Archives for category: Economics and Money

During the last few months, I’ve mentioned the marked decline in the service provided by Netflix. Apparently, I’m not the only one to notice. Netflix shares have toppled in the last year, from a high of $221 to a current $55. So as an investor, is Netflix a good buy? Simple answer: No.

One of Netflix’s biggest problems is licensing costs. Licensing costs have gone through the roof; and as a result, Netflix has not renewed licensing agreements with a number of companies, including Starz, the pay-TV cable service that supplied Netflix with films from Disney and Sony Pictures. I’m afraid they simply don’t have enough bargaining leverage. There’s no denying that films on Netflix’s streaming service aren’t as fresh as in the past. 

Moreover, Netflix’s DVD rental operation is definitely suffering. Movies take longer to get or are unavailable. In a letter to shareholders in July, Netflix spent its entire opening summary touting its streaming business. There was no mention of its DVD business. Netflix seemed to act as though its rental division didn’t exist, and that’s telling.

Netflix is treating its DVD business with disdain, which isn’t all that new. Last year, when the company was in the midst of widespread user outcry over its 60 percent price rise, Netflix announced that it would spin off its disc-rental operation. Soon after, Netflix was forced to ditch that plan and stick with its DVD operation.  

Just a few days ago, Amazon upped its competition against Netflix by signing a multi-year licensing deal with cable channel Epix, bringing a lot of popular films (Hunger Games, Iron Man 2) to Amazon’s fledgling movie streaming service. Netflix recently ended its exclusive deal with Epix, and it’s unclear whether it will renew the deal later this year. As more and more companies compete with Netflix, I wonder if it will remain the number one provider of on-demand Internet streaming media and DVD-by-mail. It won’t if its service continues downward.

In fact, in the last few months, I’ve rediscovered our public library. It offers many movies that I like for free. 

Stock Tip: Stay away from Netflix shares. I recommend a hold or even a sell.

Disclaimer:  I do not own any Netflix shares. 

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During the last few months, I’ve mentioned the marked decline in the service provided by Netflix. Apparently, I’m not the only one to notice. Netflix shares have toppled in the last year, from a high of $221 to a current $55. So as an investor, is Netflix a good buy? Simple answer: No.

One of Netflix’s biggest problems is licensing costs. Licensing costs have gone through the roof; and as a result, Netflix has not renewed licensing agreements with a number of companies, including Starz, the pay-TV cable service that supplied Netflix with films from Disney and Sony Pictures. I’m afraid they simply don’t have enough bargaining leverage. There’s no denying that films on Netflix’s streaming service aren’t as fresh as in the past. 

Moreover, Netflix’s DVD rental operation is definitely suffering. Movies take longer to get or are unavailable. In a letter to shareholders in July, Netflix spent its entire opening summary touting its streaming business. There was no mention of its DVD business. Netflix seemed to act as though its rental division didn’t exist, and that’s telling.

Netflix is treating its DVD business with disdain, which isn’t all that new. Last year, when the company was in the midst of widespread user outcry over its 60 percent price rise, Netflix announced that it would spin off its disc-rental operation. Soon after, Netflix was forced to ditch that plan and stick with its DVD operation.  

Just a few days ago, Amazon upped its competition against Netflix by signing a multi-year licensing deal with cable channel Epix, bringing a lot of popular films (Hunger Games, Iron Man 2) to Amazon’s fledgling movie streaming service. Netflix recently ended its exclusive deal with Epix, and it’s unclear whether it will renew the deal later this year. As more and more companies compete with Netflix, I wonder if it will remain the number one provider of on-demand Internet streaming media and DVD-by-mail. It won’t if its service continues downward.

In fact, in the last few months, I’ve rediscovered our public library. It offers many movies that I like for free. 

Stock Tip: Stay away from Netflix shares. I recommend a hold or even a sell.

Disclaimer:  I do not own any Netflix shares. 

Firefighters protest
against budget cuts.
Their banner reads,
“With so many funding cuts,
we are left naked.”
(Courtesy of Der Tagesspiegel)

Spain is in trouble. Five years after the global financial crisis began, unemployment in Spain is at 25 percent and rising, housing prices continue to drop, bank credit to the private sector is falling, and loans going into default continue to rise. On top of that, Spain’s economy is in recession.

The government is implementing austerity measures to avert economic meltdown, but nothing seems to work. Spain’s citizens are naturally nervous and increasingly afraid. People have staged one-day work stoppages to protest against layoffs, and demonstrated against cuts to social programs, retirement benefits, and health care coverage.  

