"Where economics isn't just a job, but an adventure"
Quote of the Week
Translation:
"This shit ain't working"
Blog Topics 2020
January An Impeachment Primer
Blog Topics 2019
March The Burgeoning US Debt
May China, Trade and Tariffs
June Income taxes: Obama v Trump
July/Aug The China Threat
Sept/Oct The High Cost of College: Part 1
Blog Topics 2018
January What Kills Bull Markets
May Are Cheap Oil Prices here to Stay
July California and Mandatory Solar Panels
August Tariffs and Trade
September Is a Recession coming?
November Increasing Healthcare Costs
December The Oracle of Omaha
Blog Topics 2017
January Trumponomics Part 2
February The Keystone Pipeline Revisited
March Border Adjustment Tax
April Are Liberal Prof's.....
May Moral Hazard Through a Libertarian's Lens (guest blog from a student)
July What's causing the Opioid Crisis
September The minimum Wage re-visited
November Everything You Want to Know about 401K
December How The New Tax Bill Affects you (spoiler alert: the middle class makes out great)
Blog Topics 2016
January Should Insider Trading be Legalized: Part 2
February The Presidential Election & the Economy
March Does Narcan Increase Heroin Use
April Is NOAA destroying the American Fisherman
June Will California Style Power Outages Happen in New England
July Textbooks, Inflation & the FTC
Sept Economic strangulation by Regulation
Oct Is this the Best we have?
Nov The High Cost of Prescription Drugs
Dec Trump, the Economy & Animal Spirits
February The Presidential Election & the Economy
March Does Narcan Increase Heroin Use
April Is NOAA destroying the American Fisherman
June Will California Style Power Outages Happen in New England
July Textbooks, Inflation & the FTC
Sept Economic strangulation by Regulation
Oct Is this the Best we have?
Nov The High Cost of Prescription Drugs
Dec Trump, the Economy & Animal Spirits
Blog Topics 2015
January Does Implementation of the Death Penalty lead to higher costs
February Less Competition and Higher Hospital Costs
March Millionaires Who Get Subsidies from the Affordable Care Act
April The Unintended Obama Legacy
May The NY Times and $15 Minimum Wage
June Are Disability Payments Bankrupting Social Security
August Seattle's $15 minimum wage and it's Surprising Consequence
October The Great Stagnation: The Obama Legacy
November Poverty in the United States
December Should Insider Trading be Legalized: Part one by Olivia Marchioni
February Less Competition and Higher Hospital Costs
March Millionaires Who Get Subsidies from the Affordable Care Act
April The Unintended Obama Legacy
May The NY Times and $15 Minimum Wage
June Are Disability Payments Bankrupting Social Security
August Seattle's $15 minimum wage and it's Surprising Consequence
October The Great Stagnation: The Obama Legacy
November Poverty in the United States
December Should Insider Trading be Legalized: Part one by Olivia Marchioni
blog topics for 2013 and 2014 are at page bottom
January Jobs Report
The January Jobs report exceeded economists expectations as the economy created 225,000 jobs when only 158,000 were expected. The unemployment rate was higher at 3.6% but only because the labor force participation rate increased to 63.4%. Average earnings increased to 3.1% from a year ago with the average wage at $28.44. This is 18 months in a row of year over year wage gains above 3% The real unemployment rate which includes part-time and marginally attached workers increased to 6.9%. The weather-sensitive construction industry helped lead the way in job creation, adding 44,000 positions, well above its 2019 average of 12,000. Among the major worker groups, the unemployment rates for adult men (3.3 percent), adult women (3.2 percent), teenagers (12.2 percent), Whites (3.1 percent), Blacks(6.0 percent), Asians (3.0 percent), and Hispanics (4.3 percent) showed little orno change over the month.
Updates/Advisories 2-18-2020
After dropping 25 points on Friday to finish at 29,398, the Dow is down 135 points about an hour before the market open as a result of missed 4th quarter earnings from Wal Mart and a warning from Apple that they will miss 1st quarter earnings as a result of the coronavirus. Apple is also predicting a global shortage of iPhones. Usually, when you have a shortage expect an increase in price. Huawei, the country's top smartphone maker, recently reopened its Shenzhen headquarters where it employs about 40,000 people, according to a person familiar with the matter. The person said its decision was in line with local guidelines that authorized businesses to reopen.
In China, 760 million people are quarantined (more than twice the population of the US), 70,500 people have the virus and there have been about 2000 deaths. As a result of the quarantine many factories have closed and transportation to and from China is close to a standstill. To put it in perspective, 80% of the worlds cell phones are produced in China. Along with decreased transportation, oil is down to $51/barrel. As a result, the entire energy section is down. Gold, a safe haven, is up to $1592/oz and gold stocks are following. One notable exception to today's downward trend is Tesla. One analyst on CNBC gave Tesla (you better sit down) a long term price target of $7000/share. Tesla is up $38 in the premarket to $838. However, the factories in China are also closed because of the coronavirus.
