"Where economics isn't just a job, but an adventure"
Danger Zone by John Tommasi on Amazon
Hi all, one good thing about the quarantine is I finished the great American novel. It is an action- adventure, detective mystery that is loosely based on my tenure working for the state of NH as an undercover operative. The action goes from NH to Florida and Jamaica to the Bolivian jungles; Enjoy! It is also available on paperback. ps you can download it to a pc or phone with the kindle app from Amazon, it is free for Prime members.
Robert McLaughlin had just poured his third shot of vodka with a beer chaser. It was his fourth beer. He was sitting at the kitchen table of his small two bedroom apartment as he watched his neighbor, Robert Cushing, get out of his car and walk into his house. “Look at him, he has an ideal life, and I’m still a patrolman, all because of him. He doesn’t deserve to be alive. It’s because of him and his liberal son that I was never chosen for Detective or Sergeant.”
December 12, 1955
Robert Randall and Fred Janvrin, both age 15, were best friends. After they came home from school they went to Janvrin’s house in Salisbury, Ma, a border community with Seabrook, NH and a summer beach resort. Janvrin went downstairs to the cellar and came up with his father’s 16 gauge, bolt action shotgun and gave it to Randall who was at the top of the stairs. Unbeknown, to either teenager, the gun was loaded with double ought buck, 11 pellets with the approximate caliber of a .32, and the safety was off. Horsing around, Randall pointed the gun at Janvrin and pulled the trigger while saying “Pow.” To his horror, the gun discharged with several pellets hitting Janvrin in the stomach and lower abdomen. After Janvrin fell down several steps and the cellar floor, Randall ran next door to a neighbor’s house for help. The woman called 911 and then she and Randall ran back to Janvrin’s house where she applied cold packs to Janvrin’s head and tried to stop the bleeding. Janvrin was conscious at the time and Randall was hysterical and pleaded with Janvrin, “Not to die.” In the follow-up investigation by police, Janvrin assured Randall that he would be ok and seemed to have no resentment about the shooting. Janvrin then lost consciousness before the ambulance arrived, and died enroute to the hospital.
In a follow-up investigation by Salisbury police, the neighbor testified that she did hear the shot that killed Janvrin, but heard no yelling or any type of argument from the Janvrin home prior to the shooting. She also testified that Randall was highly emotional and collapsed after Janvrin was loaded into the ambulance. The parents of Janvrin expressed strong positive feelings towards Randall and stated that their son and Randall were best of friends. They also stated that both boys never got into trouble despite the presence of several other boys with serious records living in the neighborhood. Police believed the both Janvrin and Randall hung out with the boys but either did not participate in the trouble or were not caught. However there was no doubt as to how upset Randall was over the death of his best friend. This was confirmed by the parents of both boys and Randall’s teacher at school. This was not helped by boys at school subsequently referred to Randall as “Killer” Randall for some time. He was also kidded by some delinquent boys that Randall, a murderer, was not going to prison but some of them had down time in juvenile detention for the less serious crimes of motor vehicle larceny, kidnapping and robbery. A Newburyport court judge ruled that that the shooting was a tragic accident and that Randall would do no time in juvenile detention but would undergo psychiatric counseling. A counselor determined that Randall was deeply troubled with survivor’s guilt, and he had a need to be punished.
January 28, 1956
It was 5:40 Pm and the boy walked into Dudley’s Diner in Salisbury, Ma, about 1000 yards away from his home. He carried a double barreled shotgun that was not loaded. “Is this a holdup,” the waitress asked?” The boy replied, “I guess so.” The waitress called another employee who recognized the boy and tried to talk him out of what he was doing. The boy told the waitress to give him the money in the register. She gave him $78. The boy replied that he only wanted half and gave her the money back. She counted out $39 and gave it to him. As he was leaving, one of the customers tried to talk him out of it. The boy told the employees not to call the police until ½ hour after he left. The boy went home, gave his stepfather the money, and told him that he wanted to turn himself in. The waitress only waited 10 minutes before calling the Salisbury house, who went to the boy’s house after responding to the Diner. There, they spoke to the stepfather and placed the boy under arrest. Robert Randall had satisfied his need to be punished.
