The Federal Reserve handed a gift to investors yesterday by ending some of the uncertainty about interest rate and stimulus policy. The Fed's extra buying of bonds to stimulate the economy will be tapered back by about $10 billion dollars, or 12 percent, starting in January. And, the Fed announced it has no plans to raise interest rates any time soon.
The strong suggestion that interest rates will stay low means the Fed is not worried about inflation right now. But should it also worry about the opposite? Persistently falling prices, or deflation, can also wreck an economy, as the experience in Japan over the last 20 years has shown.
Chris Farrell, Marketplace's economics guy, says that just because inflation is not a problem doesn't mean we don't have a potential economic problem on our hands.
"Inflation is an increase in the overall price level. Deflation is a decrease," Farrell explains. "So, on one hand, you say, 'Hey, things are getting cheaper. What is the problem?' The problem with deflation is that it can set off a downward debt spiral -- think Great Depression."
Click on the audio player above to hear more about why deflation can be problematic when investors have been so accustomed to a culture of borrowing.
When consumers think about airline fees, they typically think about baggage fees or the cost of extra legroom. Most don't notice the taxes and fees tacked onto the base fare itself. At least one of them will likely double next year.
There are four main federal taxes on a domestic airline fare. The Federal Excise Tax, Passenger Facility charges, Federal Segment Fees, and a September 11th security fee.
Roughly translated, these are taxes and fees that support air traffic control, airport upkeep and improvements, and TSA screenings. The amount of taxes and fees on an individual ticket varies, depending on how many stops the flight makes, what airport is used and so on. But a typical $300 roundtrip domestic ticket is about 20 percent taxes.
Airport officials are urging Congress to let them raise the cap on the passenger facility charge. Mark Brewer, chair of the American Association of Airport Executives, recently told Congress the money was needed to pay for critical infrastructure projects, especially in light of federal funding cutbacks.
Jean Medina, spokeswoman for the trade group Airlines for America, says passengers are already overtaxed. "We've just seen an increase likely going to be approved this week on the TSA fee, which is more than doubling the TSA fee, so we're hopeful they will not raise this fee," Medina says.
Under the Bipartisan Budget Act of 2013, TSA security fees would more than double the fee for a one-way flight to $5.60 starting next year. And if airports canpersuade Congress to let them raise the cap on airport fees, the cap on Passenger Facility Charges would go up from $4.50 (per flight leg) to $8.50.
Rick Seany, CEO of Farecompare.com, believes Congress won't approve the facility charge increase.
"I think airlines push back a lot on these things because it raises the ticket prices," says Seany. "That means they can't raise prices." Seany says airlines tried to raise ticket prices 12 times this year "with little success."
Mark Obama Ndesandjo will reportedly recall his father's abusive behavior. Also: A Turkish court suspends the trial of men accused of "corrupting public morals" for publishing a century-old novel; and a new e-book subscription service launches.
Nearly a year ago, the stream that runs through the mining town of Majiapo suddenly turned bright orange. Today it looks like a winding river of Gatorade, cutting through the terraced Chinese countryside.
But it tastes much worse.
“It’s got a strong taste, like ammonia, and it smells like sulfur," says villager Ma Huiming. "It stains your skin orange.”
Ma says he and the hundreds of other people who live here drink this water and bathe in it. He takes me to the village well beside the river. We peer inside at the orange water. “It’s completely toxic," Ma says, "But we’re too poor to afford to drink anything else. I worry about what it’ll do to my children, what kind of diseases they’ll get. People who can afford to leave for the city have moved.”
The orange water is caused by acid mine drainage -- discharged water from a coal mine -- it’s contaminated with sulfuric acid and a range of heavy metals. It’s a problem throughout Shanxi province, which provides a third of China’s coal. Ma says his employer, Yangmei Group, which runs a mine a few miles up the river, is responsible.
So I go there.
I arrive at lunch break -- coal miners are outside a canteen eating noodles. When they see a foreigner with a microphone, a yelling match breaks out between workers who begin complaining about the water and workers who warn me to leave. Miner Zhang Quanding shows me his bowl of noodles. “Look at this water!" Zhang yells. "Pigs wouldn’t even drink water like this! I’ve had diarrhea for weeks!”
Zhang says workers have complained to management, but the complaint was ignored. Upon hearing this, the boss emerges from the canteen and yells at Zhang. Another miner shouts: “A true Chinese person wouldn’t talk to a foreign journalist.”
Zhang shoots back: “A true Chinese person can’t drink this water.”