The yield on the 10 year is down to 1.54%, the dollar remains strong at $1.08/Euro and the price of a gallon of regular gas nationwide is up slightly to $2.44.
In China, 760 million people are quarantined (more than twice the population of the US), 70,500 people have the virus and there have been about 2000 deaths. As a result of the quarantine many factories have closed and transportation to and from China is close to a standstill. To put it in perspective, 80% of the worlds cell phones are produced in China. Along with decreased transportation, oil is down to $51/barrel. As a result, the entire energy section is down. Gold, a safe haven, is up to $1592/oz and gold stocks are following. One notable exception to today's downward trend is Tesla. One analyst on CNBC gave Tesla (you better sit down) a long term price target of $7000/share. Tesla is up $38 in the premarket to $838. However, the factories in China are also closed because of the coronavirus.
The yield on the 10 year is down to 1.54%, the dollar remains strong at $1.08/Euro and the price of a gallon of regular gas nationwide is up slightly to $2.44.
Updates/Advisories 2-13-2020
Remember the post that would say, the market is up to day on positive expectations of a US/China trade deal and the very next day my post would say the market is down today on pessimism about a US/China trade deal. Well, it's the usual subjects. On Thursday, the market hit a new record as it soared 275 points to 29,551 on diminished fears of the coronavirus spreading. Today, the market was down 128 points on increased coronavirus fears. There have been only 60,000 people infected with 1367 deaths, a 2.3% death rate.
In corporate news, Cisco fell more than 5% after the company reported another decline in overall revenue. In the fourth quarter, Cisco’s revenue dropped by 4% on a year-over-year basis. That decline overshadowed a better-than-expected profit. PepsiCo, Alibaba and Applied Materials all reported quarterly earnings that beat expectations. Applied Materials shares gained 4.7%, but PepsiCo and Alibaba dropped 0.1% and 1.6%, respectively (CNBC).
The yield on the 10 year was up to 1.62%, oil was down slightly to $51.52,the dollar strengthened to $1.08/Euro, gold was up to $1579/oz and the price of a gallon of regular gas nationwide is down to $2.426.
In corporate news, Cisco fell more than 5% after the company reported another decline in overall revenue. In the fourth quarter, Cisco’s revenue dropped by 4% on a year-over-year basis. That decline overshadowed a better-than-expected profit. PepsiCo, Alibaba and Applied Materials all reported quarterly earnings that beat expectations. Applied Materials shares gained 4.7%, but PepsiCo and Alibaba dropped 0.1% and 1.6%, respectively (CNBC).
The yield on the 10 year was up to 1.62%, oil was down slightly to $51.52,the dollar strengthened to $1.08/Euro, gold was up to $1579/oz and the price of a gallon of regular gas nationwide is down to $2.426.
Updates/Advisories 2-6-2020
What coronavirus? After advancing 483 points yesterday, the Dow set a new record at 29,291 and shortly before the open, the Dow is up close to 100 points on reports that China is cutting existing tariffs on US goods by half and diminished coronavirus fears. China’s finance ministry said the tariff cut was timed in conjunction with a U.S. decision last month to halve tariffs on roughly $120 billion worth of Chinese products. Tariffs on some U.S. goods will be cut from 10% to 5%, and from 5% to 2.5% on others, which will take effect on Feb. 14. Deaths from the virus in China are up to 563 with over 28,000 reported.The death rate remains at under 2%.
One notable exception to yesterdays rally was Tesla after it dropped over 100 points on reports that model 3 deliveries to China will be delayed and well, a return to sanity. It is currently down in the premarket by 30 points. Tomorrow all analysts will be looking towards the BLS to release unemployment and job creation numbers from January.
The yield on the 10 year is up to 1.66% and gold is down to $1567/oz as safe haven plays have lost their glitter (pun intended) as the market soars, the dollar is stable at $1.10/Euro, oil is down to $50.66/barrel and the price of a gallon of regular gas nationwide is stable at $2.452.
One notable exception to yesterdays rally was Tesla after it dropped over 100 points on reports that model 3 deliveries to China will be delayed and well, a return to sanity. It is currently down in the premarket by 30 points. Tomorrow all analysts will be looking towards the BLS to release unemployment and job creation numbers from January.
The yield on the 10 year is up to 1.66% and gold is down to $1567/oz as safe haven plays have lost their glitter (pun intended) as the market soars, the dollar is stable at $1.10/Euro, oil is down to $50.66/barrel and the price of a gallon of regular gas nationwide is stable at $2.452.