Robert was subsequently convicted of robbery on February, 1956 and went to juvenile detention where he underwent weekly psychological counseling. In August of that year, the courts and probation department received a report from Samuel Harder, M.D., of Boston, Ma. In this report, it was noted that Robert had spent two weekends home with his family and no difficulty was reported; quite the contrary, it was a happy weekend for all, including Robert’s siblings. It was also noted that people in Robert’s community harbored no ill will towards him, including the parents of Fred Janvrin. The report concluded with the Doctor stating that Robert had attained the maximum benefit from the counseling and would further benefit by returning home while being on parole/probation. Robert was subsequently released and returned to school. He wanted to start anew which included taking the name of his supportive stepfather. He was subsequently adopted by his stepfather, changed his name to Robert McLaughlin after he was released from probation in February 1958, and went on with his life.
Bob McLaughlin had been a police officer in Hampton, NH for 3 years and was one of three officers, two patrolmen and a Sergeant, on patrol during the midnight shift, when he received a call to respond to Punky Merrill’s Gun & General Store in Hampton Falls, NH. Hampton Falls is a small town just south of Hampton, NH with a population of 2000. Its police department consisted, at the time, of a full time Chief of Police and four special (part-time) officers. When the burglary alarm at the gun shop activated, it went to the Rockingham County Sheriff’s office who covered for part-time police departments in the county when no one was on duty. The county’s deputies where tied up at the time and Hampton and Seabrook PD’s were contacted. Seabrook advised that they would have someone available shortly. In Hampton, Patrolman Kennedy and the Supervisor, Jim Kerns, were tied up on a domestic dispute call, hence, McLaughlin was the lone ranger responding to the burglary alarm. As McLaughlin arrived at the gun shop, he noticed three men coming out the side door, all carrying bags. The owner of the store, Punky Merrill lived in an apartment on top of the Gun Shop & General Store, and when he saw McLaughlin pull up he came outside carrying his shotgun. McLaughlin got out of the cruiser with his shotgun which was loaded with double ought buck. McLaughlin yells for the three men to stop or he’ll shoot. Up until the mid-eighties, it was legal to shoot a fleeing felon in NH. As the three men fled across the driveway towards the woods, McLaughlin took a knee and fired (at the time burglary at night of an occupied structure was, and still is, a class A felony in NH). McLaughlin aimed at the hardtop about three feet behind the burglar. He had learned at the academy that when you fire a shotgun at the hardtop or cement, the pellets would bounce up six inches only and continue on their trajectory at that height. One of the eleven pellets hit the burglar, later identified as Richard Carson. “Headquarters this is 307, send backup, I have three burglars and shots fired.” By this time, Hampton’s other two units were enroute to back him. “Seabrook PD to Hampton, I have two units on their way to that location.” McLaughlin ejected the spent round, which also caused another round to load. After checking the guy who was down for weapons, he started to run after the other two. He heard shots and felt bullets whistling past him. As it turned out, after McLaughlin fired his shotgun, Punky Merrill opened fire with his shotgun. Fortunately for McLaughlin, Punky’s shotgun was loaded with lead slugs that were still in the gun since deer season ended, if he had double out or bird shot instead, it was quite possible that McLaughlin could have been shot by Punky. McLaughlin felt that one of the other two burglars fired shots at him but that was never proved. Once he reached the woods, he stopped. “Come on Bob, let’s go after them,” Punky said to McLaughlin. McLaughlin was a regular at Punky’s store, like most local cops, they knew each other well. “No, bad idea Punky, we got other units on the way, and if they see you with a gun, they may not recognize you and shoot.” “Yea, good point. I’ll head back to the shop and turn on all the lights.” “Don’t touch anything, we’re gonna check for prints and put the shotgun down.” “Gotcha.” When other units arrived they set up a perimeter and contacted State Police to see if they had a K9 unit available. Trooper Beaulieu, who was off duty at the time arrived about an hour after the call, and after a brief track through the woods, it ended at a dead end road where the burglars had probably left a car and subsequently fled. The burglar who was shot, Richard Carson, was transported to Exeter hospital under guard. He was lucky. The one pellet that hit him went thru his calf without hitting any bone. He was released within 3 days and was eventually found guilty of burglary and sentenced to 2-4 years in county prison. He never gave up the names of his two accomplices. However, John Paine was arrested after his fingerprints were found inside the store and he confessed. He also received 2-4 years in county prison. The third person was never found or identified. John Paine subsequently sued the Hampton Police Department and Robert McLaughlin personally as a result of being shot by McLaughlin. To no surprise, this was a source of significant stress to McLaughlin which compounded the stress he was dealing with from the shooting. He firmly believed that he came close to dying. He was recently married and his first child was on the way. The Town of Hampton’s insurance carrier stated that since the shooting occurred in Hampton Falls they weren’t responsible and would not provide coverage to the Town on this incident. As a result, the Town of Hampton told McLaughlin that he was on his own and they wouldn’t cover him. Fortunately for McLaughlin, the Hampton Patrolmen and Sergeants had just formed a union, and their lawyer, Whitey Frazier, later to become the Honorable Judge Frazier, threated an unfair labor practice in addition to suing the Town civilly. The Town eventually relented and provided legal counsel and monetary coverage to McLaughlin. The lawsuit brought by Carson was eventually dropped, but the entire event had left Bob McLaughlin significantly scarred. He received a commendation for bravery. It was given to him in the locker room one day before roll call. It didn’t help.
