Everybody wants in. (Michael Toolan/Magic)

On today's Planet Money:

Adam Davidson takes a road trip to Vegas, via Haiti.

When Adam and Chana Joffe-Walt traveled to Haiti recently, they kept hearing about "Magic" -- a big clothing trade show in Vegas that the Haitians hoped would be a post-earthquake boon for their apparel industry.

So Adam went to Vegas for the show. But Haiti, as it turns out, is only a bit player on the Vegas scene, swamped by the likes of China, Bangladesh and Egypt.

And the real star of the show turns out to be Ron Kirk, the U.S. trade representative. What Haiti (and everybody else) really wants is a sweet trade deal with the U.S.

For more of our coverage on Haiti's economy, listen to our podcasts on Haitian microentrepreneur Yvrose Jean Baptiste, Mango Man Jean Maurice Buteau and on the prospects for rebuilding the country.

Download the podcast, or subscribe. Music: Jamie Cullum's "Wheels." Find us: Twitter/ Facebook/ Flickr.

By Jacob Goldstein

A familiar ritual is underway in Washington: A big Medicare pay cut to doctors is looming, and Congress is trying to get its act together to block it.

And in a rare display of bipartisanship, lawmakers will likely swoop in soon and pass a measure to stop the cut -- but only temporarily.

This sort of brinkmanship on Medicare payments has been going on for years. In fact, Congress just voted in late December to postpone a 21% cut that was set to take effect on January 1. But lawmakers only postponed the cut by two months -- so here we are again.

What gives?

Continue reading "Medicare Pay For Doctors: Why Congress Keeps Punting" >

By Jacob Goldstein

Good morning.

AIG lost $8.9 billion in the fourth quarter of last year. Sure, it sounds bad -- until you compare it to the $61.7 billion the company lost in the fourth quarter of 2008. AIG's main business lines actually turned a small profit in the last three months of 2009. But the company took some big hits to its balance sheet as it paid back part of its bailout, set more money aside to cover its insurance policies, and sold a subsidiary on the cheap. Here's more from Bloomberg.

Still feeling angry about the bailouts? Arne Duncan would like a word with you. In this morning's Washington Post, the education secretary leans on old-school, anti-bank populism to push the Obama administration's plan to change how student loans work. Under the current system, "the banks earn profits on the interest; if students default, taxpayers take the loss, not the banks," he writes. "In other words, working Americans pay while bankers get rich." (Here's a counterpoint from Sallie Mae, which could lose big under the administration's plan.) A student-loan bill passed the House last year, but has been held up in the Senate.

Greece! Greece! Greece! The EU says Greece's austerity plan isn't austere enough, the WSJ reports. The Fed is looking into the whole Goldman-Greece derivatives thing, NPR says. The FT wonders who's actually holding all that Greek debt.

Neither fish nor fowl. (Nicole Duplaix/Getty Images)

By Jacob Goldstein

It was a little unnerving this morning when Ben Bernanke compared Fannie Mae and Freddie Mac to a platypus.

Sure, the platypus is a fun, weird animal. But do we really want a biological freakshow to be the model for two giant entities that sit at the center of the U.S. housing market and have cost taxpayers hundreds of billions of dollars?

Continue reading "Why Fannie Mae Is Like a Platypus" >

Good morning.

GM said a deal to sell its Hummer line fell through, and the company will "begin the orderly wind-down of the Hummer operations." You can make up your own line here about how the vehicle that was the symbol of the boom is now the symbol of the bust. Sales are down 78% this year, the Detroit News reports.

Forget Greece: Spain could be the real worry for the Euro, the WSJ says. "The euro zone's No. 4 economy, Spain has an unemployment rate of 19%, a deflating housing bubble, big debts and a gaping budget deficit. Its gross domestic product contracted 3.6% in 2009 and is expected to shrink again this year, leaving Spain in its deepest and longest recession in a half-century." Yikes.

India, on the other hand, is on fire. The country's economy is projected to grow by more than 8% in the coming fiscal year, Bloomberg reports. Of course, rapid growth often brings inflation. And, as the FT notes, food prices in India have risen 18% in the past year.

Listening to memos on the iPod while jogging home from work: A cost-benefit analysis from Peter Orszag, in this interview with Politico.

By Jacob Goldstein

Over the years Joel Riddle has spent thousands of dollars on overdraft fees.

