Graffiti near Canal Street.

tmonkey/Planet Money Flickr group

 

Today on Planet Money:

-- Economist Russ Roberts doesn't support president-elect Barack Obama's fiscal stimulus package. He talks about what it was like having the president-elect pitch the plan on his home turf, George Mason University.

-- Stanford professor John Taylor of the Taylor Rule thinks the government made some major mistakes in dealing with the current financial crisis. And he isn't shy about talking about them.

Bonus: Read Professor Taylor's analysis of what the government got wrong.

Download the podcast; or subscribe. Intro music: Young Jeezy's "Put On." Find us: Twitter/ Facebook/ Flickr.

Where is all the U.S. currency?

According to the Federal Reserve the total amount of U.S. currency out there is about $900 billion. We're talking real currency, dollar bills, $100's, $20's etc.

That works out to about $3,000 per person. Ok now open your wallet, how much do you have? Not a lot, right? So where is all the cash?

Don't look it up on the internet, that's no fun. Just think about it. We'll have the answer on Morning Edition and a longer extended-dance-remix on the podcast for Friday.

This week --as happens every month-- we get a confusing stream of data.

Yesterday, the payroll company ADP gave its Employment Report, based on the actual paychecks going out for 400,000 of their clients. They recently revised their statistical methods, after years of folks mocking them for generally being pretty lousy at predicting what the overall national numbers would show. Let's hope so. This week, they're report said that nearly 700,000 people lost jobs last month.

Tomorrow, the big numbers come out. The Bureau of Labor Statistics will give us a far more detailed and--according to most--more accurate picture of US employment. We'll learn how many people are getting paychecks and what the unemployment percentage is. The reports are quite accessible and fascinating to read. You can get a sense of how different occupations, regions, minority groups are doing in the economy.

Sixteen watches, including diamond-encrusted timepieces from Tiffany and Cartier. Four diamond brooches. Two sets of cuff links. An emerald ring. These are a few of Bernard L. Madoff's favorite things.

It sounds like a bold move. But Madoff's lawyer argued that a lot of the items were no more than $25 cuff links and $200 mittens.

$200 mittens? Really?

An online search came up empty -- Ebay has only one pair of mittens approaching that in value. And there are a few heavy duty mountaineering mittens worth almost that much.

So I had to work the phones in search of $200 mittens. My first call was to the glove counter at Bergdorf Goodman, seller of expensive soft accessories. Nothing. They have no mittens. Next call was to Hermes on Madison, right around the corner from Madoff's pad? Nope. Ok how about Barney's? Close but not $200. A search for "Prada Mittens" was frustrating when Google kept directing me to some girl's blog about her imaginary kittens Prada and Mittens. And a call to the Prada store reveled that they only sell gloves, no mittens.

Then my wife and luxury goods consultant, Robin, had a brainstorm. Why not try Bon Point, "the most expensive store ever."
It's sure not cheap to dress your 2-year-old like a French Canadian Fur Trapper circa 1730.

A call to Bon Point revealed --yes-- they do have $200 mittens, sort of. The sales consultant said they sell children's mittens for $125, which reflects a 50% off discount. So I think those can be considered $250 mittens. Maybe its not fair to affix the retail price on these mittens, because anyone can walk in off the street and buy them for less. Then again, the reason luxury goods shops have to offer such steep discounts is because the economy has tanked, and one small reason the economy has tanked is Bernard Madoff. So if there was ever someone who shouldn't get the benefit of the discounted mitten doubt, it's Bernie.

-- Mike Pesca

A new retail strategy.

Simon Johnson

 

Economist Simon Johnson of Baseline Scenario passed along this ad, noting the title, "Deflation Special."

I had €1.57 left over from trip to visit a mate of mine who was studying in Brescia, Northern Italy.

Had I changed it back as soon as I returned to Edinburgh I'd have £1.16, however I was too lazy. This has proven to be a fiscally prudent move, typical of my thrifty Scottish upbringing. Due to the falling pound it is now worth £1.73, meaning I'm nearly 50% up. Cause for celebration I'm sure you'll agree.

Coupled with falling house prices across the UK, this has led me to believe that by the end of 2009, my €1.57 should buy me a nice flat in the center of Edinburgh, and maybe some nice curtains.

You get a sense for things when you look at one of the surveys the labor department uses. Here's one of many questions it asks:

Thomas Beckett suggests 3 as an economic indicator, as in the number of U.S. states that suffered a crash in their electronic unemployment claims systems.

And Brent passes along this list from the Twitter feed The Media is Dying -- it's the top 10 messiest layoffs of 2008.

