If you are only 0.2% of a sector in the economy but contribute a whopping 40% of the lobbying dollars spent by that sector, does that make your voice a little louder? Sugar is only 0.2% of the agricultural sector of the economy but produces 40% of the lobbying dollars. That is obviously the reason that something as unhealthy as sugar gets an annual subsidy…
The word “inflation” causes people, who can remember the early 1980’s, to furrow their brow, look down and shake their head. Those were the years of double-digit inflation. Our government took several unsuccessful steps to curb inflation. (Remember the WIN buttons for “Whip Inflation Now”?) Inflation was high and scary – so scary that one man finally summoned the courage to stand up and intentionally…
On Friday, the stock market dropped close to 1%. Was that because corporate earnings had decreased by 1% – of course not. It was due to a political shock. Here is the short version: Turkey has 80 million people but very few natural resources, except for its powerful geography as a bridge to Europe from the volatile Middle East. It commands a strategic position, coveted…
On February 27th of this year, one of my heroes, Warren Buffet, said he thought stock prices were “cheap.” However, back in 2001, he said this (updated) chart was the “probably the best single measure of where valuations stand at any given moment.” It shows that GDP is now 129.6% of all stocks, compared to the 2000 high of 151.7%. What looks cheap about that? …
Republicans cause deficits by decreasing revenues. Democrats cause deficits by increasing spending. President Trump does both. Yesterday, the Treasury Department announced their plans to borrow 63% more in last half of this year, compared to last year. Nobody should be allowed to vote without seeing www.usdebtclock.org
When I was doing graduate work at the University of Dallas in international trade, we had to also study cultural distinctions and how such distinctions impact business. For example, never prop your feet up in the presence of Arabs, as showing the sole of your feet is considered dis-respectable. Another example is the importance of “face” in China. In fact, it is so important that…
Blaming Bill and Newt I believe Bill Clinton and Newt Gingrich deserve a good portion of the blame for our poisonous political environment. They accepted the economic advice, from both Republican economists and from Democratic economists, that multi-lateral trade agreements improved the economy of all trading partners. Bill and Newt then ushered NAFTA into existence. But, both the Republican economists and the Democratic economists also…
Sara Grillo is one of my favorite financial writers. In her most recent, she discusses how convenient it is for commission-paid salesmen of life insurance, annuities and long-term care insurance to emphasize how much longer people can live. These salesmen prey upon the “worst-case” fear of not dying. She goes on to point out that 39% of all Americans are obese, which statistically reduces longevity.…
One important measure of how you are doing financially is the size of your pay check. That’s no different than economists looking at changes in the Gross Domestic Production or GDP. For the second quarter of this year, GDP grew at a 4.1% rate, which is good — real good, in fact. It was the fastest growth in four years. Bottom Line: the economy is…
Let’s say I want to control my group or tribe or nation. I could use charisma, or I could use force, or I could use religion. I may not have the needed charisma, which is a fickle thing anyway. I could use force, but killing is just wasting those economic assets known as humans. But, I would probably use religion, which seems to come natural…
During long walks in First Landing State Park, I enjoy listening to the podcasts of Freakonomics by Stephen Dubner. He uses economic reasoning to focus on mundane subjects and always interviews experts on the subject. Today, it was the question of “choking” or failing to perform when under pressure. It was not surprising that intelligent people are more likely to “choke” than less intelligent people. It…
If you need another reason to be disappointed at our form of government, remember this: Back in the early 1990’s, Congress was considering the proposed North America Free Trade Association (NAFTA). A steady stream of economists testified in many different hearings before Congress on the benefit of globalization in general and the principle of comparative advantage in particular. However, virtually every single one cautioned there…
Initial Jobless Claims have not been this low since 1969. There are actually more job openings than job seekers. The problem is obviously that the job seekers don’t have the skills that employers need. Quietly, behind the scenes, Ivanka Trump has corralled fifteen large employers to pledge in writing to increase skill training, by expanding apprenticeships, increasing OJT, and training new employees. Altogether, the companies signing…
One of my long-time favorite market strategists is Dr. Jeremy Siegel from Wharton. His latest commentary shows his belief that the stock market would jump 10% – if the trade wars would suddenly end. That is consistent with my belief that the market has moved sideways all year, even though corporate earnings continue to rise strongly. The stock market has not kept up with rising…
Wall Street Wags are fretting about the “flat yield curve” but fail to mention that such a yield curve has accurately predicted 14 of the last 7 recessions. First, the yield curve is the difference between interest rates on 2-year Treasury bonds and 10-year Treasury bonds. Longer term rates are higher than short term rates for several reasons. The longer term means more things can…
Many pundits are going crazy, trying to figure out the relationship between Trump and Putin. One even remarked that their relationship is the greatest mystery of this century. Actually, I think the answer can be found with Trump’s shock when he learned that Vice President Pence had never earned more than $200 thousand a year and had only $15 thousand of cash in the bank. …
