AskDong

I was hoping to pick up a copy of Wii Fit yesterday on it’s North American debut. I had no such luck. Wii Fit is generally sold out at most retailers to my great disappointment. It looks like I’ll be repeating my Wii hunt of 2007. I’m not hugely suprised by the shortage of Wii Fit, but I am more astounded there are still shortages of the Wii almost 20 months after the initial launch.

Wii Fit retails at $90, but if I were to buy it now from less savory sources I would have to pay as much as $250. I’m not paying that extra premium. While I’m certainly not supportive of people and companies somehow jumping the line and hoarding items only to resell them, I can’t blame people for pricing a product at which it’ll sell.

I’m biased by the nature of the industry I work in, and my study of economics. I’m a strong believer in price. Price is agnostic, and price is what ensures the markets work properly. If people are willing to pay $250 for Wii Fit, that gives Nintendo incentive to produce more. Pricing it at $250 also dissuades someone like myself from going and buying the product. The price balances the market.

The efficacy of price is the clearest in the commodity market such as oil, copper, and natural gas. By it’s nature a barrel of oil from one producer is indistinguishable from one produced by another. I’m fudging a bit because crude does have different grades, but for the purpose of pricing the basic commodity the variation between West Texas Intermediate (WTI) and Dubai are inconsequential. While Nintendo may not have a monopoly on video gaming, it does have a monopoly on the Wii and Wii Fit.

In the world of oil, the closest thing we have to a monopoly is OPEC, The Organization of Petroleum Producing Countries. While they have influence, it would be foolish to think they control the oil market. OPEC learned it’s lesson in 80s. Other countries start producing more oil, and consumers started consuming less. As much as it hurts the pocketbook, high oil prices are part of the solution. However this time around, I don’t believe Oil prices will fall to 1980 levels. Many non-OPEC countries are tapped out - the North Sea is about dried up, and other such as Russia are not so eager to see prices come down. Demand management, especially in Developed nations such as the U.S., will be critical lever to keep things in balance.

Mazda is choosing to cut it’s babies in half. A couple years ago there was freak mishap on a freighter, the Cougar Ace, that rendered it unseaworthy. The ship tipped to port at nearly a 60 degree angle. As a result, much of the cargo was drenched in seawater, or stored at odd angles. There were over 100 million worth of Mazda cars in the cargo hold.

Mazda has now decided to destroy all the cars to prevent them from making it onto the gray market as new cars. Mazda has originally intended to sell some as new given that many of the cars are likely undamaged. Financially, it doesn’t matter to Mazda. They had insured their cargo, and as result are probably better off destroying the cars rather than risk their reputation if the cars turned out to be faulty. Interestingly enough, casualty and property insurance developed for exactly this type of event.

While I understand Mazda’s intentions, and the Insurance company’s reluctance to enter the car salvage business, it seems like such an awful waste. While I would be weary of Mazda if they had attempted to sell these cars as new, I would think that these cars can be at least salvaged for parts. I can’t imagine there’s much if anything wrong with the body panels. Instead these cars are being shredded. Such a waste.

After reading this article on CNN, I felt sick in my stomach about the current state of American values. As the current mortgage crisis continues to unfold, I’ve become more cynical. I had my reservations around the bail out of Bear Stearns, especially after JP Morgan quintupled it’s offer to $10. I still feel for many the Americans who are struggling in souring American Economy with mortgages they can’t afford. I have no such sympathy for the Copes whom CNN profiled.

It’s not because they worked in the heart of the subprime mortgage industry in Orange county. Employees are often as much victims of short sighted business practices as customers. Ask the numerous ex-employees of Enron.

I’ll let quotes from the article speak for themselves with some help from my own commentary

• “The two didn’t say exactly how much money they made at their last jobs but Kent admitted they each had six-figure incomes.”
• ‘”We’ve used up most of our reserves, cashed in her 401K,”‘ - Given they were making over 200k, you would think they wouldn’t have to resort to dipping into the 401k
• “Today, they’re trying to get by on his unemployment benefits of about $450 a week, which covers only about an eighth of the basic payments they owe every month” - If basic payments are almost $10,000/month, I hate to think what their total expense are.
• “And they’ve made cutbacks: trading in Kent’s Corvette for a Suburban and getting rid of the gardener, for example” - A Suburban is a cutback?
• ‘”You know you could take a roller coaster ride down,” he said. “But you never envisioned it could be a free fall.”‘ - Aren’t you basically in a free fall on roller coaster on the way down

I feel bad for coming away from the article so critical of Copes. I actually don’t particularly like casting judgement, even though I do it all the time. We all have our financial shortcomings. I’ll be the first to admit that like the Copes, I eat out too much. However, having just come back from Southern California and Orange County, I readily see how things have gone wrong.

