Spend-wary? How about health-wary?

Starbucks, like the rest of the world, has been suffering some financial setbacks.  Sales at the coffee giant have been decreasing, forcing even the closing (GASP!) of some stores.  In an attempt to garner more revenue, several promotions are being tested in a variety of cities across the US.  One promotion that is now going nationwide is the 2 after 2 deal.  If you buy something in the morning, you can get any iced grande drink for $2 after 2 pm simply by showing your receipt.

While the idea to give value to customers and increase afternoon traffic, there are also profound health consequences.  Increasing the amount of caffeine you imbibe (say, going from a cup in the morning to two cups total in a day) can increase the strain on your heart.  Drinking any caffeine after noon can also keep you from sleeping as well or as deeply.  In particular, the size of the afternoon beverages might increase caffeine dependence.  Not that people would have to buy coffee in the morning or afternoon – you could get a baked good in the morning and get an iced…chocolate(?) in the afternoon.  But I would guess the majority of customers would get coffee each time.

Like everyone else, I like a good bargain.  And I like the frou-frou sweet coffee drinks at Starbucks.  I think they are a good company, for the most part, with a strong business model.  But I wonder in this case if they are implementing a policy that will have widespread damaging effects.  After all, this particular model has already been tested in select cities.  If coffee consumption and revenues are up in these places already, that doesn’t bode well for our future health.

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What the Aussies are doing right.

I read this article this morning about the true value of the U.S. penny.  According to the article (I could not find the exact numbers myself from the U.S. Mint), it costs 1.26 cents to make a penny.  This number is down from the end of 2007 figure, which was 1.67 cents.  Still, it costs more to make the thing than its actual face value.  In 2008, the mint will produce 1,536 million pennies, according to the Mint.  That’s $3,993,600 we’re losing, annually, just from making pennies using the current method.

Congress and the Bush administration are busily trying to come up with a new, cheaper method for penny making, as the value of metals increases.  I have a better idea – get rid of the penny.  We would save about $19 million this year, which could be used to offset the debt we’re incurring from producing nickels.  Australia did it in 1991, abolishing both the 1 cent and 2 cent coins from circulation.  Vendors were given the option of rounding prices up or down to the 5 cent mark.  They haven’t economically drow0ned – we should be able to, as well.  It might even force some of our retailers to gain a better grasp of basic math. Better yet, let’s kill the nickel, too.  Bigger coins don’t cost more than their value to make, so why not kill the little ones?  Will we miss them?  Really?

Rediscovering Amity.

Amity is defined as ‘friendship’ or ‘peaceful harmony’ or “mutual understanding and a peaceful relationship, esp. between nations; peace; accord.”  But what does this type of friendship mean?  Is peaceful harmony the simple respect of leaving one another alone, or is there something more to it?  Does amity require the type of friendship that implies helping out with the hard times, as well as celebrating the good?  Does it require a deeper kind of agreement, or at least understanding, on issues of faith, morals, politics, or education?

Amity is also the name of the foundation I worked with during my time as an English teacher in China (which I was surprised to discover blogging on WordPress, just like me).  The organization is Christian in a country that is largely not, a country that actively prosecutes outside proselytizing.  It is also one of the longer running voluntary nonprofits in the country, which is a part of what originally led me to join the organization for a time.  Ultimately though I would say my experiences there were more to my advantage than theirs.

China gave me many opportunities.  The free time to write.  The forced need to interact with a culture different than mine, in a different language setting.  The experience of teaching.   The time to reflect a little on what I wanted to do with my life.  The feel-good of doing good for others.  And for that, I am and will continue to be grateful.
It’s something I can always pull out and look at and say ‘hey, I was a part of something great,” no matter what the rest of my life may or may not amount to.

Hedging

In English parlance, ‘hedging’ typically refers to statements made to qualify or modify a more extreme position or opinion. Hedging in the financial or investment sense is pretty much the same thing (i.e., covering your butt) but the way in which it occurs is what’s confusing.

So I’ll go over the simple part first. So, you want to invest. Maybe it’s in a stock, or even in a group of stocks, that you think will rise in price. Pretty simple, right? But, what if the market does poorly? What if there’s a universal market crash? How do you protect that investment? The answer is a hedge. A hedge is an investment you make as a protection against risk. Wikipedia has a really good example of how the actual investment might look and perform over a few days, so I won’t bother to re-describe that here. What I will mention is a bit about how the complexity of a hedge works.

A hedge is typically a ‘shorting’ of a stock, meaning a contract for the rights to stock shares in the short term. It could be a swap, an option, or a future, or some other kind of right, but it is often not the actual physical exchange of stocks. Let’s look at an example. You think F industry, of which B stock is a part, is going to do poorly. Or you just think B stock is going to do not-so-well. You would take a short position of this stock, borrowing the stock and selling it at its current market price. Then, at a predetermined or optional future date, you buy the shares back, hopefully at a lower price, and return them to the lender. If the shares of stock actually fell in value, you’ve made a profit.

The question then comes up as to what the lender of the short has gained. Probably there was some sort of money exchanged for the rights to the stock for that period of time, either a percentage or some other exchange. I’m not sure exactly how that technically works yet. Also, I’m not sure I need to. Right now I’m going to go ‘hedge my bets’ that I don’t need to know.