"Where economics isn't just a job, but an adventure"
Quote of the Week
I would put the emphasis on the word"VALUABLE"
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
October Jobs Report
In October, the economy created 128,000 well above the estimate of 75,000 and this in spit of the GM strike. The unemployment rate went up slightly to 3.6%, but is still the lowest in 50 years. The real unemployment rate (which includes part time and marginally attached workers) ticked up slightly to 7%. The pace of average hourly earnings picked up a bit, rising 0.1% to a year-over-year 3% gain, also in line with estimates. The average work week was unchanged at 34.4 hours. The unemployment rate for African Americans inched downward to 5.4%, an all time low. At the industry level, the biggest job creation came in food services and drinking establishments, which added 61,000. While those positions are generally associated with lower wages, they also can reflect consumer demand and the willingness to spend discretionary money. The industry has seen a surge in job creation as of late, with the past three months averaging 38,000 compared with 16,000 in the first seven months of this year. The labor force expanded by 325,000 to 164.4 million and the labor force participation rate edged higher to 63.3%. Those counted as not in the labor force declined by 118,000 to nearly 95.5 million (CNBC).
Among the major worker groups, the unemployment rates for adult men (3.2 percent), adult women (3.2 percent), teenagers (12.3 percent), Whites (3.2 percent), Blacks (5.4 percent), Asians (2.9 percent), and Hispanics (4.1 percent) showed little or no change in October.
Among the major worker groups, the unemployment rates for adult men (3.2 percent), adult women (3.2 percent), teenagers (12.3 percent), Whites (3.2 percent), Blacks (5.4 percent), Asians (2.9 percent), and Hispanics (4.1 percent) showed little or no change in October.
Updates/Advisories 11-16-2019
The Dow advanced 223 points on Friday to finish, for the 1st time above 28,000 at 28,005. It was it's third record high of the week as a result of positive statements on trade coming from the administration. In addition, both the NASDAQ and S&P also closed at record highs. The Dow had it's 4th week of gains while the S&P was on its 6th week. The record highs were a result of Economic Adviser Larry Kudlow and Commerce secretary Wilbur Ross indicated that a trade deal was imminent. Chris Zaccarelli, the chief investment officer at Independent Advisor Alliance, said in an email that "the Dow approaching the psychologically important 28,000 level is yet another sign that investors are regaining confidence in the pending trade truce with China." Microsoft and Google-parent Alphabet— two stocks that are heavily weighted within the S&P 500 — both rose more than 1.2% to all-time highs. Since mid-summer, Apple has been the best performing stock, up over 30% in 5 months. A surprising surge came from healthcare stocks that rose over 2%. This is a little surprising since the cost of prescription drugs and the price of health procedures is one of the few area's where there is bi-partisan support in Congress. However, given the contentious impeachment hearings, there will be no consideration in the near term. What did help them was the Trump administration released a plan that would force hospitals and insurance companies to disclosed the rates they negotiated. UnitedHealth, Humana and Danaher were all up more than 4% (CNBC).
The yield on the 10 year was 1.83%, The dollar remained strong at $1.10/Euro, gold was down to $1468/oz, oil was up for the week at $57.93/barrel and the price of a gallon of regular gas nationwide is down to $2.603. I gassed up yesterday at Speedway in Hampton, NH for $2.319.
In other news, every analyst that has been on CNBC has stated that the market will take a significant downturn if Elizabeth Warren becomes president. If she gets in and both Houses of Congress are controlled by the dem's, I'll predict a 20% decline in the market. In that event, my investment advise would be to invest in bond mutual funds and precious metals, traditional safe harbors in a down market.
The yield on the 10 year was 1.83%, The dollar remained strong at $1.10/Euro, gold was down to $1468/oz, oil was up for the week at $57.93/barrel and the price of a gallon of regular gas nationwide is down to $2.603. I gassed up yesterday at Speedway in Hampton, NH for $2.319.
In other news, every analyst that has been on CNBC has stated that the market will take a significant downturn if Elizabeth Warren becomes president. If she gets in and both Houses of Congress are controlled by the dem's, I'll predict a 20% decline in the market. In that event, my investment advise would be to invest in bond mutual funds and precious metals, traditional safe harbors in a down market.
Updates/Advisories 11-9-2019
After advancing 6 points on Friday to finish at 27681, the Dow has establish 3 record highs in the past 4 days. The impetus was a continued combination of a benevolent FED, a good earnings season and continued optimism of a US/China trade deal. China’s Ministry of Commerce spokesman Gao Feng said negotiators had “agreed to remove additional tariffs in phases as progress is made on the agreement. And White House economic adviser Larry Kudlow said that “if there’s a phase one trade deal, there are going to be tariff agreements and concessions.” However, there was some ice water thrown into the rally by president Trump stating “We’ll see what happens,” the president replied when a reporter asked if the agreement would be concluded in 2019. He also stated "we'll see" when asked if some tariffs will be rolled back this year. The market reached it's daily lows shortly after his statements; but to put it in perspective, the Dow has increased more than 50% under his administration. Looking at the attached YTD DOW chart, the Dow has broken out of a 4 month trading channel and has established a solid support line.
