Friday, November 27, 2015

Life Imitating Ayn?

While the Bible remains the best-selling book in history, the second best-selling book has long been Atlas Shrugged by the late Ayn Rand, the iconoclastic mother of Libertarians.  The premise of her classic is that America's business leaders keep disappearing.  Conspiracy-lovers suspect the government is kidnapping them, swooping them away in black helicopters.  As it turns out, however, they have all fled to a secret hiding place, because they can no longer tolerate governmental control of every minute detail in their lives, especially in their businesses.

As much as I enjoyed the book when I read it some 50 years ago, I found the premise implausible, because the "government" is not competent enough to accomplish much of anything and certainly not anything as complicated and far-flung as a mass kidnapping.

However, something is happening in China!  Many of their top business leaders have recently disappeared.  Some have reappeared but without explanation.  Some may have disappeared forever.  Li Hejun was chairman of energy giant Hanergy who unexpectedly failed to show up at the annual meeting in May, causing the stock to drop a stunning 47% in one hour.  The CEO of China Aircraft has also disappeared.  There is some speculation that CEOs are disappearing due to the government's anti-corruption drive.  Maybe . . .

But, many of the disappearances have been among bankers and brokers.  For example, the CEOs of both the China Minsheng Bank and Guotai Junan International have also disappeared.  There is some speculation that the central government is seeking to punish anybody who may have contributed to the Shanghai market crash in August.  Maybe . . .

The Chinese do not hesitate when executing "wrong-doers."  But, there have been no reports of CEOs being executed, just disappearing.  At least, not yet . . .

Would you like to be the CEO of a Chinese company?

Wednesday, November 25, 2015

Thankful For . . .

I am thankful that jobless claims fell by 12,000.

I am thankful that durable goods production rose 3%.

I am thankful that worker pay rose 0.4%.

I am thankful that worker spending rose 0.1%.

I am thankful that the savings rate rose to 5.6%.

I am thankful I don't have to merely guess about the economy.

I am thankful for the numbers that guide my forecasts.

I am thankful for all the geeks who produce those numbers.

I am thankful for the freedom of information, so I can have numbers.

I am thankful my parents gave birth to me in America.

I am both thankful and proud to be an American!

Monday, November 23, 2015

Waiting For Janet Godot

Sixty-six years ago, Samuel Beckett wrote the great existential play Waiting For Godot.  In that play, several travelers are waiting for a very long time for the arrival of Godot.  The story focuses on the interrelationships while they wait . . . and wait.  Things get increasingly testy between them as they wait . . . and wait.

Waiting for the Fed to raise interest rates has become like Waiting for Godot.  To be clear, there is no economic reason for the Fed to raise interest rates.  Their dual mandates are to control both inflation and unemployment.  Guess what:  Neither is a problem, and neither needs to be controlled!  Neither inflation nor unemployment provides an excuse to raise interest rates.

However, the cry to "normalize" interest rates has become deafening, by both conservatives and investors.  The conservatives argue that the Fed has taken extraordinary steps to make a Democratic president look good.  I believe, however, that the Fed has taken extraordinary steps in monetary policy to prop up the economy while fiscal policy remains impotent, and I believe they would have done the same if a Republican was president.  Regardless, this complaint has become increasingly shrill.

Investors also want interest rates to rise because they are tired of living under the guillotine.  If the Fed raises rates rapidly, the stock market is clearly over-valued.  If the Fed raises rates slowly, the stock market is probably fairly-valued.  This uncertainty is a serious worry for investors.  After the Fed declined to raise rates in September, the stock market fell, because the market was expecting the level of uncertainty to decrease, but that didn't happen.  If the Fed doesn't raise rates during its meeting next month, I expect stocks to fall again.

Madam Chair, please raise our interest rates once and then go away!

Tuesday, November 17, 2015

The Market That Didn't Bark

Just as Sherlock Holmes attached significance to a dog that didn't bark, the stock market is usually telling us something when it doesn't over-react.

Most pundits expected the stock market would be down sharply on Monday morning following the Friday terrorist attacks in Paris.  However, by Sunday night, the futures market has actually turned slightly positive.

