MONEY currencies

Why the Strong Dollar Hurts Investors and What They Should Do About it

Johnson & Johnson products
John Raoux—AP Johnson & Johnson products

The strong dollar is hurting some multi-national corporations. That doesn't mean you should do anything.

Johnson & Johnson endured a difficult first quarter. Profits at the healthcare behemoth declined by almost 9%, and the company lowered earnings projections for the rest of the year.

Part of the blame went to poor sales of a particular hepatitis drug. But J&J also took a hit from something that its executives can’t in any way control: foreign exchange.

Over the past 12 months, the U.S. dollar has gained against every major currency, according to data from Bloomberg, including more than 20% against the euro.

That can be pleasant for American consumers and travelers, whose dollars can suddenly buy more imported goods and stretch further when spent abroad in places like Europe.

But a strong dollar can also have negative consequences, and the losers include multinational American companies like J&J that sell goods overseas, where American exports are suddenly more expensive than before and thus less competitive. Indeed, currency fluctuations sliced the company’s earnings by 7.2%.

What’s more, there’s reason to believe this kind of impact will be felt across the U.S. economy. The International Monetary Fund recently projected that currency effects would decrease U.S. economic growth this year by half a percentage point, to 3.1%.

In light of all this, investors may be wondering if they should make some changes to their domestic stock portfolio, perhaps lightening up on companies with lots of international business. Here are two reasons to hold off.

The Strong Dollar Is Already Baked Into Stock Prices

Intelligent folks can disagree on the efficient markets hypothesis, which holds that share prices always reflect all relevant information. But at least some of today’s currency issues are already cooked into company stock prices.

In other words, it’s probably too late to avoid the negative currency effects—and selling now might mean missing out when the currency pendulum swings the other way. You can see that in Johnson & Johnson: While the company’s numbers look bad on paper, they actually outperformed analysts’ expectations. The company’s stock was unchanged yesterday, and is actually up a bit over the past month.

That’s also true of the broader U.S. stock market: The S&P 500, which collectively takes in about half of its revenue from overseas, is up almost 2% so far this year.

Moreover, Europe won’t stay on its current economic path forever. Eventually the economies of its member nations will improve, the European Central Bank will stop buying bonds, and interest rates will one day rise. When that happens, demand for euros will increase.

The Dollar Won’t Stay Strong Forever

One reason the greenback has performed so well against other currencies is that our monetary policy looks downright hawkish by comparison. The Bank of Japan and the European Central Bank are holding down interest rates and buying up bonds in an effort to lower interest rates, stimulate spending, and improve economic growth. If that plan sounds familiar, that’s because the U.S. Federal Reserve spent years doing the same thing. These days the conventional wisdom is that the Fed will start to raise rates this summer or fall, thereby making dollars more desirable.

But the conventional wisdom isn’t always right—and in fact economic data over the past couple of weeks has revealed some weakness in the U.S. Last month’s jobs report showed employers adding fewer workers than expected, while retail sales underperformed as well. And while a plurality of economists polled by Bloomberg couple of weeks ago estimated that the Fed would raise interest rates in June, the most recent poll shows that a majority now think that increase won’t be announced until September. As a result, the dollar has actually underperformed the yen, euro and pound over the past month.

Which all means that you can be made to look silly by trying to time the market.

“From the prospective of individual investors with an intermediate to long-term time horizon, you shouldn’t be focused on the dollar,” says John Toohey, head of equities at USAA Investments. “It all tends to even out over time.”

TIME Economy

Low Wage Workers Are Storming the Barricades

Activists Hold Protest In Favor Of Raising Minimum Wage
Alex Wong—Getty Images Activists hold protest In favor of raising minimum wage on April 29, 2014 in Washington, DC.

A few weeks back, when Walmart announced plans to raise its starting pay to $9 per hour, I wrote a column saying this was just the beginning of what would be a growing movement around raising wages in America. Today marks a new high point in this struggle, with tens of thousands of workers set to join walkouts and protests in dozens of cities including New York, Chicago, LA, Oakland, Raleigh, Atlanta, Tampa and Boston, as part of the “Fight for $15” movement to raise the federal minimum wage.

