Friday, December 30, 2016

Manufacturers Face Difficulty Predicting Popularity of New Toys



Over the years, there have been a variety of "must-have" toys that hit the shelves in the month or two leading up to Christmas. From Chatty Cathy in 1960 to Tickle Me Elmo in 1996 and everything in between, there have been so many toys that had booms in popularity around the holidays. Of course, because of the surges in popularity, those toys would often sell out quickly, and parents who wanted to find the toy for their child would have to pay much higher prices to scalpers. Some might ask themselves why the toy company didn't just manufacture more of them to begin with, but as Shan Li discusses in her L.A. Times article, the answer is not so simple.

First of all, toy manufacturers have no way of knowing which toys will be the most popular. Since only a couple of toys each year receive huge popularity, if they produced enough of every toy in their catalog to meet the demand that a must-have toy faces, then they would not make any money and would end up with warehouses full of less popular toys that won't sell. Still, some manufacturers take a chance and make an educated guess as to which toys will be most popular. Sometimes that pays off in boosted profits, and other times the company has massive losses.

There's no way to predict with 100% certainty what choices the average shopper will make during the holiday season. Many people believed that the popular item this season would be the Nintendo Wii U, a modern gaming system, when in reality, Nintendo's retro NES Classic Edition is the game console garnering the most demand. It seems that the best thing a company can do is keep their eyes open, and when they see that demand is spiking for a certain toy, try to ramp up production quickly enough to meet the demand. Some companies even keep extra factories "on retainer" during the holiday season to help make the ramping up process more efficient. Ramping up doesn't work out for every toy, however.

For any toy, it can be difficult to suddenly increase production enough to meet the spike in demand. It is most difficult when the toy involves any sort of electronic components, Manufacturing a gaming system is much more complex and time-consuming than manufacturing a stuffed animal, so if that "must-have" item of the year is an electronic device, it is more likely to stay at limited quantities, even if the manufacturers try to increase production. A few years ago, the popular toy around the holidays was the "Pillow Pet." However, because it didn't have any electronic components, the manufacturers were able to increase production to meet demand without having to raise prices. Even though the stores caught on early enough to try to ramp up production, the electronic components of this year's "Hatchimal" make it difficult to quickly produce.

While all of that is true, sometimes the decreased stock for certain products is done on purpose by stores and manufacturers alike. When shoppers are searching everywhere for the toy, other shoppers see that and get interested in the toy because of how interested the shoppers seem. High demand for a limited commodity begets even more demand by people wondering why others seem to want it so much. So, sometimes they will keep a supply of the product in storage, to limit the amount on the market and drive up demand and prices. Many companies even release the extra supply just before the holidays to capitalize on last-minute shoppers still looking for the right toy who are willing to pay anything they need to in order to get it.

They never know when interest will spike, so companies will often keep producing certain toys even after the popularity has waned. Like with the Bakugan, sometimes a toy will see a sudden surge in popularity for no apparent reason. Sometimes people will see it in stores and be interested; other times the toy will have appeared on a television show and people get nostalgic. There is no one factor that determines a product's popularity, even after it has already been popular, so in much the same way, shoppers can't expect manufacturers to know ahead of time which toys they should produce the most of. In general, it's a flip of the coin, and only the luckiest manufacturers succeed in the end.

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Friday, December 9, 2016

Number of Airline Passengers Expected to Increase by 3.5% from Last Year's Holiday Season



The holidays are a time when many people travel across the country to visit their family and friends and celebrate. Because of that, it can always be expected that airlines will be very busy in December, almost as busy as during the summer months when people are traveling on vacation. This year especially, analysts expect overcrowding at airports to be at an all-time high. In fact, according to Hugo Martin's L.A. Times article, the number of holiday fliers is expected to increase this year by 3.5%.

In 2015, over 70 million people took US-based flights in the month of December. This year, it is expected that over 45 million people will be flying during the holiday season that makes up the 21 days starting on December 16th. According to a trade group called Airlines for America, the increase in demand will likely force airlines to either increase the number of people per flight or the number of flights per day. If they don't, they will be missing out on potential business and will be upsetting loyal customers, which could hurt their bottom line in the long-run.

Just as the increase in demand is affected by the upcoming holidays, so too is a notable decrease in the number of fliers on certain days. As can be expected, because people are flying in order to spend the holidays with loved ones, they won't want to fly on the holidays themselves. Therefore, it is predicted that the days with the least demand will be Christmas Eve, New Year's Eve, and their corresponding days. Similarly, in order to get to their destinations in time for the holidays with the least amount of missed time at work or school, it is expected that the largest number of people will choose to travel on December 22nd or December 23rd.

Airlines for America also released estimates regarding which airlines will likely be the most crowded on those days. The more populous the city, the more potential fliers it contains, so it makes sense that the airports with the largest number of passengers should be: Hartsfield-Jackson Atlanta International Airport, Chicago O’Hare International Airport, Los Angeles International Airport and Dallas/Fort Worth International Airport. So, if you're planning on flying for the holidays and you don't want to get caught up in the chaos that will be the most crowded year in recorded history, you should avoid those popular dates and locations at all costs.

Low airfare and an improving economy are the reasons that economists choose to explain the spike in demand for air travel. While demand usually increases anyway, simply because the population continuously increases, this year's significant boost is cause for a stir among airlines. They are doing everything they can to meet the demand, which includes a 3.9% increase in the number of airplane seats sold per day during the holiday season. Around 99,000 more passengers per day will be  added, and to do that, airlines will have to make many technical and operational changes. Will they be successful at keeping up with the higher number of passengers? It's doubtful, but they might pull it off. 

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Friday, December 2, 2016

Mobile Shopping Increasingly Becoming an Integral Component of Black Friday



Black Friday has become a cultural phenomenon throughout the US. When it first started in 1952, it was just a day to start your holiday shopping, when stores discounted their products so that they could begin making a profit for the year and be "in the black." As time went on, the deals got better and better until it got to a point that people were waiting for hours in the middle of the night on Thanksgiving to get a chance at the best discounts once the stores opened. Over the past few years, however, stores have started to offer the same deals online as in the stores, which has reduced the number of Black Friday shoppers. Samantha Masunaga, in her L.A. Times article, discusses the shift to mobile shopping and some of the reasons why Black Friday continues, even with such decreased demand.

This year, it is projected that the e-commerce for the holiday season will grow to a valuation of over $117 billion. While Cyber Monday once represented the day when deal-hunters could get discounts on their online shopping, but now that so much of the Black Friday Shopping can be done online, many people consider Cyber Monday to be obsolete. It makes more sense to get their deals over the holiday than to find an hour or two in the middle of a busy workday to find the best deals. Retailers are seeing the difference: on Thanksgiving night, which has in itself begun to replace Black Friday, sales were 13.6% higher than last year, a total of nearly $1.2 billion.