Earnings season continues unabated as over 450 of 500 S&P companies have reported with about 3/4's beating estimates. Most recently, Disney posted better-than-forecast quarterly numbers, sending the stock up 3.8%.
The yield on the 10 year increased to 1.93%, the dollar strengthened once again to $1.10/Euro, gold was down significantly as trade fears diminished to $1460/oz, the price of oil rose to $57.44/barrel and the price of a gallon of regular gas nationwide decreased to $2.624.
Earnings season continues unabated as over 450 of 500 S&P companies have reported with about 3/4's beating estimates. Most recently, Disney posted better-than-forecast quarterly numbers, sending the stock up 3.8%.
The yield on the 10 year increased to 1.93%, the dollar strengthened once again to $1.10/Euro, gold was down significantly as trade fears diminished to $1460/oz, the price of oil rose to $57.44/barrel and the price of a gallon of regular gas nationwide decreased to $2.624.
Updates/Advisories 11-5-2019
All 3 indexes are at record highs. Yesterday the Dow advanced 115 points to close at 27,462; it's first record high since mid July. Oil and Energy companies led the way. Even tho Exxon-Mobile and Chevron reported weaker quarterly earnings than the same period last year, they were up as a result of rising oil prices based on the expectation that a US/China trade deal will increase world demand for oil. Oil is up to $57/barrel and has increased more than 5% in the past 3 days. Also as a result of expectations of a favorable trade deal, Apple is at an all time high of $258 and a market cap of $1.1 trillion. Earnings continue to be good, even for UBER that beat on both the top and bottom line, however it was still a loss of $1 billion. The CEO stated that he expects to see profitability by 2021. However, in spit of favorable earnings and outlook, the stock is down 6% in premarket trading.
Speaking of the premarket, the Dow is looking to continue gains as it is up about 70 points about 1 hour prior to the markets open. Optimism about a US/China trade deal is increasing and China is hoping that Trump will remove some existing targets and postpone tariffs expected to go into effect December 15. Reuters is reporting that a US trade official stated that the Dec 15 tariffs are on the table. There is some significant economic data that will be reported later today. Composite and services PMI (purchasing managers’ index) numbers for October are expected at 10:45 a.m. ET, followed by non-manufacturing PMI and a host of other non-manufacturing figures at 11: a.m. ET. Balance of trade figures will also be announced at 9:30.
The 10 year yield is at 1.79%, well above the 2 year at 1.58%, the dollar strengthened to $1.11/Euro, gold is down to $1501/oz and the price of a gallon of regular gas nationwide is up to $2.612.
Speaking of the premarket, the Dow is looking to continue gains as it is up about 70 points about 1 hour prior to the markets open. Optimism about a US/China trade deal is increasing and China is hoping that Trump will remove some existing targets and postpone tariffs expected to go into effect December 15. Reuters is reporting that a US trade official stated that the Dec 15 tariffs are on the table. There is some significant economic data that will be reported later today. Composite and services PMI (purchasing managers’ index) numbers for October are expected at 10:45 a.m. ET, followed by non-manufacturing PMI and a host of other non-manufacturing figures at 11: a.m. ET. Balance of trade figures will also be announced at 9:30.
The 10 year yield is at 1.79%, well above the 2 year at 1.58%, the dollar strengthened to $1.11/Euro, gold is down to $1501/oz and the price of a gallon of regular gas nationwide is up to $2.612.
Updates/Advisories 11-4-2019
About an hour before the markets open, the Dow is up 160 points and is on track to set a new record. The reason for the move is, ho-hum, increased optimism over a US/China trade deal. Wilbur Smith, the commerce secretary stated that his department is about to grant a number of licenses for a number of US firms to sell to Chinese telecom giant Huawei (pronounced Yea Way). The US/China trade war has been going on for over a year and is estimated to have stymied world growth by 1%. In addition there is inertia from the positive jobs report that came out on Friday (see above). The corporate earnings season continues on an upward note as almost 80% of S&P 500 companies have met or beat earnings with a positive outlook. Uber Technologies and Shake Shack are among the companies set to report after the close Monday. Last week, Uber competitor, Lyft, handily beat earnings. Jim Cramer of CNBC has pointed out, very succinctly, that what is driving the market is very simply demand. He highlighted "that demand is strong for money, homes, data processing, cancer drugs, programming, cellphones, planes and stock."
In other news, Elizabeth Warren's healthcare plan, Medicare for All, was given a $20.5 trillion price tag by her campaign. This is being panned by literally everyone with an IQ greater than a rock. Joe Biden stated that it would cost between $30-$40 trillion, Forbes has given it a minimum price tag of $32 trillion and I've seen some estimates as high as $60 trillion. To put it in perspective, Obamacare was estimated at costing $859 billion over 10 years and the actual cost is currently well over $2 trillion.
The yield on the 10 year is up to 1.76% as investors are buying stocks and selling bonds, the dollar is stable at $1.12/Euro, gold is done slightly at $1512/oz, oil is up on perceived increased worldwide demand at $56.75/barrel and the price of a gallon or regular gas nationwide is $2.60 with California having the highest price at $4.07 and Louisiana the cheapest at $2.17.
