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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
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
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 2014 blog topics for 2013 are at page bottom
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
September Jobs Report
For the 1st time since January of 2010, the economy failed to create any jobs. As a matter of fact, we lost 33,000 jobs and the unemployment rate dropped .2% to 4.2%, but few are worried since everyone is attributing the drop to the hurricanes that ravaged the Gulf coast, primarily in Texas and Florida. The drop in the unemployment rate was a function of the number of people who left the labor force, also a result of the hurricanes. What many economists are expecting is a surge in employment figures in the forthcoming months, especially in construction, as the infrastructure in the southeast is rebuilt. What is troubling analysts was the strong growth in income, as wages increased by .5% for the month, for the most part, guaranteeing a rate hike in December. In September, average hourly earnings for all employees on private nonfarm payrolls rose by 12 cents to $26.55. Over the past 12 months, average hourly earnings have increased by 74 cents, or 2.9 percent. Contributing to the growth in income is the low unemployment rate since businesses have increased wages to attract employees. Target has increased its base wage paid to employees to $11/hour, well above the minimum wage in most states. Amy Glaser, senior vice president of Adecco Staffing, said that employers she worked with were raising wages and reaching into less-common pools of potential employees like retirees, stay-at-home moms and people with disabilities (NY Times). Among the major worker groups, the unemployment rates for adult men (3.9 percent) and Blacks (7.0 percent) declined in September. The jobless rates for adult women (3.9 percent), teenagers (12.9 percent), Whites (3.7 percent), Asians (3.7 percent), and Hispanics (5.1 percent) showed little change (BLS). In September, 1.6 million persons were marginally attached to the labor force, down by 275,000 from a year earlier. These are people who would take a job, but haven't looked for one in the past 4 weeks.
Updates/Advisories 10-19-2017
It's the usual suspects: anticipation of a tax cut, increasing global economy and favorable business climate. As a result, the Dow gained 160 points on Wednesday to finish above 23,000 for the 1st time, at 23,158. However, all good things ... In premarket trading the Dow is off more than 100 points as investors are taking profits and are worried about lofty PE ratio's (the price of a stock divided by earnings per share). High PE's are usually indicative of an overvalued market which is being stated by more and more analysts.The historical PE ratio is 16 (Chart) and it is currently at 25. What is also a harbinger of doom is that today is the 30 year anniversary of the largest market percentage decline in history. On Oct 19,1987, the Dow tanked 508 points, which represented over 23% of its value. To put it in perspective, if that was to happen today, that would represent over a 5300 point drop. Also hurting the market are geopolitical concerns, specifically, the issue in Spain where Catalonia section province wants its independence. This raises the spectre of the stability of the European Union. Meanwhile, in the central banks sphere, the question of who will be named as the next chair of the U.S. Federal Reserve continues to linger at the back of investors' minds.
White House spokeswoman Sarah Sanders said Wednesday that U.S. President Donald Trump would likely announce his decision on who will take on the role in the "coming days," according to Reuters (CNBC).
The yield on the 10 year is stable at 2.34% as is the dollar and gold at $1.18/Euro and $1289/oz. Oil is giving up some gains at $51.39/barrel as traders feel that it is overbought in the short term, and the price of a gallon of regular gas nationwide is down to $2.457.
White House spokeswoman Sarah Sanders said Wednesday that U.S. President Donald Trump would likely announce his decision on who will take on the role in the "coming days," according to Reuters (CNBC).
The yield on the 10 year is stable at 2.34% as is the dollar and gold at $1.18/Euro and $1289/oz. Oil is giving up some gains at $51.39/barrel as traders feel that it is overbought in the short term, and the price of a gallon of regular gas nationwide is down to $2.457.
Updates/Advisories 10-18-2017
After advancing 85 points on Monday, the Dow tacked on another 43 points yesterday to finish just shy of 23,000 at 22,997, however, it did have an intraday high above 23,000 (for the 1st time) at 23003. It appears today that the train will keep rolling. In the pre-market, the Dow is up 100 points spurred on by IBM as the company reported stronger than expected 3rd quarter earnings, but more importantly, it guided higher. IBM is up over 10 points and is accounting for 70% of the Dow's pre-market increase. What will continue to drive the markets this week is earnings and the FED. Later today, the FED is scheduled to release its beige book report (because the color of the binder is beige), the publication is a summary of current economic conditions and may give some indication of future rate hikes and according to CNBC, president Trump is scheduled to give his pick on his nomination for the new chair of the FED. There seems to be 5 candidates, including current Chair Janet Yellen, whose term expires early 2018.