Not only are people taking advantage of online deals rather than going into the stores, a surprising number of shoppers are doing so via mobile devices instead of computers. Nearly $550 million of the $1.2 billion total on Thanksgiving night came from mobile purchases. That's a 58.6% increase from last year's mobile sales. While mobile shopping is convenient, some people find it to be too much of a hassle and prefer using a computer, at least to complete their transactions. Not enough online retailers have improved their mobile layout, which has led to a projection that while 53% of e-commerce visits will happen on mobile devices, only 34% of sales will happen on apps.

Many customers find the checkout process to be too time-consuming or confusing on mobile apps for some businesses, and opt to go onto a computer or choose an easy-to-understand platform like Amazon to make their purchases. If online retailers want to stay competitive, they will have to improve their platforms, potentially by integrating easier payment systems like PayPal, Android Pay, or Apple Pay, rather than making customers try to input credit card information on the small screen of their smartphone. Target and Wal-Mart, among other companies, have noticed improvements in their mobile performance over the past few years. After fixing its online platforms and making it easier to checkout, Target even found that mobile sales over the weekend had increased by 200% from last year.

While mobile apps and online platforms are great for the tech-savvy consumer, many customers prefer the emotional connection to Black Friday that they get by physically going to the late-night sales. Some shoppers don't want to do online shopping because they would prefer to see the product up close and examine it before buying. Other people just enjoy the cultural experience of rushing through the store, hunting for deals. Whatever the reason, even if Black Friday becomes a mainly online phenomenon, it is very likely that there will still be in-store experiences available. Black Friday is a tradition for many shoppers, and especially since many people do their bargain-hunting online, crowding is less of an issue, many shoppers expect to be able to keep up the practice for many years to come.

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Friday, November 18, 2016

Study by Adobe Systems: Holiday Deals and Discounts of 2016



With Thanksgiving quickly approaching, many people are already starting to plan for the holiday shopping that comes right around the corner. Late November is often the best time to shop for the holidays if you're looking for great deals on many items. However, this rule often only applies to general items, not specialty items that might sell out quickly. Jonnelle Marte, in her L.A. Times article, describes the results of a study performed by Adobe systems, which tells shoppers which dates are potentially the best for deals on toys, electronics, clothing, and jewelry.

Just a few years ago, Black Friday started early on the morning following Thanksgiving, when many people were off of work and had the time to go wait in hours-long lines to get a deal on the latest products. More recently, though, Black Friday has undergone a shift to start earlier and earlier, to the extent that some stores start their "Black Friday" sales as early as 6 PM on Thanksgiving Day itself. Some items have their best deals on Black Friday, but not as many as might be expected.

Electronics are one category of items that receive the largest markdowns on Thanksgiving Day, according to Adobe's research. From flat-screen televisions to cell phones and computers, Thanksgiving is the day to get those deals. When compared to the average prices on the electronics in October, it was found that televisions are expected to be discounted by an average of 20% and tablet computers will have an average discount of 18%. Those deals won't last forever, of course, given that the stores only have a limited supply of each product, but for the deal-hunters that get to their holiday shopping extra early, they could find themselves snagging quite the discount.

Another type of item that has its greatest discount on Thanksgiving is jewelry. Adobe's study found that on average, jewelry will be discounted approximately 10%. The research also found that many people push off making those purchases until later on, closer to the holidays, often because they are searching for the "perfect" piece of jewelry, regardless of the jewelry's brand. Because they search for a certain style and higher quality of jewelry, they often miss out on the deals, but because they get the best piece they can, many customers don't mind missing out on the 10% savings.

Most other items have their greatest deals on days other than Thanksgiving/ Black Friday. For example, clothing and other apparel often have the greatest discounts on November 22nd, or the Tuesday before Thanksgiving. Retailers often start their discounts on clothing early, because it's not an item in major demand. Most people are more appreciative if they get a new electronic device on the holidays, not clothing, so the stores have to do something extra to get the additional revenue that has become expected during holiday times. In fact, some everyday items, like socks, will sometimes be marked down the most significantly right after the holidays are over.

As for toys, Adobe's research showed that the best day for deals would be Cyber Monday, which is the Monday after Thanksgiving. Cyber Monday is known for its online deals, but it is expected that most toys, especially generic ones, will be discounted an average of 13%. Toys are a more tricky item, especially for parents, because if they wait for the best deal on certain in-demand items, they may end up missing out on the item altogether, if te store's stock runs out. So, in general, Cyber Monday can offer the best deals on toys, as long as you're not focused on getting a particular toy. If you are looking for the latest Hatchimal or Lego set, you might want to pay a little bit extra to guarantee you get it.

Overall, the best deals seem to be those involving electronics that are offered on Thanksgiving Day. Every other deal seems to be a good one, but only to the customer who doesn't care about what specific product they are getting. For electronics, especially televisions, many customers don't care about the specific brand, so any discount on a large, flat-screen television is a good thing. When it comes to pieces of jewelry, people become pickier and look for quality pieces that won't necessarily offer the better deal. The above suggestions will benefit people searching for general products, but if a customer is looking for a very specific product, they might just have to bite the bullet and spend full price on it to help guarantee that they get exactly what they want.

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Friday, November 4, 2016

SolarCity Releases New Type of Solar Panels in Response to Decreasing Growth in the Industry



One of the biggest complaints that homeowners have against solar panels is that they "look ugly." Homeowners claim that the normal glass and metal panels clash with the look of their house and negatively affect the feel of the neighborhood. Fortunately for them, Elon Musk, the chairman of SolarCity, has revealed a whole new line of solar panels that look more like regular roofing tiles. Ivan Penn and Russ Mitchell, in their L.A. Times article, discuss what this innovation means for consumers and how it ties into all of the other technology being designed by Musk's companies.

Not only do these re-designed solar panels address the "ugliness" issue, but Musk also hopes that these panels will provide homeowners with more of an incentive to invest in one of Tesla's wall-mounted batteries. When the sun is shining, the tiles provide energy for current use and charge up the battery. When the sun isn't shining, the charge in the battery can be used to provide energy for the house. Eventually, he hopes that every home will have its own personal "alternative energy ecosystem" made up of Tesla and SolarCity devices. His goal is for green-minded homeowners to mix electric vehicles, charging stations, solar rooftops, and wall-mounted batteries to create the perfect blend for an energy-efficient home. Realistically, all of those devices are very pricey, so the components are sold separately, but Musk makes it clear that they work best as a total system.

