, the increased supply and decreased demand have resulted in 17% lower prices for milk! How many dairy farmers survive depends on how fast banks cut off credit to unprofitable farms.
GDP for Higher
During Q3 ‘11 U.S. GDP finally exceeded the real pre-recession peak of total economic output recorded in Q4 ‘07. It took 15 quarters to offset the 5.1% decline in output during the Great Recession, 3 times the average number of quarters needed to reach the prior peak in other post-WWII recessions. The bigger problem, the number of employed persons is still 6.5 million below what it was before the GR.
Tunnels Going to Pot
Authorities recently found 32 tons of pot after stumbling on a well built cross-border tunnel linking San Diego and Tijuana. The agents who made the discovery were surprised. I wonder why; they have found over 70 such tunnels since 10/08, more than in the previous 6 years! Why, the proliferation? Because of increased and improved border crossing and land enforcement by ICE agents. Digging to avoid detection is a natural economic response.
Unemployed and Well Slept
The Friday File: What do the involuntary unemployed do with their free time? Researchers find that about 40% of their “free” time is spent working in the home which includes cooking, doing laundry, shopping, home improvement projects, caring for elder parents etc… 30% of the time goes to sleeping longer and TV. Another 30% is spent on other leisure activities like reading and going to movies. As for searching for a new job, that takes up about 1% of the extra hours!
“Doc-Fix” is Broken
Unless Congress acts by 1/27/12, doctors treating Medicare patients will suffer a 27% fee cut. Last year, and every year since ’03, Congress passes a temporary “Doc Fix.” Problem is, every year, the size of the “Fix” gets bigger. The need for this annual display of fiscal dysfunction stems from a formula (the Sustainable Growth Rate) passed well over a decade ago designed to control Medicare spending that totally failed, but has never been repealed.
The Five Little PIIGS
In October ’08 European banks looked pretty healthy; they held few toxic US mortgage backed securities. But, this strength was a fiction. European banks met their Waterloo in large holdings of euro-denominated sovereign debt of the PIIGS (Portugal, Ireland, Italy, Greece and Spain). The banks assumed that Germany, France, and other strong European economies would never allow a sovereign default of a Euro denominated bond. Oh well! And, here, once again, the rating agencies were MIA.
This Old House
When parties lose majority status in Congress and when a return to majority status looks tough, retirement announcements become common. When the Ds lost their majority in the House in ’94 29 announced they would not run in ’96. When the Rs lost their House majority in ’06 27 Rs did not seek reelection in ’08. So far this year, 17 Ds have announced their retirement. Five to 10 more retirements are expected.
Government Closure as a Tactic
The 20 day State of MN government shutdown this July cost MN $60 million in lost revenue but saved about $65 million n salaries not paid, according the MN Management and Budget Department. Of course, the report failed to look at the damage caused to the state’s reputation. However, given that Gov. Mark Dayton (D) blinked and did not raise taxes, the threat of closure must be considered a valid future negotiating strategy for Republicans.
Happy Thanksgiving
The annual US turkey crop of 248 million birds (7.1 billion pounds, or 23 pounds/person) is worth $4.4 billion. MN produces the most birds followed by NC, AR, and MI. The US produces about 750 million pounds (2.5 pounds/person) of cranberries; more than half come from WI. Lastly, the pumpkin crop is worth $117 million. Most are grown in patches in IL, CA, NY and OH. Happy Thanksgiving and see you Monday!