Archive for the 'Economics & Finance' Category
Posted by Michael Kennedy on 26th July 2014 (All posts by Michael Kennedy)
It looks to me that the Supreme Court will have little justification for continuing the Obamacare program as it exists. The Halbig decision should kill it off. It is clear that the IRS subsidies to federal exchange subscribers are illegal.
The only statement anyone has found in the legislative history that addresses this point comes from the Act’s lead author, who affirmed that Congress did intend to withhold tax credits in federal Exchanges. During a September 23, 2009, mark-up of his bill, which ultimately became the PPACA, Senate Finance Committee chairman Max Baucus (D-MT) refused to consider a Republican amendment regarding medical malpractice on the grounds it fell outside the Committee’s jurisdiction. Sen. John Ensign (R-NV) protested, asking how Baucus’ bill could do other things that lie outside the Committee’s jurisdiction, like direct states to create Exchanges. Baucus responded the bill creates tax credits, which are within its jurisdiction, and makes eligibility for those tax credits conditional on states creating Exchanges. Conditional necessarily means that Baucus intended to withhold tax credits in states that did not create their own Exchanges.
I just don’t see how the Court can ignore that history. The political left has been on a rant about Congressional intent since the decision was announced.
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Posted in Economics & Finance, Health Care, Leftism, Medicine, Politics, Taxes | 10 Comments »
Posted by David Foster on 20th July 2014 (All posts by David Foster)
WSJ has a good article about three people who have put themselves on good career trajectories without benefit of 4-year college degrees. One is a welder, one is a nurse, and one is an owner of franchised fast-food restaurants. Unfortunately, however, the article uncritically uses the term “middle-skilled jobs,” which is seen increasingly in articles about the job market. These jobs are said to be those which require more than high school and less than four years of college, and typically involve some sort of technical or practical training.
“Middle-skilled”….really? Is the job of a toolmaker in a factory really less-skilled than the entry-level job likely to be obtained by someone with an undergraduate Sociology degree? Is a nurse’s job less-skilled than the work likely to be assigned to someone hired on the basis of his English degree? Does owning and operating a food truck really require less skill than the kind of tasks typically assigned to an undergraduate Business major? Is the work of an air traffic controller less-skilled than the kind of a job likely to result from a major in Victim Studies?
It is good that there is increasing recognition of good career paths not requiring college degrees; however, the term “Middle-Skilled Jobs” is misleading and contributes to the continuation of credential-worship.
Posted in Academia, Business, Economics & Finance, Education, Media, Tech | 17 Comments »
Posted by David Foster on 18th July 2014 (All posts by David Foster)
…as in, “Universal Entities controls 73% of the Gerbilator market.”
Uh, no, actually they probably don’t. IBM once had something like 70% of the market for computer hardware, software, and services. The big integrated steel companies, Bethlehem Steel and US Steel, once had a very high share of the American steel market. Sears once had a high share of the retail market. These examples could be multiplied easily and almost endlessly.
A seller into a market does not control that market, or its position in that market, absent direct violence (the Mafia and various drug cartels, for example) or heavy government intervention–and even the latter is unlikely to be reliable in the long term, as the owners of TV station licenses facing first cable competition, and later Internet competition as well, found out, and as the owners of taxicab franchises facing Uber and similar competition are now discovering.
The phrase “controls X percent,” when applied to a market, is almost always intellectually lazy, and is used far too often by writers who should know better.
Posted in Business, Economics & Finance, Media | 9 Comments »
Posted by Carl from Chicago on 14th July 2014 (All posts by Carl from Chicago)
A few years ago I went to Norway and had a great time. In this post I described how expensive everything was in Norway due to their highly valued currency (tied to oil riches) combined with the relentless decline of the US dollar (tied to ZIRP and other dubious economic moves). In the simplest terms, a fast food meal or a beer in Norway cost over $20 USD which is complete madness.
Business Insider discussed the Scandinavian economic experiment, where high taxes are applied to goods and services in order to fund a vast social safety net. From the article:
In Norway, a burger and fries at a fast food joint will set you back $23. A six-pack of warm grocery-store beer is nearly $30.