Sometimes his bank balance is lower than he thinks. And when he uses his debit card to buy something that costs more than what he has in his account, his bank charges him a $35 fee.

So Joel, who works for NPR, was happy when he learned that Bank of America started letting its customers change the way overdrafts are handled. Rather than getting charged, customers can choose to have their debit-card purchases be automatically denied when they try to buy something that costs more than they have in their account.

But when he called B of A to make this change, the person he talked to on the phone started telling him that he could still be charged overdraft fees. (As it turns out, this could occur in rare cases, because certain merchants preauthorize a debit card transaction even if the customer's account contains only some minimal amount that's not enough to cover the full purchase.)

Anyway, the lady on the phone kept giving Joel some weird example about buying gas. He doesn't have a car, and kept asking her for other examples, but she kept returning to the gas thing.

"I felt that Bank of America was intentionally trying to confuse me," Joel said. He thought the bank was trying to get him to keep overdraft protection.

Continue reading "Avoiding Debit-Card Fees: One Man's Quest" >

By Alexander Hotz

The prospect of Greece defaulting on its sovereign debt is a big deal these days. But in the long view, a default wouldn't be remarkable. Greece has been in default on its debt for more than half the years since 1800, according to Kenneth Rogoff, a Harvard economist.

Other European countries, including Russia, Poland an Hungary, have also spent significant chunks of modern history in default.

"We usually see a bunch of sovereign defaults," in the years following a banking crisis, Rogoff told the Telegraph. "I predict we will again."

Of course, not all European countries are serial defaulters. The U.K., Belgium and all of the Scandinavian countries have stellar credit reports.

Rogoff spoke to Planet Money's David Kestenbaum on yesterday's podcast. In an email to Kestenbaum after their interview, he pointed to a table in his recent book, This Time Is Different, as a reminder of just how often countries default on their debt.

The graphic above uses data from that table, which lists the percentage of time countries have been in default or rescheduling (a technical term explained here) on their sovereign debt.

Note: The graph is based on the years since 1800. For countries that became independent after 1800, the data starts at independence.

Is it surprising that a Congressman suggested the Federal Reserve may have funded Watergate and Saddam Hussein? Maybe not, if the Congressman is the author of a book called "End the Fed."

Here's how Rep. Ron Paul put it this morning, when Ben Bernanke appeared before the House Financial Services Committee:

...it has been reported in the past that during the 1980s that the Fed actually facilitated a $5.5-billion loan to Saddam Hussein. And he then bought weapons from our military-industrial complex. And also that is when he invested in a nuclear reactor. ...

Also there's been reports that the cash used in the Watergate scandal came through the Federal Reserve. And when investigators back in those years tried to find out, they were always stonewalled, and we couldn't get the information. ... would you grant that after 10 or 15 years, the American people deserve to know?

Bernanke's response:

Continue reading "Ron Paul, Ben Bernanke and Watergate" >

By Jacob Goldstein

The number of banks in financial trouble is at a 17-year high, according to the feds. Lending is way down. But Wall Street firms are doing great, and bonuses are way up.

Numbers released yesterday by the FDIC and the New York State comptroller are a reminder of the gap between the nation's commercial and savings banks (which offer checking accounts, loans and the like) and Wall Street firms (which, among other things, buy and sell stocks and bonds for themselves and their customers).

Continue reading "The Wide Gulf Between Wall Street and Commercial Banks" >

A labor group blockades the Athens stock market to protest government austerity measures. (Petros Giannakouris/AP)

On today's Planet Money:

Greece is scrambling to get its national debt under control. Investors are already nervous. So what would happen if Greece actually defaulted-- if it simply stopped making payments on its bonds?

Investors would go beyond nervous. They might even panic. Particularly because Greece isn't alone among European countries when it comes to being heavily indebted. Investors would start demanding higher interest rates on bonds sold by countries like Spain, Italy and Portugal. And then they, in turn, could default.

At least, that's what Ken Rogoff, Harvard prof and former chief economist at the IMF, says in today's podcast.

His description reminded us of what happened after Lehman Brothers went bankrupt; panic ensued, and a bunch of other big companies fell apart. So if push comes to shove, will Greece be like Bear Stearns -- saved from default at the last minute -- or like Lehman Brothers?

Download the podcast; or subscribe. Music: Depeche Mode's "Shake the Disease." Find us: Twitter/ Facebook/ Flickr.