He put us in CZECH

The Czech Republic's Prime Minister had some choice words for the U.S. economic stimulus package today. PM Mirek Topolanek stood before the European Parliament and said the Obama Administration's fiscal package and financial bailout "will undermine the stability of the global financial market" and ultimately is "the way to hell."

Whoa.

You may be asking yourself, just who is Mirek Topolanek? Outside of his role as the PM, he is the current head of state for the European Union (don't get excited, they get a new one every six months) and an opinionated Czech who likes to put others in check. I can't blame him for being suspicious of our government- (taxpayer) sponsored bailout, seeing as how the Czech Republic is a relatively stable economy in an unstable time, has a plethora of homegrown financial wizardry (a good thing?) and abhors its Communist past. Given these facts we can understand Topolanek's anti-interventionist soapbox rant.

BUT, what the world needs now is solutions, not more finger-pointing. We're all in this one together, PM.

The Chinese hate our economic policy too, but primarily because they can't control the value of the dollar. You see, when the U.S. economy collapsed last year, the Chinese - and most of the rest of the world - were holding "emergency money" in the form of, you guessed it!, U.S. dollars. It is common for countries to hold "emergency money" or reserves just in case of...say, and economic collapse. So when the dollar is bad, it's bad for everyone and in this case, the U.S.- Chinese economic yin yang was damaged.



As a result, of this financial dependence on the U.S., China has proposed a global currency to replace the dollar as the currency of "last resort". In this sense, countries who hold reserves won't have a heart attack every time the dollar takes a dip and can have more control over their own monetary policy.

Not a bad idea considering what we've witnessed over the last year in the U.S. Delasol thinks it wonderful that countries are eager to put their own financial houses in order and make smart decisions for themselves. But confidence is the integral ingredient here. Without a strong central government feeding morale to its citizens and reassurance that the darkest days are (hopefully) behind us, people would hoard cash, gold and ammunition in their homes. Trust me, this is not ideal. As expected, President Obama wasn't having it, flatly saying "I don't believe there is a need for a global currency." But if China doesn't want to fund our stimulus package anymore, can we blame them?

Delasol would love to hear your comments on the Obama Administration's economic stimulus package.

Cheers!

The Economics of the "Drug Game"

ECONtrepreneurs watch the news. They understand that national and even international-level policies ultimately have some effect on them. They can't be about the business of managing healthy, wealthy lives if they are in the dark about current events.

Anyone who has been watching the news over the past couple of years has noticed a spike in the number of stories chronicling the breadth of Mexico's drug cartels. It's real, people, and not just in Mexico. The war for firepower, territory and control of the drug supply to one of the most drug-dependent countries in the world has been both ineffective and unprofitable for some time now.

You see, in 1969 former President Richard Nixon introduced the nation to the War on Drugs to "...to curb supply and diminish demand for specific psychoactive substances deemed immoral, harmful, dangerous, or undesirable.(1)" This initiative created laws that were to enforce the new campaign.

Well, enforcing gets...expensive. To reduce the supply of drugs a country must hire and salary cops, DEA agents and the like. To reduce the demand of drugs you have to pay for drug treatment, prevention and education. In fiscal year 2008, the U.S. government devoted approximately $13.7 billion to these efforts.

The shrewd ECONtrepreneur would then ask if what we are paying is worth the cost. Well, to this economist the answer is a resounding "NO!" Don't believe, me? Ask a guy from Harvard. Please meet Mr. Jeffrey Miron.



Miron says our economy would in fact save $7.7 billion a year if drugs were legalized. Hmmm...spend $13 billion or save $7.7 billion? A no brainer. Not to mention that the violence that surrounds illegal drugs would gradually diminish and the government could tax the stuffing out of suppliers.

Delasol does not advocate junkies running a muck in the streets of America. We do however agree with the economic argument that is it more profitable, sustainable, logical and justifiable to treat drugs as a health issue and not as a crime issue.


(1) From the omniscient Wikipedia.

Flying the (not so) Friendly Skies

An article in today's online edition of the New York Times explores the pros and cons of low-cost air travel. How can the average ECONtrepreneur take advantage of this information?

The global economic slowdown has scared (and rightfully so) many into saving more and spending less. Airline travel - a relative luxury - is one of the hardest-hit industries. As people have opted to stay home for holidays and vacations, airlines have struggled to maintain profits and maintain overhead costs without letting workers go.

For ECONtrepreneurs, you can visit any online travel site (Travelocity is Delasol's personal favorite; great prices, easy to customize packages, variety of destinations and a San Antonian company to boot!) and find round-trip fares from Los Angeles to Tokyo for less than a grand, NYC to London's Heathrow Airport for less than $600 or Reagan National to DFW for about $200. Get while the gettin' is good!

Airlines, on the other hand, are imposing new 'a la carte' fares for just about...well..anything! Already passengers have had to fork over cash for in-flight snacks, entertainment and pillows, but the article reveals that similar fees for beverages, Wi-Fi and those roomy exit row seats are in the works, thus making the full cost of flying more difficult for customers to determine. A word to wise ECONtrepreneurs: Don't purchase anything you don't know the cost of!! Many sites (like Travelocity) provide the extra amenities and their costs, so it's always worth it to shop around.

Happy Trails to You!