Posted: Friday, 27 June 2008 1:14PM
The Osgood Files
WCBS 880 Reporting
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A Melting Market on Wall Street
Suppose we start with the good news about Wall Street. OK, how about this: There's an excellent chance you won't owe capital gains taxes next year...there!
After yesterday's Wall Street skid, stocks are at their lowest level since September 2006. CBS Business Reporter Alexis Christoforous explains what happened, "We had another big surge in oil prices to above 140 dollars a barrel. We had downgrades in both the banking sector and the automotive sector, especially with the holiday coming up. A lot of people just don't want to place any big bets right now."
With a holiday coming up?! So this is happening because it's almost the Fourth of July? The dollar is down to 64 European cents, gas is headed to five dollars, some home prices are down 25%, stocks just lost two years of gains.
OK, is there an analyst who can explain to us what consumers are supposed to do?
Eugene Peroni is an Advisors Asset Management. He says,"Consumers and the financial markets will probably have to adopt to the fact that oil prices, commodity prices for that matter are going to stay at loftier levels for a while."
I see. Can I get a second opinion? Expert # 2, James Corider from OptionSellers.com, has an idea of when this little gas price bubble is going to pop. Corider says, "The national average, which is around $4.10, should probably be adding about ten cents here in the coming several days. And of course, for the big Fourth of July weekend, consumers can expect to pay more than ever than they ever have."
Can I get a third opinion? Art Hogan from Jeffries and Company says, "We tend to have a pendulum that swings too far in one direction. We are overreacting to news, a lot of which is not news."
"News that is not news." So, we are trapped in a mass hallucination, reacting to things that aren't really happening --- helpless to do anything except stay at home, and shop less.
Hey, isn't that just the opposite of what a patriot is supposed to do? I seem to remember that we were supposed to shop more...
Just as President George W. Bush says, "...And I encourage you all to go shopping more."
Yes, and things would be all right. That's why we got those stimulus checks. I wonder whatever happened to those...
Spelling Out the Second Amendment
The Supreme Court has ruled the Second Amendment means just what it appears to mean and neither Washington, DC nor any other city or state can make it impossible for a law abiding citizen to buy a gun for the purposes of hunting or self-defense period, end of debate.
So, I guess the NRA can just call it a crusade and go home.
Wayne LaPierre from the National Rifle Association says, "We are going to be filing suits in Chicago, suburbs of Chicago, in San Francisco..."
The problem with gun control in Washington, DC is that it didn't work. Had homicides dropped over the last 32 years, the debate might have been different. But homicides didn't drop.
Alan Gura, the attorney for Dick Heller, states, "The criminal element right now knows that people are defenseless and can't defend themselves from violent crime, and criminals are not discouraged from committing crime."
Alan Gura, the attorney for Dick Heller, the security guard who sued when he was denied a permit to keep a gun at home.
Dick Heller says, "...And I'm very happy that now I'm able to defend myself and my household in my own home."
Heller still has to get a permit, though. The Court didn't prohibit that, nor did it prohibit gun registration, which is will be DC Mayor Adrian Fenty's top priority.
Fenty says, "All the firearms in the District of Columbia, including handguns, must be registered with the Metropolitan Police Department..."
Meantime at the NRA, Wayne LaPierre says his next move, now that the right to bear arms is set in stone, is to establish a right to conveniently purchase them.
He says, "We are going to be filing suits in Chicago, suburbs of Chicago, in San Francisco, to make sure every individual citizen in America, law-abiding citizen, has equal access to this freedom."
And with neither major party willing to make gun control an issue anymore, that leaves mayors like Adrian Fenty pretty much alone on the issue stating, "...More handguns in the District of Columbia will only lead to more handgun violence..."
Don't worry, Mr. Mayor. As the attorney said, banning guns didn't stop crime in your city. But with guns now available to law abiding citizens, the criminals should be out of town by sundown.
Fed Up Over High Fuel Prices?
According to a new survey by Consumer Reports, we are about 20 cents a gallon away from the end of the traffic jam.
A new survey on how drivers are responding to gas prices finds that most drivers know exactly who's to blame. Jeff Bartlett from Consumer Reports says, "The majority are pointing their finger at the government."
What do they want the government to do? Alternative energy comes first, then negotiating lower prices, then conservation, and then...
Bartlett continues, "...Allowing more offshore drilling and opening up drilling and exploration in new places."
81%! In the meantime, people've had to make changes...
Jeff Bartlett feels that, "They're cutting back on vacations. They're spending simply more time at home. They're combining their errand trips. And when they do drive, they're driving slower, so they can conserve the fuel that they use."
Last year, Consumer Reports found that $3.50 a gallon would cause people to drive less. And they have driving, is down by 20 billion miles in one year.
And the new survey says when the median price reaches $4.32,and it's getting close, even more traffic will simply disappear. In the meantime, close to 80% are ready to buy higher mileage cars, and 26% will take desperate measures.
Bartlett says, "A quarter of motorists are considering in some way two-wheel transportation, either motor scooter or motorcycle. Now, of course, we would caution everyone to consider the true benefits as there are some safety tradeoffs with those."
"Safety tradeoffs." I'll be in the body cast for six months, but at least I'm getting 100 miles a gallon! As for how people will pay for that new car or the scooter, or the body cast they're putting more expenses on their credit cards. And a significant number are cutting back on their contributions to their savings accounts.
Which, alert listeners may notice, is pretty much the type of behavior that got us here.
The More Wine Costs, the Better the Taste?
The laws of economics are not like the laws of Congress or laws of the church. You don't go to jail or go to Hell for breaking them.
Economic laws are principles derived from experience, like price being a function of supply and demand. There are other factors too that enter into that equation, sometimes because they affect either supply or demand, but sometimes for unexpected and apparently illogical reasons.
Now, you might expect the taste of a wine to affect its price because if more people like it, there's more demand for it and you can charge more for it.
But a recent study finds an unexpected phenomenon: that the part of the brain responsible for pleasure is significantly more active when a person knows that it's more expensive.
In other words, not only does the taste affect the price, but the price affects the taste in a positive way.
The study showing that our taste buds react more positively to wine that we know is high-priced was done at Stanford University's Graduate School of Business and the California Institute of Technology.
What do they know about wine? It doesn't matter.
But they do know when they had 20 adult test subjects sample the same wine at different prices, these people reported experiencing pleasure at significantly greater levels, when they were told the wine cost more.
And indeed, the brain wave activity, which was also measured, showed greater activity when the price was known to be higher.
So, it's not just your nose and your taste buds that are involved, it's your brain. And your brain fools you into thinking it tastes better, because it costs more. According to the study, if an experience is pleasurable, the brain will use it to help make future choice.
The unfortunate thing is that this message will not be lost on those marketing wine, and they'll think twice before reducing the price. The lower the price the more you'll buy? It doesn't work that way.
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