Now that Paul Ryan has received the Republican nomination for Vice-President, there is a resurgence of interest in the writings of Ayn Rand. The hero in her books is always an intense, self-confident, self-made man who fights over-whelming odds to remain true to his beliefs. Ryan required his staff to read her book Atlas Shrugged, which describes how John Galt organizes a secret army of…
While jogging through Seashore State Park yesterday morning, I was listening to talk radio and heard the disc jockey say he had to get to bed by 9PM in order to do his 6AM show and had missed Obama’s speech the night before. Then, the conservative DJ and Romney-supporter added “but I heard it was a good one.” A few minutes later, an irate listener…
When is good news really bad news? The unemployment rate just dropped from 8.3% to 8.1% of the workforce. That must be good news? Nope! The latest monthly Jobs Report, prepared by the Department of Labor, was issued this morning. Economists were expecting about 125 thousand new jobs to be created last month. Instead, it was only 96 thousand. Once again, economists merely laugh at…
Understandably, economists are always asked about the economy. We rely on our training, and our experience, while trying to be mindful of our philosophical leanings between the Austrian, the Keynesian, and Supply-side schools of economics. Some try to avoid the discussion by relying on “technical analysis,” which means lots of charts and spooky terms like “double-inverted head & shoulders.” My thinking is that technical analysis…
From my window on Labor Day, I can see many Americans enjoying the beach. Meanwhile in Europe, the leader of Germany has finished hiking the Alps, and the leader of France has returned from the Rivera to cobble together enough agreement to end their financial crisis. At least, I hope so . . . it’s only been three years since this crisis began! Thursday will…
There was an informal survey of financial advisors on CNBC yesterday, showing an over-whelming 68% of us think the most important event this year will be the November election. I guess all those financial advisors watched the Republican Convention last week and are looking forward to the Democratic Convention this week . . . not me. I plan to watch the exact amount of the…
So, who is the all-important swing voter listening to ??
It’s hard not to think of particular individuals when reading a book about people. I’ve been reading The New Retirementality by Mitch Anthony, and it is a “must-read” for Baby-Boomers. It reminds me of the many, many Baby-Boomers I have talked with, who are bitter and disappointed that they will not enjoy the retirement their parents did. Their parents were usually more frugal but still spent…
During the past month or so, the previously-scary stock market has been pleasantly tranquil. I expect it will remain that way another week or so. In the meantime, the Fed holds its annual symposium in Jackson Hole, Wyoming. This is an important meeting of central bankers worldwide (except ECB’s Draghi). It is very informal, with the most important conversations held in hallways and outdoors, viewing…
Ever since Ronald Reagan accepted the teachings of Arthur Laffer and became a born-again Supply-sider, Republicans have been required to genuflect on the altar of Supply-side economics, which believes that leaving money with the rich allows them to create jobs. Since Romney is a member of the wealthy 1% and only paid 14% of his income in taxes, it is reasonable to assume he was…
Largely as a result of Ron Paul’s remarkable organizational abilities during the long Republican primary, the party platform will, for the first time in twenty years, advocate a return to the gold standard. This strongly appeals to those who believe it will automatically limit spending. As usual, it is more complicated. America was on the gold standard until President Nixon took us off of it…
Readers know I divide the world of economics into three schools. There is the Austrian or “Tough Love” school that argues a balanced budget is essential every year. There is the Keynesian school that argues deficit spending is essential when the economy is weak. Then, there is the Supply-side school that argues a cut in the highest marginal tax rate is always essential. No one…
Recently, Mayor Bloomberg of New York City proposed a prohibition on sugar drinks larger than 32 ounces. My first thought was . . . NANNY STATE – I don’t need no government bureaucrat telling me what to eat or drink. I still feel the same way. Later, I read Mayor Bloomberg’s reasoning that obesity was driving up his health care expenses, which he was trying to…
Readers know I’ve been increasing cash for the last few months, expecting possibly severe turbulence the rest of the year. But, the market has been drifting upwards over the last six weeks. Does that mean the bull has returned? In a word . . . No! I would be more likely to believe the bull had returned if trading volumes had increased. That would suggest…
Most blogs allow for readers to post their comments and react to whatever the blogger wrote. This blog does not permit that . . . and for a very good reason — securities regulators are like traffic police, i.e., they are humor impaired. If a client responded to something I wrote with a kind word, I would be in trouble with the regulators for allowing…
John Kenneth Galbraith was a famous Keynesian economist who wrote an influential book entitled The Affluent Society in 1958 and contributed a useful phrase to the American way of speaking — “conventional wisdom.” It can refer to anything that is commonly accepted among others, kinda like saying “everybody else believes this is true, so don’t bother me with any other facts.” According to “conventional wisdom,” hedge…
I have a long-time love/hate relationship with Ayd Rand, who wrote many things, including the powerful Atlas Shrugged. I believe I have read everything she ever wrote and have seen movies of several of her works. As a writer, I respect and envy the clarity with which she writes. As a writer, I understand why she colored her characters in such black & white terms of…