When the market opened on Monday morning, it started sinking, not badly but sinking.  About eleven o'clock, there were rumors that the French air attack on Syria had destroyed oil facilities, and the price of oil started rising.  This focused the market's attention that reducing the oil glut would be good for most every economy.  Stocks began to soar.

So, why didn't the stock market tank?  First, it would have been more likely to tank, if the terrorist attack had occurred on U.S. soil, instead of foreign soil.  Second, since the attack was on Friday, investors had a two-day weekend to adjust.  Third, and I hate to say it, we have become more sanguine about terrorism.  There have been attacks, and the economy labored on.  There will be more terrorist attacks, and the economy will continue to labor on.  The economic cost of terrorist attacks is not as great as the emotional costs.

Saturday, November 14, 2015

20/20 Hindsight

Was Saddam Hussein a bad man?  Absolutely!  Did he deserve to die?  Absolutely, as slowly and painfully as possible!  Is the world a better place without such a monster in it?  I'm not so sure anymore.

But, how could the world not be a better place without such a sick, degenerate monster in it?  If his presence in this world kept other even-worse monsters out of it, the world would be better off with Saddam in it.

Iraq sits on the great fault line between Sunni Muslims and Shiite Muslims.  Although a Sunni, Saddam didn't care about the tribal warfare inside his religion.  He executed both with equal indifference.  Iraq existed as a terrible police-state, where the people had no rights and lived in constant fear of the authorities.

Was Iraq a bad place to live?  Absolutely!  But, isn't it even a worse place now, with open warfare between the Sunni ISIS and everybody else?  Saddam shot lots of people.  But at least, he didn't behead them.  The Iraqi people have suffered greatly, since the execution of Saddam

His death opened the gates of Hell for all the demons of Islam to escape.

I keep remembering General Colin Powell's mention of the "Bed, Bath & Beyond" rule:  If you break it, you own it.  Last night, France made another payment on that purchase.  I am so sorry for them!

Friday, November 13, 2015

Peeking Into 2016

While I cannot recall ever hearing anybody say that the legendary investment bank of Goldman Sachs was kind or charitable or even decent, I have often heard people say respectful things about the research department of Goldman Sachs.  Therefore, I try to follow their research closely.  Here are some of their latest expectations:

1.  World GDP growth will pickup from 3.2% this year to 3.6% next year.  GDP growth in the U.S. will slow slightly from 2.4% this year to 2.3% next year.  China will continue to slow from 6.9% this year to 6.4% next year.  The Euro-zone will increase from 1.6% to 1.8%, while England will increase from 2.7% to a respectable 3.0%.

2,  The S&P 500 will be flat over the next twelve months, while European stocks will rise 6.7% and Japan could rise a whopping 12.3%.

3.  Interest rates (10-year) will rise 80 basis points (0.8%) over the next twelve months in both the U.S. and Europe.  (I don't believe this.)

4.  The dollar will continue to rise, compared to the euro or pound.  They expect the euro to breach parity and "break the dollar."  Specifically, they expect the euro to drop another 13.6% to only 95 cents.  The pound could drop another 5.2%.

5.  Commodities will continue to get crushed by the lack of global growth.  Gold will drop another 8.1% over the next twelve months.  (Don't you know Goldman hates to say avoid gold?)  Copper is sometimes called "Dr. Copper" because of its track record in predicting the global economy, and it is expected to drop another 12.4% over the same period.

Interestingly, Goldman believes now is a good time for Buy-Write funds, which are mutual funds that own stocks for growth but also sell call options against those stocks for income.  All I can add is -- Amen!

Thursday, November 12, 2015

Forgiving and Forgetting

How long does it take to "let bygones be bygones?"  Years ago, I heard a minister preach that you should forgive and forget when you are young.  When you are older, the forgetting gets easier but the forgiving gets harder.  That may be true.