These hefty price tags are due, in part, to high wages for low-skilled service jobs. But high taxes play a role too.
Most products have a 25 percent value-added tax, which means that $5.50 of the cost of that burger goes to fund Norway’s generous social programs.
As a visitor, you get little for the added price. But, as a resident, your daily spending helps to fund an expansive package of benefits, including health care, child care, high-quality education, pensions, and unemployment insurance.
Some are now proposing this high-cost method, with large taxes embedded in everyday prices, as a solution to the inequity in incomes and wealth that is discussed widely in politics and economics today.
From the perspective of someone who is highly interested in economics and tax policy, my two rules of thumb are:
1) that the tax policy raise the money that it intends to raise
2) that the tax policy not significantly distort economic activity
Any society that implements high taxes such as Norway needs a comprehensive surveillance model in order to collect these taxes. It is difficult to avoid taxes that are broadly assessed on fast food, for instance, because each corporate location will set up cash registers and controls to remit these taxes onto the state. The same types of processes can be installed in liquor stores, formal bars and nightclubs, grocery stores, and restaurants.
In a less-homogeneous society such as the USA, we already have major problems with tax evasion on cigarettes and likely liquor, and these are in responses to our sales taxes. The problems would be compounded if we placed value added taxes on all goods at a higher level and on services such as restaurants, hair care, etc… Smuggling would become rampant and informal or barter methodologies would increase in size and scope. These sorts of costs would have to be applied across the USA or some areas would become uncompetitive and see an out-migration of economic activity, starting with incremental additions (no one has opened a new manufacturing plant in Illinois in years, for instance) and eventually leading to the lock, stock and barrel out migration of existing industries (such as the exodus of car manufacturing out of the Midwest and California to the American South).
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Posted in Big Government, Economics & Finance, Public Finance, Taxes | 33 Comments »
Posted by Lexington Green on 9th July 2014 (All posts by Lexington Green)
Todd applies his family structure analytic model to explain why the Euro is doomed to fail. He notes that the French and the Germans, for example, have little in common. He expressly says that the French individualism is much closer to the Anglo-American individualistic culture, distinct from the German authoritarian style. He says that the French elite caused the problem and they cannot admit their mistake or the entire foundation of the French political structure would collapse.
The European idea of a union of free and equal states has been destroyed by the Euro, and it is now an economic hierarchy, with the Germans at the top. Further, democracy itself is incompatible with the Euro.
Todd notes that the very low birth rates in Europe have a positive benefit: There will be no open or violent conflict to resolve the current political conflicts. Rather, contentious issues are kicked up to the “European level” — which means nothing whatsoever will happen.
He sympathizes with the British position. Britain is dependent on a dying content, Europe. “It is committing suicide under German leadership.” But Britain is part of a much larger Anglo-American world, which in ten years, on current trends, will have more people than all of Europe.
Of course, America 3.0 is based in large part on a “Toddean” understanding of American culture, and this talk is consistent with our understanding.
A fascinating talk.
H/t Brian Micklethwait
Posted in America 3.0, Anglosphere, Economics & Finance, Europe, France, Public Finance, Video | 3 Comments »
Posted by Jonathan on 9th July 2014 (All posts by Jonathan)
Think Like a Freak: The Authors of Freakonomics Offer to Retrain Your Brain by Steven D. Levitt and Stephen J. Dubner
John R. Lott’s review of the latest Freakonomics book by Steven D. Levitt and Stephen J. Dubner. Lott seems to have an ongoing personal quarrel with Levitt and Dubner. However, his critiques of their arguments seem reasonable. His review is worth reading.
Posted in Book Notes, Economics & Finance, Human Behavior | 4 Comments »
Posted by Jonathan on 1st July 2014 (All posts by Jonathan)
John Cochrane on Larry Summers on economic stagnation.
It’s a good post and there are many good comments in response.
What it comes down to is that no one yet knows the extent to which current economic weakness results from tech-driven structural changes in the economy, and demographic changes, as opposed to bad govt policies.
