David Kestenbaum

Who Hides Money Outside The Country?

David Kestenbaum — Tue, 14 May 2013 19:34:00 +0000

Over the past decade, some 39,000 people have come forward voluntarily to tell the IRS about offshore money they haven't been paying taxes on. This group provides a small window into the world of people who are hiding money in offshore havens. (It's a world we've been trying to learn more about, partly by setting up an offshore company in Belize.)

The names of the 39,000 aren't published anywhere, and they're not eager to be interviewed.

Lady Gaga Writing A New Song Is Like A Factory Investing In A New Machine

David Kestenbaum — Thu, 25 Apr 2013 07:30:00 +0000

I spoke yesterday with Dan Sichel, a Wellesley economist and a Lady Gaga fan. Both of these facts are relevant for this story.

The U.S. government is about to tweak the way it measures the economy, and some of the biggest changes will affect the entertainment industry.

Under the current system, Sichel told me, Lady Gaga's sales of concert tickets, online songs and CDs all count toward gross domestic product. But the value of the time she spends in the studio working on new songs isn't counted.

When A Famous Hospital Didn't Want An Expensive New Drug

David Kestenbaum — Thu, 28 Mar 2013 07:41:00 +0000

Last year, a new drug called Zaltrap was approved as a kind of last-chance therapy for patients with colorectal cancer. Studies suggested Zaltrap worked almost exactly as well as an existing drug called Avastin. In fact, the main difference between the two drugs seemed to be the price.

"I was rather stunned," Dr.

Three Ways To Totally Transform U.S. Immigration Policy

David Kestenbaum — Thu, 21 Feb 2013 08:05:00 +0000

With immigration policy in the news again, I asked three economists, "Dream big: If you could create any immigration policy for the U.S., what would it be?" Here's what they said.

1. The Best And The Brightest

Dean Baker of the Center for Economic and Policy Research would give out more visas to highly skilled workers: scientists, engineers, computer programmers and doctors.

In this universe, with fewer low-skill immigrants, low-skilled labor would be more expensive. So, food would cost a bit more. Child care might, too. There could be fewer restaurants.

'Give Me The Money Or I'll Shoot The Trees'

David Kestenbaum — Thu, 07 Feb 2013 08:34:00 +0000

Ecuador's Yasuni National Park is one of the most diverse ecosystems on Earth. But there's a complication: The park sits on top of the equivalent of millions of barrels of oil.

This creates a dilemma.

Ecuador prides itself on being pro-environment. Its constitution gives nature special rights.

An International Battle Over One Of The Most Boring Things In Finance

David Kestenbaum — Fri, 01 Feb 2013 08:38:00 +0000

This week saw the end of a years-long, international, multi-billion-dollar battle over one of the most boring things in finance: savings accounts.

At the center of the battle was Iceland, a tiny country where the banks grew into international behemoths during the credit bubble.

The banks got so big partly by convincing foreigners to open up online savings accounts. In particular, lots of people in England and Netherlands opened up "ICESAVE accounts" with a bank called Landsbanki.

The North Dakota Town Where A One-Bedroom Apartment Rents For $2,100 A Month

David Kestenbaum — Thu, 10 Jan 2013 08:27:00 +0000

A plain, one-bedroom apartment in Williston, N.D., rents for $2,100 a month. For this price, you could rent a one-bedroom apartment in New York City.

Williston is not New York City. There are 30,000 residents and one department store. The nearest city is two hours away.

Rents are so high in Williston because the town is in the middle of an oil boom. Unemployment is below 1 percent, and workers are flooding into town.

But the workers, by and large, don't want to stay in Williston.

What A Former FBI Hostage Negotiator Can Teach Us About The Fiscal Cliff

David Kestenbaum — Fri, 28 Dec 2012 17:28:00 +0000

The tortuous negotiations involved in the "fiscal cliff" talks are like a chess game.

To shed some light on the kinds of negotiation techniques that members of Congress might be using during the talks, we asked two negotiators to walk us through their tactics with examples from their everyday lives.

Adam Galinsky teaches negotiation at Columbia University's business school. He was recently at an airport in North Carolina, waiting to fly home.

How A Middle-School Principal Convinced Students To Come To School

David Kestenbaum — Fri, 14 Dec 2012 08:24:00 +0000

Shawn Rux took over as principal of MS 53, a New York City middle school, last year. At the time, 50 or 60 kids were absent every day. You could understand why they stayed away: The school was chaos.

Twenty-two teachers had quit, the entire office staff had quit, and hundreds of kids had been suspended. The school was given a grade of F from the city's department of education.

"It was in a bad place," Rux says.

Rux decided he needed to create incentives for kids to come to school.

A Sequester Is A 'Jelly-Like Mass,' And Other Notes On Fiscal-Cliff Jargon

David Kestenbaum — Sat, 17 Nov 2012 12:48:00 +0000

Here's a quick rundown on three of the most impenetrable terms related to the fiscal cliff. For more, see our post, The Fiscal Cliff In Three And A Half Graphics.