Orange county is amplification and microcosm of America. We’ve become a country too concerned with immediate gratification rather than long term satisfaction. The Copes are in their predicament not because they didn’t earn good money. They did. They are in their predicament because they had neither a contingency or sustainable plan. If you know you’re on a roller coaster, then you should know that you need to build and save energy (money) on the way up to use on the way down.

I’m not very good about throwing my shoes away.  This partly because I’m cheap, and partly because I find old worn shoes extremely comfortable.  At any given time I usually own 4 pairs of shoes - sneakers, brown shoes, black shoes, and some boots.  However, I almost always wear only wear set exclusively, the black or brown ones.  Currently it’s the brown shoes. I’ve been wearing them for about a year and half now.

I actually have some replacement shoes for my trusty old brown shoes, but I still tend to wear the old shoes. I have a hard time letting go, and I feel the longer I wear my old shoes, the longer my new shoes will last.  In college I duct taped my sneakers together after the sole loosened and flopped around.  I can’t bear to throw away shoes that have anything less than a major hole through the sole.  Why?  As I’ve seen it a shoe as long as it encloses my foot, it’s good enough to be worn. Neither my girlfriend or my parents feel this way.  My girlfriend threw away my old sneakers, and my parents did the same back when I was in high school.

Slowly, I’m coming to realize that they might be right. When wearing the same pair of shoes days in and day out it’s difficult to discern inadequacies in the shoes.  However right now as I still have my old shoes and my new new shoes, I can make a direct comparison. My old shoes really don’t offer much support or protection (the soles have small crsck which means they get wet when the sidewalk is wet).  I think I need to bite the bullet and transition to new shoes more often I do right now.

Over Thanksgiving, I gave a good yelling to my dad when I got out of the bathroom.  He had recently stocked the bathroom with probably what was the cheapest toilet paper I have ever used in my life.  It was the generic toilet paper from Market Basket, one of the lower priced Supermarkets in the Boston Area.  I have no problem with either Market Basket or Store branded products.  I think both can deliver fantastic values on some products.  Market Basket toilet paper is not one of these products.

I preach frugality on most things.  I don’t personally believe in owning flashy cars, designer clothes, or most other luxury items.  I do, on the other hand, spend much more than the average person on traveling and I definitely believe in treating my bottom to “luxury” toilet paper.  As a guy I have occasion to use toilet paper on average 5 times a week.  When I do have to use toilet paper, I use a generous amount - I would say at least 20 sheets each visit on average, or about 7 feet.

I can purchase the least expensive toilet paper, Scott’s 1 Ply, available at drugstore.come for $9.99 for 12 rolls or 6000 sheets. The stuff I used at my Dad’s was much cheaper.  He didn’t recall how much it cost, but I wouldn’t be surprised if it at was at most half the price of the Scott’s.  I’ve used the cheap Scott’s 1 ply sheets before, and after using the Market Basket toilet paper, the Scott’s 1-ply would feel like Quilted Northern.  The more expensive and thicker Charmin’s Ultra is offered at $9.99 for 12 rolls, or 2400 sheets.

• Scott’s 1 Ply: 6000/$9.99 = .1666 cents a sheet
• Charmins’ Ulttra: 2400/$9.99 = .41625 cents a sheet
• Market Basket (estimated) = .1666/2 = .08 cents a sheet

Knowing how much toilet paper I use, and the going price of toilet paper, I can figure out how much it really costs me to use the luxury brand over the course of lifetime (I estimate generously that I have about 60 years left on the ticker).

20 sheets X 5 visits X 60 years X 52.15 weeks = 312,900 sheets of toilet paper for the rest of my life

At most I can save a bit $1000 over my lifetime. This doesn’t even take to account the fact that I believe I would probably have to use more sheets of the cheap stuff to do the same job as better toilet paper. My estimate of total sheets is on the  high side as I haven’t accounted for the fact that about half my toilet paper usage is provided free at work.  The actual savings is likely to be much less.

Next time you’re victim of cheap toilet paper consider sending a message with a gift of your own.  Life’s too short, and butt cheeks too sensitive to expose to thin grainy toilet paper.  I certainly rather make my sacrifices elsewhere in life.