The stock market keeps going up. Is this mainly a result of easy money or is the market telling us something about future growth? My hunch is that the longer it keeps going up, the more likely it’s discounting future growth. The fact that this is an unpopular idea makes me more confident that it’s valid.
Maybe it’s a combo of structural change and anticipation of the lifting of Obama’s boot from the economy’s neck. Time will tell. It may yet turn out to be mostly an inflationary bubble.
Disclaimer: The above is not investment advice. Your cat may understand this stuff better than I do.
UPDATE: Here’s a good presentation of the alternative case.
Posted in Economics & Finance, Predictions | 13 Comments »
Posted by TM Lutas on 9th June 2014 (All posts by TM Lutas)
Thomas Piketty has written a monster of a book, Capital in the Twenty-First Century. I find myself in strange agreement with Brad DeLong, that the collective conservative response is weak. I had a patch of time that left me twiddling my thumbs waiting for some pretty long database operations to finish over the past four days. So I went and decided to fisk the book. I just finished the introduction. It took four posts, Part I, Part II, Part III, Part IV and overran the spare time I had available from a database import and indexing task by about 12 hours.
Now I know why the criticism is so weak. Piketty is a target rich environment and doing a line by line analysis is simply exhausting. But it’s the only way to be sure.
Posted in Book Notes, Business, Economics & Finance, Public Finance, Society, Taxes, USA | 18 Comments »
Posted by David Foster on 4th June 2014 (All posts by David Foster)
A good piece by Glenn Reynolds at USA Today: Greedy Socialism.
The reality, of course, is that government employees, be they cabinet officials or low-level clerks, are motivated by the same kinds of desires that motivate people in other walks of life: money, security, power over others, creativity, status, ego-feeding and public adulation, in addition to the satisfactions of doing good work and providing value to others…with the individuals weights of these factors of course varying from person to person. The principal-agent problem does not disappear just because the agent works for the government.
I particularly like this passage from Glenn’s article:
The absence of a bottom line doesn’t reduce greed and self-dealing — it removes a constraint on greed and self-dealing. And when that happens, ordinary people pay the price. Keep that in mind, when people suggest that free-market systems are somehow morally inferior to socialism.
Posted in Economics & Finance, Human Behavior, Leftism, Political Philosophy | 2 Comments »
Posted by Jonathan on 4th May 2014 (All posts by Jonathan)
Gary Becker, one of the greatest living economists and a longstanding member of the University of Chicago faculty, has died. עליו השלום.
(Photo courtesy Nobelprize.org.)
UPDATE: Gary Becker links follow.
James J. Heckman (pdf)
The Godfather of Freakonomics Has Died — Here Are His Most Groundbreaking Theories
The Wall Street Journal
The New York Times
The New Yorker
UPDATE 2: University of Chicago Gary Becker Obituary
(Links via Lex and Joseph Morris.)
Posted in Chicagoania, Economics & Finance, Obits | 3 Comments »
Posted by Kevin Villani on 26th April 2014 (All posts by Kevin Villani)
The political movement Occupy Wall Street has shaped the tax and spending proposals of the Obama administration’s budget and political debate on the premise that our capitalist economic system is rigged to favor the top-earning “one percenters.” But income inequality can result either from capitalism or politics, each for better or worse.
Historically, political elites focused on enriching themselves at the expense of the general public: In 1773 patriots threw the tea into Boston Harbor of the East India Tea Company, granted a “royal charter” in 1600. The U.S. system was founded not just on the principles of democracy but on limited government complementing private market capitalism that encouraged individuals to “pursue happiness” — accumulate wealth — on merit rather than political connections. Support for the less fortunate was provided by family members, religious and other charitable organizations.
Believing (wrongly) that class envy against the new economic elites — innovative entrepreneurs — would cause revolution, Karl Marx offered the socialist alternative “from each according to his ability, to each according to his need” with politics supplanting merit. Despite totalitarian methods universally employed by governments seriously pursuing the socialist model leading to the murder of tens of millions, one historian recently concluded that communism reduced workers “to shiftless, work-shy alcoholics.”
