Arizona Banking Options Changing

The Pay Day lending stores are mostly closing up in Arizona. This coincides with the expiration of the law that allowed them to operate for the last ten years.

Starting Thursday, the state no longer will allow payday-loan operators to set interest rates as high as 460 percent annually. A 10-year-old law that allowed them to charge above the 36 percent annual rate cap imposed on other lenders, such as banks, will expire.

That doesn't mean that the demand for their services will go away with them. It will merely shift to other "products."

Miller said that to stay in business, many payday lenders likely will offer auto-title loans, which can generate annual returns of up to 204 percent, according to state law. The Center for Responsible Lending said more than 200 payday stores in Arizona have received auto-title loan licenses in the past two years...

Another alternative for potential borrowers are pawn shops.

As the Wednesday expiration approaches of a law allowing payday-loan lenders to charge Arizonans up to 460 percent annual interest, Valley pawn-shop owners say they expect to see a little more business coming their way.

Pawn-shop owners had seen a marked decrease in business since the advent of the payday-loan industry. Pawn shops provide collateral loans, money in exchange for personal property that can be reclaimed after paying the loan with interest.

They offer 60-day loans at 16 percent interest with an additional 30 days prorated at 0.2 percent interest per day, about 88 percent annual interest on loans up to 90 days.

In any case, one set of alternatives has now gone away.

Slideshow Karaoke Video

All of the presentation videos from Ignite Phoenix #7 are now up on You Tube. Slideshow Karaoke kicked off the second half. My presentation starts at 3:00. Be sure to listen to the introduction since it sets things up and lets you know what we were working with. My thoughts on the experience may be found here. (And I still have no recollection of the last slide.)

Signs of a Local Recovery

Sales tax collections are up in Phoenix (and that doesn't include the new tax on food) indicating consumers are spending more.

The over-year growth in sales-tax collections is showing positive results for Phoenix.

City officials said April sales-tax collections were up 1.7 percent compared with the same month last year, rising from $29.2 million to $29.7 million.

May collections were up about 0.7 percent compared with May 2009, rising from $27.9 million to $28.1 million. The figures do not include revenue from the city's recently enacted food tax.

This is a positive sign for the local economy.

Inflating the Currency

In this case the currency is law school grades.

One day next month every student at Loyola Law School Los Angeles will awake to a higher grade point average.

But it’s not because they are all working harder.

The school is retroactively inflating its grades, tacking on 0.333 to every grade recorded in the last few years. The goal is to make its students look more attractive in a competitive job market.

HT: Power Line

Should We Tax College Attendance

A couple of economists look at the rising income gap and see a growing payoff to attending college. At the same time, we're becoming more progressive in taxing income. They then raise a provocative question:

For many, the solution to an increase in inequality is to make the tax structure more progressive—raise taxes on high-income households and reduce taxes on low-income households. While this may sound sensible, it is not. Would these same individuals advocate a tax on going to college and a subsidy for dropping out of high school in response to the increased importance of education?

Food for thought. As they say, read the whole thing.

HT: Carpe Diem

Policies that Encourage Growth

Since we finished up the chapter on economic growth last week, the following news seemed appropriate. North Korea has freed up their markets in the hope of keeping their people from starving. Meanwhile Russia will get rid of the capital gains tax in order to spur investment and economic growth.

HT: Instapundit

Money in Music

We went over money and banking in class on Wednesday and Thursday. Here's a little recent monetary history presented in song.

Just so you know, we go over what a moral hazard is in Micro.

HT: Donald Marron

Slideshow Karaoke at IgnitePhx

So how do you explain those pictures?

My daughter Jana has been working with Ignite Phoenix for a while and has encouraged Mary and me to attend. Things matched up and we were able to attend our first Ignite on June 11th. Ignite is a set of 18 presentations put on by people that are passionate about something. Each presentation is 5 minutes long (no more, no less) and includes 20 slides that automatically advance every 15 seconds. Some of the presentations are merely good, the rest are fantastic.

There is a break in the middle of the presentations and when the second half starts up again, they do something called "Slideshow Karaoke." (No, it doesn't involve singing.) For participants, they pick three names from members of the audience. Each contestant then gets up on stage and makes a short presentation punctuated by 6 slides that they have never seen.

So this is what happened.

Mary and I got into the auditorium area early in order to get good seats. As we were waiting for things to begin, an IgnitePhx volunteer came around asking for people that would like to be in the pool for Slideshow Karaoke. Since my daughter was one of the volunteers, I figured I'd support the effort and put my name in the hat. I calculated that the chance that I'd actually be chosen was remote at best.

The announcement of the contestants came at the end of the first half, right before the intermission. Much to my surprise, I was the first contestant chosen. I was certain that this was Jana's doing but was assured by everyone that it was merely a random draw.

The explanation of the rules was straightforward. We would get up on stage in a predetermined order (I was second) and give our presentation. Each of us would have six slides that would automatically advance every 15 seconds. We wouldn't see the slides until they were on the screen. Although we asked about the content of the slides or at least some hint about the theme of the slides, we were given no clues.