Downstream, villager Ma Huiming says it would be best if the Yangmei Group shut down the mine. Both the Yangmei Group and the local government denied requests for interviews. Ma says he’d like to return to farming, but between the toxic water and the coal dust in the air, it’s become too difficult to grow anything.
As a red truck packed with black rocks rumbles through the village, Ma says he’s left with only one choice: mining more coal.
China's largest Bitcoin exchange, BTC China has been forced to stop taking Chinese currency. The move follows a reported meeting this week between payment processing companies in the country and the People's Bank of China, and a decision by national financial agencies in the country earlier this month that effectively banned dealing in Bitcoin, the so-called cryptocurrency -- which Marketplace Tech has been looking at all week -- seems either on the verge of collapse or going to the next level.
Eric Posner is a professor of Law at the University of Chicago who has been studying Bitcoin. He says people should stop thinking of it as a currency.
"It's more like a payment system that people can use to transfer dollars from one place to another, and the way you transfer your dollar is you buy a Bitcoin, ship it through the internet, and then the other person gets it and converts it into a dollar," Posner says.
One reason Posner says he's not bullish on the idea of Bitcoin as a currency has to do with the government's inability to control its supply. Governments, he says, need to be able to control currencies through economic highs and lows.
"f there's a recession, for example, you need to increase the money supply, and if there's a boom, you need to reduce the rate at which money grows," Posner says. "If the government has no control over the supply of the money that people use because people have used Bitcoin, it won't be able to use these instruments to help control the economy. I don't think the government would tolerate that, and I don't think the public would want the government to give up this important instrument. And, so I think the government would find a way to ensure that Bitcoins did not replace the dollar as our currency."
That's why Posner is a fan of the idea of governments regulating Bitcoin exchanges. "The exchanges are absolutely essential," he says. "If I'm a merchant who accepts Bitcoins, I want to be able to immediately be able to convert my Bitcoins into dollars. But if an exchange exists, there's got to be servers, there's got to be employees, there's going to be even a building somewhere with people in it -- and the government can go after those things."
If Posner's advocacy of regulating Bitcoin exchanges sounds like it undermines one of the basic tenents of the cryptocurrency -- frictionless transfer of money from one party to another -- Posner says you're right. Regulation will weaken that feature of Bitcoin. But, regulating the exchanges will help bring Bitcoin out of the shadows and into the mainstream.
"If you think of [Bitcoin] as just a very useful mechanism for transferring value from one place to another, then regulation will not undermine that goal. It will actually improve that by making the use of Bitcoins more secure, protecting people from some of the illegal or undesireable uses of Bitcoin -- for example, to finance criminal activity or to buy drugs."
Phil Robertson has been suspended from the popular A&E reality show for saying, among other things, that homosexuality is sinful and comparing gays to "the greedy, the drunkards, the slanderers." He says he's reflecting "what the Bible teaches."
The retailer acknowledged early Thursday that there was a massive security breach of its customers' credit and debit card accounts. It started the day before Thanksgiving and extended at least to Dec. 15 — the heart of the holiday shopping season.
The panel has approved 18 recommendations it hopes will make things safer at the state's prisons. The proposals come on the heels of recent indictments of corrections officers and inmates at a Baltimore jail that involved drug smuggling and sexual impropriety.
After a decade of kicking the ball down the road, Congress appears ready to repeal its payment formula for Medicare and replace it with a whole new system. This time, doctors would be paid according to the quality of results they produce, rather than the number of services they provide.
It's a cross between Secret Santa and Make-a-Wish. For more than 20 years, ordinary Brazilians have read letters addressed to Santa that end up at their local post office and helped fulfill those wishes. The Father Christmas Project helps about half a million kids, some of whom ask for basic things like food and beds.
Upwardly mobile consumers in China and Korea also are buying lots of fur, and "not necessarily your grandmother's old mink coat," says an observer. U.S. and Canadian trappers are flush; animal welfare advocates are concerned.
Young professionals "co-living" in San Francisco-area mansions say they're doing more than cutting costs and promoting sustainability — they're building communities, and tech-powered social networking makes it easier.
Sarah Ramirez left a high-prestige career to bring California's bounty of unsellable fruit to food banks in the state's Central Valley. Her grassroots organization is trying to address a regional conundrum: While many area farms end up with imperfect fruit that can't be sold to supermarkets, local farmworkers struggle to afford fresh produce.
Hispanics and Asian-Americans say getting relief from deportations is more important for many of the 11 million immigrants here illegally than creating a pathway to U.S. citizenship. That's according to a Pew Research Center survey released Thursday.