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Posted in Big Government, Crony Capitalism, Economics & Finance, History, Political Philosophy, Public Finance, Taxes | 15 Comments »
Posted by Carl from Chicago on 18th April 2014 (All posts by Carl from Chicago)
Recently a few loose threads have come together on the Internet and some “old school” high tech companies.
Yahoo! – Yahoo! (I guess I need the exclamation mark) has a value that is less than the sum of its component parts. The market capitalization of Yahoo! comes in the fact that it owns a significant portion of two Asian internet companies. Per this pithily titled article “How Is Yahoo So Worthless“:
Yahoo is huge. It is the fourth-biggest Internet domain in the United States. It is the fourth-biggest seller of online ads in the country. It is the most popular destination for fantasy sports, controls one the most-trafficked home pages in news, and owns the eighth-most popular email client. In the last three months, it collected more than $1 billion in revenue. It’s very rich.
It’s also totally worthless.
Technically, it’s worse than worthless. Worthless means without worth. Worthless means $0.00. But Yahoo’s core business—mostly search and display advertising—is worth more like negative-$10 billion, according to Bloomberg View’s Matthew C. Klein.
The math: Yahoo’s total market cap is $37 billion. Its 24 percent stake in Alibaba, the eBay of China, is worth an estimated $37 billion (Alibaba hasn’t IPO’d yet, so this figure will vary), and its 35 percent stake in Yahoo Japan is worth about $10 billion. That means its core business is valued around negative-$10 billion.
This isn’t just a random business article; there is some actual financial science behind this analysis. At my trust fund site Yahoo! is one of the stocks I selected since I believe that their new CEO Marissa Meyer is a badass but according to the math she is still losing the battle.
At one point in my career I worked for a public company that had $300M in cash on hand and a market value of $200M. Your business plan could be to fire everyone and drink in a bar all day and you’d be much closer to $300M than $200M (after all, how much can you drink). The market is anticipating that bad things are going to happen or that Yahoo! won’t be able to successfully sell and repatriate the cash for these investments. It is like that famous postcard my relatives in Montana had that said “If I won a million dollars I’d just keep ranching until it was all gone.” That is what the market today thinks of Yahoo! – even if they successfully extracted the cash from these investments, they’d invest it into something of less value (by $10B or so, apparently).
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Posted in Business, Economics & Finance, Tech | 16 Comments »
Posted by Zenpundit on 9th March 2014 (All posts by Zenpundit)
cross-posted to zenpundit.com
The Union League Club of Chicago Building
Yesterday, I attended the 2014 Midwest Business & Markets Conference at the historic Union League Club of Chicago. While business conferences are far afield from my usual interests, the main draw for me was seeing Lexington Green speak about the book he co-authored with James C. Bennett, America 3.0
Michael J. Lotus (“Lex”) His book
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Posted in Anglosphere, Business, Chicagoania, Civil Society, Deep Thoughts, Diversions, Economics & Finance, Education, Entrepreneurship, Illinois Politics, Internet, Political Philosophy, Politics, Society, The Press, USA | 9 Comments »
Posted by David Foster on 6th February 2014 (All posts by David Foster)
New Yorker cartoon by David Langdon. (click to expand) I can’t find a date for this, but it was probably sometime in the late 1950s or early 1960s.
Posted in Economics & Finance, Tech | 3 Comments »
Posted by Carl from Chicago on 26th January 2014 (All posts by Carl from Chicago)
The NY Times recently had an article about the high levels of pollution in India’s capital city, Delhi.
Beijing’s air pollution has reached such toxic levels recently that the Chinese government is finally acknowledging the problem – and acting on it. But in New Delhi on Thursday, air pollution levels far exceeded those in Beijing, only without any government acknowledgement or action.
When I was in India in late 2012 I too was overwhelmed and amazed by the level of smog and pollution in the capital. When you blew your nose, particulate matter came out in your snot. This photo taken below is out the window of our tour bus and you could not see large office buildings along the roadside a few hundred feet away.