In January of 1970, I was discharged from the Army and returned to Old Dominion University to finish up my first degree.  With my short hair and rippling muscles (yes, long ago!), I walked into the Student Center for the first time.  On the left side was a long table with 7-8 students sitting around it, when one tall, lanky student with dirty long hair and ratty jeans pointed at me and said "Look, a baby-killer!"  The students at his table laughed and turned away from me.  Being tightly-disciplined, I ignored his comment and let him live.  But, I still remember him, even after 45 years, especially on Veteran's Day.

I have no idea whatever happened to him.  Even after letting my hair grow and becoming a lazy college student myself, I rarely returned to the Student Center before I graduated.  But, if the Good Lord would let me pistol-whip one person on this planet, I would have to track down that hippie-punk.  Perhaps, I could then let bygones be bygones and put it behind me.

Until then, I will just remember those veterans I was honored to serve with . . .

Tuesday, November 10, 2015

Fear Not The Reaper

One of the few affable economists in this nation is the highly-regarded Jeremy Siegel of Wharton.  Last week, he made two comments that, at first, appear incongruent.  First, he said the latest jobs report practically assures an interest rate increase when the Fed meets next month.  Second, he predicted the Dow could reach 20,000 next year, up 13.5% from yesterday's close.

In other ways, he is predicting a nice healthy bull market despite a rising interest rate environment.  Many investors find the two conditions incongruent.  That's why the market almost always drops when the Fed threatens to raise rates.  However, history teaches us something different.  The stock market normally rises until the third or fourth interest rate increase -- but only if the market thinks more increases are not imminent.

Even if last week's job report does push the Fed to raise rates in December, instead of March, there is no reason to suspect the Fed will launch a long series of rate increases.  Given the lack of inflation and given the relatively weak world economy, I still expect the Fed to raise rates once, just to silence its many critics.  The American economy can easily afford a minor interest rate increase, even though large multinational export companies will be hurt somewhat from the strengthening dollar, which results from an interest rate increase.  (The bigger problem is below everybody's radar screen --  with $18 TRILLION in debt already, a quarter point increase in interest costs will blow a $45 billion hole in our Federal budget and add to our national debt -- go slow, Janet!)

Dr. Siegel teaches us that an interest rate increase by the Fed is not to be feared.  He's right!

Saturday, November 7, 2015

Little Problems

I have problems.  You have problems.  Everyone has problems.  But, not everyone has the same problems.

Once a year, the Financial Planning Association teams up with the National Council of Mayors to host pro bono financial planning in twenty cities across the country, by CERTIFIED FINANCIAL PLANNER (TM) Professionals, for those people who cannot afford such individualized attention.  Today was that day.

One person was a 64-year-old taxi driver, still without Obamacare, but with surgery for bladder cancer this coming Friday.  He doesn't have the luxury of waiting for Medicare.  I hate it when I have to recommend bankruptcy.  Another was a 62-year-old women whose husband deserted her AFTER he punched out her front teeth.  Even without those teeth, she somehow found a low-paying job and survived by maxing-out her credit cards.  Now, she has a job -- but way too much credit card debt.  And, to top it off, she also has problems with the IRS now.  I steered her into credit counselling and explained the OIC process or offers in compromise with the IRS.  She seemed grateful for my advice, or maybe she was just grateful that somebody actually listened to her problems.  I don't know.

Yes, I have problems . . . little problems.  I hope your problems are also little.  I wish nobody had big problems.  But, they do!

When I sit down for Thanksgiving Dinner this year, I will indeed be very thankful for my problems . . . my little problems!

Friday, November 6, 2015

Short Term Myopia

The most watched economic data point has always been the monthly "jobs report" published by the Department of Labor on the first Friday of each month.  Today, that report was just GREAT!

Last month, 271 thousand jobs were created, far more than the 182 thousand that was expected.  The previous two months were revised higher by another 12 thousand jobs.  The traditional unemployment rate dropped to only 5%.  The more important U-6 level of unemployment, which includes those forced to take part-time jobs when they want full-time jobs, fell to 9.8%, the lowest in seven years.

The reason this data point is so closely watched is that it is thought to be the best "real-time" indicator of the economy.  In an economy where almost 70% of all spending is spending by consumers, the health of the consumer is critical, and that depends on the health of the job market.  Therefore, a good report should push the stock market higher, right?