Why Coke Cost A Nickel For 70 Years

David Kestenbaum — Thu, 15 Nov 2012 09:04:00 +0000
Prices change; that's fundamental to how economies work.
And yet: In 1886, a bottle of Coke cost a nickel. It was also a nickel in 1900, 1915 and 1930. In fact, 70 years after the first Coke was sold, you could still buy a bottle for a nickel.
Three wars, the Great Depression, hundreds of competitors — none of it made any difference for the price of Coke. Why not?
In 1899, two lawyers paid a visit to the president of Coca-Cola. At the time, Coke was sold at soda fountains. But the lawyers were interested in this new idea: selling drinks in bottles.

A Hidden Safety Net, Made Visible By The Storm

David Kestenbaum — Tue, 06 Nov 2012 21:16:00 +0000
The Fairway supermarket in Red Hook, Brooklyn is the sort of place New Yorkers, accustomed to cramped spaces, talk about with amazement. It's an actual, full-size supermarket, right at the edge of New York Harbor.
It's a beautiful setting, but one that was diastrous last week, when Sandy came through.
"There were five feet of water throughout the store," Bill Sanford, the president of the company told me. "Everything was submerged."
They had to throw out dumpsters worth of food.

Energy Independence Wouldn't Make Gasoline Any Cheaper

David Kestenbaum — Fri, 26 Oct 2012 08:19:00 +0000
Just about every president since Richard Nixon has set energy independence as a goal, and both major candidates have brought it up the current campaign.
As it turns out, there is a place, not so far from here, that has achieved energy independence: Canada.
Canada produces far more oil than it consumes. They're not dependent on the Middle East! They've got all the oil they need!
I called Stephen Gordon, a professor of economics at Université Laval in Quebec City, to ask him about what energy independence means for his nation.
"It's not really that big a deal," he told me.
Really?

The Accountant Who Changed The World

David Kestenbaum — Thu, 04 Oct 2012 19:16:00 +0000
The story of the birth of accounting begins with numbers. In the 1400s, much of Europe was still using Roman numerals, and finding it really hard to easily add or subtract. (Try adding MCVI to XCIV.)
But fortunately, Arabic numerals (1, 2, 3, 4, etc.) started catching on, and with those numbers, merchants in Venice developed a revolutionary system we now call "double-entry" bookkeeping. This is how it works:
Every transaction gets entered twice in financial records.

They Won't Tell You Their Names, But They'll Help You Hide Your Money

David Kestenbaum — Fri, 28 Sep 2012 07:25:00 +0000
We set up our shell companies. Then we wondered: What do people actually do with shell companies?
One popular use, it turns out, is what professionals call "asset protection." Ordinary people call this "hiding money."
Maybe you're a surgeon worried a patient might sue you and take everything you have.

Insurance Companies Send Out Rebate Checks; Economists Get Nervous

David Kestenbaum — Thu, 20 Sep 2012 07:32:00 +0000
Nearly 13 million Americans have gotten, or will soon be getting, rebates from their health insurance companies. This is because of a provision in the Affordable Care Act (aka Obamacare) that's supposed to force insurance companies to run better.
But while the idea of getting a check from your health insurance company may sound great, some economists worry this rule could actually make health insurance more expensive.
The provision requires that health insurance companies spend at least 80 percent of premiums on health care.

Even If You're All-Powerful, It's Hard To Fix The Economy

David Kestenbaum — Fri, 14 Sep 2012 18:37:00 +0000
The world inside Mark Zandi's computer model feels pretty familiar. It's full of people who are worried about the economy. Their homes are being foreclosed on. They're paying more for gas. Something like 13 million of them can't find jobs.
Zandi is the chief economist at Moody's Analytics, and he built his model to predict what's going to happen in the real world.

A Father Of High-Speed Trading Thinks We Should Slow Down

David Kestenbaum — Mon, 27 Aug 2012 19:42:00 +0000
First, three stories from Thomas Peterffy's life as a trader:
Story #1:
When Peterffy was a kid growing up in communist Hungary in the 1950s his buddy went to Austria and brought back a pack of Juicy Fruit gum. Peterffy bought the pack, broke the sticks of gum up into little pieces, and sold them at a profit. The principal at his school was not amused. "Where's your communist conscience?" the principal asked.
Not surprisingly, given story #1, Peterffy moved to the U.S.