******** April 29, 1974
It was 11:32 PM on a warm evening in May. “Headquarters to 308.” “Ten-three,” Robert McLaughlin answered. “Go to 942 Woodland Ave, report of a shot fired and a man down on the front lawn. Ambulance enroute.” Holy shit Robert McLaughlin thought and then answered, “ten-five.” “Headquarters to 312, can you back him?” “Ten-five, responding code 2,” Vic DeMarco answered. “Three-oh-five copied also, I’ll be responding.” Car three-of five was supervisor, Bill Ritchie. “Headquarters to units, the ambulance will stage down the street from 942 and will respond once the scene is secured.” Four minutes later Bob McLaughlin arrived at the call. “Headquarters I’m out, I got a man down and another with a handgun.” Damn Bill Ritchie thought, and he upped his response to code three. Vic DeMarco did the same. McLaughlin didn’t think, he just reacted. He grabbed the cruiser shotgun and racked a-round in the chamber as he exited the cruiser and took cover behind the engine block. “Drop the gun,” he yelled to the man who was now standing over the body, “and put your hands on your head and walk towards me.” The man dropped the gun and started walking towards McLaughlin as Bill Ritchie arrived on the scene. Bill got out of the cruiser with his gun drawn. The shooter was later identified as Joe Williams who owned a bus company. While McLaughlin covered Williams, Bill handcuffed him. “Three-oh-five to headquarters, have the ambulance respond. We’ve secured the scene and have one in custody. Tell the ambulance to step on it, the guy who’s down is covered in blood.” “Ten five.” DeMarco arrived at the same time as the ambulance, and accompanied them to the man lying in blood. He was later identified as Robert Muller from Lexington, Ma. The first EMT to arrive took one look at Muller and said, “He’s gone.” “How do you know?” DeMarco asked. “The bullet hole right between the eyes has something to do with it. That gray stuff oozing out of his head is his brains. Not a thing we can do.” At this time, Katherine Williams, Joe’s wife came out of the house screaming. DeMarco and McLaughlin were able to take her into the house and calm her down. Detective Sergeant Norm Brown arrived on the scene and covered the body with a blanket that was in his unmarked car. The other patrolman on duty was Jim Tuttle who arrived on scene shortly after Brown. “Jim, this is Joe Williams, he’s under arrest for murder, transport him to the station and book him. It’ll be McLaughlin’s arrest,” Bill Ritchie said. “That the dead guy on the steps?” Tuttle asked. “Yup, deader than a door nail, got him right between the eyes.” “That’s cold,” Tuttle answered as he was putting Williams in the cruiser. Both McLaughlin and DeMarco were able to calm Katherine Williams down and she was able to call her sister to come get her. While they waited, they were able to get most of the story from her. Joe and she were going through a nasty divorce that just got nastier, and they were separated. At some point, Joe drove by the house and saw Muller’s car in the driveway. Joe suspected Katherine was having an affair. Katherine surmised that Joe parked his car down the street and shot Muller when he came out of the house. After Katherine’s sister arrived, McLaughlin walked her to the car from the side door so she didn’t have to see the body. He then came back to see Ritchie. “Ok Bobbie, you have the arrest. Tuttle transported Williams back to the station and dicks are processing the scene.” “Ok Sarge, I’ll start right on the report.” “And Bobbie, good job.” “Thanks.” It was McLaughlin’s second gun incident in eight months. Back at the station, Williams had already confessed to then Hampton Police Chief Clayton Bosquin who had been contacted earlier. Bosquin relayed the confession to McLaughlin. “Williams said he and his wife had been separated to see a marriage counselor in recent weeks but that Muller continued to see his wife. He said friends and neighbors told him that Muller would come to the Woodland Road home after he had left for work.” Bosquin continued, “Williams then said after visiting with a friend, he drove by his house at around 11 when he saw Muller walking out the front door. He was holding the gun in his hand and pointing it at Muller’s shoulder when Muller grabbed his hand and the gun went off. He didn’t mean to