Updates/Advisories 2-5-2020
After yesterday's gain where the Dow advanced 408 points to finish at 28,808, Friday's loss of over 600 points based on coronavirus hysteria has been wiped out. In addition, the Dow is up another 250 points about an hour before the markets open. Let me try to put the coronavirus in perspective: 11 people in the US have been infected with no deaths and over 400 in China have died. In the US last year, about 42 million people were sick (estimate from CDC) with the flu and over 62,000 died. Also an unconfirmed Chinese TV media outlet had reported that a research team at Zhejiang University had found an effective drug to treat people with the new coronavirus.
Disney and GM topped earnings and are both in the green while Ford disappointed and is down 8%. Tesla's stock price continues to border on the insane having increased 237 points (36%) in 2 days. This came after positive earnings and an analyst predicting them to reach a $trillion dollars in revenue. The irrational exuberance is also a function of people not wanting to miss out and a short squeeze. In the premarket today, there is some profit taking as it is down 30 points (3%) as Tesla announced a delay to China of model 3 deliveries.
The yield on the 10 year is up to 1.6%, the dollar is stronger at $1.10/Euro, gold is down to $1557/oz, oil is up to $50.97/barrel and the price of a gallon of regular gas nationwide is down to $2.458.
Disney and GM topped earnings and are both in the green while Ford disappointed and is down 8%. Tesla's stock price continues to border on the insane having increased 237 points (36%) in 2 days. This came after positive earnings and an analyst predicting them to reach a $trillion dollars in revenue. The irrational exuberance is also a function of people not wanting to miss out and a short squeeze. In the premarket today, there is some profit taking as it is down 30 points (3%) as Tesla announced a delay to China of model 3 deliveries.
The yield on the 10 year is up to 1.6%, the dollar is stronger at $1.10/Euro, gold is down to $1557/oz, oil is up to $50.97/barrel and the price of a gallon of regular gas nationwide is down to $2.458.
Updates/Advisories 2-3-2020
Shortly after the noontime hour, the Dow is up 188 points at 28,443 but off it's highs of over 370 points. The Dow dropped over 600 points on Friday as fears of the coronavirus ran rampant. What's changed? The threat is still there, the number of cases in the US increased to 11 and the death toll in China from the virus reached 361 on Sunday. What has changed is that the hysteria is gone. Traditional safe haven assets like gold and US Treasury bonds are down as stocks rebound and demand for safety bets wanes. The 10 year yield is up to 1.53% and gold is down to $1583/oz. Oil continues to get pummeled as it dropped to below $50 earlier for the 1st time in a year. It has recovered somewhat and is currently trading at $50.22/barrel. Oil demand in China has dropped by 20% as a result of the quarantines and travel restrictions; that equates to about 3 million barrels/day. The energy sector is down close to .5% and Exxon-Mobile, the largest oil company in the US is down to $60.84/share, a 10 year low. Tesla continues to soar as as Argus Research raised its price target to over $800. It's up $84 to $735/share. Needless to say, I believe this gives irrational exuberance new meaning. Nike is leading the Dow higher with a 4.3% rise after analysts at UBS and JPMorgan recommended buying the stock on coronavirus-related weakness.
The dollar remains stable at $1.11/Euro and the price of a gallon of regular gas nationwide is down to $2.47
The dollar remains stable at $1.11/Euro and the price of a gallon of regular gas nationwide is down to $2.47
Updates/Advisories 2-1-2020
It was the worst day since last August as the Dow dropped 603 points to finish at 28,256, 2.1%, on fears concerning the coronavirus. Other averages followed suit. Even tho only 7 people in the US are infected with the virus, the US declared an emergency on Friday and all major airlines suspended flights between the US and China. A drop of this magnitude, especially on a Friday, is not all that surprising since most investors are risk adverse and want to minimize risk going into the weekend. From a technical standpoint (3 year chart), there is still a strong long term support line that has not been broken
Airline stocks and resorts continue to get hurt as well as most companies and sectors associated with China. Apple, which recently attained an all time high, was down 3.4% along with China Southern Airlines down 3.00%, MGM Resorts International (MGM), which operates casino/hotels in Macao, lost 1.49%. Copper miner First Quantum Minerals fell 3.30% today. Copper demand is very closely linked to global economic growth and the price copper is widely regarded as an indicator of sentiment on global growth. When it came to materials, the only bright spot was gold and silver, safe havens that closed at $1591/oz and $18.03/oz respectively. Another bright spot was Amazon that blew away earnings and was up $139 putting it over $2000/share with a market cap above $1 trillion. Tesla continues to defy gravity and logic, not to mention fundamental analysis, and was also up (a new high at $650) for the day, week and month.