This is big shakes in a country where people don’t take to the streets easily, even when they are toiling full-time for pay so low it forces them to take government subsidies to make ends meet, as is the case with many of the employees from fast food retail outlets like McDonalds and Walmart, as well as the home care aids, child caregivers, launderers, car washers and others who’ll be joining the protests.

It’s always been amazing to me that in a country where 42% of the population makes roughly $15 per hour, that more people weren’t already holding bullhorns, and I don’t mean just low-income workers. There’s something fundamentally off about the fact that corporate profits are at record highs in large part because labor’s share is so low, yet when low-income workers have to then apply for federal benefits, the true cost of those profits gets pushed back not to companies, but onto taxpayers, at a time when state debt levels are at record highs. Talk about an imbalanced economic model.

A higher federal minimum wage is inevitable, given that numerous states have already raised theirs and most economists and even many Right Wing politicos are increasingly in agreement that potential job destruction from a moderate increase in minimum wages is negligible. (See a good New York Times summary of that here.) Indeed, the pressure is now on presidential hopeful Hillary Clinton to come out in favor of a higher wage, given her pronouncement that she wants to be a “champion” for the average Joe.

But how will all this influence the inequality debate that will be front and center in the 2016 elections? And what will any of it really do for overall economic growth?

As much as wage hikes are needed to help people avoid working in poverty, the truth is that they won’t do much to move the needle on inequality, since most of the wealth divide has happened at the top end of the labor spectrum. There’s been a $9 trillion increase in household stock market wealth since 2008, most of which has accrued to the top quarter or so of the population that owns the majority of stocks. C-suite America in particular has benefitted, since executives take home the majority of their pay in stock (and thus have reason to do whatever it takes to manipulate stock price.)

Higher federal minimum wages are a good start, but it’s only one piece of the inequality puzzle. Boosting wages in a bigger way will also requiring changing the corporate model to reflect the fact that companies don’t exist only to enrich shareholders, but also workers and society at large, which is the way capitalism works in many other countries. German style worker councils would help balance things, as would a sliding capital gains tax for long versus short-term stock holdings, limits on corporate share buybacks and fiscal stimulus that boosted demand, and hopefully, wages. (For a fascinating back and forth on that topic between Larry Summers and Ben Bernanke, see Brookings’ website.)

Politicians are going to have to grapple with this in the election cycle, because as the latest round of wage protests makes clear, the issue isn’t going away anytime soon.

Read next: Target, Gap and Other Major Retailers Face Staffing Probe

Listen to the most important stories of the day.

TIME Economics

The Real Reason the Dollar Is So Strong Right Now

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Purestock—Getty Images/Purestock Close-up of American dollar bills

And why it could seriously hurt American business

When is a stronger U.S. dollar not a good thing? When it causes companies to sell fewer products overseas. That’s one of the big concerns at the moment among American CEOs, many of whom are worried about what the dollar’s strength against currencies like the euro and the yen mean for US exports–and corporate profits.

They have legitimate reason to worry. Each of the five major dips in U.S. corporate profitability since 1970 have occurred following reduced sales after periods of relative dollar strength. The Fed has recently expressed concerns about whether the dollar’s strength could hold back the US recovery, which has been lackluster to begin with. Wages are still growing at only around 2 %, not enough to push up consumer spending, which is the major driver of our economy. If US exports also begin to suffer, it could be difficult for the economy to sustain the 3% a year growth figure that is needed to create more jobs.

Some economists believe the dollar’s strength reflects the fact that the U.S. is still the prettiest house on the ugly block that is the global economy. (Certainly, to employ another metaphor, it’s the strongest leg on the global stool with China slowing sharply and the Eurozone debt crisis flaring back up as Greece looks likely to run out of money next month.) But I think it’s more about central bankers and their actions. The dollar’s strength reflects the Fed’s own recent indications that it will likely raise interest rates by the end of the year.