Analysts believe that SolarCity's big announcement regarding the new-and-improved solar panels was due to the slowing growth of Southern California's solar industry. Where solar panel sales rose by 66% in the first three quarters of 2015 compared to the previous year, sales only rose by 12% in the same period of 2016. They believe the slowing growth is caused by the dwindling number of early adopters for the technology. The hope is that the new style of solar panels and the introduction of Tesla's new Powerwall home electricity storage batteries will help them quickly move on to the early majority segment of potential customers. Additionally, the slowing growth could be due to changes in state and local regulations. Rules are changing regarding how solar companies can sell their energy to utility companies, and tax credits for green energy are running out, so it becomes a less affordable proposition by the day.

Still, overall, analysts believe that the solar industry will continue expanding through the end of 2016. Prices on solar panels and wall-mount batteries are continuously going down, which helps those on the fence to make a decision. It is believed that overall sales in the solar industry will reach $38 billion by 2025, from $3 billion in 2016. While utility companies and local regulators have been targeting solar providers, making their costs rise, the solar companies have responded by partnering with electricity storage companies. It is sensible that a package of solar energy with a way to store it can be optimal based on customer demands. But, Musk already has a head-start on everyone else, since Tesla and SolarCity already make up their own strategic alliance. If other companies want to catch up, they will have to figure out a way to cut costs significantly, or accept lower profits until they have been able to get a substantial market share.

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Friday, October 28, 2016

Twitter Inc. to Shut Down Vine and Lay Off Hundreds of Employees



Five years ago, Facebook and Twitter got into a battle over who would ultimately purchase Instagram. When the more-powerful Facebook ultimately purchased Instagram, Twitter took a risk and went for the unheard-of Vine app. In the short-run, Vine was a far cheaper investment and ended up with millions of users. However, now that live video streaming seems to be the way of the future. According to Paresh Dave, in his L.A. Times article, Twitter is being forced to stop all future development on Vine and cut approximately 9% of its workforce to make ends meet as their profits continue to decrease.

Vine is an app that enables users, especially those with comedic talent, to share short videos, limited to approximately 6 seconds. Many people have gained viral fame due to Vine, including comedians like Thomas Sanders and singers like Shawn Mendes. Unfortunately, even though Vine gained massive popularity, it only lasted a few years before users and advertisers realized that YouTube and other platforms would be more lucrative. As one analyst stated, there are too many alternatives for video advertising to have a successful app that limits clips to 6 seconds.

Vine isn't the only thing Twitter Inc. is getting rid of, though. In order to save around $100 million per year, even after severance pay, Twitter plans to lay off approximately 350 of its 3,900 employees. Unfortunately, analysts don;t believe that the cuts will be enough in the long run. While Twitter's revenue is up 8% from last year, in part due to advertisement sales, it is also showing a loss of over $100 million per quarter. Twitter executives seem confident that the addition of live-streaming capabilities will enable the company to be more successful in the future, but that remains to be seen.

One of the main problems that analysts have pointed out regarding Twitter Inc.'s business is that users are too limited. On Twitter.com, posts are limited to 140 characters, and on Vine, videos were limited to 6 seconds. Users don't like limits, especially when they are so small. At least on Snapchat, videos have a slightly longer 10-second limit, nearly double that of Vine. There has been some talk in recent years of Twitter raising their character limits, but as of yet, that has not come to fruition. Logically, longer messages and longer videos would have more space for advertisement, so if Twitter wants to stay competitive, it may have to adapt to the longer format used by most platforms.

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Friday, October 21, 2016

Orbital ATK's Successful Rocket Launch Enables it to Supply the ISS Again



The International Space Station (ISS) currently houses three astronauts: one each from Russia, Japan, and the United States. Those astronauts live and do research in the floating structure 250 miles above the Earth, and as such, need a steady supply of food and equipment to stay alive. Two years ago, on October 28, 2014, an unmanned Antares rocket from a company called Orbital ATK exploded on takeoff, destroying the rocket, launch pad, and the entire shipment of supplies. Fortunately, Orbital ATK seems to be making a return to the market. Just this week, as detailed in an article by the Associated Press of the L.A. Times, a newly rebuilt Antares rocket took flight, carrying over 5,000 pounds of food and other supplies for the astronauts on the ISS.

The rocket's flight was in view for watchers throughout the East Coast, as far north as Boston and as far south as Charleston.  Besides the fact that the renovations and repairs cost over $15 million, the engineers of Orbital ATK were very relieved when the rocket launch was successful. because it meant that they could get back into the business of supplying the ISS. Over the past two years, since Orbital ATK was out of commission, NASA's sole source of supplies was SpaceX. When the American space program first ended in 2011, government-owned shuttles were forced into retirement, which gave SpaceX and Orbital ATK room to take over.

Orbital ATK was doubtful about its ability to launch over the past few weeks, due mainly to the hurricane weather in the region, but the success of their rocket has brought the company back on track. Analysts expect that the next space-related venture to be commercialized will be flights to transport crew members of the ISS. NASA also hopes to get astronauts to Mars by the 2030s, which would mean the next goal for companies like SpaceX would be commercialized transport to Mars and other planets in the future. Orbital ATK's newly regained ability to send rockets into space has granted the company a spot in the competition for control of a future commercialized form of interplanetary travel.

The payload of supplies released by the Antares rocket, stored in a Cygnus capsule, is currently orbiting the Earth, waiting a few days before it will break free of the orbit and make it all the way to the space station. The reason for the delay is that a new crew of three astronauts is set to launch from Kazakhstan this week, and NASA wants to give them a little bit of time to get settled on the ISS before they have to immediately begin unpacking supplies and beginning the experiments. Especially because their last rocket exploded before it ever left the ground, many people were wary that a similar outcome could be expected this time. The success of Orbital ATK's rocket speaks volumes for their position in the future market of commercialized space transportation.

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Friday, October 14, 2016

Workplace by Facebook: The Newest Social Media Platform for Businesses



Many businesses have Facebook pages where they do a lot of their social media marketing. In fact, Facebook's statistics show that they have over 50 million pages dedicated only to small businesses. Additionally, over 41% of small businesses in the U.S. operate on Facebook to some extent. In Facebook's latest attempt to draw more demand, the company has created a new platform targeted specifically at businesses, non-profits, and other organizations. As described in an article by the Associated Press of the L.A. Times, the new platform, called Workplace, has several distinct differences from Facebook's business uses.

While Facebook business pages have the option of producing advertisements and sponsored/ promoted posts, Workplace boast a complete absence of ads but makes up for it by charging its users a monthly fee. Sensibly, Facebook has committed to certain price ranges based on the number of active users. If active users number under 1,000, they charge $3 per user per month. For 1,000 to 10,000, the price is $2 per user per month, and for any number of active users above 10,000, the price will be only $1 per person per month.