In a normal economy, that would be true.  When the report was released this morning, Dow futures quickly dropped 40 points - why?  Because good news is bad news, when the stock market is obsessing over the Fed raising interest rates.  The Fed's job is to depress both unemployment and inflation.  If unemployment goes too low, many economists believe that inflation will result.  The Fed must balance both priorities.

It is time for the Fed to "normalize" interest rates and begin raising them.  Unfortunately, that pushes the dollar up, which hurts our exports and our biggest industrial companies.  That short-term reality scares the market.  I expect the market will drop dramatically if the Fed does raise rates next month, before rebounding.  Logic only prevails in the long-term, not the short-term.

A great jobs report should be enjoyed, not feared.  So . . . ENJOY!

Tuesday, November 3, 2015

Investing Religions

There are religions in the investing world.  One example is the Warren Buffett religion, that preaches you should buy what you like and keep it forever.  Another is the Benjamin Graham religion, that preaches you should not buy anything until you have exhaustively studied all financial information, all public information, and maybe a little private information as well.  Another religion is Modern Portfolio Theory, which argues investment returns can be maximized while investment risks are minimized -- the Holy Grail -- if your portfolio is carefully diversified across many asset classes, not just many stocks.  Then, there is also the passive religion, which preaches you should just buy an index of the stock market, like the S&P 500, and then go to sleep, trusting the resilient American economy to make you healthy in the long run.

I'm attending a conference on another investing religion, called "chartism" or technical analysis, which preaches you can base your investment decisions on graphs alone.  Some adherents don't even know the names or businesses of the stocks they buy and sell.  They simply stare into computer screens,searching for graphs that appear to relate to each other.  This seems to have some magical hold on the adherents.  After all, sunspots do impact the stock market, you know!

Like all religions, it does have some merit.  Graphically illustrating the relationship between stock market and interest rates or price-earnings ratios, for example, is quite helpful in teaching concepts but should have no magical hold over investors.

Like all religions, it also has fanatics. Deep in the confines of my suspicious mind, I sometimes wonder if chartists would even know when to use the restroom without a graph to tell them.  Frankly, I find that making decisions by looking at a chart is merely a crutch for lazy investors.

Friday, October 30, 2015

Where Are The Lions?

Why did Romans spend good Roman money to attend contests between lions and Christians?  Wasn't the victor pretty obvious?  What was the contest anyway?

Why do I spend good American money to attend football games between the Dallas Cowboys and anybody else?  The participants are always changing.  I don't know and have never met any of the players, and I have no loyalty to any individual team member.  Does the contest even matter?

Jerry Seinfeld likens professional sports to "cheering for laundry," as the players wearing the uniforms are always changing.  Only the laundry remains.  It is not like cheering for your high school football team, where you probably knew some of the players.

Psychology-types suggest it is a collective "Walter Mitty" wish to somehow live vicariously through the "heroic" players, experiencing both emotional highs and emotional lows.  Sociology-types suggest it reflects a longing for more heroes in a disappointingly complex society.  Maybe, it is just an excuse for guys/dudes to get together, drink beer, eat chicken wings and act stupid?  Maybe, sports allows us to feel like we are part of something bigger than ourselves?  Maybe, sports satisfies some primeval male-bonding need?  I remember reading somewhere that women talk face-to-face, while men talk shoulder-to-shoulder.  Between cheers, I guess?  A more existential view is that, as long as we are experiencing emotional highs and lows, we must still be alive.

An economist might look at professional sports as just one part of the vast entertainment industry.  It is no more noble than a soap opera.  But, it does contribute to GDP, employing thousands of non-players, and paying billions in salaries.  Maybe, it even lessens negative social costs, such as juvenile delinquency, by keeping kids off the street.

Of course, the only thing that really matters is whether the Cowboys win or lose!

Tuesday, October 27, 2015

Rolling Crisis?

When I moved from the barely-growing mid-Atlantic to rapidly-growing Texas in the late 1970's, I was grateful that at least some part of the country was growing.  A few years later, Texas experienced an oil crash.  I remember seeing bumper stickers that read:  Please God, let there be one more oil boom, and I promise not to waste it next time.