Indeed, the dollar’s strength almost perfectly tracks Fed statements about the coming end of easy money. The tightening of US monetary policy (or even the hint that policy will tighten at some point) has driven the dollar up (and oil down) even as Europe’s beginning of its own “QE” or quantitative easing program has driven the Euro down. None of it reflects the economic reality on the ground, but rather the fact that central bankers are, as investment guru Mohamed El-Erian frequently says, the “only game in town.” For more on what the stronger dollar might mean for consumers, companies and the economy as a whole, you can listen to Josh Barro from the New York Times and I discuss the topic on this week’s Money Talking.

TIME Economy

The Middle Class Is Doing Worse Than You Think

It seems like everyone is concerned about economic inequality these days. A Gallup poll in January showed that more than two-thirds of Americans are dissatisfied with the way income and wealth are distributed, and politicians from both parties are talking about the problems facing the middle class.

But the problem may be even worse than Americans think.

A new report by the Federal Reserve Bank of St. Louis — hardly a liberal bastion — found that economic inequality is actually much worse if you take into account the demographics of the middle class.

Under the traditional economic model, which ranks all American families by their incomes and then analyzes those in the middle, the median income of the middle class increased only slightly, by between 2% and 8%, between 1989 and 2013.

But if you use a different economic model that takes into account demographic and sociological attributes, such as age, educational attainment, race or ethnicity, the median income of the middle class has actually decreased by 16% during that same time period, according to the report, which was released Tuesday.

Senior economic adviser William Emmons and policy analyst Bryan Noeth argue that the method economists typically use to measure the financial health of the middle class fails to reflect important shifts in the population, like whether a middle class family qualifies as middle class in terms of income but not in accumulated wealth, or whether a family is counted among the middle class one year, but not the next.

Instead, they suggest using a method that tracks the group more holistically, by defining a middle class family as one “headed by someone who is at least 40 years old, who is white or Asian with exactly a high school diploma, or by someone who is black or Hispanic with a two- or four-year college degree.”

“In effect, the bar has been rising to remain near the middle of the income and wealth distributions,” Emmons and Noeth write. “The growing importance of college degrees and other advantages more commonly enjoyed by white and Asian families are contributing to significant downward pressure on the relative standing of less-educated and historically disadvantaged minority families.”

TIME psychology

7 Ways Your Mind Messes With Your Money

Mmmmmoney: Get a grip; it's just paper
KAREN BLEIER; AFP/Getty Images Mmmmmoney: Get a grip; it's just paper

Jeffrey Kluger is Editor at Large for TIME.

A new book shows the many ways money makes you crazy

If your brain is like most brains, it’s got an awfully high opinion of itself—pretty darned sure it’s pretty darned good at a lot of things. That probably includes handling money. But on that score your brain is almost certainly lying to you. No matter how much you’re worth, no matter how deftly you think you play the market, your reasoning lobes go all to pieces when cash is on the line. That is one of many smart—and scary—points made by author and J.P. Morgan vice president Kabir Sehgal in his new book Coined: The Rich History of Money and How it Has Shaped Us. Here, in no particular order, are seven reasons you should never leave your brain alone with your wallet.

Inflation? What’s that? You’re way too smart to think that if your salary doubles but the price of everything you buy doubles too you’ve somehow come out ahead, right? Wrong. In one study, volunteers were given the opportunity to win money that they could use to buy gifts from a catalogue. In later rounds, the amount they could win went up by 50% but so did the cost of all of the catalogue items. Nonetheless, their prefrontal cortex registered greater arousal after the staged inflation—even when they were warned before the study began that the purchasing power of their money would not increase. The implication: If a corned beef sandwich and a Coke cost $15,000 you’d still be thrilled to be a billionaire.

Keep yer lousy money: Guess what! I’m going to give you $199. Nice, right? Oh, did I forget to mention that it comes out of $1,000 someone else gave me to divide up between us any way I see fit? In multiple studies, when it’s up to one subject to apportion a fixed amount and up to the other to accept it or neither one gets paid, more than half of recipients will reject anything less than 20% of the total. In other words, you’ll turn down a free $199 to deny me my undeserved $801. Your ego thanks you, your checking account doesn’t.