For the last 18 months, Workplace (originally called Facebook at Work) was only available to select organizations by invitation. Now that it has begun to be released to the general public, Facebook hopes that demand will grow quickly. Workplace has some similarities to normal Facebook, but also seems to take some notes from LinkedIn, in that it has a news feed and the ability to build profiles and connect with coworkers and people in similar fields. In theory, Facebook believes that Workplace's set-up should be pretty easy for users to grasp since its layout is so similar to Facebook's.

Growth doesn't seem to be much of a concern for Workplace. Even under the invitation-only system, users more than doubled over the past six months, from approximately 450 businesses to over 1,000. In general, Workplace is a communication tool that helps "connect everyone." Its algorithms are different from Facebook, which means you should see more content that actually pertains to you. Additionally, the platform is supposed to be a great facilitator for group chats and video calls, which can help tie together the employees of even the largest companies. At this point, it's hard to tell whether Workplace will be the next big thing, but knowing Facebook, it is very likely to become popular sooner or later.

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Friday, October 7, 2016

Caltech Researchers Discover Deep-Level Earthquakes in the Mantle



For a very long time, seismologists (people who study earthquakes) believed that earthquakes could only happen in the Earth's crust layer, no more than 15 miles below the surface. A recent discovery by researchers at Caltech turned that assumption on its head. As Rong-Gong Lin II wrote in his L.A. Times article, it turns out that some earthquakes actually have the ability to travel deep under the surface, to the mantle level, which can multiply the quake's power many times.

Some of the earthquakes took place so far under the surface that the state-of-the-art sensors employed by the Caltech researchers barely sensed them, which explains why conventional seismometers have failed to pick up the signals in the past. Basically, what the researchers discovered is that the largest earthquakes are those that spent some time percolating in the mantle. One example was the 8.6 earthquake that happened in the middle of the Indian Ocean in 2012. At the time, science's understanding of how earthquakes work could not explain how an earthquake that large had happened.

If these greater-strength quakes were possible, areas around the Newport-Inglewood fault or the San Andreas fault could be at risk. Fortunately, the researchers have so far only found evidence of microquakes (2.0 or less) that originated in the deeper layers. It is possible that the deeper-level quakes are more spread out and don't usually join together, which could mean that they would only cause small microquakes. If a quake on the scale of magnitude 3 or 4 were to be detected in the mantle, concerns would likely be raised, but right now, researchers have asked for more time to study and learn more about the way earthquakes work.

Additionally, research performed in areas other than the Long Beach portion of the Newport-Inglewood fault line did not show nearly as much evidence of deep quakes. Some evidence points to liquids flowing up from the mantle in certain beachside areas, so that may contribute to Long Beach's increased risk for deep quakes. At the moment, there is no way to tell if deep-level quakes are as large a risk as they could be. Perhaps it is only an issue in Long Beach; maybe it's only an issue in cities that border the ocean. Only time and a lot more research will reveal the truth.

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Friday, September 30, 2016

Consumers Aren't as Enthusiastic About Self-Driving Cars as the Industry Would Hope



To the automobile industry, self-driving cars are the next big thing. On its own, the principle seems amazing. A consumer can sit down in a car, input a destination, and just relax until the journey is complete. There's no more need to stress out at the amount of traffic or worry about getting into an accident. Many of the self-driving cars even make it possible for the passengers to take a nap on long trips. While car producers and ride-sharing services believe that self-driving cars will be the most popular thing since sliced bread, according to Tracey Lien's L.A. Times article, consumers aren't as excited about the new technology.

 A recent study performed by Kelly Blue Book involved questions posed to a group of interviewees representative of the general American population, based on this year's census figures. The numbers gathered by the survey were surprising to the self-driving car industry, to say the least. Approximately 80% of participants in the survey don't want to give complete control to the car. They want to always have the ability to turn off the self-driving feature and drive manually. One of the biggest attractions of a self-driving car is that the passengers no longer have to go through the stress and tediousness that driving entails. However, the survey found that 62% of participants not only are willing to drive but actually enjoy the action of driving.

When asked about fully self-driving vehicles, which companies like Google and Uber have been working on developing, one-third of people said they would be completely unwilling to buy such a car. The lack of steering wheel and gas/brake pedals is unsettling for many drivers. Additionally, 62% of people responded that they would not want to live in a world where every vehicle was autonomous. Of the people surveyed, the youngest group (12- to 15-year-olds) were the most interested in a world full of autonomous cars, but even among them, 33% still were still doubtful.

Part of the reason that the people surveyed were against the concept of self-driving cars was that they don't know enough about the concept. Many worry about the science-fiction behind self-driving cars. So many movies have been made depicting smart vehicles as the first step along the path to global domination of machines over man. Even with all of the articles and advertisement about the benefits and drawbacks of self-driving vehicles, 25% knew nothing, 35% knew little, and 28% knew some about the topic. If automobile producers want to raise interest, they should focus on educating people about the facts of self-driving cars.

The most encouraging fact discovered by the survey is that the most participants showed interest in "Level 4" classification of self-driving cars. Under Kelly Blue Book's system, "Level 4" is a type of vehicle that has the ability to drive on its own, but can easily be taken over by a driver if they need to. Whenever the concept of a completely computer-controlled car was mentioned, however, participants reacted negatively. People tend to be nervous about new concepts, especially when it comes to new types of technology. A self-driving car is seen by the more hesitant consumers as a potentially dangerous new technology that may provide more risk than benefit. To address that significant portion of the market, the producers of the self-driving vehicles may need to focus on giving them more first-hand experience. Simply offering test drives could be enough to push wary buyers more onto the pro-autonomy end of the spectrum.

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Friday, September 16, 2016

Mobile Ordering Benefits Both Restaurants and Customers



Often, when you go to restaurant or coffee shop, you are plagued with the hassle of lines and long wait times. Wouldn't it be nice if you could just walk in and walk out minutes later with your order in hand? Fortunately, many restaurants have begun to introduce their own mobile applications that make the process easier for everyone. Samantha Bomkamp, in her L.A. Times article, describes some of the reasons why restaurants have embraced mobile apps and what benefits they can provide.

Mobile apps have the convenience factor that everyone wants. Instead of going into the store and waiting in a line behind a bunch of other people who may still need to decide on their order, you can open up the app on your way to the restaurant, decide what you want, place the order, and pay immediately. All you have to do is walk in and pick up your food, without even the need to stop to pay. Additionally, many fast food and coffee shops are revamping their service to include express lines for people who order online, thus shortening the wait times for everyone.

Pizza shops especially have been making mobile applications a large part of their business strategy. Because a significant portion of their business is already in the delivery sector, their apps have been developed to give customers many options and an easy interface to work with. That kind of app is easily transferable to the pick-up customers, many of whom prefer to tap a button than deal with having to describe their order over the phone. This year restaurants like Dominos and Taco Bell and even coffee shops like Starbucks and Dunkin' Donuts have started developing their own applications, making the already fast food even more convenient.