As Texas slipped into recession, the northeast started booming. A few years later, Texas enjoyed a housing boom caused by the Garn-St Germain bill, that allowed Savings and Loan Associations to do almost anything.  Of course, that caused lending excesses, which then caused a real estate recession scandal  in Texas, while California began enjoying a boom in technology.  Economists reasoned that the United States is so huge that some sort of recession is always "rolling around" the country and called them rolling recessions.

Some pundits humorously suggested there is only one recession, and it just keeps rolling around the country.

In 1997, Asia entered into a serious recession.  However, their recession became a financial crisis and pulled most of the developed world into a recession.  In 2008/9, the United States endured a financial crisis that pulled the global economy into a recession.  In 2010/11, Europe endured a financial crisis and almost pulled the global economy back into recession.  (While we didn't go back into recession, our stock markets certainly suffered.)

Today, there is concern that Asia is slipping back into recession and possibly another financial crisis.  The Shanghai Stock Market collapse sure smells like a financial crisis, at least to the nose of a financial economist.

I wonder if those now-older pundits would humorously suggest there is only one financial crisis, and it just keeps rolling around the world.

Thank You, John !

Almost every family has some goofy, old aunt or uncle who always complains "the end is near, and we're all going to die."  Wall Street is like that, especially about all things political.  When the sky is not falling, it is like Sherlock Holmes' dog that didn't bark.  The lack of an expected response can be very telling.

Did you know the Federal debt ceiling has to be raised next week?  Did you know that the Federal budget expires December 11th?  Did you know the Federal Highway spending ends in two days?   Now, what could possibly go wrong?

Yet, Wall Street is not over-reacting.  Uncertainty increases bearishness, but Wall Street is not particularly bearish.  (In fact, October has been kind to the bulls.)

The Fix is in!  Wall Street is not over-reacting to this uncertainty, because it is not uncertain.

My expectation is that John Boehner is now free of his radical Republicans and can cut a deal with Democrats.  What a refreshing change!  His expected response would be to delay, blaming it on the Democrats, instead of his own right-wing extremists.  He is above partisan dictates and can now be a statesman!  He can even c-o-m-p-r-o-m-i-s-e . . .


All this tells me the market has already factored in a deal.  Therefore, I don't expect a bullish response when the deal is announced.

Friday, October 23, 2015

Obama Is A Failure

But, so was Ronald Reagan, George H.W. Bush, Bill Clinton, and George W. Bush.  All promised to "do something" about the loudness of TV commercials.  That has been the most common complaint to the Federal Communications Commission since 1980, averaging over twenty thousand complaints each year.

At least Obama "did something" and got Congress to pass the Commercial Advertisement Loudness Mitigation Act (CALM).  In 2013, commercials were supposed to become less loud.  Did you even notice?  I didn't think so.

The burden of compliance is on TV broadcasters and cable providers.  They have purchased equipment to insure that average commercial loudness is no greater than the programming.  Quickly, the advertisers found a way around this by introducing a few seconds of silence at the beginning and end of commercials, keeping the average acceptable but changing peak loudness even more abruptly, still making viewers look for the remote.  Now, there are arguments about excluding the increased bass during the commercials.  The battle has temporarily shifted from the legislators, who are claiming they "did something," to regulators, who are being over-whelmed with technicians and lawyers.  The battle will eventually have to return to the legislators.

If the President of the United States is the most powerful man on the planet, why are they impotent against the advertising business?  Because the advertising business is the most powerful business on the planet!  That business is powerful enough to convince people they should eat unhealthy food.  It is powerful enough to convince people that credit card debt is good.  It is even powerful enough to make people vote against their own best interest.  It has no moral compass.

And, it is more powerful than five different Presidents of the United States of America!

Wednesday, October 21, 2015

Shelter In A Storm ?