shoot him, it was an accident.” After McLaughlin finished the report, he went home. It was 4 AM and he was still wound up from the night’s incidents. He started drinking vodka with beer chasers. McLaughlin was still drinking when Beverly got up at 7 AM that morning. “What the hell are you doing up and why are you drinking.” “I couldn’t sleep. I went to a murder scene last night. Guy was shot right between the eyes. I saw his brains oozing out.” “I don’t want to hear that. I’m making breakfast for the kids. Deal with it and don’t go talking to anyone at work. You don’t want to lose your job. At least you got some overtime out of it.” Bob just looked at his wife. He went to bed and didn’t get up until 5 PM that night, just in time to get ready for his 6-2 shift. He held everything in and didn’t talk about it to anyone. The stress mounted for Robert. He received another commendation for his actions that night. This time it was in the roll call room.
Joe Williams was released the next day on $25,000 Surety bail. In other words, he put his house as collateral and walked out of jail. William’s attorney, Richard Leonard, presented a letter to the court during a sanity hearing from a Boston psychiatrist who had examined Williams. Leonard quoted the doctor's letter as saying "Williams is not psychotic and not dangerous to himself and others." His case went before a Grand Jury in June where they found no probable cause and the shooting was in fact an accident. Joe and Katherine were eventually divorced.
August 17, 1975
Twenty-two year old Tim Campbell had just bought his Datsun 280Z and he couldn’t believe how well it handled. It was a warm night and he had the top down. What made it better was the gorgeous brunette Amanda that was next to him in the passenger’s seat. The night had gone well and as he was driving her home he was hoping that she would invite him in. He was going a little too fast in his haste to get her home when he began to skid around a corner on Winnacunnet road. He overcompensated, began to fishtail and ended up in the oncoming lane. Luck was not with Tim and Amanda that night. He hit a Dodge Swinger head-on as it was travelling in the opposite direction. Neither had their seatbelts buckled and both he and Amanda hit the windshield. If anything good could be said, they died instantaneously.
“Headquarters to 307, respond to the area of 795 Winnacunnet Street for a 10-25 with PI, ambulance is enroute.” “Roger that headquarters, I’ll be responding code 2,” responded patrolman Robert McLaughlin. Bobby, as he was called by his friends, had been on the Hampton, NH Police Department for 5 years. He was on his way to a serious motor vehicle accident with personal injury and he was going with blue lights and sirens. It was just before midnight. “I copied that also, and I’ll back him,” stated then patrolman Vic DeMarco. Vic and Bobby both got on the police department in 1970 and soon became close friends. When DeMarco and McLaughlin arrived at the accident site, they realized immediately that the accident was more serious than what the dispatcher indicated. It was a two car head on collision. They called for additional officers. They were joined by detective Tuttle and officer’s Kennedy and Ritchie. “Headquarters to units at the accident scene, two ambulances are enroute.” “Be advised,” Vic DeMarco responded, “we may not need them. This is a possible double 10-26,” which was police code for a fatal accident. Vic called for additional units. Bill Wren, who was on a little more than a year, was one of the first units to arrive and he was immediately assigned to traffic control. When the Hampton ambulances arrived on the scene, they confirmed the worst, it was a double fatal. They also call for a pumper truck to stand by as there was a gasoline leak from one of the cars involved in the accident. The accident occurred in front of 795 Winnacunnet road, the Cushing residence. After being woken by the crash and subsequent arrival of emergency vehicles, Robert Cushing dressed, lit a cigarette and went out his front door to see what was going on. He walked to one of the victim’s car while smoking and was advised by officer’s Kennedy and McLaughlin to leave the accident scene and put out the cigarette since there is gas leaking from the cars. “Oh, because you have a badge you can