Research has found that, when technology can be used to place an order, the frequency of customer visits rises 6% and average spending goes up by 20%. Because the technology makes it easier to order efficiently, customers are more likely to come back to the restaurants in the future. Additionally, third-party apps like Eastman Egg, an app based out of Chicago that not only lets customers order food from nearby restaurants, but also tracks their location to let the restaurant know the optimal time to start preparing the food so that it will be ready as close as possible to the time the customer arrives. With single restaurants, the app has been found to work wonders but has some issues with large chains like Starbucks that have multiple locations. One way or another, it seems that mobile apps are taking over the restaurant industry, and it's speeding up the process for everyone.

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Friday, September 2, 2016

Prices Generally Unaffected by Increased Competition in the Pharmaceutical Industry



The laws of economics state that price is inversely proportional to competition. The more competition there is in an industry, the more options a potential customer has, which means the competitors have to lower their prices to draw in the customers. This phenomenon occurs especially in situations where the products being sold by different companies are similar enough to be interchangeable. For some reason, as investigated in Melody Peterson's L.A. Times article, that doesn't seem to be happening with pharmaceutical prices, even when there are many competitors.

To some extent, it makes sense that pharmaceutical manufacturers charge high prices for the prescription drugs and medical devices that they provide. It takes years and millions of dollars in research and development to create something new, which then has to spend years being tested by the Food & Drug Administration before it is finally approved for sale to the public. Often, by the time a medication has been approved by the FDA, there is only a small amount of time remaining on the patent. So, the developing company has only a few years in which to recoup their investment before other companies come out with generic versions.

The unfortunate aspect of that situation is that the medications and devices being developed are often necessary to cure or treat diseases. That can create an unfair situation: the creating company has the right to choose whatever price they want for their product, and the sick person has no choice but to pay it. That's what makes pharmaceuticals different from a normal product. If a computer company comes out with a new type of device that they have patented and decides to charge exorbitant prices for it, a customer has the choice to either pay the high price or move on without buying the new computer. It doesn't work that way with medicine. If a medication is highly priced, a sick person's only options are to pay the price or not be treated for their illness, which could lead to worse sickness or even death.

You would think that once a patent runs out, generic drug manufacturers would enter the market with a lower-priced product, thus giving customers a choice. The increased competition between the original manufacturer and all of the new generic providers should drive the price down, but it doesn't. Even generic drug producers have been coming out with exorbitantly priced medications. The price is usually slightly less than what a name-brand has it listed for, but nowhere near low enough to make it affordable or even justifiable. One example is a drug called ursodiol, which treats gallstones. The method of creating ursodiol was perfected decades ago, and all patents have run out. The ingredients are not very expensive, yet every drug company is charging somewhere around $5 per pill.

Analysts believe that drug manufacturers are defying the laws of economics for one simple reason: they can. When one company raises their price on a medicine, instead of lowering prices to gain greater demand, the competitors follow suit and raise their prices. In that way, the companies bring in more income, mainly at the cost of medical insurers, which leads insurance companies to charge higher premiums to customers. It's a cycle of rising costs with no end in sight. If a single company stood against the status quo and kept their prices at normal levels, the other companies would eventually have to either lower their prices or go out of business due to lack of demand.

Since none of the companies seem to be following economic principles and standing against the current, many are suspicious of the whole situation. Some fear that the medical suppliers have secretly formed a type of coalition or "trust," an incredibly illegal practice. The grand jury has subpoenaed some of these companies to find out if they had any communication with their competitors prior to making consistent price increases. Analysts believe that a trust could be the explanation as to why drug producers have successfully avoided the laws of economics from catching up to them. In time, a federal investigation may reveal the truth of the matter.

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Friday, August 26, 2016

Proposed Bill to Help Widowed Spouses Renegotiate Mortgage Rates



Under current practice in California, if a widowed spouse is an owner of their home, but wasn't on the mortgage note at the time of their husband or wife's passing, obtaining a loan modification can be extremely difficult. Often, when the overall household income goes down due to a spouse's death, the surviving spouse will have trouble coming up with the monthly payment on a mortgage that was determined earlier on based on two salaries instead of just the one. Additionally, laws don't protect widows and widowers from being foreclosed upon while trying to get their bearings. Fortunately, as described by Andrew Khouri in his L.A. Times article, a few Senators have proposed a bill to try to help people stuck in that kind of predicament.

A common practice by banks in these situations is called "dual tracking." Dual tracking simply means that a bank is pursuing a foreclosure while also negotiating a modified mortgage with the client at the same time. Through that method, banks are able to cover all of their bases and make sure that they don't get stuck in an endless cycle of paperwork. Unfortunately, that leaves widowed homeowners trapped. While loan servicers will generally accept payments from the surviving spouse, they rarely can get through all the red tape around proving ownership before the foreclosure has completed. So, in many of these situations, unless the surviving spouse has some way of making up the difference in monthly loan payment for long enough to hold off a foreclosure, they end up losing their home due to no real fault of their own.

One of the benefits to homeowners of the new bill being proposed is that dual tracking will be banned. In other words, foreclosure proceedings are put on hold while all of the required documentation is taken care of. Only once the lender and borrower have finished negotiating the loan modification can any necessary foreclosure continue. This provision in the bill can hold off foreclosure for a limited amount of time, but it only applies to major financial institutions. Smaller banks are exempt from the regulations, which makes sense since smaller lenders are less able to afford to grant extensions on their loans.

The bill, Senate Bill 1150, has been amended a few times and has since been passed by the Senate and Assembly. One important amendment added to the bill was a three-year sunset provision, which means that the bill will have to be formally renewed every three years or it will be thrown out. Legislators hope that the new laws will help to fix the system that punishes widowed homeowners for factors beyond their control. Since the bill has already been passed, all that is left is for the governor to sign it into law. Then, we shall see how much the system really changes.

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Friday, August 19, 2016

Proposed Changes by LA City Council to Expedite Permitting for Small Businesses



Small businesses in Los Angeles have, for a long while, been facing many difficulties in getting started. Local and city-wide ordinances make it a very long and expensive process to open a new business, especially a restaurant or similar establishment. The main complaint among those trying to get their foot in the door is that they are required to work with and submit paperwork to various departments within the city government that don't necessarily work closely together. In several instances, an aspiring business owner worked with one department for a while to get their plans approved, only to find out from another department that their plans will be rejected due to insufficient parking. Fortunately, according to Amy Edelen's L.A. Times article, members of the Los Angeles City Council are looking to introduce a new plan to make the process faster and easier for all parties involved.