Oil prices are higher, at $52.24/barrel on rumors that US crude inventories have decreased. The weekly inventory report is due today at
10:30 AM. The yield on the 10 year is up to 2.34%, the dollar is steady at $1.18/Euro, gold is down to $1280/oz and the price of a gallon of regular gas nationwide is, down again, to $2.461.
In other news, HCLP, a stock pick from last month, is up 10% as it announced resumption of its quarterly dividend, 6%, and a $100 million stock buy-back.
Oil prices are higher, at $52.24/barrel on rumors that US crude inventories have decreased. The weekly inventory report is due today at
10:30 AM. The yield on the 10 year is up to 2.34%, the dollar is steady at $1.18/Euro, gold is down to $1280/oz and the price of a gallon of regular gas nationwide is, down again, to $2.461.
In other news, HCLP, a stock pick from last month, is up 10% as it announced resumption of its quarterly dividend, 6%, and a $100 million stock buy-back.
Updates/Advisories 10-16-2017
With about 2 hours left in the trading day, the Dow is closing in on 23,000 as it is up 45 points at 22,917. "The support for the market is centered on improving economic conditions worldwide and on growing expectations for tax relief," said Bruce Bittles, chief investment strategist at Baird, in a note to clients; in other words, the usual suspects. In addition, A new report from Kevin Hassett (the chair of the presidents Council of Economic Advisors) projects that reducing the corporate tax rate to 20 percent will result in a windfall for U.S. workers since they argue that the enhanced profits from lower taxes, can increase US household income from $4,000 to $9,000.
The healthcare sector, which has advanced 22% in the past year, is down .27% today as President Trump stated that in addition to cutting subsidies to insurance companies which goes to Obamacare subscribers, he is planning on doing something about the high cost of drug prices say that we have the highest prescription drug prices in the world, and we are in fact subsidizing the rest of the world. He isn't totally wrong since many companies have price controls on drug prices (such as Canada) and the drug companies make a greater profit from the US where there are no price controls and where they have patent protection (a monopoly) for 20 years and sometimes more.
The yield on the 10 year is up slightly to 2.29%, oil is up to $51.90/barrel, the dollar and gold are steady at $1.18/Euro and $1306/oz, and the price of a gallon of regular gas nationwide is down slightly to $2.471.
The healthcare sector, which has advanced 22% in the past year, is down .27% today as President Trump stated that in addition to cutting subsidies to insurance companies which goes to Obamacare subscribers, he is planning on doing something about the high cost of drug prices say that we have the highest prescription drug prices in the world, and we are in fact subsidizing the rest of the world. He isn't totally wrong since many companies have price controls on drug prices (such as Canada) and the drug companies make a greater profit from the US where there are no price controls and where they have patent protection (a monopoly) for 20 years and sometimes more.
The yield on the 10 year is up slightly to 2.29%, oil is up to $51.90/barrel, the dollar and gold are steady at $1.18/Euro and $1306/oz, and the price of a gallon of regular gas nationwide is down slightly to $2.471.
Updates/Advisories 10-15-2017
The Dow has finished 10 of the past 13 days in the green and the Trump trade continues. On Friday, it advanced 30 points Friday, to finish at 22,872. While it wasn't a new record closing high, it did reach an intraday high of 22,905. The driving feature this week has been earnings. Bank of America increased 1.5% on better than expected earnings and is close to a 52 week high.JPMorgan Chase and Citigroup also posted stronger-than-expected quarterly results on Thursday. Netflixis expected to beat earnings and advanced above $200/share for the 1st time. Earnings season has started on a positive note with close to 90% of companies topping expectations. Average earnings growth is expected be 4% this quarter. The consumer price index rose 0.6 percent last month, below the expectations of.7%. Retail sales gained 1.6 percent, below expectations of 1.7%. Treasury yields, as a result, dropped to 2.28%.
While speaking at an international banking seminar, she acknowledged persistent low inflation but stated she expected it to increase in the near future. Most analysts see a 3rd rate hike for the year in December. She also stated that the economy has grown modestly this year and that the effects of the hurricanes that have hit the US this year will be devasting in the short term but "suggests that the longer-term effects will be modest and that aggregate economic activity will recover quickly."
In other news, there is expected to be a mass exodus from Puerto Rico post hurricane Maria. There are conflicting opinions of the effect of this migration. There are some who feel that welfare ranks will increase as a result, while others feel that this will help solve the labor shortage in many areas since this will represent a new infusion of workers.
As a result of increased Chinese imports and heightening mid-east tension, oil increased over 1.5% to $51.45/barrel. Also, there is the threat of an embargo, led by the US, of Iranian oil. the dollar remained steady at $1.18/Euro, gold increased to $1306/oz and the price of a gallon of regular gas nationwide decreased to $2.473.