For those of us who worry about a global economic slowdown, there is one sector of our U.S. economy that should remain largely immune, and that is homebuilding.  First, relatively small amounts of inventory have been added since the Great Recession, while population has increased.  With demand for housing rising faster than the supply of housing, it is not surprising that rents are rising faster than the rate of inflation, especially among Millennials.  This has made builders quite optimistic, with the Builders Sentiment Index reaching it's highest level in ten years, since October of 2005.  With that confidence, they have been building and building, especially multifamily.  The third quarter of 2015 was 13.1% higher than Q3 of last year.

The faster inflation of rent for Millennials and the record-low mortgage rates should continue to pull them into home-buying.  Of course, having watched their parents or friends' parents lose their homes in foreclosure, a great many Millennials have been slower than past generations to "put down roots" and buy homes.  Interest rates are not going to get lower, and houses are not going to get cheaper.  The Millennials have some catching-up to do, and that will be good for the country, regardless of the rest of the world!

Monday, October 19, 2015

Quarterly Column

My latest column for Inside Business lives at: 

Friday, October 16, 2015

My Thoughts Exactly

A One-Handed Clap

Psychologists say constant negative feedback creates a certain numbness to feedback, so we should offer some positive feedback whenever possible.

How many times have I asked readers to take a cold shower at ?  That website shows the spiraling problem of increasing debt.  It is frustrating, frightening and maddening!

But wait!  The budget deficit for the Federal government's fiscal year that just ended was "only" $439 billion -- the smallest deficit  since 2007!  That is great progress!  There's your positive feedback . . .

But, once you look into the details, it is not so positive.  The deficit is decreasing for the wrong reasons.  It is decreasing because the economy is growing, not because of governmental spending restraint.  While it is certainly not unimportant that the economy is growing, that smokescreen does make it easier to avoid dealing with the obvious spending inefficiencies.  It is not just the total number of dollars spent but also what those dollars are spent on!

No matter what the problem is, the answer is always the same . . . more revenue!

Medicare premiums are about to jump.  It is easier to increase premiums than, for example, to stop spending 40% of all lifetime medical costs during the last ninety days of life.  Saying yes to more revenue is easier than saying no to spending.

As a financial planner, clients always scream when I tell them to spend less.  After all, everything we buy is a necessity, isn't it?  Unfortunately, that is true for both individuals and nations.  Can we really expect our government leaders to eliminate spending when we cannot do it ourselves?

Tuesday, October 13, 2015

Still 98.6 Degrees

Is the stock market over-heated?  The shorthand answer on Wall Street deals with the Price-Earnings (PE) Ratio or how many times the stock market values each dollar of earnings per share.  In other words, if a stock earns $1.00 per share and sells for $20 per share, then the PE ratio for that stock is 20 times.  If the earnings per share for the whole stock market is $100 per share and the S&P 500 index is 2,000, then the PE ratio is also 20 times.  Since the long term average over the last sixty years is 16.5 times, we would call 20 times over-heated.

The trick is figuring out what are earnings per share (EPS) for the entire market.  Currently estimated at about $112 per share, that makes the current PE ratio about 18 times, which would be only slightly over-heated.  However, investing legend at Wharton, Dr. Jeremy Siegel, has dug into the numbers and thinks the $112 estimate is too low.  One reason is the dramatic fall in energy prices has triggered huge balance sheet write-downs that are ending as oil prices stabilize.  That adds about $8 per share.  In addition, the strong U.S. dollar has depressed earnings about $5 per share, which also seems to have stabilized.  Adding that $13 to the current estimate of $112 means real EPS is about $125, which drops the PE ratio to 16 times or about average.

So, is the stock market over-heated?  No, not by the normal measure of PE ratio.

Now, go back to sleep . . . with one eye open!

Sunday, October 11, 2015

Bold Predictions ?