The tuk-tuk in the photo (it is a three wheeled semi-motorcycle used as a taxi) is green and yellow because those are the official colors of vehicles using CNG, designed to reduce pollution, which are also used for city buses. Unfortunately the streets are clogged with traditional gas powered vehicles and myriad ancient looking diesel trucks which more than make up the difference.
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Posted in China, Economics & Finance, Energy & Power Generation, Environment, India | 7 Comments »
Posted by Carl from Chicago on 25th January 2014 (All posts by Carl from Chicago)
In San Francisco recently there has been a minor hubub about the buses that ferry technology workers from San Francisco (where they live) to Silicon Valley (where they work). “Activists” have been blocking the city bus lanes where the technology companies pick up workers, and the city of San Francisco recently voted to charge the buses $1 for each time they stop in the bus lanes to pick up passengers, per this article. However, the “real” challenge isn’t with the buses, but the impact of Google, Facebook and other technology companies in the valley that are contributing to a rapid gentrification of the entire city
But while logistical details of the pilot program were the reason for having the hearing, they also had nothing to do with it. For many residents, the high-ceilinged room at City Hall was a forum for airing much bigger grievances about inequality, for articulating angst against an industry attracting bands of well-paid workers to town while long-term residents are losing their homes. “These companies are filthy rich,” said a resident born in San Francisco. “We need to squeeze them for everything they’re worth.” Some speakers wanted the buses to be banned and for companies to take the money spent on shuttles and funnel it into the city’s transportation budget — advice the committee approving the proposal didn’t find too compelling.
A similar difference in approach played out at the protest that morning. While some activists made careful arguments about the tornado of wealth, growth and housing shortages that has thrown the city into an affordability crisis, others held a giant sign with a much less nuanced message: “F*** off Google.”
This thread crystalizes two key threads that I’ve noticed in my visits to California for work and for pleasure (Dan and I have been there a couple of times to run the Presidio 10) and I often travel to the valley to visit various companies as part of my job. The first item is that San Francisco has been completely remade, from top to bottom, and there are almost no “bad” neighborhoods left in the entire city. I’ve walked through most of the city or taken the streetcars, or driven, and since the 2008 bust the entire city has been part of an enormous revitalization as wealthy tech workers and related professionals have bought up property in the city. There still are a bunch of drunks in the Tenderloin, aggressive panhandlers everywhere, and some projects and worse neighborhoods in the corners of the city, but by and large it has been completely upgraded.
The second thread is that the workers in Silicon Valley are so completely opposite of these “activists” that it is difficult to know how to begin the comparison. At all of the companies I’ve visited the professionals are engaged in their work and have a very “capitalistic” view of being the best and beating the competition. While California is a completely “blue” state on the map, these technology professionals couldn’t be more “red” on the issues of free markets, access to capital, and the nature of the world-wide competition that they face (I don’t know about social issues because we’d never discuss that sort of thing). These firms leverage overseas workers without a second thought, and ruthlessly prune inefficient parts of their organization to focus on their core differentiators.
While the world was focused elsewhere San Francisco transformed into a post-industrial city full of aggressive technology workers and professionals. Due to some remaining elements of rent control there are still some of the characteristic “activists” milling around but the relentless and unstoppable force of high property values will find solutions and will eventually demolish and buy out their remaining haunts until it is just the ruthless face of the post industrial economy that can afford to live in the city.
The “activists” will end up packing their belongings and heading over to Oakland or somewhere else where the rents are affordable and they can pick up their protests there. Unfortunately for them San Francisco’s compact size, beauty, and absence of large scale government subsidized housing will drive them completely out of the city. The college students will likely pick up some of the protests but since they don’t really vote or build a substantial power base up the wealthy firms will soon control local government and then policy and reality will align.
If you really want to look at long term opportunities I’d recommend property in Oakland. Oakland has a great location, it just needs to be terraformed via gentrification and rising property taxes until every activist and poor person is driven out, just like it is occurring today in San Francisco. Maybe this is a 20-30 year vision, but it will happen.