The yield on the 10 year was down to 1.52% as investors continued to buy bonds,the dollar was stable at $1.11/Euro, oil was down again to $51.63/barrel and the price of a gallon of regular gas nationwide continued its downward trend to $2.477.
Airline stocks and resorts continue to get hurt as well as most companies and sectors associated with China. Apple, which recently attained an all time high, was down 3.4% along with China Southern Airlines down 3.00%, MGM Resorts International (MGM), which operates casino/hotels in Macao, lost 1.49%. Copper miner First Quantum Minerals fell 3.30% today. Copper demand is very closely linked to global economic growth and the price copper is widely regarded as an indicator of sentiment on global growth. When it came to materials, the only bright spot was gold and silver, safe havens that closed at $1591/oz and $18.03/oz respectively. Another bright spot was Amazon that blew away earnings and was up $139 putting it over $2000/share with a market cap above $1 trillion. Tesla continues to defy gravity and logic, not to mention fundamental analysis, and was also up (a new high at $650) for the day, week and month.
The yield on the 10 year was down to 1.52% as investors continued to buy bonds,the dollar was stable at $1.11/Euro, oil was down again to $51.63/barrel and the price of a gallon of regular gas nationwide continued its downward trend to $2.477.
Updates/Advisories 1-31-2020
After being down over 200 points yesterday on coronavirus fears, it recovered to finish up 124 at 28,860 after the World Health Organization didn't declare a world emergency. Oops, shortly after the markets open today, the Dow is down 230 points at 28,629 on increased virus fears as China announced that close to 9692 have been infected with 213 dead; that's about a 2.2% mortality rate. The virus has now spread to 18 other countries and Chinese officials believe that it originated in a Bat to Human transfer in a Wuhan outdoor market (Bats are a food source in China). It is estimated that the virus will cost China more than $60 billion in lost GDP. Speaking of GDP, 4th quarter GDP for the US came in at 2.1%, slightly higher than estimates.
Airline and resort stocks continue to crash and burn and caterpillar gave lower guidance and is down over 2%. On the plus side, Amazon is up close to 10% on favorable earnings and NNVC, NanoViricides is up 30% as it believes it is close to a Coronovirus vaccination. More than half of S&P companies have reported earnings with about 70% beating estimates. The major averages were on pace to end the month with solid gains despite an uptick in volatility stemming from geopolitical events. The S&P 500 and Dow were both up more than 1% for January entering Friday’s session. The Nasdaq, meanwhile, was up more than 3%; good news for advocates of the January barometer.
The yield on the 10 year is down to 1.55% as investors buy bonds and sell stocks, gold is up to $1582/oz, the dollar weakened to $1.11/Euro, oil and oil stocks are down with oil at $51.89/barrel and Exxon-Mobile trading at a 10 year low and the price of a gallon of regular gas nationwide is down again, now to $2.485.
Airline and resort stocks continue to crash and burn and caterpillar gave lower guidance and is down over 2%. On the plus side, Amazon is up close to 10% on favorable earnings and NNVC, NanoViricides is up 30% as it believes it is close to a Coronovirus vaccination. More than half of S&P companies have reported earnings with about 70% beating estimates. The major averages were on pace to end the month with solid gains despite an uptick in volatility stemming from geopolitical events. The S&P 500 and Dow were both up more than 1% for January entering Friday’s session. The Nasdaq, meanwhile, was up more than 3%; good news for advocates of the January barometer.
The yield on the 10 year is down to 1.55% as investors buy bonds and sell stocks, gold is up to $1582/oz, the dollar weakened to $1.11/Euro, oil and oil stocks are down with oil at $51.89/barrel and Exxon-Mobile trading at a 10 year low and the price of a gallon of regular gas nationwide is down again, now to $2.485.
The last 5 recessions have been preceded by an inverted yield curve where the yield on the 2 year is higher than the yield on the 10 year. Currently, the yield on the 2 year curve is 2.32%, which is greater than the yield on the 3 and 5 year, but the yield on the 10 year is 2.46%. As a result, I'm not yet predicting a recession. However, if you look at the table above, once the yield curve has inverted, all is not lost. The market continues upward until a recession is imminent. For instance, the yield curve inverted in January of 2006 and the S&P peaked 20 months later in October of 2007, and the recession started in December of 2007. I will be concerned if the 2 year yield is greater than the 10 year. ON THE BRIGHT SIDE, mortgage rates have decreased by 1/2% since last summer and it is now worth it to refinance if you took out a mortgage last year.
The wealth effect is an increase in consumption (and accompanying decrease in savings) as a result of an individuals assets (usually a portfolio or land/home) increasing in value. A negative wealth effect is just the opposite, and since most indexes declined more than 10% and tested bear market territory, this appears to be the case. Conversely, the market recovered in January and all losses and more were covered.