As we were leaving for intermission, someone came up and asked who was going second. I acknowledged that I was. The reply was a smile and a snicker.

At that point I had about 20 minutes to figure out what I was going to do with my 90 seconds on stage. (I did actually calculate that six slides times 15 seconds per slide is a total of 90 seconds.) I also took into account that we had just experienced some really great presentations, and I didn't want to embarrass either myself or my daughter. (Jana was going to have to work with these people in the future.) I thought about different stories and approaches and themes, and finally settled on talking about what I do.

As intermission finished, I gathered with the other contestants back stage to go over the logistics - timing, getting on and off the stage and using the microphone. Then it was time to go and the perpetrator of all this got up to explain Slideshow Karaoke to the audience. He went over the rules and also noted that he was the only one that had seen the slides that he had put together (while he was drinking one evening.) At that point I felt my first and only twinge of nervousness.

After that, things happened quickly. The first contestant was up and making her way through the slides. I got ready to move on stage and the switch slide came up giving me 15 seconds to get into position and start talking. I started with the only thing that I had scripted, "I'm Scott Gustafson and I teach Economics."

At that point my first slide came up. It was a black and white picture of two old men with long beards taken about a hundred years ago. I made some comment about this being how my students see me when they come into class at 7 a.m. and then just rolled on from there.

Ninety seconds later the switch slide came up, and I exited the stage.

After we were all done, we got back up on stage, and they had the audience vote for the best presentation by cheering. Jana had sent out a tweet telling everyone to cheer loudly for her Dad so I won.

Slideshow karaoke was a lot of fun. I got lucky and had great slides to talk to. The first slide set it all up and then I was on a roll.

As I recall, the slides were the old men, a college student drinking a beer, a pretty girl sleeping, the flames, the tattooed stomach and a crying kid. I'm not real sure about that last one.

So that's where those pictures came from.

If you get the chance, go ahead and put your name in the hat. Slideshow Karaoke is a lot of fun.

And yes, I really do teach economics at seven in the morning.

More on World Cup Economics

More on World Cup Economics

A look back at the economics of the World Cup.

HT: Megan McArdle (really Courtney Knapp)

Economic News From Far Away to Close to Home

There was a question in class on Thursday about the effect of the World Cup on the world's economy. I'm not up on the World Cup, but other economists are.

In NY the state government proposes to borrow $6 billion from the state pension fund so that they can loan it to local governments so that the local governments can make their annual contributions to the state pension fund.

On the gulf coast, the oil spill has reduced the supply of shrimp raising the market price for frozen shrimp by 30%.

Over in Mesa, the last citrus packing plant is shutting down due to reduced volumes. Fruit will now have to be trucked to Yuma at considerable expense to be processed. This will shut down most of the remaining groves in the area.

Finally, Arizona has sold the state Supreme Court building among others to raise $300 million in cash to help fund the budget. The state will buy the buildings back over the next 30 years.

Federal Leasing Rates for Solar

The BLM has released their leasing rates for solar installations built on federal land here in Arizona. It is a two part tariff. There is a basic rate for using the land which gets paid every year. The second part is a Megawatt Capacity Fee that gets phased in over the first 5 years of the plant's production.

The base rate goes from a low of $15.70 per acre in Pima county to a high of $313.88 in Yuma county. I have no idea why it is so high in Yuma county.

Defining "Green Jobs"

Apparently I have a green job.

On March 16th the BLS issued a notice in the Federal Register asking for comments on what constitutes a "Green Job." While there doesn't seem to be any official definition, congress and the administration still want to count and track "Green Jobs." As part of their comment request, the BLS gave their best shot at defining a "Green Job."

To start things off, the BLS provided a list of 7 categories of economic activities as well as 4 types of green goods and services. They also provided a list of green goods and services industries for inclusion in "Green Jobs."

I teach an online course in Environmental and Natural Resource Economics at Mesa Community College. This falls under NAICS code 611210. The economic activity is category 7 - Education, and the service is type 1 - Direct green good or service.

You might want to peruse the list, it has some fairly interesting entries. Everything from lead free bullet production to organic beer distribution services.

HT: Ed Morrissey at Hot Air

 

Stimulus Money for LED's

Mesa got $1 million in federal stimulus money to replace 2500 traffic lights with LED's. That's $400 a light which probably includes the cost of installation. Once they are operational, Mesa expects to save $0.028 million per year in electricity costs. At that rate, it will only take 35.7 years of savings to get the $1 million back. Of course that doesn't include interest. Since the federal government had to borrow the money to give it to Mesa, the appropriate interest rate would be the 30 year Tbill rate - currently 4.13%

What that means is the savings the new lights generate won't cover the annual interest on the borrowed $1 million. Hence over 30 years the net cost after electricity savings will be $ 1.4 million.

No rational person would ever make such an investment with their own money. But since this is federal stimulus money...