In other news, Elizabeth Warren's healthcare plan, Medicare for All, was given a $20.5 trillion price tag by her campaign. This is being panned by literally everyone with an IQ greater than a rock. Joe Biden stated that it would cost between $30-$40 trillion, Forbes has given it a minimum price tag of $32 trillion and I've seen some estimates as high as $60 trillion. To put it in perspective, Obamacare was estimated at costing $859 billion over 10 years and the actual cost is currently well over $2 trillion.
The yield on the 10 year is up to 1.76% as investors are buying stocks and selling bonds, the dollar is stable at $1.12/Euro, gold is done slightly at $1512/oz, oil is up on perceived increased worldwide demand at $56.75/barrel and the price of a gallon or regular gas nationwide is $2.60 with California having the highest price at $4.07 and Louisiana the cheapest at $2.17.
Updates/Advisories 11-3-2019
The Dow advanced 301 points on Friday to finish at 27,347, 12 points short of an all time high. The S&P 500 set an all time high of 3067. The impetus was the job report that showed the economy created 128,000 jobs in October (see above) easily beating the expected increase of 75,000. A favorable earnings season also contributed to the rally, and lets not forget the FED's 3 interest rate cuts this year. Exxon Mobil was among the best-performing stocks in the Dow on the back of stronger-than-forecast quarterly results. The stock gained 3% and U.S. Steel shares rose 14.8% after the company posted Thursday afternoon a smaller-than-expected quarterly loss. The industrial's and financials sectors rose more than 1.4% each. Apple shares rose more than 2% to a record high, lifting the Nasdaq (CNBC). Trade still remains a drag on the Dow as the Dow dropped 100 points on Thursday as a result of Bloomberg News reporting Chinese officials have been casting doubt over the possibility of a long-term trade deal with the U.S. But, according to CNBC, China said Friday it reached a consensus in principle with the U.S. during trade talks this week which helped the rally.
The 10 year yield was down slightly to 1.73%, the dollar weakened to $1.12/Euro, gold was stable at $1516/oz, oil was up to $56.23/barrel and the price of a gallon of regular gas nationwide dropped to $2.608.
The 10 year yield was down slightly to 1.73%, the dollar weakened to $1.12/Euro, gold was stable at $1516/oz, oil was up to $56.23/barrel and the price of a gallon of regular gas nationwide dropped to $2.608.
Updates/Advisories 10-31-2019
The FED didn't disappoint and is made another .25% interest rate cut and it had a neutral statement concerning outlook which was the market expected. As a result, the market was up 115 points yesterday. Today, about 30 minutes into the trading day, the market is down 78 points at 27,108. The FED indicated that it may pause rate cuts but committed to act appropriate to sustain the expansion. There is no threat of inflation which remains below 2%. Speaking of expansion, preliminary figures for 3rd quarter GDP showed an increase of 1.9%, higher than the expected 1.6%; however, this is subject to two more revisions.
Today's action is a function of China/US trade talks overshadowing good earnings. Bloomberg News reported Thursday, citing unnamed sources, that Chinese officials have been casting doubt over the possibility of a long-term trade deal with the U.S. The report added Chinese officials are concerned about President Donald Trump’s “impulsive nature” and the risk of him backing out of any kind of deal. In contrast to this, President Trump tweeted that he expects to sign a partial trade agreement with China in the near future. Also hurting the Dow is economic data showing the PMI (manufacturing index) is at its lowest in 10 years.
Minimizing the DOW downtrend is favorable earnings from Apple and Facebook that are both up. Apple stated that sales of Apple wearables (watches, pods etc) are up and believe it will continue.
The yield on the 10 year is down to 1.74%, the dollar is stable at $1.11/Euro, gold is up to $1512/oz, oil is up slightly to $54.37/barrel and the price of a gallon of regular gas nationwide is up to $2.614. I gassed up yesterday in Stratham, NH for $2.30/gallon (cash price).
Today's action is a function of China/US trade talks overshadowing good earnings. Bloomberg News reported Thursday, citing unnamed sources, that Chinese officials have been casting doubt over the possibility of a long-term trade deal with the U.S. The report added Chinese officials are concerned about President Donald Trump’s “impulsive nature” and the risk of him backing out of any kind of deal. In contrast to this, President Trump tweeted that he expects to sign a partial trade agreement with China in the near future. Also hurting the Dow is economic data showing the PMI (manufacturing index) is at its lowest in 10 years.
Minimizing the DOW downtrend is favorable earnings from Apple and Facebook that are both up. Apple stated that sales of Apple wearables (watches, pods etc) are up and believe it will continue.
The yield on the 10 year is down to 1.74%, the dollar is stable at $1.11/Euro, gold is up to $1512/oz, oil is up slightly to $54.37/barrel and the price of a gallon of regular gas nationwide is up to $2.614. I gassed up yesterday in Stratham, NH for $2.30/gallon (cash price).
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 |