Losing feels worse than winning feels good: Here’s something the Vegas casinos don’t tell you: That high you get from winning $10,000 at the craps table will fade a lot faster than the what-was-I-thinking self-loathing that comes when you lose the same amount. To get people to wager $20 on a coin flip, researchers have found that they typically have to be given the chance to double their money; betting $20 to win, say, $35 just doesn’t cut it. That seems like good sense—but given the realistic shot you’ve got at winning, it’s also bad math.

Simply the best: You know that store that opened on your corner that sold nothing but artisanal beets—the one that you knew would go out of business within a month and that didn’t even last two weeks? The owner totally didn’t see that coming. That’s called the overconfidence bias. The hard fact is, about 80% of new businesses are floating upside down at the top of the aquarium within 18 to 24 months—but nearly all entrepreneurs are convinced they’re going to be in the elite 20%. We bring the same swagger to playing the market and speculating in real estate—and to dancing at a wedding after we’ve had enough drinks and are convinced we’ve got moves. Watch the video later and see how that works out.

The hunt beats the kill: Never mind cigarettes and alcohol, if there’s one substance the government should regulate it’s dopamine—the feel-good neurotransmitter that gives you a little reward pellet of happiness when your brain decides you’ve done something good. The problem is, your brain can be an idiot. There’s far more dopamine released in its nucleus acumbens region—the reward center—when you’re anticipating some kind of payoff than when you’ve actually achieved it. That means expanding your business is more fun than running it and investing in the market is more fun than consolidating your gains. Those are great strategies—but only until the very moment they’re not.

I think therefore I win: I have a perfect three-step plan for winning the Power Ball Lottery: 1) I buy a ticket. 2) About 175 million other people buy tickets. 3) They give me all the tickets they bought. OK, failing that, the odds are pretty good that I may not be the person on TV who gets handed that giant check. But I play anyway thanks to what’s known as the availability heuristic. I think about winning, I see commercials with people who have actually won, I fantasize about what I’ll do with the money when I do win—and pretty soon it seems crazy not to play. The more available thoughts of something unlikely are, the more realistic it seems that it may actually happen. This is the reason there should always be a 48-hour cooling off period after you leave baseball fantasy camp and before you’re allowed to sell your house and try out for the Yankees’ farm club.

Fifty shades of green: Perhaps the biggest reason we’re irrational about money is that we’ve come to fetishize not just the idea of wealth but the pieces of currency themselves. In one study, subjects counted out either actual bills or worthless pieces of paper of the same size, and then plunged their hands into 122ºF (50ºC) water. The ones who had handled real cash experienced less pain—effectively anesthetized by the Benjamins. Other studies have shown heightened brain activity when people witness money being destroyed, with the degree of neuronal excitement increasing in lockstep with the value of the currency. It’s money’s world; we’re just living in it.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

TIME Congress

How Elizabeth Warren Turns Boilerplate Viral

Her secret sauce? Carefully modulated anger

Last week, Sen. Elizabeth Warren posted a video on Facebook of a recent speech in which she discussed the decline of the middle class and criticized Republicans in Congress. Its substance was fairly routine for a Democratic lawmaker, but the response was not.

In one week, the video has gone viral, grabbing more than 2 million views and picking up more than 50,000 shares on Facebook. And it’s not unusual for the Massachusetts Democrat, either. Three of her most-watched speeches on YouTube have more than a million views, while another seven have more than 100,000 views.

So what’s her secret? TIME sat down with some rhetoric professors to take a closer look at her most recent viral hit and figure out why the former Harvard professor who once had trouble just doing a softball interview with The Daily Show has become such a power hitter online.

They argued that the secret sauce in Warren’s videos is a palpable but carefully modulated sense of anger, the very quality that billionaire investor Warren Buffett had criticized her for earlier this week.