My first assignment as a graduate assistant years ago was to research and teach a class on a theory of motivation by Victor Vroom from the University of Michigan. His theory was a giant step forward in the ability to “quantify” motivation. Basically, it says my motivation to do something is a function of (1) how bad I want it to do it and (2)…
I enjoy watching Greta van Susteran on right-wing Fox News. I enjoy watching Rachel Maddow on left-wing MSNBC. And, I enjoy watching Fareed Zakaria on semi-centrist CNN. When he recommended this book by Jonathon Haidt last week as “required reading,” I decided I would read it. Humorously, Haidt appeared on Zakaria’s show this morning, after I went to the trouble of reading his book. Sadly,…
Everybody must have been happy yesterday, because the Dow rose 217 points, to the highest level in 3 months. The Republicans were happy because they could lament the fact that unemployment rose from 8.2% to 8.3% More significantly, the combination of unemployed plus under-employed (called the U-6 rate) rose to a scary 15%. The Democrats were happy because 163 thousand jobs were created, far more…
As a boy, I was taught that gentlemen don’t discuss politics. As a candidate in Army OCS, I was instructed never to engage in partisan activities, especially anything controversial. Not surprisingly, I still avoid all things Republican or Democrat. And, most of all, I RUN from any discussion of abortion politics! Imagine then my consternation at a recent dinner party when I was seated next…
On and off for the last three years, the stock market has been increasingly ignoring the fundamentals of earnings, earnings per share, sales growth, market share, etc. Investors have become far too focused on a possible, catastrophic European collapse. Last year, we viewed the European problem (with the exception of Greece) primarily as a banking problem. Last December, the European Central Bank (ECB) launched its…
Republicans and Democrats agree the budget deficit is a huge problem that must be resolved. However, with obedience to the right wing extremists, the Republicans will not agree to any tax increases. Likewise, with obedience to the left wing extremists, the Democrats will not agree to cut any entitlements, like Medicare and Social Security. Since the representative democracy we love seems to be failing us,…
At one point in my life, I had to fly to Europe for business almost every month. It was particularly annoying when I had to do business during the months of July and August, because the Europeans were maniacal about “going on Holiday.” Business would just stop! Nothing was more important than Holiday! So far in July, the U.S. stock market has done well, because…
The last boom was powered by residential real estate. The last bust then followed the value of residential real estate as it fell . . . and fell . . . and fell for a long six years. Last month, the chief economist of the National Association of Realtors announced that residential real estate had found its bottom and would start recovering, which would eliminate…
Recently, I had dinner with a six-year-old boy and his parents. Watching his attitude toward desserts, I saw the problem with Supply-Side economics . . . please stay with me on this! Supply-Side economics is a relatively new belief that the economy will grow if the highest marginal tax rates are decreased. It started with the realization that there is a point (the Laffer point)…
Nobody knows why Friday the 13th is considered unlucky. There is no written mention of it in Western literature before 1869. Italians find Friday the 17th to be unlucky. Greece and some parts of Spain suspect Tuesday the 13th is unlucky. And, on Wall Street, it is still called Black Friday by the superstitious. Hopefully, the CEO Jamie Dimon won’t feel unlucky today when he…
I just read the latest outlook from Wells Fargo, and here are the salient points: 1. During the second half of this year, U.S. growth is expected to remain unchanged, at about 1.7%.2. Global growth is expected to be 3.0%, if Europe doesn’t “blow up.”3. While they think Europe will instead “muddle through,” it remains the biggest risk.4. Led by lower oil prices, inflation risks…
One day, the bulls will be running down Wall Street. The next day, the bears will steal money from everybody on The Street. For those of us who are both fascinated and absorbed by such things, it is often hard to see any other things in life. This weekend, we had to help some relatives, who had been without power for eight days. One cousin…
On Monday morning, a survey of economists indicated that the June Jobs Reports issued this morning would show 80 thousand jobs were created last month. However, on Thursday morning, the ADP report said 176 thousand jobs were created, which was better than expected. As a result of the ADP report, this morning’s survey of economists showed their prediction had increased from 80 thousand to 100…
From an economic perspective, the causes of the European financial crisis are twofold. First, they give more money to their voters than they can afford to give. Second, they over-protect workers, greatly limiting business flexibility and productivity. Accountants can easily document the first, but how do you document the second? How about a crystal-clear example? The European Court of Justice just ruled that an employee…
Nobody ever spit on me, but I do remember one pimply-faced kid saying “Oh, look, a baby-killer” when he so astutely observed a young, fit Jim Flinchum with short hair returning to college in 1970. Over the next few years, there were several minor snubs, none of which mattered . . . then or now. But, somehow a nation of 300 million people got embarrassed…
That is how the chairman of the British Financial Services Authority described the environment of the big banks setting interest rates. In particular, he was talking about the current scandal involving the London Inter-Bank Offered Rate or LIBOR. This is an important scandal because the interest rate on countless home mortgages, credit cards, and virtually all commercial loans change according to LIBOR. At this point,…