Even for restaurants that already exist, the renewal of a conditional use permit, which is required to get a liquor license, can take a year, between actually submitting the documentation and waiting for it to be approved. Councilman Mitch O'Farrell has taken the first steps toward speeding up the process, by proposing a plan that would create a new department in the city government designed specifically to deal with small businesses and create that connection between all of the other departments. O'Farrell believes that the new department will be beneficial because it will allow new business owners to sit down with a representative of City Hall and spend just a few minutes planning out a checklist of all of their requirements and an approximate timeline.

Too many potential business owners have been forced to give up before ever opening. Small businesses contribute greatly to the economy, so if the process isn't improved, more potential employees will be laid off and new jobs will become much harder to find. Even renewing a permit can be a tiresome and costly process, especially in areas where rent is high. If the permit takes a while to be approved, the business owner is forced to pay rent for months when the business isn't open or making any money. While representatives from the Department of Building and Safety claim that the permitting process isn't nearly as long as people complain, others claim that the delays are due to the convoluted nature of the various departments. With O'Farrell's plan, at least some of that confusion should be resolved, which should help to speed things along.

Even if a business already existed on the property, if the business changes from an office space to a retail establishment, under current regulations, a "change of use" is triggered. That means that the entire process of starting a business has to go back to the beginning as if the original business had never existed. While most of the complaints about the process are related to new restaurants, analysts hope that the new rules will help all small businesses to get their start. O'Farrell believes that the initiative will make the process more straightforward, and as long as it is approved by the City Council, the changes are expected to begin by the end of the year. As O'Farrell said, "Behind every empty storefront, there's a story." Hopefully, the City Council will approve his plan and help make those stories into realities.

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Friday, August 12, 2016

Uber and Lyft's Low Prices Won't Last Forever



Besides its convenience factor, a user's ability to rate their drivers, and the inherent safety that comes with the app tracking your motion along a pre-determined route, Uber has attracted so many customers in large part due to its subsidized pricing. Over the years, Uber has aggressively pushed to become the leader in the ride-sharing market. To do so, they have often offered prices that are discounted to such an extent that the company sinks billions of dollars into the app each year. While it may seem counter-intuitive to lose money, Uber is actually proceeding exactly as planned: they are focusing first on acquiring customers and forcing out any competitors before they try to turn a profit. Tracy Lien, in her L.A. Times article, addresses Uber's plan and describes how such a monopoly might affect the market.

Uber and Lyft, the most popular ride-sharing services, both know that the fastest way to get loyal customers id to give them a cheaper alternative to taxis. While many consumers still prefer taking a taxi over using one of the ride-sharing apps, most people care more about saving some money. Fortunately for consumers, the ride-sharing apps are not only competing against taxis, they are also competing against each other, which has allowed prices to fall even lower. Eventually, though, as economists have reiterated time and again, when one of the companies gains control of the market, their prices will go up. Maybe it will be slow at first, but it is a law of economics that if one company is the only source of a good or service, consumers are either forced to pay whatever price the company sets or live without it.

Uber is currently valued at over $62 billion, and is by far the market leader, even though they continuously lose money or barely break even in their attempt to grow their market share. While Lyft is in second place, they also have plenty of money to burn, especially after a recent $500 million investment by General Motors. In fact, while Lyft is falling behind Uber in most areas, they have nearly half of the market share in their hometown of San Francisco. It's possible that Uber won't be able to force Lyft out of the competition in the long-run, or they may find that the attempt would be too costly to be economical. However, economists still worry about what might happen if Lyft and other competitors were forced to back out.

Uber just lost a battle in China to become the main provider of ride-sharing services. That loss could lead Uber to focus on the US and Europe more closely and work harder on taking as much market share as possible. Therefore, it is believed that their prices will go even lower in the near future. If they can keep their prices low enough for a long enough time, they may be able to gain enough customers to be unstoppable. Some economists believe that Uber should look toward becoming more valuable to the consumer rather than a cheaper option. The Premier options in ride-sharing apps attract upper-class customers, which could be a substantial source of boosted income for Uber, even if they don't succeed in encapsulating the entire market.

While it is likely that all of the ride-sharers will eventually start raising prices in the future, there are several reasons why they wouldn't suddenly shoot up to exorbitant rates. First, there are anti-trust laws and similar regulations on how much a company can charge for a product or service, especially if that company is one of only a few providers. Additionally, if Uber or Lyft suddenly started charging extremely high prices, their customers would just switch to taking taxis. So, whatever happens with their market share, economic theory would tell us that the ride-sharing apps would steer away from charging more than taxis unless they somehow found a way to remove that competitor entirely, which is unlikely.

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Friday, August 5, 2016

Google Fiber Set to Make Debut in Irvine



We all know the frustration of slow internet. Not only can it delay our work, it can make relaxing at the end of the day an arduous process. The endless buffering, the error messages, and the snail-paced downloads are annoying at best, and anger-inducing at worst. Fortunately, no matter how slow your internet speed is now, technology has been growing in leaps and bounds over the last several years. In fact, Google has been working on a new type of high-speed internet connection called Google Fiber. According to Andrew Khouri, in his L.A. Times article, some apartments in Orange County, California, are even getting a chance to try it out before anyone else.

The Irvine Company, a private real estate company that owns a large portion of the rental property in the city of Irvine, California, just released a statement that Google Fiber is being made available in many of its properties. While they didn't reveal many specifics about when the internet will be made available, Google has stated that their beachhead market will be small businesses and some apartment communities in Irvine. Irvine Co. is Orange County's largest landlord, and as such, is drawing even more interest through their sudden move to provide this highly-sought-after amenity.

Google Fiber isn't just slightly more powerful than normal internet; it can reach speeds up to 40 times faster than the average broadband connection. Housing developers, business owners, and many others are doing everything they can to get a foot in the door with Google Fiber, knowing that the ultra-high-speed internet can be a huge benefit for personal use or for prospective home-buyers. Analysts believe that having the high-speed internet that Google Fiber offers will be a way for commercial landlords to quickly draw in new renters.

Google released a statement recently that said that the roll-out of Google Fiber will be limited. The properties will be limited to those located in Irvine that already have the necessary "existing fiber infrastructure." Fortunately for the Irvine Co., they have been designing their buildings with extra empty conduits since the 1980s, which could make it easier to install Google Fiber without much hassle. While Google said a while ago that they are also looking at Los Angeles and San Diego for a roll-out of the new technology sometime in the future, Google failed to provide further information on the matter. If Google Fiber is as successful as expected in Irvine, it will likely spread very quickly throughout the state, country, and even to various other areas around the world. Everyone wants faster internet, and this could be the technology that gives it to us.