The Energy Information Administration reported that oil output will increase from its current 11 million barrels/day to close to 13 million by 2020 and we will most likely be the #1 producer in the world. This is an increase from 5.5 million/day from 2005 and it has occurred as a result of hydraulic fracturing drilling techniques.
In Other News:
Elon Musk recently stated that the worlds population is accelerating towards collapse. Hmmmm; let's look at some facts and figures and then do some math. The earth reached a population of 1 billion in 1900 (that took about 1/2 million years), but by 1967, it was 3 billion, 6 billion in 2000 and currently, it's 7.5 billion. Let's look at the US with a population of 321 million, and ask yourself, is it overpopulated. If you look at NY City, a resounding yes comes to mind. However, in the US, about 50% of the population lives within 50 miles of a shore (this includes the Atlantic, Pacific, Gulf of Mexico, Great Lakes and Mississippi).
Let me try and put this into perspective: the average household has 2.6 people and given a population of 321 million, that yields 123,461,538 households. The size of Texas is 172,000,00 acres. Assuming you put 1 household on an acre lot, the Entire population of the US can fit into Texas with room to spare, leaving the rest of the US baron of people.
How about Russia with a population of 144 million? Russia is 1.8 times the size of the US with a smaller population, so they have even more empty space and if you look at Canada, which is larger than the US, with a population of 33 million, there is even more empty space (I know bring your winter clothes).
So while I will agree that there is definitely some localized overpopulation, I don't see doom and gloom.
FICO SCORES
Fair Isaac Company reports that it's FICO scores (FICO being an acronym for Fair Isaac Co) reports that the average FICO score in the US has reached an all time high of 700 nationwide amongst adults. The share of consumers who are viewed as the riskiest from a credit perspective (these are sub-prime and have a score lower than 640) reached a new low of about 40 million — or 20 percent of adults in the U.S. that have FICO scores. according to the Wall St Journal. A lot of you may be asking what is a FICO score, how is it calculated and how it affects me. Fair Isaac uses use information provided by one of the three major credit reporting agencies – Equifax, Experian or Trans-Union. From this, they have a formula to get a credit score which can be as high as 850. The biggest part is your payment history, followed by how much you owe, credit history, credit mix and new credit (see chart). Next, how do you interpret your FICO Score: anything > 800 is excellent (and gets you low interest rates on loans and credit cards), 740-799 is very good, 670-739 is good, and anything less than 670 is considered not good and sub-prime (chart). Lastly, as no surprise, the older you are, the better your score (chart)
Fair Isaac Company reports that it's FICO scores (FICO being an acronym for Fair Isaac Co) reports that the average FICO score in the US has reached an all time high of 700 nationwide amongst adults. The share of consumers who are viewed as the riskiest from a credit perspective (these are sub-prime and have a score lower than 640) reached a new low of about 40 million — or 20 percent of adults in the U.S. that have FICO scores. according to the Wall St Journal. A lot of you may be asking what is a FICO score, how is it calculated and how it affects me. Fair Isaac uses use information provided by one of the three major credit reporting agencies – Equifax, Experian or Trans-Union. From this, they have a formula to get a credit score which can be as high as 850. The biggest part is your payment history, followed by how much you owe, credit history, credit mix and new credit (see chart). Next, how do you interpret your FICO Score: anything > 800 is excellent (and gets you low interest rates on loans and credit cards), 740-799 is very good, 670-739 is good, and anything less than 670 is considered not good and sub-prime (chart). Lastly, as no surprise, the older you are, the better your score (chart)
What do Rising Rates mean to you and the Economy
As interest rates rise as a result of FED policy, there are both good and bad effects. Firstly, the Fed's move affects all short term rates. It has no direct effect on mortgage rates which is a function of the yield on the 10 year US Treasury bond, however, they are highly correlated (above chart). What affects the yield is the price of the bond (yield and bond prices are inversely related). As bond prices decrease, the yield increases and why would bond prices decrease? Bonds tend to be a defensive play when the economy is doing poorly; hence, investors only have so much money and they will buy bonds instead of stocks. Conversely, when the economy is doing well, investors will buy stocks and sell bonds which depresses the bond price but raises the yield. The rate on the 30 year fixed mortgage is generally 1.25% to 2.75% higher than the yield on the 10 year(Chart).
Who Benefits
As rates increase, banks generally benefit. The demand for money is inelastic and when banks loan money, they will make more on those loans. Conversely, borrowers suffer from the higher cost of money, but since the economy is doing well, more people are working, real wages tend to increase and the blow of the higher cost of money is mitigated. Savers who have minimal debt also benefit, as the FED raises interest rates, rates on Savings, CD's and money markets generally increase which helps this particular segment.