The recent video’s headline doesn’t entice—“Watch and share my opening statement from yesterday’s first Middle Class Prosperity Project forum”—or boast an impressive backdrop. For nearly six minutes, it’s a close, unwavering shot of the 65-year-old academic and freshman Senator sitting on a black leather chair behind a microphone and a nameplate in a nondescript Capitol Hill room. The first minute and a half of the speech is relatively dull, filled with facts highlighting the decline of the middle class.

Then she slows down.

“In the 32 years from 1980 to 2012, 90% of Americans got zero income growth,” says Warren. “Nothing. All of the income growth in that 32-year period went to those at the top.”

It’s at this point in the speech where she first begins to repeat her points for emphasis—a trick used by “orators since time immemorial,” says Jeffrey Walker, chair of the Department of Rhetoric and Writing at the University of Texas at Austin—and let her emotion bubble up.

“She projects an attitude of indignation and anger and wants the audience to gin up their emotion about this issue,” says Walker. “The phrasing and the tone of voice and the hand gestures all contribute to a sense of her being angry, but it doesn’t seem artificial.”

That anger continues in what Walker calls the “rhythmic envelope”: a few refrains of what caused those economic problems—ripping “the choice to” do x, y and z in Washington—and who she thinks should be blamed. The next line she repeats begins with “I’ll believe Republicans care” about the country’s “middle class,” “working families,” and “future.” She nears the end of her speech blasting Republicans in short phrases.

“I have a message for my Republican colleagues: you control Congress,” she says in what becomes the pull quote on Facebook. “Stop talking about helping the middle class – and start doing it. Close tax loopholes, raise the minimum wage, cut student loan interest rates, raise Social Security payments, fund our schools and our highways and medical research.”

Lynn Itagaki, an English professor at Ohio State University, says that Warren is a “great translator” with a “plain-spoken manner” who can help sway the mass public on complicated material, especially through a vehicle—Facebook—that has a built-in audience ready for one of Warren’s favorite topics, tackling student debt.

“With the kind of a precision of a doctor or surgeon, she names it, identifies the political choices that caused it historically and then she proposes a solution,” says Itagaki of middle class economic issues. “She provides a diagnosis of the problem and then provides you a prescription.”

“She’s activating the emotions of ‘we must protect what is good about our families and what is good about hard working Americans,’” she adds. “And in order to do that we have to get angry about the lobbyists and lawyers, the tax loopholes and tax breaks, the attacks on teachers and fire fighters in the service of billionaires and corporations.”

But in this speech, Warren could do better in connecting with the audience on a personal level, according to Walker, as she talks broadly about “young people” and “moms and dads” instead of specific people. And she would be, as Buffett argues, more effective in changing minds instead of reinforcing some if she didn’t bash Republicans.

“She doesn’t give you an image of a particular person being crushed under the debt,” says Walker. “It restricts the audience that she can be really effective with to those who mostly agree with her already. So there’s a partisan preaching to the choir aspect.”

“If you’re trying to persuade someone to do something, you don’t say ‘you’re ugly and stupid and evil, so will you do something for me,’” he adds.

Still Walker, who believes that the state of U.S. discourse is “pretty depressing” after reading some of the Facebook comments, believes that Warren did succeed in generating some passionate responses.

“It has a huge number of hits on the webpage,” he says. “Perhaps it’s the generation of emotion that ultimately has that effect. … Clearly she made some people angry. Not angry at her, rather, angry at the problem.”

TIME medecine

The Unintended Side Effect of Lower Drug Prices

Q - Dance Ecstasy Pills
Getty Images

Trends in the pharmaceutical sector could bring down drug prices but harm the development of new medicines

As public pressure mounts on drug makers to lower prices, both the private sector and the FDA are looking for solutions. At the same time, expiring patents are forcing big drug makers to explore new avenues of growth. While these factors could benefit patients, they could also inadvertently compromise the development of miracle drugs that save millions of lives.

In a recent survey of pharmaceutical industry executives, 43% support the idea of the FDA taking the economic value of drugs into account in the approval process. Insurance companies already require drug makers to demonstrate such value and European regulators factor in economic benefits into their analysis. But scrutiny by the FDA could make a big difference to which medicines make their way to the market and impact how R&D is conducted at drug companies.