Unable to find employment at home, thousands of young people are leaving Spain for the booming economy of Germany. The number of Spaniards in Berlin is astounding, just listen to the sounds of Spanish on street these days. 

Firefighters protest
against budget cuts.
Their banner reads,
“With so many funding cuts,
we are left naked.”
(Courtesy of Der Tagesspiegel)

Spain is in trouble. Five years after the global financial crisis began, unemployment in Spain is at 25 percent and rising, housing prices continue to drop, bank credit to the private sector is falling, and loans going into default continue to rise. On top of that, Spain’s economy is in recession.

The government is implementing austerity measures to avert economic meltdown, but nothing seems to work. Spain’s citizens are naturally nervous and increasingly afraid. People have staged one-day work stoppages to protest against layoffs, and demonstrated against cuts to social programs, retirement benefits, and health care coverage.  

Unable to find employment at home, thousands of young people are leaving Spain for the booming economy of Germany. The number of Spaniards in Berlin is astounding, just listen to the sounds of Spanish on street these days. 

In recent days, the USA credit rating has fallen, and the US stock market has plummeted. Many people think the USA is headed in the wrong direction. When I look around the world and see countries like China and Germany prospering, even in these dire economic times, I wonder if the USA should try to emulate their economic approach. However, as the old adage says, “the grass is always greener on the other side.”


According to a recent article published by the Organisation for Economic Co-operation and Development (OECD), what country has the fastest-growing inequality and poverty of any developed economy? If you’re thinking the USA, you would be wrong. Another clue: workers in this country are paid some of the lowest wages in western Europe. Perhaps, it’s Greece, Portugal or some other Euro-zone basket case country.

Well, the answer might surprise you. It’s Germany. I know this sounds crazy since we think of Germany as the land of the industrial miracle and social equality. Moreover, during the last year, the German stock market has grown astronomically as the country has climbed out of recession (while the USA has just limped along). For most of us, Germany is a shinning example of what a country can achieve if it keeps its public finances in check, creates a diverse economy, and implements deregulation (some of the goals advocated by the US Republican party).

By all appearances, Germany seems exceedingly prosperous. Yet, Germany has no minimum wage, with approximately 2 million workers paid around $6.50 an hour (a high number given the size of the German workforce). Furthermore, German workers saw their wages (after inflation) actually fall by 4% in the 2000s. So while I am not an economist, these figures sound alarming.

Likewise, China, for all its economic might, has a totalitarian regime with extreme social inequalities. So, what’s my point? It’s just that we tend to over simplify our view of other countries. The Germans and Chinese have done exceedingly well these past few years, but they have their problems too. And while the USA is still recovering from the Bush era irresponsibility’s, it’s too early to count the USA out.  

In recent days, the USA credit rating has fallen, and the US stock market has plummeted. Many people think the USA is headed in the wrong direction. When I look around the world and see countries like China and Germany prospering, even in these dire economic times, I wonder if the USA should try to emulate their economic approach. However, as the old adage says, “the grass is always greener on the other side.”


According to a recent article published by the Organisation for Economic Co-operation and Development (OECD), what country has the fastest-growing inequality and poverty of any developed economy? If you’re thinking the USA, you would be wrong. Another clue: workers in this country are paid some of the lowest wages in western Europe. Perhaps, it’s Greece, Portugal or some other Euro-zone basket case country.

Well, the answer might surprise you. It’s Germany. I know this sounds crazy since we think of Germany as the land of the industrial miracle and social equality. Moreover, during the last year, the German stock market has grown astronomically as the country has climbed out of recession (while the USA has just limped along). For most of us, Germany is a shinning example of what a country can achieve if it keeps its public finances in check, creates a diverse economy, and implements deregulation (some of the goals advocated by the US Republican party).

By all appearances, Germany seems exceedingly prosperous. Yet, Germany has no minimum wage, with approximately 2 million workers paid around $6.50 an hour (a high number given the size of the German workforce). Furthermore, German workers saw their wages (after inflation) actually fall by 4% in the 2000s. So while I am not an economist, these figures sound alarming.

Likewise, China, for all its economic might, has a totalitarian regime with extreme social inequalities. So, what’s my point? It’s just that we tend to over simplify our view of other countries. The Germans and Chinese have done exceedingly well these past few years, but they have their problems too. And while the USA is still recovering from the Bush era irresponsibility’s, it’s too early to count the USA out.