Sugar man, won’t you hurry‘Cos I’m tired of these scenesFor a blue coin won’t you bring backAll those colors to my dreams Silver magic ships you carryJumpers, coke, sweet Mary Jane Sugar man met a false friendOn a lonely dusty roadLost my heart when I found itIt had turned into a dead black coal Silver magic ships you carryJumpers, coke, sweet Mary Jane Sugar man…
Let’s assume you get a 100% VA mortgage for a new house. Let’s further assume that, ten years later, your mortgage is down to $80 thousand, and your home is now worth $125 thousand. Originally, the loan-to-value of your mortgage was 100%. But, that dropped to a much safer 64% ten years later (80/125). My point is this: there are advantages to inflation. Debt can…
Since my father told me about his experience in World War II, seeing a freshly liberated Nazi concentration camp, I have been very interested in the Holocaust. Recently, I had the opportunity to tour the Richmond Holocaust Museum, which I highly recommend. While I am steeped in the horrible atrocities committed against the Jews, I’ve become interested in the aftermath, after the surviving Jews were…
In your lifetime, how many times have there been more job openings than people looking for jobs? Today, there are 6.6 million unfilled job openings and only 6.0 million people looking for work. More precisely, there are 6.6 million openings for skilled workers and 6.0 million unskilled job applicants. The “skills gap” has never been greater. Another indicator of a tight job market is the…
Few of us maintain our mental sharpness until the end. Mental fuzziness should be a final luxury at the end of life, not open season to be preyed upon. Unfortunately, I just read about yet another Ponzi scheme, stealing $102 million from about 600 seniors in Florida, and I hope there is a special place in Hell for those who prey upon the vulnerable. However,…
Although I seldom do it anymore, I have been a scuba diver for most of my life. In 1975, I had the opportunity to dive a cave off the Suwannee River in the Florida Panhandle. That was enough to convince me that cave diving is vastly more difficult and dangerous than regular open water diving. I learned my lesson and never did it again. Watching…
Q. Do I believe the Russians tried to influence our 2016 elections?A. Yes Q. Do I believe it was authorized by President Putin?A. Yes Q. Do I believe Putin wanted to help candidate Trump?A. It was far more important to Putin that Clinton lost.. Q. Why did Putin hate Clinton so much?A. He believes she tried to interfere with HIS election in 2014. Q. Did…
To read my latest column for Inside Business, go to: https://pilotonline.com/inside-business/news/columns/article_c50ae3fa-8127-11e8-8923-c3ae049e6dfb.html
According to Goldman Sachs, the smartest people on Wall Street work at Goldman Sachs. Indeed, their research department actually deserves that accolade. Their latest analysis suggests commodities will benefit strongly from the stronger dollar. More significantly, they believe there is too much angst over the current trade war, calling such fears “oversold.” I hope they are right! My concern is that we have entered a…
There are economic systems, and there are political systems.Examples of economic systems include capitalism and socialism.Examples of political systems include democracy and dictatorship.Of course, there are degrees of each. The combination of capitalism and democracy is called free enterprise.The combination of socialism and dictatorship is called communism.You can have the combination of capitalism and dictatorship, such as today’s China.You can have the combination of socialism…
I was talking with some fellow students of economics. We started discussing the 0.2% drop in estimates of Q1 GDP growth, but that quickly morphed into a discussion on politics. With a bunch of economic nerds and with a rich assortment of economic datapoints, why were we talking about politics? As we talked through that, it became apparent that, despite the overwhelming majority of the…
Zuckerberg is founder and CEO of tech giant, Facebook. To my knowledge, nobody ever accused him of being a nice guy. Still, he was man enough to recognize the intrusion and interference of Russia into both our 2016 election and 2018 election. In May, he convened a meeting in Menlo Park of executives from all the major tech firms to discuss ways to prevent any…
The opening salvo in this trade war was the immediate rejection of the Trans-Pacific Partnership (TPP), which I wrote then was a mistake. The Administration looked only at the raw commercial aspect of the TPP, ignoring its wider significance, especially the economic containment of China. It was a clear rejection of geo-politics as part of trade policy. There is no disagreement that it is time…
James Davison Hunter is a brilliant sociologist at the University of Virginia. As he is an excellent but prolific writer, I have barely begun reading everything he has produced. But, my thinking has already started to evolve. There are military wars, and there are culture wars. Military wars are usually caused by tribal conflicts or economic conflicts. Culture wars are more complicated. Because religions have…
Was it a huntsman or a playerThat made you pay the costThat now assumes relaxed positionsAnd prostitutes your loss?Were you tortured by your own thirstIn those pleasures that you seekThat made you Tom the curiousThat makes you James the weak? And you claim you got something goingSomething you call uniqueBut I’ve seen your self-pity showingAs the tears rolled down your cheeks. Soon you know I’ll…
When was the last time you went to: www.usdebtclock.org Go, go look at it now. There are lots of numbers, all rising rapidly. Today, focus on two of them in particular. First, in the upper left, find the national debt, which is now over $21 TRILLION. Second, near the center, find the Gross Domestic Product, which is now over $20 TRILLION. In other words, our…
I hate to sound like a broken record, but . . . the Index of Leading Economic Indicators (LEI) was up again last month. This traditionally means there is no recession on the 12-18 month time horizon. Our economy being propelled by new manufacturing orders, consumer expectations, stock prices, and capital goods. But, there is an interesting change. The LEI has slowed over the last…