Who is Hurt
Generally, borrowers are hurt. Generally, the payments on all short term loans increase. If you take a college loan, a personal loan or a boat loan, rates will increase. The Prime Rate increases, it is generally 3% above the Federal Funds Rate and it is the rate the biggest banks charge their best customers on short term loans. If you have a HELOC (Home Equity Line of Credit), this will increase also and it is generally the same rate as the prime rate. However, the short term loan that is not affected is the car loan. Generally there is so much competition in this area, that a loan on a new car can range from 0%(not all the time) to a little over 4%.
As interest rates rise as a result of FED policy, there are both good and bad effects. Firstly, the Fed's move affects all short term rates. It has no direct effect on mortgage rates which is a function of the yield on the 10 year US Treasury bond, however, they are highly correlated (above chart). What affects the yield is the price of the bond (yield and bond prices are inversely related). As bond prices decrease, the yield increases and why would bond prices decrease? Bonds tend to be a defensive play when the economy is doing poorly; hence, investors only have so much money and they will buy bonds instead of stocks. Conversely, when the economy is doing well, investors will buy stocks and sell bonds which depresses the bond price but raises the yield. The rate on the 30 year fixed mortgage is generally 1.25% to 2.75% higher than the yield on the 10 year(Chart).
Who Benefits
As rates increase, banks generally benefit. The demand for money is inelastic and when banks loan money, they will make more on those loans. Conversely, borrowers suffer from the higher cost of money, but since the economy is doing well, more people are working, real wages tend to increase and the blow of the higher cost of money is mitigated. Savers who have minimal debt also benefit, as the FED raises interest rates, rates on Savings, CD's and money markets generally increase which helps this particular segment.
Who is Hurt
Generally, borrowers are hurt. Generally, the payments on all short term loans increase. If you take a college loan, a personal loan or a boat loan, rates will increase. The Prime Rate increases, it is generally 3% above the Federal Funds Rate and it is the rate the biggest banks charge their best customers on short term loans. If you have a HELOC (Home Equity Line of Credit), this will increase also and it is generally the same rate as the prime rate. However, the short term loan that is not affected is the car loan. Generally there is so much competition in this area, that a loan on a new car can range from 0%(not all the time) to a little over 4%.
Strangulation by Regulation:
The tax code is 77,000 pages, under Obama there were 4000 new EPA regulations (info from CBS) Dodd-Frank imposed somewhere between 310-500 new requirements on banks(various analysts CNBC) and Obamacare has over 20,000 pages of regulations (Washington Post); and people are complaining because Trump is trying to streamline government. He has signed the "2 for 1" executive order that mandates all agencies to do away with 2 regulations for every one they pass. I can run my life and spend my money, much better than the government and I applaud Trump's efforts in doing away with economically ruinous legislation.
UNH Study Results 5-31-2016
In other News:
First, a little history. In 1800, 90% of the adult population were farmers (lots of factory child labor), by 1900, 25% of the population and currently, about 2% as a result of technology garnering greater yield/acre. As a result much farmland from the 19th century is no longer. In a recent study out of UNH, it was found that 75% of the farmland from the mid 19th century is now covered by trees and this is contributing to warmer winters. Trees causing higher temperatures you say; how is this possible? It is very simple physics. In the winter in NH (and most other states), farm pastures are covered with snow, and this reflects sunlight, and heat, into space. Now that 75% of these pastures are covered with trees, the dark trees absorb the heat and it permeates into the atmosphere causing a general warming and milder winters. If you've ever wondered what a stone wall was doing in the middle of the woods, those woods were once pastures and delineated borders that contained live stock.
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A number of people have asked me about Bernie Sanders tax plan and he is in the same fantasy land as Obama. First, it would never pass a republican Congress and early indications are that the Republicans will definitely maintain control of the house.
He wants to make all state university's free; let's just look at NH. At UNH there are 14,500 students of which 45% are out of state. Just tuition, not including room and board for out of state students is $30,000 and in-state $17,000. If you do the math that's a total of $331,325,000, and that doesn't even include Plymouth, Keene and Granite state which are also part of the state University system. Do that for every state and it is an astronomical cost that his proposal doesn't even begin to cover. I hesitate to do the cost for California that has 38 million people as opposed to NH's 1.6 million.
What I find particularly disconcerting, is all the people who are buying this.
A number of people have asked me about Bernie Sanders tax plan and he is in the same fantasy land as Obama. First, it would never pass a republican Congress and early indications are that the Republicans will definitely maintain control of the house.