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Friday, July 29, 2016

Government Restrictions Eased on Secondary Housing Units



Throughout California, but especially in the Los Angeles area, housing opportunities are getting very limited. There simply isn't enough space to provide housing to the thousands of current residents and the hundreds of new people looking to find somewhere to live. Los Angeles has plenty of draws: the nice weather, the variety of shops and restaurants, and a wide array of employment opportunities. However, as more people look to come to California, the market shifts accordingly. Currently, even for those who can afford to buy a house or rent an apartment in the rising housing market, there is little room for being picky based on location; you just take what you can get. Fortunately, as Liam Dillon and Andrew Khouri describe in their L.A. Times article, California lawmakers are working on a way to address the major housing issue.

New construction of homes or apartment buildings could provide housing opportunities. Unfortunately, all available vacant land has also been growing scarce. Until recently, getting the required approvals and permits for construction was such an arduous process that it made it nearly unfeasible for most people to even try. Now, due to the push from Governor Jerry Brown and LA mayor Eric Garcetti, legislators are relaxing regulations, making it easier for homeowners to build "granny flats" in their backyards, thus converting empty space into housing.

Just a few years ago, any homeowner that wanted to convert a garage into an extra room or add an extra freestanding structure in their backyard had to face the seemingly endless trials of the governmental bureaucracy. In the end, many who tried to add on to their property, whether for guests, for family, or as a rental to bring in some extra income, inevitably failed or at least had to go through months of stressful negotiating with the city of Los Angeles. Now that the restrictions are being relaxed, at least to some extent, homeowners may help California as a whole to keep up with growing demand. Statistics show that Los Angeles needs to add at least 100,000 new units each year in order to keep up with the market, and retired individuals may benefit the most from this opportunity.

Some, like 78-year-old Rochelle Ventura, tried previously to submit plans to the city for backyard additions, but the strict regulations led to their ultimate rejection. Since 2005, so few units have been approved that only 347 have been completed in the Los Angeles area. Some of the regulations seem unnecessary to most, especially if the secondary unit will be used by family members. One of the new bills is overturning a restriction that required secondary units to have uncovered access to a public street. Since that is no longer a necessity, under the new rules, more property owners may find it economical again to take a crack at expanding into the territory of secondary units. Hopefully, the new legislation will help to solve problems for those trying to find housing as well as those trying to gain a little bit of extra income by providing the sought after housing.

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Friday, July 22, 2016

ZestFinance to Use Search Data in Calculating Credit Scores



Traditionally, a credit profile is derived by looking at a potential borrower's history of paying back loans. Whether from car loans, credit card usage, or a mortgage on a home, the more an individual can show that they have paid back borrowed money in the past, the lower their interest rate will be on a new loan. However, there is the issue of the Catch-22 of credit: without any credit history, it is very difficult to get your first loan on the path to a good credit profile. Some companies have started including monthly rent payments in their calculations. In partnership with Chinese search engine Baidu, Hollywood credit firm ZestFinance will be using a potential borrower's internet search and shopping history to calculate their credit score, as described in James Rufus Koren's L.A. Times article.

Nontraditional means have been used in the past to calculate a potential borrower's credit, especially when that borrower has never borrowed money, but this will be the first time using search data. ZestFinance has focused on borrowers with little credit history from the very beginning and is confident that the sheer size of Baidu's engine will make them succeed where no one has ever dared venture before. The company will be breaking out in both the US and China, underwriting loans through the companies Basix and JD.com, respectively.

In addition to using the search data in calculating credit profiles, behavioral data gained from analyzing search history can help the company to avoid fraudulent customers. With enough data, ZestFinance believes they will be able to statistically determine the likelihood of a borrower paying back their loan in a certain time frame. One example they give is that for some reason, potential borrowers who fill out their loan application with proper capitalization are more likely to pay back their loan than a borrower who writes in all capital letters. They aren't sure exactly why this correlation exists, but they believe that enough research will enable them to create fair assessments of a borrower's credit profile.

Some believe that this system will be unfair, because how can anyone really tell if someone will pay back a loan based on what they look up online? However, if this is the system that enables the majority of those people who were previously refused loans to start down the road to good credit, then it may be worth it. In fact, ZestFinance believes their system will be fairer than current non-traditional calculations in that it can allow people with no credit history to have a decent interest rate, whereas before, they had to choose between paying exorbitant rates or missing out completely on the chance to develop their credit profile. As Douglas Merrill, a ZestFinance executive, says, three out of four Chinese citizens lack the financial history to have a fair credit profile. In exchange for a small, carefully limited, loss of privacy, credit could be gained more easily by everyone, and for most, that's a pretty simple trade.

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Friday, July 15, 2016

Long-Term Government Bonds Seen as "Safest" Investment



Although the global economy's struggles have made success more difficult for investors this year, many are trying new, riskier methods to multiply their money. Some, however, have decided to take the safe route, since very few investment opportunities remain with high payouts. So, the majority of "safe" investors have been going after utilities and bonds, which have the most stable profits, albeit slow ones. Tom Petruno, in his L.A. Times article, discusses some of the options that investors have been left in an economy with ever-dropping interest rates.

Options like utility stocks provide at least some semblance of "certainty," which has investors paying higher prices than they would expect to earn back in the short-term. All appearances seem to point to many investors playing the long game, more willing to take less profit than risk losing money. Additionally, because many investors have been focusing more on high-yield bonds as a safe haven for their money, government-backed bonds have been suffering. In about half a year, the US Treasury note yield has dropped from 2.27% to 1.37%.

Even in Japan and several countries in Europe, government bonds, which are known for being safer than most investments, have taken a hit. The market is so shaky in those countries that yields on bonds are somewhat negative, which means a bond owner is losing money on their investment. Because of this phenomenon, Japanese and European investors are looking to US bonds. While the American bonds only have a rate of 1.5%, it's better than losing money, so investors are rushing in.

According to economists, owning bonds is a representation of an investor's belief that the economy is improving. By holding onto one's bonds, an investor can be suffering through low-yield years in order to benefit greatly in the long run. Long-term bonds are described as an "insurance policy," no benefits for years, but great to have at the end of the road. Stocks have begun recovering again, and while stocks may hit all-time highs in the coming months, some companies fear that profits will still take a while to get back to normal levels.

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Friday, July 8, 2016

U.S. Takes Second Place in World Oil Reserves



The top oil-producing countries in the world are Russia, Saudi Arabia, Canada, and the United States. A few short years ago, the US was dead last in that hierarchy based on estimates of total recoverable oil throughout each country. As shown in Rob Nikolewski's L.A. Times article, a recent study by Rystad Energy has shown that the United States has beaten out some of its former competition, taking second place behind Canada as one of the world's top oil producers.