While speaking at an international banking seminar, she acknowledged persistent low inflation but stated she expected it to increase in the near future. Most analysts see a 3rd rate hike for the year in December. She also stated that the economy has grown modestly this year and that the effects of the hurricanes that have hit the US this year will be devasting in the short term but "suggests that the longer-term effects will be modest and that aggregate economic activity will recover quickly."
In other news, there is expected to be a mass exodus from Puerto Rico post hurricane Maria. There are conflicting opinions of the effect of this migration. There are some who feel that welfare ranks will increase as a result, while others feel that this will help solve the labor shortage in many areas since this will represent a new infusion of workers.
As a result of increased Chinese imports and heightening mid-east tension, oil increased over 1.5% to $51.45/barrel. Also, there is the threat of an embargo, led by the US, of Iranian oil. the dollar remained steady at $1.18/Euro, gold increased to $1306/oz and the price of a gallon of regular gas nationwide decreased to $2.473.
Updates/Advisories 10-11-2017
After rising 70 points yesterday to close at 22,830, the Dow set it's 47th record high of 2017, compliments of the Trump trade and looming tax cuts. Wal-Mart was the big gainer on the Dow as it advanced almost 5% as it announced a $20 billion stock repurchase plan in addition to continuing to focus on existing stores and expanding e-commerce. The focus this week will be on the start of 3rd quarter earnings season and the release of the minutes from the FED's most recent meeting September).
Just before the noontime hour, the Dow is up 6 points as it has traded sideways since the open. Most investors are waiting for the FED minutes scheduled to be released today at 2 PM. However, what is on the ticket for this month is the FED's planned reduction of its balance sheet (accomplished by shrinking the money supple which is a contractionary policy). On the earnings front, BlackRock and Delta Air Lines both reported quarterly results that beat expectations.
Mortgage applications dipped 2.1% last week as mortgage rates increased. Currently on a 30 year fixed mortgage, the average rate is 4.16%. The current yield on the 10 year is 2.33%. Oil is up to over $50 at $50.83 on statements from OPEC that they see increased world demand, the dollar weakened slight to $1.18/Euro, the price of gold is up slightly to $1290 oz and the price of a gallon of regular gas nationwide is down to $2.478. In NH it is $2.52, and Ma $2.61.
Just before the noontime hour, the Dow is up 6 points as it has traded sideways since the open. Most investors are waiting for the FED minutes scheduled to be released today at 2 PM. However, what is on the ticket for this month is the FED's planned reduction of its balance sheet (accomplished by shrinking the money supple which is a contractionary policy). On the earnings front, BlackRock and Delta Air Lines both reported quarterly results that beat expectations.
Mortgage applications dipped 2.1% last week as mortgage rates increased. Currently on a 30 year fixed mortgage, the average rate is 4.16%. The current yield on the 10 year is 2.33%. Oil is up to over $50 at $50.83 on statements from OPEC that they see increased world demand, the dollar weakened slight to $1.18/Euro, the price of gold is up slightly to $1290 oz and the price of a gallon of regular gas nationwide is down to $2.478. In NH it is $2.52, and Ma $2.61.
Updates/Advisories 10-9-2017
TESLA YEAR TO DATE
The market is in a general malaise. After dropping 2 points on Friday, the market is flat-lining today at 22,775, still near all time highs. After the payroll numbers were released on Friday (see above), the market sold off, but only for a short period of time since the decrease was attributed to the hurricanes that hit the south and southeast. Today's pause is just that, as investors are waiting for the heavy weights to report earnings for the 3rd quarter. Some of the major companies scheduled to report quarterly results this week include BlackRock, Citigroup, Bank of America and Wells Fargo. Earnings this quarter are expected to grow by more than 4%. Even tho the Trump Administration has failed to delivered on tax reform, it is expected to have some measure of success (unlike health care reform) which is propping the market at it's high levels. He has been successful in reducing much legislation via executive orders and this has been a positive for earnings.
Tesla is down 8 points today on reports that the production of it's new battery powered electric semi truck is being postponed since they have to divert resources to on problems it is having with its model 3 sedan. Missing production goals is more the norm than the exception for Tesla.
Hurricane Nate, which was a weak category 1 storm, never the less, closed down 92% of the oil rigs in the Gulf. However, there was little to no damage and they should be up and operating within the week. As a result, oil is up to $49.35/barrel. The yield on the 10 year is constant at 2.36%, the dollar is stronger at $1.17/Euro, gold is trading sideways at $1283/oz, and the price of a gallon of regular gas nationwide is down to $2.494.
Tesla is down 8 points today on reports that the production of it's new battery powered electric semi truck is being postponed since they have to divert resources to on problems it is having with its model 3 sedan. Missing production goals is more the norm than the exception for Tesla.
