The era of the textbook cartel and $300 textbooks is ending

Friday, November 15, 2013

The era of the textbook cartel and $300 textbooks is ending

Mark J. Perry | November 12, 2013, 4:26 pm

I’ve written before about the unsustainable college textbook bubble, which is illustrated in the chart above. Between January 1998 and September 2013, the CPI for college textbooks has increased by more than 144%, compared to an increase of only 44.4% for the CPI for all items, and an increase of only 0.6% for the CPI for recreational books. In real terms, the cost of college textbooks has increased by more than 69% over the last 15 years, while at the same time the real cost of recreational books has fallen by more than 30%. The reason that the college textbook bubble is on an unsustainable price trajectory and is already starting to show some initial signs of deflating is because of the increasing amount of competition for the college textbook market. For example, here are some alternatives to the best-selling Principles of Microeconomics by Greg Mankiw, which has a list price of $306. Read more of this post

Swiss Bank Decline Makes Way for Italy Mozzarella Makers

Swiss Bank Decline Makes Way for Italy Mozzarella Makers

After eating at 40 restaurants in Ticino in a quest to gauge the quality of mozzarella, Andrea Lamberti’s verdict was clear: it was bad. So he left his native Italy and set up a cheese-making business in the Swiss canton. “When I visited Switzerland for the first time, I immediately knew I’d move here if I ever wanted to start my own company,” said Lamberti, 44, co-founder of Caseificio Oro Bianco Sagl, which produces and imports five kinds of mozzarella cheese in the Italian-speaking region. “In Italy, businesses don’t have the chance to develop. The state destroys companies,” Lamberti, who set up shop in Chiasso in September, said in a phone interview. Read more of this post

Should CEO Pay Be Capped? A Vote May Make It So; Swiss Proposal Aims to Rein In Executive Compensation

Should CEO Pay Be Capped? A Vote May Make It So

Swiss Proposal Aims to Rein In Executive Compensation

NEIL MACLUCAS

Nov. 14, 2013 6:38 p.m. ET

ZURICH—Switzerland will vote next week on a proposal limiting executive pay to 12 times that of a company’s lowest paid worker, the second time this year the country will use the ballot box in an attempt to rein in corporate compensation. On Nov. 24, voters will be asked to approve or reject the 1:12 Initiative for Fair Pay, which organizers say would address a growing wealth gap in Switzerland. The initiative is premised on the idea that no one in a company should earn more in a month than others earn in a year. Read more of this post

Shoppers Can’t Shake the Blues; Results From Wal-Mart, Kohl’s Reflect Stretched Paychecks

Shoppers Can’t Shake the Blues

Results From Wal-Mart, Kohl’s Reflect Stretched Paychecks

SHELLY BANJO

Updated Nov. 14, 2013 6:46 p.m. ET

Wal-Mart Stores Inc. WMT +0.23% offered little reason for holiday cheer, reporting its third straight quarter of poor sales in the U.S. and painting a gloomy picture for the economic recovery. The downbeat outlook from the world’s largest retailer was a reminder that even as U.S. stock prices climb to record heights, many Americans remain caught between high joblessness and hits to their paychecks that are limiting their ability to spend, putting a further drag on an already sluggish economy. Read more of this post

Scotiabank Warns “Yellen Has Ensured An Equity Market Crash Is Inevitable”

Scotiabank Warns “Yellen Has Ensured An Equity Market Crash Is Inevitable”

11/14/2013 19:20 -0500

Authored by Guy Haselmann of Scotiabank,

FED – Encouraging the Melt-Up Trade, While Regulating Bubbles Away    

The Fed moved ‘all-in’ in 2008/09 when it pushed rates to zero and embarked on QE. Since the Fed basically used its final chips via this action, it became trapped playing ‘this hand’ until the bitter end. The stakes are enormous and grow over time. The only way the Fed can ‘win’ is – as Yellen said today – “to do everything possible to promote a very strong recovery”. Tapering too soon could be calamitous toward this objective. Yet, the longer it continues, the more the risks aggregate.  However, Yellen seemed to calmly indicate today that any unintended consequences or dangers to financial stability are worth the risk. Read more of this post

Prices Start at $80 Million; London Now Has More Homes on the Real-Estate Market Listed for £50 Million or More, Topping All Previous Price Records

Prices Start at $80 Million

London Now Has More Homes on the Real-Estate Market Listed for £50 Million or More, Topping All Previous Price Records