First, a drug that cures a type of cancer might cost billions of dollars to develop whereas a drug that cures a minor affliction could be much cheaper to create. Complex medicines that treat the most serious diseases naturally require more clinical trials, longer testing periods, greater expense, and opportunity cost (the returns that investors could get by putting the money to work elsewhere).

In this scenario, if the FDA were to focus on cost-effectiveness, the life-saving cancer drug might not get approved whereas the cheaper, but minor, drug would. Since the cost of failure is high, this could discourage pharmaceutical companies from devoting resources to medicines that are expensive to produce, even if they are crucially important to society.

The unreliability of cost estimates exacerbates this. While a new study by the Tufts Center pegs the average cost of developing and getting a new drug approved at $2.6 billion, estimates from the Federal Trade Commission and the private sector range from $521 million to $5 billion, according to the Washington Post. This could be due to different interpretations of the opportunity cost as well as the allocation of research tax credits across a drug maker’s portfolio of products.

What this implies is that the process of assessing the economic value of a new drug could be extremely complicated, subjective, and possibly lead to the wrong results; in turn, such uncertainty could have a chilling effect on innovation.

Another issue is the direction that drug makers seem to be going in.

Pfizer (PFE), the world’s largest pharmaceutical company, recently announced the $17 billion purchase of Hospira, a company that makes generic medicines for hospitals and copycats of biotech proteins such as Amgen’s Enbrel. This comes on the heels of patent expirations of major drugs like Lipitor that have made Pfizer a very rich company and a household name. Analysts speculate that the new acquisition is a move by the company towards the generics business in order to make up for the loss of valuable patents on branded medicines.

This “patent cliff”, as it is called, is not unique to Pfizer. Other major drug makers like Eli Lilly (LLY) and Bristol-Myers Squibb (BMY) are all dealing with patent expirations, which reportedly can dent the sale of brand name medicines by 90% and move people towards cheaper generics. In addition, pharmacists and doctors are 80% more likely to prescribe generics in today’s cost-conscious environment.

This means that Pfizer will probably continue to widen its portfolio of generics to bolster profits and that other pharmaceutical giants will follow. This may be good news for their stockholders but it’s bad news for the development of new medicines, which require original R&D by the drug companies.

There is no doubt that drug prices are way too high. Cancer drugs, for example, can cost up to $100,000 a patient per year. At the same time, less than 3% of patients use specialized drugs while 50% of drug payments go to that segment. Drug makers must find ways to reduce these costs without lowering the standards of testing required to ensure the safety of patients. The solution may be new technologies and process improvements that make R&D more cost-efficient, according to a report by Deloitte, or perhaps the development of powerful biologic drugs to replace traditional medicines.

But whatever the ultimate answer, it’s important to recognize that miracle drugs, which have revolutionized medicine in the past, are critical to our future well-being. Even medicines that are expensive to produce and too costly for current patients eventually fall in price and give birth to generics, which can benefit future generations. Without that original R&D, those drugs (and cures) might never exist.

Sanjay Sanghoee is a business commentator. He has worked at investment banks Lazard Freres and Dresdner Kleinwort Wasserstein, at hedge fund Ramius Capital, and has an MBA from Columbia Business School. Sanjay does not hold any investments in pharmaceutical companies, including Pfizer, Eli Lilly, and Bristol-Myers Squibb.

MONEY Odd Spending

Are Snowdrop Bulbs the Next Speculative Bubble?

Snowdrops growing on the edge of a woodland garden.
Clare Gainey—Alamy Snowdrops growing on the edge of a woodland garden.

Probably not—but they sure are popular.

In the early 1630s, the Dutch became obsessed with tulips. So obsessed that bulbs sold for 10 times the average annual salary of a skilled craftsman. At the peak of their popularity, bulbs were trading hands 10 times a day, in exchange for everything from two tons of butter to oxen to farmhouses. They were the big-ticket item of the Dutch Golden Age.

Until they weren’t. In February 1637, the people of Haarlem decided they’d had enough and stopped buying tulips at auction, sparking a panic throughout the country that resulted in the devaluation of the bulb. The market evaporated, and the world witnessed the bursting of one of its first economic bubbles.