Hurricane Nate, which was a weak category 1 storm, never the less, closed down 92% of the oil rigs in the Gulf. However, there was little to no damage and they should be up and operating within the week. As a result, oil is up to $49.35/barrel. The yield on the 10 year is constant at 2.36%, the dollar is stronger at $1.17/Euro, gold is trading sideways at $1283/oz, and the price of a gallon of regular gas nationwide is down to $2.494.
Updates/Advisories 10-4-2017
After advancing 20 points to finish at 22,662, the Dow is up for the 6th day in a row in addition to setting it's 3rd record in a row. The market was spurred by positive economic data. ADP (payroll processing company) stated that private sector jobs grew by 135,000 last month, which was lower than Augusts (think hurricanes) but greater than the 125,000 that was expected. This is always a precursor to the numbers released Bureau of Labor Statistics (BLS), that will be released this Friday. In addition the ISM nonmanufacturing index (the service component of Consumption), hit 59.8 in September which is indicative of a healthy economy. In addition, investors continue to remain optimistic about tax cuts. Gains were higher, but Trump rattled the markets somewhat by saying that Puerto Rico's debt (in the form of bonds) may need to be wiped clean. currently, most Puerto Rican bonds are trading in the vicinity of 1/2 their stated par value. The yield on the 10 year remain steady at 2.33% as did the dollar at $1.18/euro and gold at $1278/oz, oil sank below $50 to $49.86/barrel and the price of a gallon of regular gas nationwide dropped to $2.534.
Oil prices fell after a surprising jump in US crude inventories of 2 million barrels. This once again triggered fears of a global oversupply and marks the 3rd day in a row of declining prices. The energy sector was down .3% for the day.
Oil prices fell after a surprising jump in US crude inventories of 2 million barrels. This once again triggered fears of a global oversupply and marks the 3rd day in a row of declining prices. The energy sector was down .3% for the day.
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 reach 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 barron 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 31 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" 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.
In one of the presidential debates, Hillary Clinton stated that supply side economics of lower taxes and regulation doesn't work. She needs better economic advisers. If you look at the attached chart, GDP soared after the Reagan stimulus and the average GDP post stimulus was 4.83 (a 40 year average is about 3.2); whereas post Obama stimulus, increased taxes and regulation, was a meager 2.23%. We have not been above 3% during his entire presidency and this has been the slowest recovery since the great depression.
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 — 88 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 — 88 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
California Drought of 2015
California is in the middle of a drought; it must be global warming or now the more politically correct term, climate change. In case you haven't noticed, the climate is always changing. It is in a constant state of flux. If you notice the chart below right, California has had a number of mega-droughts during the medieval ages and this was considerably worse than it is now; and as far as climate change, it's obviously not an exact science(click on pictures below).
California is in the middle of a drought; it must be global warming or now the more politically correct term, climate change. In case you haven't noticed, the climate is always changing. It is in a constant state of flux. If you notice the chart below right, California has had a number of mega-droughts during the medieval ages and this was considerably worse than it is now; and as far as climate change, it's obviously not an exact science(click on pictures below).
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%.
"We have to pass the bill ..."
http://blog.heritage.org/2010/03/10/video-of-the-week-we-have-to-pass-the-bill-so-you-can-find-out-what-is-in-it/
When Obamacare was 1st released, The Congressional Budget Office predicted that it would cost $900 billion over 10 years. At the time, I made a prediction to my students that I estimate the final cost would be closer to $3 trillion. Three years later, the CBO has raised it's estimate to $1.6 trillion. At this rate, we are on pace to reach the $3 trillion mark.
www.healthcare.gov, the official website to sign up for Obamacare had an original cost of $100 million. That cost is now up to $2.6 Trillion and rising. If the government can't manage the costs on a web site, and these costs have trippled since it opened on October 1, how can it possible manage a 2700 page, 4500 provision bill. The words of Nancy Pelosi (see above) are acting as a harbinger of doom: "We have to pass the bill, so we can find out what's in it."
When Obamacare was 1st released, The Congressional Budget Office predicted that it would cost $900 billion over 10 years. At the time, I made a prediction to my students that I estimate the final cost would be closer to $3 trillion. Three years later, the CBO has raised it's estimate to $1.6 trillion. At this rate, we are on pace to reach the $3 trillion mark.
www.healthcare.gov, the official website to sign up for Obamacare had an original cost of $100 million. That cost is now up to $2.6 Trillion and rising. If the government can't manage the costs on a web site, and these costs have trippled since it opened on October 1, how can it possible manage a 2700 page, 4500 provision bill. The words of Nancy Pelosi (see above) are acting as a harbinger of doom: "We have to pass the bill, so we can find out what's in it."
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?
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 |