The amount of "recoverable oil reserves" is calculated based on how much of a country's oil is both technologically and economically feasible to extract. In other words, if it is too deep to get out or will cost more money to mine than can be earned in the market, then it isn't calculated in the country's total reserves. Leaders in the oil industry have determined that the United States' improved position in the market is likely due to technological advancements, especially those that enable the procurement of shale oil.

Shale oil is a type of oil found in some sedimentary rocks that can be extracted pressurized drilling. It is a type of oil that was previously ignored or not considered useful because it was harder to extract. However, since much of the "easier to access" oil has been extracted and used up over decades of drilling, the technology advanced to keep up with demand. Additionally, other forms of drilling technology, such as hydraulic fracturing, or "fracking," which involves the pumping of pressurized fluid into otherwise-empty oil well in order to force any remaining oil out have added to US reserves. Texas by itself has over 60 billion barrels worth of shale oil, an amount comparable to the total oil reserves in the entire country of Mexico.

The Rystad study concluded that there are approximately 2.1 trillion barrels of oil globally, from over 60,000 oil wells. Over half of the reserves in the US are shale oil deposits, which, since they are more difficult to extract, can incur extra costs. Right now, oil prices are very low, which might seem like a good thing to the average consumer. However, when prices stay low for too long, producers can;t extract more oil in an economical manner, which reduces the total amount in the market, which can cause prices to shoot up.

According to one economist, if oil prices stay below $50 per barrel, miners will not put in the investment to tap shale oil reserves. If prices get closer to $100, he predicts that the US will provide a significant portion of the oil market over the next few years. So, even though the US has plenty of oil deposits in Texas, California, South Dakota, and Alaska, and technology can help the mining along, prices will have to go up in the short-term in order to keep gasoline prices steady in future years.

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Friday, July 1, 2016

Global Economies Stabilizing After Downturn Caused by Brexit



Although the Brexit Referendum sent economies around the world into a steep dive, they seem to be rebounding much more quickly than expected. Investors have been buying more than selling this week. driving the US stock market higher three separate times. However, analysts have also noticed that US bond prices have surged, which indicates that investors are less anxious about Brexit in the short-term, but still worried about its implications down the road. The members of the Associated Press of the LA Times describe in their article some of the ways in which the economy has shifted since Brexit, and what that may mean for the future.

Britain's departure from the EU, which dropped the value of the euro by over 10%, left economists worried that economies around the globe would quickly follow suit. Fortunately, after a significant downturn, most of the economies are bouncing back quickly. While the amount of investment in the US economy seems to be the same before and after Brexit, there has been a shift as to where investors are putting their money. Oil prices went down. Consumer staple companies and utility stocks, which are known as low-risk investments, have had increased demand.

Investors believe that Brexit in and of itself will not have enough of an effect on the US economy to be significant. However, they worry that if the trend becomes contagious, it will be difficult to combat the negative effects of several countries leaving the EU at once. Overall, though, the economy seems to be on track. The Nasdaq and Dow Jones both increased by 1.3%, and the stock market did well this quarter. Even the S&P 500 improved by 1.9% in the period between April and June. Analysts believe that most of the improvement comes from energy stocks, utilities, and telecom companies.

On Thursday, stock trading started slowly but soon began to rally at normal levels, which may signal that investors have decided to stop worrying about Brexit's effects, at least for the time being. Even the UK's stock market has recouped many losses since last week, due mainly to overseas companies benefiting from the reduced value of the local currency. Around the globe, economies are doing well, or at least not being significantly affected by Brexit. The pound and the euro are still losing value, with the former at faster rates than the latter, but both seem to be slowing. It could be that economists were right: if handled correctly, Britain leaving the EU might only have negative repercussions in the short-run, with unknown benefits in the long-term.

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Friday, June 24, 2016

Britain's Exit from the EU and its Effects on the Global Economy



This week, Great Britain voted on a referendum that concluded with their decision to leave the European Union. With that decision, the international financial markets became a sea of confusion and the pound hit its lowest value since 1985. The European Central Bank is worried about the negative consequences this landmark decision will have on the general population as the devaluation could cause a nation-wide panic. Jonathan Kaiman, Don Lee, and Julie Makinen discuss in their latest L.A. Times article some of these potential effects, not just to Britain's financial future, but to the world.

Early this morning, the voting results had begun to show a not insignificant push for the "leave" camp of British voters: 52% had voted for the United Kingdom to leave the European Union. While the difference of 4% between the two sides may seem small, it represents a shocking turn that many policy-makers didn't expect.  Apparently, the general populace would prefer to be independent, no longer under the rule of the EU. Why are the British people so adamant about leaving the European Union?

The "Brexit" (British exit) is based on three main issues: economics, immigration, and identity. Under current practice, the members of the EU have a common market with a shared form of currency that makes the economy run smoothly. However, the UK is forced to send a sum of money to Brussels (the headquarters of the EU) each year, where the money gets redistributed to other member states, which can help to stabilize their economies and hopefully induce growth. Many of the "leave group" don't want to pay extra taxes to support another country other than their homeland.

The immigration argument comes down to the fact that anyone from an EU-member country is legally able to move to the UK and get a job without needing a work visa. According to economists, this is good for the economy, filling necessary jobs and helping the local housing market. Many UK citizens are against the free immigration, however, because they believe that non-citizens are coming in and using up already limited public resources. Finally, many voters in Great Britain don't see themselves as "European." They prefer to identify themselves as British above all else and dislike many of the laws and regulations that come with being a member of the EU. In all, those supporting the Brexit do it because they want Britain to have control over its own governance again.

Unfortunately, many economists believe that the Brexit will lead to massive, irreversible economic downturn around the world. Already, the pound's value has gone down by over 10%, the price of oil has taken a dive, and even stocks in Asia have suffered. Investors throughout Europe and the US are preparing for the worst. As everything unfolds in the UK, even countries as far as Singapore are feeling the effects due to the high degree of uncertainty as to what will happen next. No one knows for sure, but economists believe that Britain will not be able to avoid a hard recession with economic output dropping by 1-6% in the coming years.

The abounding fear and uncertainty have more strongly affected Asian markets than anywhere else so far. Japan's Nikkei index dropped 7.5%, Hong Kong's 4.7%, and Shanghai's 2%. All of Asia's markets have been feeling the significant effects caused by the upcoming Brexit. Fortunately, analysts believe that the worst of the Brexit will negatively affect the Chinese economy, but only in the short-term. In fact, economists believe that the financial instability will benefit China in the long-run. As Britain leaves, the power of the euro will decline, which could give the Chinese renminbi (RMB) a chance to replace the euro as the world's second-most-powerful form of currency. However, as a whole, it is expected that the global economy will not do well over the coming months and years. Only time will tell how things will end.

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