tell me what to do? I live here,” replied Cushing. McLaughlin stepped up and stated to Cushing, “Sir if you don’t put out that cigarette and move back, you’ll be placed under arrest.” “You can’t arrest me.” “I can and I will. Last warning sir. Either move or you’ll be in handcuffs.” With that said, Cushing begrudgingly moved off the road and to his front yard. A short time later, detective Tuttle began taking pictures of the accident. Cushing who was still steaming, from his last encounter with the police, walked onto the road and in front of Detective Tuttle taking pictures. “Sir, please move,” said Officer Kennedy to Cushing. “I will not move. You can’t tell me what to do.” Officer McLaughlin was nearby. “Sir, you’ve been warned,” and with that, officers McLaughlin and Ritchie placed Cushing under arrest and told him to place his hands behind his back. “I will not. You can’t arrest me.” A brief struggle ensued between Cushing and officer’s McLaughlin and Ritchie. The struggle consisted of Cushing refusing to place his hands behind his back. After being assisted by Detective Tuttle, they were able to place the cuffs on Cushing and he was placed in the cruiser, transported to the station and booked and bailed for disorderly conduct. Bill Wren thought to himself that Cushing really tried hard to get arrested, and it appeared he succeeded. When word of Cushing’s arrest was circulated around town, everyone was amazed since they all felt it was out of character since he was a well-respected elementary school teacher. Cushing filed charges against the officers who arrested him and retained counsel to defend him. The charges against the officers were subsequently investigated and found to be without merit. There was eventually a negotiated plea to the disorderly conduct charge, which was continued for a year without a finding by Judge Gray at the District Court level. Essentially, if Cushing did not get arrested during the next year, the charges would be dropped.
September 23, 1975
It was a quiet Sunday morning in Hampton and 65 year old Gladys Ring was on her way to church when she rolled through a stop sign. Robert McLaughlin was on duty that day and was sitting on the side of the road observing traffic when Gladys went through the stop sign. After he pulled her over, Vic DeMarco responded to back him. “What do you have Bobby,” Vic asked?” “She blew a stop sign and she’s upset that I stopped her. She won’t give me her license.” Both officers then approached the car. “Mrs. Ring, if you don’t give me your driver’s license, we have no other choice but to arrest you and tow your car,” McLaughlin said. “I’m on my way to church, you have no right to stop me, I’m a grandmother.” “Ma’am, last time, if you won’t give me your driver’s license, you’re going to be placed under arrest.” “You can’t arrest me, my taxes pay your salary.” “Ma’am, step out of the car, you’re under arrest.” “I am not,” and with that Gladys locked her arms while grasping the steering wheel. McLaughlin then opened the driver’s door to the car and tried to pull her out of the car. “Vic, give me a hand here, get her hands while I pull her out.” Both officers were then able to muscle Gladys out of the car but not before ripping the jacket she was wearing at the shoulder seem. She was transported to the station and charged with disobeying a police officer and resisting arrest. She was subsequently released on PR (personal recognizance) bail. In a very short time, the story of Gladys’ to spread through the neighborhood and reach the ear of Robert Cushing Sr. and his son Renny. The Cushing’s were outraged since the Cushing children and others in the neighborhood referred to Gladys as “Aunt Gladys”. The Cushing’s, with Robert’s arrest last month still fresh in their minds, started a petition within days that circulated throughout the neighborhood and Hampton condemning what they called the “aggressive tactics of the Hampton Police Department”. They also demanded the termination of officer’s Vic DeMarco and Robert McLaughlin. The Cushing’s went as far to appear before the Hampton Board of Selectmen to air their grievances. After an internal investigation, both officers were cleared of any wrongdoing, and the petition went nowhere. It seemed that everyone soon forgot about the incident, everyone except for Robert McLaughlin.