Fast forward to today. A snowdrop (Galanthus) known as “Golden Fleece” just sold on the U.K.’s eBay website for a record £1,390 ($2,150), surpassing the previous record of $1,115. Last weekend, a variety known as “Treasure Island” sold for more than £500 (about $775). In 2014, the naming rights to a snowdrop varietal, along with a bulb, sold for $2,500. While it’s not nearly the same level of economic fervor the tulip generated—you can still get bulbs for less than $10—Galanthomania is definitely a thing.

What accounts for the tiny flower’s big price tag? For one thing, the dainty bloom is tough as nails, often braving the cold and snow to become a harbinger of spring. They are also easy for horticulturists to split, and years of cross-pollination have led to more than 1,500 varietals. Though less popular in the United States, they are celebrated in United Kingdom with festivals and special events throughout the beginning of the year.

According the Carolyn Walker, owner of Carolyn’s Shade Gardens in Bryn Mawr, Pa., there are fewer galanthophiles in the U.S., in part because of trade restrictions under the Convention on International Trade in Endangered Species (C.I.T.E.S.). Buying a snowdrop bulb or plant from overseas requires detailed forms and permits, which increases the price, and hassle, of a sale.

But that doesn’t mean a galanthophile community hasn’t taken root stateside. When Walker, one of the nation’s few sellers, posts a new catalogue with snowdrop bulbs, she sells out in days. Though her bulbs typically top out at $89, she says that spending hundreds or thousands of dollars on a bulb makes sense if you consider it a collector’s item.

People pay thousands of dollars for a bottle of wine, jewelry, or an item of designer clothing, she says. If you’re not into designer clothes but you’re really into Daphne’s Scissors or Lady Beatrix Stanley, splurging makes sense.

Are we about to see another Tulip Mania? Probably not.

“One specific element of Tulip Mania in the 1600s was that tulips were not traded directly,” said Markus Brunnermeier, a professor of economics at Princeton University. They were sold as forward contracts, or the promise of a bulb at a future date.

“In general, as long as speculation stays within a small group of (non-systemic) speculators, I would not be worried from a regulatory perspective,” he says.

Whew.

TIME Food & Drink

Global Coffee Consumption Projected to Soar Over Next Five Years

MakiEni—Flickr/Getty Images
MakiEni—Flickr/Getty Images

Populous nations like India and China are increasingly becoming fans of coffee

As more of the world turns to coffee, demand for the beverage will increase by nearly 25% over the coming five years, according to the International Coffee Organization (ICO).

“Consumption is increasing as societies in India, China and Latin America continue to be Westernized,” the ICO’s executive director Roberio Silva told the Wall Street Journal.

Currently, consumer intake of coffee stands at 141.6 million bags of beans; but by 2020, coffee demand is slated to rise to 175.8 million bags (each weighs approximately 132 lb.).

The high demand coincides with a period of tight coffee supplies globally and currency fluctuations in Brazil. Last year’s high prices were partly precipitated by a drought in the South American nation, currently the world’s largest coffee grower.

Global coffee production has been cut by 5.7 million bags this crop year because of the Brazilian drought, bad weather and a Central American plant fungus.

Other coffee growers like Vietnam, India and Indonesia are not expected to produce enough coffee to ensure a market stabilization next year.

[WSJ]

TIME Economics

Why the Nazis Were Desperate for Gold

Gold
Comstock Images / Getty Images

During World War II, the German Nazi government robbed more than 600 tons of European gold

History News Network

This post is in partnership with the History News Network, the website that puts the news into historical perspective. The article below was originally published at HNN.

It was the greatest robbery in world history. During World War II, the German Nazi government robbed more than 600 tons of European gold. That bullion was vitally important for the financing of the German army’s wars of conquest that started with the invasion of Austria in 1938. At that time, the gold was worth $600 million, but at today’s price for bullion it would be worth $22 billion.