Cross posted at LITGM
Posted in Big Government, Economics & Finance, Tech, Transportation | 24 Comments »
Posted by Carl from Chicago on 20th January 2014 (All posts by Carl from Chicago)
The United States Postal Service (USPS) is in bad financial shape. The service is currently losing money and is unable to pay some required payments to the government for employee retirement benefits. While the USPS has retained its first class mail monopoly, it sends only a small percentage the ecommerce packages that are the backbone of the physical internet economy.
The real failure of the postal service, however, is encapsulated in the photo above. In our River North neighborhood, where the population density is high (local residents in high rise condominiums plus innumerable tourists) and the value of real estate is high, too, there is one institution that you can count on to not shovel their sidewalk or take care of their property. The US Postal Service.
The employees of the USPS are unionized and likely no one has the job of shoveling the sidewalk, or it isn’t in their job description. Thus it isn’t shoveled, and you need to trudge through it which becomes treacherous as the snow melts and re-freezes. Since many of the people who actually might want to use the postal service in this area are elderly, the dangerous sidewalks are even harder to defend.
They also used to have two mailboxes in the “drive up” section where you can pull your car up to the curb in front of the River North post office. Recently when I attempted to mail Christmas cards (we don’t like to leave them with the mailman in our condominium building because we’ve heard horror stories) at the post office, I couldn’t stuff them into the mailbox, because they reduced capacity down to a single mailbox. There were a few other potential customers milling around fuming as well, since the outdoor mailbox had apparently been jammed beyond capacity for some time.
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Posted in Big Government, Business, Chicagoania, Economics & Finance | 25 Comments »
Posted by Michael Kennedy on 18th January 2014 (All posts by Michael Kennedy)
The CMS has a new contractor for Obamacare, not just the web site. The previous contractor, CGI Federal, has been replaced rather suddenly.
“Accenture, one of the world’s largest consulting firms, has extensive experience with computer systems on the state level and built California’s large new health-insurance exchange. But it has not done substantial work on any Health and Human Services Department program.
“The administration’s decision to end the contract with CGI reflects lingering unease over the performance of HealthCare.gov even as officials have touted recent improvements and the rising numbers of Americans who have used the marketplace to sign up for health coverage that took effect Jan. 1.”
CGI Federal is the company connected with Michelle Obama through her classmate, a fellow Princeton alumna.
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Posted in Big Government, Economics & Finance, Health Care, Management, Medicine, Politics | 18 Comments »
Posted by David Foster on 3rd January 2014 (All posts by David Foster)
Western Civilization and the First World War…with a very good comment thread.
The Power of Metaphor and Analogy.
The Normalization of Abusive Government.
Would You Trust Your Financial Future to This Woman? Patty Murray, a U.S. Senator and an obvious moron and bigot..as the quotes in this post clearly demonstrate…is head of the Senate Budget Committee.
Whose Interests Will Jack Lew be Representing? There were some rather interesting clauses in the Treasury Secretary’s employment agreement with Citigroup.
Time Travel. Some personal connections with the past.
Posted in Britain, Economics & Finance, Europe, France, Germany, History, Human Behavior, Political Philosophy, USA, War and Peace | 8 Comments »
Posted by David Foster on 28th December 2013 (All posts by David Foster)
Why grade inflation hurts social mobility
It is important to distinguish between meritocracy and credentialism.
The redistribution of dreams
Actually, I would not have used the term “redistribution” in this context. The policies of the Democratic Party are not so much a redistributor of dreams as a broad-spectrum killer of same.
Posted in Academia, Civil Society, Economics & Finance, USA | 5 Comments »
Posted by Carl from Chicago on 26th December 2013 (All posts by Carl from Chicago)
Divvy bikes came to Chicago this year towards the end of the summer and they seem to be a big hit. We see people riding Divvy bikes all the time and they have a distinctive “flash” light on the front (like a strobe) that is visible from far away, even from our condominium high up over River North.
I often walk near the train station and I noticed the Divvy van loading up bikes when the obvious hit me; Divvy bikes came from all over the city and ended up near the train station. These vans were redistributing the bikes back to other stations so that the next days’ rush hour could repeat the process.