Losing With LIBOR: One Trader's Story

David Kestenbaum — Fri, 27 Jul 2012 20:24:00 +0000
We've been talking a lot lately about what's been dubbed the "LIBOR rate fixing scandal," where some of the biggest banks in the world have been accused of manipulating a key global interest rate.
If those words — "manipulation of a key interest rate" — leave you wondering what the big deal is, and who would be harmed, meet Dan Sulli

The Farmer And The Commerce Clause

David Kestenbaum — Thu, 05 Jul 2012 07:06:00 +0000
Last week's Supreme Court ruling on the health care law might have made Roscoe Filburn a little happier.
Filburn was an Ohio dairy farmer who had a beef with the federal government, one he took to the U.S. Supreme Court in 1942. He lost.
The dispute was simple: The federal government said Filburn had grown too much wheat.

Nobel Laureate: 'I've Been Wrong So Often, I Don't Find It Extraordinary At All'

David Kestenbaum — Tue, 08 May 2012 17:30:00 +0000
I recently had a brief conversation with Ronald Coase.
"I'm 101 at the moment," he told me. "I get older by the minute."
Coase is a legend in economics. He won the Nobel prize. He has a theorem named after him.

When Should A Country Abandon Its Own Money?

David Kestenbaum — Fri, 27 Apr 2012 06:49:00 +0000
Iceland is a tiny nation in a big financial mess. It's still recovering from the aftermath of the 2008 global economic crisis, which caused a domestic banking collapse.
Its currency, the krona, is also in really bad shape. That's led Icelanders to pose an existential currency question: Should they abandon the krona?
One key problem is size.

From Abe Lincoln To Donald Duck: History Of The Income Tax

David Kestenbaum — Thu, 22 Mar 2012 08:56:00 +0000

http://www.youtube.com/watch?v=00u6qUelp6c

China's Giant Pool Of Dollars

David Kestenbaum and Jacob Goldstein — Thu, 15 Mar 2012 04:01:00 +0000
China's central bank is sitting on a giant pool of U.S. dollars. It's the world's biggest holder of foreign reserves, worth over $3 trillion at last count.
All that money has piled up because every year, China exports more than it imports; it runs a trade surplus.
There are lots of reasons for China's trade surplus. In the past few decades, China has built an amazing manufacturing ecosystem.

From Cell Phones To Cigarettes: The Long Arm Of The Chinese Government

David Kestenbaum and Jacob Goldstein — Mon, 27 Feb 2012 20:38:00 +0000
The streets of Beijing and Shanghai feel like an entrepreneurial free-for-all, full of mom-and-pop stores and street vendors selling snacks and cheap toys.
But when you pull back the curtain, you see a different picture: a country where the government still controls huge swaths of the economy.
When you're in China, there's a good chance you're doing business with the government every time you:
make a call on your cellphone (the government owns the country's biggest cellphone network)
buy gas for your car (the two biggest oil companies are owned by the governm

Is China An Economic Miracle, Or A Bubble Waiting To Pop?

David Kestenbaum and Jacob Goldstein — Thu, 16 Feb 2012 17:00:00 +0000
China's economy sailed through the financial crisis unscathed — at least in the short run.
When the global crisis hit, the country's government-owned banks started lending out lots more money. The money came largely from the savings accounts of ordinary Chinese people.

The Secret Document That Transformed China

David Kestenbaum and Jacob Goldstein — Fri, 20 Jan 2012 16:55:00 +0000
In 1978, the farmers in a small Chinese village called Xiaogang gathered in a mud hut to sign a secret contract. They thought it might get them executed. Instead, it wound up transforming China's economy in ways that are still reverberating today.
The contract was so risky — and such a big deal — because it was created at the height of communism in China. Everyone worked on the village's collective farm; there was no personal property.
"Back then, even one straw belonged to the group," says Yen Jingchang, who was a farmer in Xiaogang in 1978.

People Want More Coins, That's A Good Sign For The Economy

David Kestenbaum — Mon, 09 Jan 2012 21:01:00 +0000
All the instability in the global economy this year has been good for the United States Mint.

Why A New York Cheese Buyer Hangs On The Euro's Fate

David Kestenbaum — Mon, 21 Nov 2011 05:01:00 +0000
Among the chilly aisles at Murray's Cheese Shop in Manhattan, the entire continent of Europe is represented. Something like 60 percent of the cheese in Murray's comes from the continent, according to Aaron Foster, a cheese buyer at the store.
For all the talk about how the European debt crisis is effecting the global economy, it can be hard to connect it with daily life here in the U.S. Here's one link: Aaron Foster's bonus depends on how cheaply he can buy cheese from Europe.

Leaving The Euro Is Hard To Do

David Kestenbaum — Thu, 10 Nov 2011 19:44:00 +0000
"I don't want the euro to fall apart," says Simon Wolfson.
Lots of people don't want the euro to fall apart. But Wolfson feels compelled to say so because he's offering a $400,000 prize for figuring out how to dismantle the euro.
Wolfson — aka Lord Wolfson of Aspley Guise — is the CEO of a big retailer called NEXT. He has argued against the UK joining the euro, but his company has stores all around the euro zone.
"This is a life boat in case the euro breaks up," he says.