Reliance on the death penalty continues to decline with 39 people executed this year, only the second time in 19 years that fewer than 40 people were put to death, a private group reported Thursday.
Duck Dynasty patriarch Phil Robertson is off the hit A&E reality series indefinitely after disparaging gays as sinners akin to adulterers and swindlers, the network said. A&E announced Wednesday what it called a "hiatus" for Robertson, 67, after he disparaged gays in the January edition of GQ magazine.
The same kind of technology that recommends movies on Netflix or purchases on Amazon is now helping students choose college courses. A new program developed on a campus in Tennessee uses predictive analytics to suggest classes and is seen as a way to make higher education more efficient.
KAI RYSSDAL: There was a rare bit of good economic news for Spain today. The Organization for Economic Cooperation and Development said labour reforms the government pushed through this year have helped create 25,000 new jobs a month. Some Spaniards, though, aren't celebrating. In the southern parts of the country, unemployment tops 74 percent. Our man Stephen Beard has been reporting on Europe's unemployed young people this week in a series called Jobless Generation. Today he's in Seville.
STEPHEN BEARD: A horse and carriage clatters through a square, lined with orange trees. In the warm winter sun a tour guide shows off the centerpiece of this beautiful and historic city.
(sound from tour guide: "This is the cathedral of Seville..inside we find the tomb of Christopher Columbus the one who discovered America for the Spanish crown...")
BEARD: Inside this vast, magnificent cathedral, the tomb presents a contradiction. The world's most famous explorer -- buried in what's now one of the less adventurous parts of Spain. Emigration from this region is relatively low. Even though youth unemployment is sky high. (sounds of Maria Marin...) Maria Marin, 21 years old and unemployed. She says it would be really hard leaving Spain in spite of having little hope of getting a job in Andalusia. Gayle Allard of the IE business school in Madrid understands Maria's reluctance:
GAYLE ALLARD: Language skills are not very strong in this country and as you go south that situation gets worse. So I can't imagine that it would be easy for Andalusians to go outside the country and find work.
BEARD: There is some work in Andalusia, but not much of the highly skilled, well paid variety.
(drilling and sawing metal sounds)
BEARD: This workshop trains young people for good jobs in aircraft assembly. Airbus makes a military transport plane in this region. But they hire barely a thousand new staff every year, not making much of a dent in the unemployment figures. Idoia Saez runs this training facility. She says many young Andalusians have given up and are reverting to the kind of unskilled farm work they used to shun.
SAEZ : You can find there Spanish people picking up fruit or picking up olives...
BEARD: Would you have young people with degrees prepared to pick up olives?
SAEZ: I know particular people who have a really big degree and they';re working on the streets, picking up all the rubbish.
BEARD: To Americans it will seem incredible that educated kids would rather languish in a menial job or depend on welfare than look for work abroad.
But the gravitational pull of Andalusia is very powerful. It's not just poor anguage skills keeping young people at home. I've come to the outskirts of Seville to see a young man -- unemployed -- in his 30's -- who speaks fairly good English but is aghast at the thought of emigrating.
(sound of a door opening)
BEARD: Hi, Pepe? Hi, Pleased to meet you. Pleased to meet you too. Come this way. Pepe Bada has a degree in marketing and a history of hard work. Laid off in the summer, he desperately wants to find another job. But here at home. Not in the colder, more frenetic working environment of northern Europe.
BADA: It's a relaxed way of life here. Because in the south of Spain we live outside, because of the weather. You have to enjoy the weather.
BEARD: And Pepe cannot bear the thought of swapping Seville for some grim and cheerless town further north
BADA: To exchange our beautiful city with this culture and heritage to an awful ugly industrial city…I don't think so! (laughs)
BEARD: Pepe has a working wife and two small children. The family income has more than halved since he lost his job...but even that is not enough to get him to budge from his beloved south
PEPE: I prefer to have a simple life here, to live simply here than to go to another place.
BEARD: Like hundreds of thousands of unemployed young men and women in southern Europe, Pepe can rely on the help and support of his parents and family. But in Italy -- where I'm headed next -- there are those who blame some youth unemployment on the family. In Seville, southern Spain, I'm Stephen Beard for Marketplace.
Democrats on the Senate Intelligence Committee are pressing for the release of a so-called torture report on Bush-era interrogation practices. But there are several hurdles to clear before portions of the report might become declassified.
In the past five years, the Fed has created $3 trillion out of thin air. In that context, today's news is vanishingly small.