The stations seem to have a solar powered panel; they should connect each of the bikes to a sensor and then broadcast to a central station so that they can map out bike usage in regular intervals and use this information to improve their bike distribution algorithm. I assume that they can also make some stations larger than others; this way you could collect many bikes downtown and then redistribute them to stations that they came from (presumably on the north side) during the day. Here is an article I found about the Divvy “Rebalancers“.
Perhaps some day they could alter pricing in some sort of “congestion” model to charge people more who drop bikes off at popular stations and charge people less to ride those same bikes in the opposite direction to less popular stations. This could supplement the “rebalancers” with market forces. Grist for an MBA case study perhaps?
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Posted in Chicagoania, Economics & Finance | 4 Comments »
Posted by David Foster on 16th December 2013 (All posts by David Foster)
(The leadership transition at the Fed inspires me to rerun this post, which initially appeared in December 2008)
In Goethe’s Faust, Mephistopheles desires the introduction of paper money. At his instigation, courtiers approach the emperor at a masked ball and get him to sign the following document:
To all it may Concern upon Our Earth
This paper is a thousand guilders worth
There lies, sure warrant of it and full measure
Beneath Our earth a wealth of buried treasure
As for this wealth, the means are now in train
To raise it and redeem the scrip again
In the bright sunlight of morning, the now-sober emperor observes hundreds of pieces of paper, each bearing his signature and claiming to be equivalent in value to gold, and demands to know what is being done to apprehend the counterfeiters.
Treasurer: Recall–Your own self signed it at the time,
Only last night. You stood in Great Pan’s mask
And with the Chancellor we approach to ask:
“Allow yourself high festive joy and nourish
The common weal with but a pen’s brief flourish.”
You signed: that night by men of a thousand arts
The thing was multiplied a thousand parts
So that like blessing should all accrue
We stamped up all the lower series too
Tens, Thirties, Fifties, Hundreds did we edit
The good it did folk, you would hardly credit.
Your city, else half molded in stagnation
Now teems revived in prosperous elation!
Although your name has long been widely blessed
It’s not been spelt with such fond interest
The alphabet has now been proved redundanct
In this sign everyone finds grace abundant
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Posted in Economics & Finance, Poetry | 2 Comments »
Posted by Carl from Chicago on 15th December 2013 (All posts by Carl from Chicago)
ZIRP or “Zero Interest Rate Policy” has been in effect in the USA since late 2008. From that point forward, the effective interest received on money from CD’s, banks, and non-risk bearing debt is very low, especially when taxation is taken into consideration.
Recently I was standing at an ATM when I saw this receipt casually left on the ground. It showed over $300,000 left in a low or non interest bearing account. To me, this embodies how ZIRP has turned the world on its head.
When I was growing up, inflation was high and interest rates were high, too. I distinctly remember my grandfather having an argument with someone else when he said that interest rates would never go below 10% again (they were nearly 20% at the time). If you had any money, you had to put it to work to get the benefit of “compounding interest” which is basically interest earned on interest, which would make your assets grow quickly. In parallel, of course, inflation was making everything cost more, so you were probably treading water, but that is a different issue entirely.
In the age of ZIRP, there is no point instructing anyone about the advantages of compounding interest, because the effects are too small to be believed. In the portfolios I run for my nieces and nephews, they receive ZERO CENTS most months on the cash held in their account, and the cumulative year end totals are too small to receive an interest 1099 from the IRS. The SEC fee, which amounts to a few pennies per trade, actually is a larger cost, so I am just likely to ignore both elements.
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Posted in Big Government, Business, Economics & Finance | 16 Comments »
Posted by David Foster on 12th December 2013 (All posts by David Foster)
…quite a few of them, anyway
The above poster was apparently often found on the walls of high-school guidance counselors in the 1970s. So says Mike Rowe, who has proposed an improved version of the poster. Link.
via American Digest
Posted in Academia, Advertising, Business, Economics & Finance, Education, USA | 16 Comments »