He wants to make all state university's free; let's just look at NH. At UNH there are 14,500 students of which 45% are out of state. Just tuition, not including room and board for out of state students is $30,000 and in-state $17,000. If you do the math that's a total of $331,325,000, and that doesn't even include Plymouth, Keene and Granite state which are also part of the state University system. Do that for every state and it is an astronomical cost that his proposal doesn't even begin to cover. I hesitate to do the cost for California that has 38 million people as opposed to NH's 1.6 million.
What I find particularly disconcerting, is all the people who are buying this.
Just as a reminder from my blog of October 2013, Carbon dioxide composes only .0387% of our atmosphere (in decimal form that’s .000387), and of all the CO2 currently being produced on the earth, man only accounts for 3.4% (.034 in decimals). Therefore, if you want to calculate the amount of CO2 in the atmosphere caused by man, you would multiply .034 x .000387 to get .0000131 or .00131%.
The Arctic ocean is warming up, icebergs are growing scarcer and in some places the seals are finding the water too hot, according to a report to the Commerce Department yesterday from Consulafft, at Bergen, Norway.
Reports from fishermen, seal hunters and explorers all point to a radical change in climate conditions and hitherto unheard-of temperatures in the Arctic zone. Exploration expeditions report that scarcely any ice has been met as far north as 81 degrees 29 minutes. Soundings to a depth of 3,100 meters showed the gulf stream still very warm. Great masses of ice have been replaced by moraines of earth and stones, the report continued, while at many points well known glaciers have entirely disappeared.
Very few seals and no white fish are found in the eastern Arctic, while vast shoals of herring and smelts which have never before ventured so far north, are being encountered in the old seal fishing grounds.
I apologize, I neglected to mention that this report was from November 2, 1922. As reported by the AP and published in The Washington Post — 96 years ago!
The text in the above example is a genuine transcription of a 1922 newspaper article, an Associated Press account which appeared on page 2 of the Washington Post on 2 November of that year
The Arctic ocean is warming up, icebergs are growing scarcer and in some places the seals are finding the water too hot, according to a report to the Commerce Department yesterday from Consulafft, at Bergen, Norway.
Reports from fishermen, seal hunters and explorers all point to a radical change in climate conditions and hitherto unheard-of temperatures in the Arctic zone. Exploration expeditions report that scarcely any ice has been met as far north as 81 degrees 29 minutes. Soundings to a depth of 3,100 meters showed the gulf stream still very warm. Great masses of ice have been replaced by moraines of earth and stones, the report continued, while at many points well known glaciers have entirely disappeared.
Very few seals and no white fish are found in the eastern Arctic, while vast shoals of herring and smelts which have never before ventured so far north, are being encountered in the old seal fishing grounds.
I apologize, I neglected to mention that this report was from November 2, 1922. As reported by the AP and published in The Washington Post — 96 years ago!
The text in the above example is a genuine transcription of a 1922 newspaper article, an Associated Press account which appeared on page 2 of the Washington Post on 2 November of that year
For a good laugh on Obamacare, go to this web site and watch this video; http://www.youtube.com/watch?v=qpa-5JdCnmo. It shows the president on 36 different occasions stating that if you like your healthcare plan you can keep it. Obviously there are 1 of two explanations for this misunderstanding. He was ill advised on the 2700 page, 4500 provision Affordable Care Act, or he knew about it and lied. According to a study by Forbes magazine, the ACA will increase premiums to men under 27 by 77%, 40 year olds, 37% and 64 year olds by 37%.
Commentary on Minimum Wage
The main argument concerning minimum wage is that it will help to alleviate poverty. That is clearly not the case. As you can see from the chart at the left, the poverty rate dropped dramatically in the 1960's. This was a function of great society legislation; specifically, increase in Social Security benefits in addition to the inception and implementation of Medicare and Medicaid. Since then, the poverty rate has fluctuated between 9-15% and is highly correlated with the unemployment rate. The vertical grey area's in the graph represent periods of recessions in the US. As can be expected, unemployment rises during recessions and peaks at the end (unemployment is said to be a lagging indicator). As you can also see from the chart, so too does the poverty rate. There is no indication whatsoever that the poverty rate is affected by increases in the minimum wage. Generally, this is quite the contrary. As can be evidenced from the below left chart, increases in minimum wage can contribute to unemployment and as we can infer from the above chart, as unemployment increases so to does poverty. If you look at NH, they have the lowest state poverty rate in the nation and it generally parallels the national unemployment rate. By raising the minimum wage, you increase business costs. As a result; businesses either pass these costs onto the consumer (in which case inflation nullifies any wage increase), substitute capital for labor, or simply go out of business. If you look at the chart below right, UAW (United Auto Workers) membership has decreased in the late 1970's from 1.5 million to 350,000 in 2009. The reason for this is simple. Detroit isn't making fewer cars, they are making more, but they have made their assembly lines more robotic and have substituted capital for labor, which became cheaper in the long run. This can also happen to those fast food workers who want a $15 minimum wage. There is currently a machine on the market that can make 300 burgers/hour. In other words, capital can be substituted for labor. Someone please e-mail me and explain how someone is better off unemployed at $10-15/hour as opposed to being gainfully employed at $7.25/hour
You cannot legislate equality. If you want to decrease poverty, implement policies to insure that higher levels of education is available to all.