Blog Topics 2020
January An Impeachment Primer February The Coronavirus and the Market. March/April Balanced Budget and Term limits May The Cost of the Quarantine and Recovery
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 for 2013 - 2016 are at page bottom
Updates/Advisories Week Ending 5-9-2021
Unemployment in May rose to 6.1% from 6% and only 266,000 jobs were added when 1,000,000 were expected. Bad news? Nope, the Dow advanced 229 points to close at a new record of 34.778. The reason being is that analysts felt that this would forestall inflation, so far it hasn't, and postpone any FED rate hike. Part of the problem is that many individuals, because of the additional $400 federal unemployment benefits, are making more money unemployed than employed. When President Biden was asked if he believed this was the case Friday, he responded no. There are currently over 9 million people collecting unemployment. The labor force participation rate was little changed at 61.7 percent in April and is 1.6 percentage points lower than in February 2020. I'm just wondering in what alternative dimension he took economics. Leisure and hospitality saw the biggest gains by adding 331,000. Among the major worker groups, the unemployment rates for adult men (6.1 percent), adult women (5.6 percent), teenagers (12.3 percent), Whites (5.3 percent), Blacks (9.7 percent), Asians (5.7 percent), and Hispanics (7.9 percent) showed little or no change in April. The labor force participation rate was little changed at 61.7 percent in April and is 1.6 percentage points lower than in February 2020. Some economists are forecasting double-digit growth in the current quarter after gross domestic product rose at a 6.4% annualized pace in the first quarter and more weak data could put those forecasts at risk. The spectre of inflation continues. Agricultural products aren't exempt. The price of corn is at its highest level since 2012. Same goes for soybean prices. Even sales of block cheese futures have been soaring in anticipation of grilling season. Then there's consumer products. Diaper prices have gone up in the past year, and two major producers — Kimberly-Clark (KMB) and Procter & Gamble (PG) — have warned customers that fresh hikes are coming. Shortages of computer chips, meanwhile, are helping to push up car prices, and could soon do the same for electronics and household appliances. Oil is trading at $64.82/barrel, the dollar weakened to $1.22/Euro, gold is up to $1823/oz (a safe haven play against inflation), and the average price of a gallon of regular gas nationwide is at a 1 year high at $2.96/gallon.
Updates/Advisory Week Ending 5-2-2021
On April 22, the Dow was down 300 (34036) points compliments of Joe Biden. Not only does he want to increase the corporate tax to 28% from 21% (a 33.3% increase), he also wants to increase capital gains from 15%-20% to a high of 43%. That will surely stymie economic investment spending (capital goods, tech etc). Want many dems don't realize, or conveniently forget, not only are corp profits taxed, so are dividends to individuals (double taxation) that are payed out to shareholders; i.e., a corp tax of 28% and cap gains (any investment longer than 1 year) of 43% equates to a significant tax amount on profits. So lets do some math: let's assume that a corp makes $100, after a 28% tax that leaves $72, after a 43% cap gains tax that leaves $41 which equates to a 59% tax rate on profits; brilliant; if it's a short term Capital gain you are taxed at your highest tax bracket rate. The Dow is currently trading at 33,875, down from highs, despite record earnings. Of the S&P 500 companies reporting, 87% have beat earnings. Why then isn't the Dow soaring? Primarily because of guidance that is less than stellar and there is the spectre of inflation and the FED raising rates. Add to that the anti-business stance of the Biden Administration and the outlook is less than rosey. In March, the overall inflation rate, CPI-W (urban workers) rose .6% and the year over year inflation rate is 2.6% while food rose 3.5% and energy 13.2%. As you can see from the accompanying chart inflation is on the rise, and while we are at it, let's not forget the added $4 trillion of debt that Biden wants to add because of stimulus programs. The yield on the 10 year, to no surprise, is up to 1.63%, gold, an anti-inflation trade is up to $1768/oz, the dollar is stable at $1.2/Euro and the price of a barrel of oil is up to $63.49
Update/Advisory Week Ending 4-11-2021
Historical 10 year rate
The Dow was up 297 points on Friday and 648 points for the week to close at 33,801, another record high. All sectors did well with financials and health care leading the way. The market remains over valued with an average S&P 500 P/E of 34 vs a historical P/E of 17.5. Whereas I don't see a bear market, a correction wouldn't surprise me. A good part of this sugar high is a function of all the stimulus money that is being pumped into the economy at the expense of the US debt which will eclipse $30 trillion this year. This will eventually be manifested in a higher inflation rate which we are seeing now for the first time in over 12 years as the FED is predicting over 3% inflation for the year. According to CNBC, as more people receive the Covid-19 vaccine, corporate leaders and investors are asking themselves a new question: What will consumer spending look like next? About a third of the U.S. population has gotten at least one dose of the Covid-19 vaccine. Airport and store traffic is picking up. And some economists are predicting a major boom that could last for years. I am not one of those. The FED will step in and raise interest rates. Rates are already up on the 10 year bond to 1.73% which has driven mortgage rates on the 30 year fixed to 2.9%. During the week, Stocks linked to the recovering economy led the gains again amid the accelerating vaccine rollout. Carnival Corp rose 2.6% after getting two upgrades on Wall street amid pent-up demand and potential summer restart. General Electric climbed more than 1%. JPMorgan added 0.8%. Oil is holding its own at $61.84/barrel, and the dollar and gold are relatively stable at $1.19/Euro and $1732/oz.