I would never hire anybody who worked at investment banking giant Goldman Sachs, UNLESS they worked in the research department, which I do respect.  Here are some of their latest forecasts:

1.  GDP growth in the U.S. remains essentially unchanged at 2.4% last year, 2.5% this year, and 2.4% next year.
2.  GDP growth in Europe increases from 0.9% last year, 1.6% this year, and 1.8% next year.
3.  GDP growth in China continues to slow from 7.4% last year, 6.8% this year, and 6.4% next year.
4.  U.S. stocks should increase 6.2% over the next twelve months.
5.  European stocks should increase 18.8% over the next twelve months.
6.  Japanese stocks should increase 20.4% over the next twelve months.
7.  Interest rates on the benchmark 10-year Treasury bond should increase a whopping 73 basis points or about three-quarters of one percent over the next twelve months.
8.  The dollar will appreciate 15% against the euro and 3.8% against the pound but depreciate 7.6% against the yen.
9.  Oil will remain essentially unchanged,while natural gas will cost 23.6% more.
10.  Gold and cooper continue to lose value, with a loss of 8.4% for gold and 5.8% for cooper.

Notable in its absence, there is no discussion of any potential recession or bear market!

Saturday, October 10, 2015

One Joy of Education

We've all heard about the increasing concentration of income among the top 5%.  You might even think the 95% are treated unfairly.  Or, maybe the 5% are just better protected.

If you are having trouble convincing your kid that he should stay in high school and then go to college, consider the latest research from the National Center for Health Statistics:  In 1995, a high school dropout was 2.5 times more likely to be killed in a car wreck than a college graduate.  By 2010, they were 4.3 times more likely to be killed.  Who knows what it will be like in another five years?

Is it as simple as the rich get richer, while the uneducated get killed.  Or, is it because dropouts are less responsible than college grads?  Or, is it the company they keep?  Or, is it an secret government plan to kill off Americans with less education than the President?  Or, is it because the newer cars are too expensive for the dropouts but protect the educated who can afford the newer cars -- an unintended consequence of government regulation?

Regardless, the message is clear . . . stay in school!!

Friday, October 9, 2015

Majority vs Minority

Q.  What is the difference between Republican congressmen and Tea Party congressmen?

A.  Republicans believe in majority rule, not minority rule.

Thursday, October 8, 2015

Senatorial Sense

Democrats are right:  The seeds of the next financial crisis are sown in the ashes of the last one.

Former Senator Hillary Clinton is right:  She wants to tax high-frequency trading and "dark pools', making them more transparent and less profitable.  High-frequency trading poses a systemic risk to our financial system by overwhelming it with vast numbers of cancelled trades.  Dark pools are ways for investors buy and sell large quantities of stock in secret.  Think about that!

Senator Elizabeth Warren is right:  She wants more criminal prosecutions of white-collar professionals on Wall Street, who knowingly sell overly-risky investments to unsophisticated investors.  All I can say is . . . ditto!

There will be another financial crisis, I promise.  If you assume the 78 years between the Crashes of 1929 and 2007 means anything, we should not expect another in our lifetimes.  However, if we learned nothing else from Alvin Toffler's classic Future Shock, we learned that the rate of change keeps increasing at an increasing rate, suggesting the 78 year interval means little if anything.

There is no reason to believe another financial crisis is in the near-future, but these senatorial reforms will help keep another financial crisis in the future.

Wednesday, October 7, 2015

According to the Good Doctor(s)

Republicans are right:  When your corporate income tax rates are the highest in the developed world, they are too high.  That is the reason that American corporations have maintained $2 TRILLION overseas, where it doesn't have to pay 25-40% (depending) income taxes on it.

Dr. Ben Carson is right:  He has proposed a six-month window to repatriate the entire amount tax-free, as long as 10% is spent on some social good to be determined, such as Red Cross or Headstart or whatever.  Would such a huge cash injection help the United States?  Absolutely!  Would it help us a great deal?  Probably not.

Dr. Gabriel Zucman is also right:  He is a professor at the University of California and just wrote a book entitled The Hidden Wealth of Nations, in which he deduces there is now about $7.6 TRILLION (about 8% of the world's total wealth) hidden in such tax/secrecy havens as Panama, Channel Islands, etc. (Even though it has been illegal since 2009, the amount of foreign money in Switzerland has increased 18% since then.)  Of course, not all of that hidden money is from Americans, but wouldn't the world benefit if 8% of its wealth was returned to it?

Does that mean Dr. Carson should be elected President of the United Countries of Earth?