Adolf Hitler had nothing but contempt for gold or money, believing that the only things that really mattered in politics and warfare were willpower and brute force. His top financial man was Hjalmar Horace Greeley Schacht, a respected banker who was responsible for ending the infamous German inflation after World War I. That still ranks as one of the worst in history. Schacht got his unusual middle name from his father, a failed German immigrant to the U.S. who greatly admired publisher Horace Greeley. Schacht was conceived in the U.S., but born in Germany just after his parents returned home.

Schacht advocated an economic policy known as autarky or self-sufficiency. Germany in World War I had been defeated largely by the British blockade that starved millions of Germans. Schacht’s autarky program was designed so that his country would never again be dependent upon another nation for vital products such as food or war materials. There were a few vital war products, though, that were not indigenous to the country. Weapons-grade steel is but one example. Germany had lots of low-quality iron ore, but it needed the mineral tungsten, which was plentiful in Spain and Portugal, to produce steel used in tanks and bombers. The Germans made synthetic fuel out of their own coal, but that was also not good enough for heavy bombers and tanks. When the Nazi army rolled into the Soviet Union in June 1941, it powered by Romanian oil. Ball bearings were also vital for the German war effort, and Berlin bought them from Sweden. Chromium was another crucial product, and that came from Turkey.

The Nazis had to pay for the goods in gold. Suppliers would not accept the German currency, but they would accept gold in payment. Throughout history, gold has always been the payment of last resort. Willy Sutton said he robbed banks because that was where the money was. The Nazis robbed central banks because that was where the gold was.

The first victim of Nazi aggression was Austria, which Berlin invaded in March 1938. The Germans picked up 91 tons of that country’s central bank gold in addition to 14 tons of personal bullion, which was taken mainly from Vienna’s large Jewish community.

The Nazis then systematically attempted to steal each nation’s bullion in each country it invaded. In Czechoslovakia and Holland they succeeded, but in others nations such as Poland and Norway local officials and soldiers made heroic efforts to keep their gold out of German hands, moving it to Canada, the U.S., Britain, or France. A group of Polish central bank officials in September 1939 took 81 tons south to Romania and with the help of the British through the Black Sea to Istanbul and then to Beirut, where France’s fastest war ship took it to Toulon and safety.

Just after midnight on April 9, 1940, a retired Norwegian colonel, who had just been called back to military service because of the fear of an invasion, spotted the German cruiser Blücher steaming toward Oslo. He immediately ordered an ancient Krupp cannon to fire at it. The ship soon sank, and a unit of Nazi soldiers aboard with orders to seize Norway’s gold were delayed. That gave a band of Norwegians that included the poet Nordahl Grieg time to start moving the country’s 50 tons of gold as well as King Håkon north to above the Arctic Circle. The Norwegian gold was shipped to Canada and the U.S., while the king spent the war in Britain.

Nazi gold reserves were running out in 1940, when the Germans got their biggest haul during the invasion of Western Europe. Berlin seized 205 tons from Belgium gold and 137 tons of Dutch gold. That financed the invasion of the Soviet Union a year later.

The Soviets were ill prepared for the attack because Stalin mistakenly believed that Hitler would honor their 1939 treaty. But eventually a week into the attack, the Soviet Politburo gathered together its wits and voted to ship their country’s three most precious items to the eastern side of the Ural Mountains for protection. Those were the Hermitage Museum artworks, the embalmed body of Lenin, and 3,000 tons of gold. All the valuables traveled together in trains with armed guards.

The last major Nazi booty of the war was 119 tons of Italian gold that German occupying forces moved first from Rome to Milan and then to an abandoned fortress on the Austrian border. Most of it went to Berlin in 1944.

With the war clearly coming to an end, Berlin officials in February 1945 sent two trainloads of gold and precious art works to a salt mine in Merkers, a village in central Germany. Two months later, U.S. troops stumbled on that treasure. They rescued, though, only 219 tons of gold out of the more than 600 tons the Nazis had stolen.

George M. Taber is the author of “Chasing Gold: The Incredible Story of How the Nazis Stole Europe’s Bullion (Pegasus Books, December 2014).

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