Update/Advisory Week Ending 4-4-2021
Hi All, this week will be brief since I'm off to St Thomas. During his inaugural address, Biden says he wanted to be president for all people. The next day on a post in facebook I stated I was willing to give him a chance. The first bill he passed into law was signed on party lines and here's what he said about his infrastructure bill: WASHINGTON Biden will push through infrastructure plan even with no Republican support Reuters President Joe Biden would be willing to push through his $2 trillion infrastructure plan without the support of Republican lawmakers if he cannot reach a bipartisan deal, Energy Secretary Jennifer Granholm said on Sunday.
This doesn't make him a president for all people, it makes him a lying dog faced pony soldier!
Update/Advisory Week Ending 3-28-21
Not only have democrats never met a tax they didn't like, they're thinking of new ones too. Current tax on gasoline is 18.4 cents/gallon federal and depending on your state another 20-60 cents (attached image). This is being proposed by newly installed Transportation Secretary Pete Buttigieg. According to CNBC, he spoke "fondly" (CNBC's words not mine) of a mileage levy, which would tax travelers based on the distance of the journey instead of on how much gasoline they consume. Buttigieg said that while gas taxes have traditionally been part of the way the U.S. pays for the Highway Trust Fund, "we know that it can't be the answer forever because we're going to be using less and less gas." This is also a none to subtle way of pushing consumers towards electric cars. I'm just curious on how this will be reported and verified. In financial news, both the Dow and the S&P 500 finished at new records. On Friday, the Dow staged a late day rally and finished the day up 453 points. For the week, it was up 211 points. Part of the impetus was President Joe Biden on Thursday announced a new goal of having 200 million Covid vaccination shots being distributed within his first 100 days in office. As of Friday, 100 million coronavirus vaccinations had been given since Biden was inaugurated. This in turn caused consumer sentiment to rise. A University of Michigan survey released Friday showed the final reading of the index of consumer sentiment was 84.9 in March, up from 76.8 in February. Economists polled by Dow Jones expected a reading of 83.7 (CNBC). I personally think the market is overbought, particularly given an average S&P 500 P/E of 40.47. I have invested in defensive stocks. The only exception to this is the financial sector which does well in a period of rising interest rates. The yield on the 10 year bond was up over 1.7%. Oil was up over $2/barrel to finish at $61.84/barrel as a result of the Suez canal being blocked by a disabled ship and supply concerns. Some estimates put the clearing of the canal at two weeks. The dollar was stable at $1.19/Euro and gold was down slightly at $1732/oz.
Minimum Wage Commentary
In the new Covid Relief Bill there is a provision for a required $15 minimum wage nation wide. Minimum wage should be left to the individual states. A Federally mandated minimum wage for all states is stupidity personified given the following: The attached map shows cost of living by state for a market basket of goods that on the average, nationwide, cost $100. The interpretation is a follows: That market basket of goods would cost $139.10 in New York, and $151.70 in Calif. As you can see, the cost of living is 51,7% higher in Calif, the most expensive state, than the national average; however In Mississippi, it would only cost $86.10. If you do the math, the cost of living is 76.2% high in California than Mississippi Even if you compare Calif and NH, the cost of living in Calif is 38.2% higher than NH As a result, I feel that a one-size-fits-all federally mandated minimum wage is ludicrous and it should be left up to the individual states.
Economy and the Dow
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As you can see from the attached charts, the stock market mirrors the American Economy, and granted, there are bumps in the road but both ALWAYS recover. Stop checking your retirement accounts and do nothing. You, and believe or not, even me (yes I am making fun of myself), cannot time the market, but it will recover. Today the Dow dropped 10%, 2352 points, which is the worst point drop ever and the largest point drop since Black Monday in 1987 where it dropped over 23%; and this drop occurred in spite of the FED announcing that it would inject up to $1 trillion into the economy. Once again, there are no rational expectations in the market, just hysteria and the hysteria will eventually diminish.
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.
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)
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.
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
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.
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?
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
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
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
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.
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.