Lighting up in southern Algeria.

Geoff Porter, Eurasia Group

 

Today on Planet Money:

If you're an American and your gas stove won't light, you start by calling a repair company or checking to make sure you paid the bill. If you're a European, you might start by blaming Russia.

Russia's state-owned Gazprom appears to have cut the supply of gas to neighbors from Romania to Austria. It's the second time in recent years that Russia has turned off the spigots. Meanwhile, in Africa, Nigeria is burning off 20 billion cubic meters of natural gas a year -- because it has no way to ship the stuff to market.

As Eurasia Group analyst Geoff Porter tells it, some in Europe would like to build a pipeline from Nigeria through Niger and Algeria, then across the Mediterranean to France. It's a bit of a pipe dream, but one player has shown some interest in the region -- Russia's Gazprom.

After the jump, more photos from Porter, plus a map from Eurasia Group.

Download the podcast; or subscribe. Intro music: Mates of States "Get Better." Find us: Twitter/ Facebook/ Flickr.

Click for full-size map.

Eurasia Group

 

Porter says a pipeline through here might as well have a bull's-eye on it.

Geoff Porter, Eurasia Group

 

Downtown Tam, Algeria.

Geoff Porter, Eurasia Group

 

A local man finds a snake.

Geoff Porter, Eurasia Group

 

Say you don't buy that new car, then maybe the auto manufacturers have to lay someone off, and that someone then can't go hiring your company to do whatever it does. And on and on...

The idea is called the Paradox of Thrift. Paul Krugman, the Nobel Laureate and New York Times columnist, talks about it here.

Some free-market types disagree, arguing "Consumers Don't Cause Recessions." From that link: "My friend Bill Anderson actually derives sustenance from his hatred of Paul Krugman; at lunch one time, Bill skipped a sandwich and instead just bought a New York Times."

It's worth nothing that this is one report by one player. After the jump, one take by one economist, Ian Shepherdson of High Frequency Economics, who says he's waiting for official numbers but meanwhile uses words like "shockingly awful."

Bonus: Jobless claims swamp computer systems.

The ADP report shows private employment down 693K in December, far worse than the consensus, -495K.

This is shockingly awful. If the recent relationship between the ADP numbers (after their recent revisions) and the official payroll data holds, then we should expect a number of about -700K on Friday, the biggest drop in 59 years. The pre-ADP consensus was that payrolls fell 500K. As always, average experience can be misleading, and the error between ADP and payrolls has varied from -125K to +179K over the past six months. Even the best case here, though,implies a payroll number of -568K. The bulk of the deterioration in ADP jobs is in small and medium-sized firms, though losses at big firms are increasing too. Service sector losses are rising fastest. We await Friday with trepidation.

Seen in Torino, Italy.

Peter Hauser

 

Peter and Jill write from Torino, Italy:

During holiday dinner conversations the crisis of the economy was of course a topic, and while one friend (who works for FIAT) told us about the problems in his sector of the economy, another friend told us the opposite.

The man is working for a famous chocolate maker . . . and he told us that since the crisis started sales are up 5-6%. Apparently it's a well known fact in the chocolate industry, that when times are bad, people tend to comfort their souls with affordable treats.

I know the feeling. I've got a bowl of candy sitting on my desk right now.

I work in the field of water and wastewater infrastructure construction, repair, and maintenance in Minnesota.

Concrete products (pipe, precast manholes, etc) here are 50% of their 2007 costs. HALF PRICE. Other material (plastic and ductile iron pipe, for example) costs are falling too. This is due to lack of demand and the manufacturers are trying to cover their overhead. There is the potential for a bargain if water and sewer is part of the next bailo- er, stimulus package.

European countries say Russia's Gazprom turned off gas supply.

ADP says U.S. companies cut 693,000 jobs in December.

Obama pushes states to cover more unemployed.

Hill aide: Congressional Budget Office to project $1.2 trillion deficit in 2009.

Asia stocks rise after Obama indicates stimulus spending to last for years.

Seen at a Brooklyn hot dog shop.

Bronwen Stine

 

Today on Planet Money:

-- Pam Olson in Centerville, Ohio, checks in with a Planet Money indicator.

-- Roger Lowenstein's While America Aged sees doom in the pension system. Mike Pesca reads it for you.

-- Economist House Call! Renee Edlund, 26 and living in Houston, takes a hard look at the job market with help from economist Simon Johnson of Baseline Scenario.

Download the podcast; or subscribe. Intro music: Alphabeat's "Fantastic Six." Find us: Twitter/ Facebook/ Flickr.