RUTH BLOOMFIELD

Nov. 14, 2013 6:49 p.m. ET

London is making history once again, this time in the realm of real estate: The capital now has more homes on the market listed for £50 million or more than at any other time on record, according to one new study. That’s $80 million for those across the pond. Read more of this post

NY Fed Compares The Current Reach-For-Yield To South Sea Bubble Of 1720

NY Fed Compares The Current Reach-For-Yield To South Sea Bubble Of 1720

Tyler Durden on 11/13/2013 20:08 -0500

When a tin-foil-hat-wearing digital dickweed points to record volumes of cov-lite loans, insatiable demand for Ugandan bonds, and the disconcerting disconnect between record-high median leverage and almost-record-low credit spreads, the mainstream can scoff at their obsessions… but when the NY Fed – once again – highlights the potential froth in credit markets and compares it to the South Sea Bubble of 1720… maybe it’s time to get the hint… Read more of this post

More Americans ditch their passports; Even some boldface names — Tina Turner! — are leaving Uncle Sam behind

More Americans ditch their passports

November 14, 2013: 10:49 AM ET

Even some boldface names — Tina Turner! — are leaving Uncle Sam behind.

By Lynnley Browning

FORTUNE — Time to dump your American passport — and with it, presumably, your bothersome U.S. tax bill. The reason, international tax lawyers say, may have less to do with offshore tax evasion and more with a new generation of sophisticated — and legal — tax planning. Read more of this post

Israel may be start-up nation, but it’s low-tech government

Israel may be start-up nation, but it’s low-tech government

Most of Israel’s services – particularly from the public sector – are far from innovative.

By Orr Hirschauge | Nov. 15, 2013 | 5:19 AM

The year 2013 is on track to set records for Israeli high-tech exits. Some of the more prominent companies sold this year include Waze, Trusteer and Intucell, alongside smaller companies such as Wix. The trend created a feeling of euphoria, fueling the local stock market and driving the total investment in Israeli high-tech to a high in the third quarter not seen since the dot-com days. It would seem that startup nation has never been better off.

Read more of this post

Holding on for tomorrow: How economic uncertainty dulls investment

Holding on for tomorrow: How economic uncertainty dulls investment

Nov 16th 2013 |From the print edition

IT TAKES a cool head to invest. A firm’s decision to build up capacity or spend cash on research pays out tomorrow but must be paid for today. That makes investment returns uncertain, influenced by factors—from oil prices to politics—that firms cannot control. With rich-world investment rates looking anaemic, many wonder why big firms are hoarding cash rather than putting the money to work. According to new research, doubts about the future, some of them self-inflicted, are a likely cause. Read more of this post

Heinz’s plant closure ‘guts’ Ontario’s tomato capital; After 104 years of operation, Heinz says it’s closing its Leamington, Ont. plant, leaving 740 people out of work and dealing a devastating blow to the community

Heinz to close Ontario plant, leaving 740 out of work

Armina Ligaya | 14/11/13 | Last Updated: 14/11/13 7:28 PM ET
If it wasn’t for a simple condiment, the quaint town of Leamington, Ont., situated near the southernmost tip of Canada along the shores of Lake Erie, likely wouldn’t exist. After ketchup-maker H.J. Heinz chose the Ontario location as its first site for expansion outside the U.S. for its burgeoning food empire in 1909, the community slowly grew around it. The factory thrived, even inspired a Stompin’ Tom Connors song. Read more of this post

Filipinos are losing patience with the slow relief effort and increasingly angry with President Benigno Aquino, a popular figure who has until now navigated multiple crises during his three years in office

Aquino faces growing anger

MANILA — Six days after devastating Typhoon Haiyan swept through the midsection of the impoverished island nation, Filipinos are losing patience with the slow relief effort and increasingly angry with President Benigno Aquino, a popular figure who has until now navigated multiple crises during his three years in office.

BY –

4 HOURS 32 MIN AGO

MANILA — Six days after devastating Typhoon Haiyan swept through the midsection of the impoverished island nation, Filipinos are losing patience with the slow relief effort and increasingly angry with President Benigno Aquino, a popular figure who has until now navigated multiple crises during his three years in office. Read more of this post

Crédit Lyonnais: Sting in the tail; More bad news from a 20-year-old bank bail-out; Crédit Lyonnais is not the only bad bank with poison in its long tail.

Crédit Lyonnais: Sting in the tail; More bad news from a 20-year-old bank bail-out; Crédit Lyonnais is not the only bad bank with poison in its long tail.

