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The Fed just doesn’t get it.. February 9, 2009

Posted by The Armchair Economist in Business, Commentary, Consumerism, Economics, Politics.
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Late 2008, the the Fed gave out ~$350b, about half of the $700b ‘bailout’  Congressional hearings showed that  there was very poor accountability towards how banks spent that money.  Rather than  loan it out, banks just hoarded it.  When asked why they weren’t loaning the money, they said that they are increasing loan requirements due to the poor economic outlook.  In other words, the banks are doing what they should be doing… assessing the risk of nonpayment to potential borrowers.

Today, the Fed announced an overhaul in how the rest of the bailout money will be used: it will be used to buy back the ‘toxic assets’ that are supposedly weighing down the banks balance sheets.  How does this change the fundamental problem of banks not loaning the money out?  (more…)

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Making Recycling Work November 15, 2007

Posted by The Armchair Economist in Business, Consumerism, Economics, Environment.
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I’m probably not the only one to wonder where the bins of plastic bottles and newspapers I painstakingly separate out are indeed recycled. Here’s an interesting article from The Economist that elaborates on the inner workings of how recycling works.

This article got me thinking.. how the hell do Americans generate almost 800kg’s of municipal waste a year? One reason that comes to mind is the underhanded practice of raising prices by selling a decreased amount of product in similar packaging. In one example, after years of stagnant sales, coke tried (unsuccessfully) to raise their prices, but came to realize that 0.99 was a mental barrier to their 2L bottles of soda, thus reduced their bottle size to 1.5L, retaining the same pricing point). Another recent example is soap manufacturers cutting ‘grooves’ into their bars to ‘make it easier to handle’, but at the same time you have ~7-8% less soap per bar, while the size of the packaging remains the same. Perhaps the US should adopt a rule from the Germans, ie: shifting the responsibility for the entire life cycle of packaging to producers… but oh lord.. that means corporate responsibility!! god no.