You cannot legislate equality. If you want to decrease poverty, implement policies to insure that higher levels of education is available to all.
BLOG Topics 2013
January Do Protected Seals lead to Depleted Fish Stocks
February Prohibition: Profits to Cartels & Increased Violence for Americans
March Increased Minimum Wage & Extended benefits lead to Higher Unemployment
April Ethanol from corn & Agflation
May Cash for Clunkers lead to Higher Used Car Prices & Wasted Tax Dollars
June The Affordable Care Act; Anything but Affordable Part 1
July The Affordable Care Act; The poster Child for False Advertising
August Detroit: Higher Taxes + Liberal Benefits = Bankruptcy
September No Keystone Pipeline leads to more pollution
October Global Warming! Or is it Global Cooling!
November Poverty & Benefits
December Does Affirmative Action lead to Reverse Discrimination?
February Prohibition: Profits to Cartels & Increased Violence for Americans
March Increased Minimum Wage & Extended benefits lead to Higher Unemployment
April Ethanol from corn & Agflation
May Cash for Clunkers lead to Higher Used Car Prices & Wasted Tax Dollars
June The Affordable Care Act; Anything but Affordable Part 1
July The Affordable Care Act; The poster Child for False Advertising
August Detroit: Higher Taxes + Liberal Benefits = Bankruptcy
September No Keystone Pipeline leads to more pollution
October Global Warming! Or is it Global Cooling!
November Poverty & Benefits
December Does Affirmative Action lead to Reverse Discrimination?
Blog Topics 2014
January Will Lake Meade become another Aral Sea
February Does Taxing the rich hurt the economy
March The Cause of the Great Depression
April Temporary Agricultural Subsidies lead to wealthy Farmers and Higher Prices
May The Presidents Stance on Gun Control leads to Increased Gun Ownership
June Is there really a Gender Pay Gap
July Did the Supreme Court decision in Roe v. Wade lower the crime rate
August Department of Education and wasted Money
October The Financial Follies of the EPA
November Social Security and Portfolio Diversification
December The White House and Terrorism
February Does Taxing the rich hurt the economy
March The Cause of the Great Depression
April Temporary Agricultural Subsidies lead to wealthy Farmers and Higher Prices
May The Presidents Stance on Gun Control leads to Increased Gun Ownership
June Is there really a Gender Pay Gap
July Did the Supreme Court decision in Roe v. Wade lower the crime rate
August Department of Education and wasted Money
October The Financial Follies of the EPA
November Social Security and Portfolio Diversification
December The White House and Terrorism
iOMe Challenge 2012
The United States has amongst the lowest savings rate for all technological nations. The iOMe challenge is a nationwide competition between Colleges where teams submit a 10,000 page essay on how Americans can improve their savings rates. In addition, teams must produce an approximate 60 second video which complements the essay. If you click on the iOMe logo above, it will take you to Bentley University's 2012 video submission. The faculty adviser for the challenge is John Tommasi and is offered during his Fall EC 351 course, Contemporary Issues in Economics.
I'm pleased to announce that on February 15, Bentley was declared the winner of the iOMe video portion of the contest. Congrats to the team members and great job! |
EC 3900 Energy Economics
EC 3900, Energy Economics and International Markets, is a 3 credit, Short Term Program, that is offered during Spring semester. After 7 weeks of lecture, the class takes a 10 day educational/cultural tour to France where 80% of their electricity is produced by nuclear power. During the 10 day trip, students travel to, and tour various nuclear facilities Last year's class visited; Marsailles, Aix en Provance, Lyons, Brest and 4 days in Paris.
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Unintended Consequences
If there were ever words that can strike fear into the hearts of any man women or child, it's: "I'm from the Government and I'm here to help". On a monthly basis my blog, from an economic standpoint, will explore government laws, decisions and actions, which while well intentioned, had inadvertent results that were either disastrous, or made a bad situation worse. It wouldn't surprise me if you reached the conclusion that congress does two things well, nothing and overreact; and you may ask yourself, do Congressional members vote for what is best for the economy, or what will get them re-elected.
iOMe Challenge 2012 - Video |
iOMe Challenge 2011 - Video |