Nov 16th 2013 | PARIS |From the print edition

COUNTRIES struggling to return their bailed-out banks to normal (Britain and RBS spring to mind) will take little cheer from France this week. On November 13th the cabinet authorised borrowing €4.5 billion ($6.1 billion) next month to pay off the last of the debt incurred in rescuing Crédit Lyonnais two decades ago. The bank will have cost French taxpayers almost €15 billion in all. Read more of this post

Federal Student Loans Surpass $1 Trillion; Delinquency Rate Soars To All Time High

Federal Student Loans Surpass $1 Trillion; Delinquency Rate Soars To All Time High

Tyler Durden on 11/14/2013 13:27 -0500

There is a reason why US consumer revolving (credit card) credit growth is getting lower and lower and lower and at last check posted a mere 0.2% annual increase. That reason is that as the NY Fed disclosed moments ago, federal student loans officially crossed the $1 trillion level for the first time ever. Notably: the quarterly student loan balance has increased every quarter without fail for the past 10 years! And just to prove that while credit card balances are plunging due to more stringent bank repayment requirements, this is more than offset by borrowers shifting to student loans, where the delinquency rate on student loans is soaring and has just hit an all time high of 11.83%, an increase of almost 1% compared to last quarter. Even according to just the government lax definition of delinquency, a whopping $120 billion in student loans will be discharged. Thank you Uncle Sam for your epically lax lending standards in a world in which it is increasingly becoming probably that up to all of the loans will end up in deliquency.

Europe’s Health Cuts Leave Mentally Ill Struggling

Europe’s Health Cuts Leave Mentally Ill Struggling

Alfonso Rodriguez, a 30-year-old Spaniard struggling with mental-health problems for a decade, was able to live independently until last month. Following cutbacks in community support, his condition deteriorated and he was forced into an overcrowded, understaffed hospital ward with peeling paint and ancient furniture in his hometown of Alicante. He can’t even satisfy his desire for a cigarette. Read more of this post

Denmark Feeds World’s Biggest Home Debt Load as Caps Spurned

Denmark Feeds World’s Biggest Home Debt Load as Caps Spurned

Denmark’s government has no plans to curtail private lending and is instead working on measures to help the world’s most indebted households maintain access to cheap credit. While authorities in neighboring Norway and Sweden are probing ways to limit borrowing, Denmark says indebtedness is no threat because households can tap pensions and home equity if they get into trouble. Danes owe their creditors 310 percent of disposable incomes, the Organization for Economic Cooperation and Development estimates. That’s almost double the level in Sweden, where the central bank has suggested imposing a 200 percent cap on debt to safeguard financial stability. Read more of this post

Corporate default risk models are broken

November 14, 2013 8:39 am

Corporate default risk models are broken

By Vivianne Rodrigues and Tracy Alloway in New York

Half a decade of loose monetary policy in the US has produced a curious reaction in the analytical frameworks that attempt to forecast the rate at which the country’s companies will default – the models have gone mild. Even as leverage and signs of credit deterioration build up in the system, most of the models used by investors to forecast the probability of companies not paying back their debt have yet to predict a rise in corporate defaults. Other models, analysts say, have been forecasting a spike in defaults that never materialises. Read more of this post

Captive reinsurance: Life in the shadows; American life-insurers are less robust than they seem

Captive reinsurance: Life in the shadows; American life-insurers are less robust than they seem

Nov 16th 2013 | NEW YORK |From the print edition

THE word reinsurance has a reassuring ring, conjuring up an image of layer upon layer of precaution. And that, roughly, is the intention of the product, allowing insurers to insure themselves. By assuming a share of the liabilities of many different insurance firms, reinsurance firms make it possible for mammoth claims following a storm or earthquake to be paid without bringing down the insurers that issued most of the policies in the affected area. A new form of reinsurance proliferating in America, however, does more or less the opposite. Read more of this post

Conglomerates Bounce Back; Borrowing clout gives large companies an edge in a financial crisis

Posted: November 14, 2013

Matt Palmquist is a freelance business journalist based in Oakland, Calif.

Conglomerates Bounce Back

Bottom Line: The Great Recession had a positive effect on the stock prices of conglomerates around the world, especially in regions with well-developed capital markets and strong investor safeguards. 

Conglomerates lost much of their luster decades ago. Indeed, skeptical investors often factor in a “conglomerate discount” by valuing diversified companies at less than the sum of their parts. But the Great Recession has restored some of their shine. Read more of this post