Economists have two primary trade associations. First, the American Economic Association (AEA) is the oldest and is oriented toward academic economists, more commonly known as “nerds.” As far as I can tell, it has no ideological bent. If you can still solve quadratic equations in the dark, this group might be for you. Second, there is the National Association of Business Economics (NABE), where I’ve…
When closely-related but different subjects are conflated, heated arguments are not uncommon. A week or so ago, there was a heated kerfluffle about voting and the Post Office. My Republican friends became very animated, because others don’t see the problem of illegal voting as a big problem. My Democratic friends became very animated, because others don’t see the problem of voter suppression as a big…
If you build a swimming pool without a fence and a child drowns in it, you are guilty of creating an attractive hazard. Did you really expect a child NOT to jump into the pool? If you require college students to return to campus during the Covid-era, knowing there are bars and party venues near campus, are you not guilty of creating attractive hazard? Did…
It is no small understatement to say I’ve been disappointed with our current RINO President, but he deserves kudos for the Israel-UAE deal he announced last week. Since the birth of Israel in 1946, Israel has been the most hated neighbor in a nasty neighborhood. Slowly, it has made “peace” with Egypt and then Jordan. (The UAE is a small (10 million people) country but…
Most people are overly-fearful of recessions and shouldn’t be. Garden-variety recessions are routine. They come and go. The danger is that a garden-variety recession might morph into a financial crisis, which is much worse. We are certainly in a recession right now. (In fact, it is a totally unique “flash depression,” which sounds worse than it is.) The risk is that this recession might also…
Last summer, I visited the new National Memorial for Peace and Justice in Montgomery, Alabama, which is more widely known as “the lynching museum.” Touring both campuses, it was a long day feeling one of the horrors of history come alive. For example, I learned about the man that was lynched in my own hometown. It is a history museum . . . and much…
There is widespread agreement on Wall Street that development of a Covid-19 vaccine will be bullish. Of course, that’s true, but it also begs a few questions. First, how will we know when there is a credible vaccine? At completion of the phase three trials? When a bio-pharma company says so? When the CDC announces it? When there are enough doses for everybody? When? Second,…
Both Republicans and Democrats agree the economy needs additional stimulus but disagree on the amount. The Republicans believe $1 trillion is enough, while Democrats want no less than $2 trillion. It should be emphasized that the Republicans think we do need $1 trillion! Now, the President freely admits he will stop that stimulus if it contains the money needed by the Post Office to assure…
While I am not qualified to discuss psychology, I can still wonder about it. For example, I don’t understand the sadness and exasperation at the loss of sports this season, due to Covid. One pundit estimated college football alone contributed $4 billion to our annual GDP, a paltry contribution in a $22 trillion economy. Of course, the whole ESPN-world surely contributes much more. Sports is…
Because the bond market is so much bigger than the stock market, it has long been the accepted-wisdom that you could “read” the bond market for a reliable understanding of change in the financial markets. For example, one could learn a great deal about risk appetite and about inflation expectations. That is no longer true. Because of massive quantitative easing (official) and yield curve control…
It will be a long time before we get meaningful estimates of the total monetary cost of the pandemic, but I’m confident TEN TRILLION DOLLARS will be low. If you measure only the 6% GDP drop in Q1 and the 33% drop in Q2, you get about $3 trillion. Now, let’s assume that was the cost of the lockdown, which politicians swear we will never…
A gun lover is NOT the same thing as a gun-nut. I have had guns since I was a boy and am not sure how many guns I have today. After the Army, I even joined the National Rifle Association for a few years. In those days, it was primarily an interest group and sponsored gun-safety training. I actually taught a few classes in Texas. …
Mark Warner is the senior Democratic U.S. Senator from Virginia. When he was running for the office in 2008, he described himself as an “extreme moderate.” While I always liked that philosophical description, I was slightly suspicious that it might be self-serving, as Virginia was still a fairly Republican state at the time. Recently, I heard him taking questions from voters. One question was how…
The stock market can handle bad news, but it hates surprises. No economic data is more closely watched than the monthly “Jobs Report” issued by the Bureau of Labor Statistics on the first Friday of each month. It is always a comparison against expectations. If the data is better than expected, the market will go up. Usually, expectations are in a narrow range. Expectations for…
First, there is an increasing certainty of future tax increases. Both Republican economists and Democratic economists agree on one thing — an over-concentration of wealth is bad for democracy. Of course, that’s where the agreement ends! The Republicans think it is a small problem that will eventually fix itself, as succeeding generations divide up the wealth. Democrats think it is a clear and present danger.…
Every business has a seedy side. Not even the church business is spared. In the financial world, I’ve always found the world of offshore asset-protection-trusts (APT) to be one of the most seedy places. There are many legitimate financial planning reasons for asset protection, such as protecting a kid’s inheritance from bad marriages, etc. The legitimate reasons can be handled in several U.S. states onshore…
Everybody knew that our GDP would drop badly in the second quarter, following a 7% annualized drop in the first quarter. Estimates were that our GDP would drop 30-35%, and it dropped 32.9% – the biggest drop in history, by a factor of three times. The lockdown from mid-March to Mid-May was costly indeed. Estimates for the third quarter are a huge improvement – up…
From my first investment course many years ago, I’ve known Warren Buffett as a legendary investor. I learned he was clearly one of the best investors of all time, if not the best. However, from 2009 through last month, he has under-performed the S&P by 4.4% each year. More recently, that under-performance was even worse from 2017 through last month, when he under-performed by a…
Even before 2002, when former Vice President Cheney famously said “deficits don’t matter”, economists have begged the question of whether deficits actually do matter. Out of that discussion, a new isolationist school of thought has emerged, i.e., Modern Monetary Theory (MMT). It has also been widely popularized by Democratic Rep. Alexandria Ocasio-Cortez of New York. A new book by Stephanie Kelton called the Deficit Myth: …
Given my love of the outdoors, nobody was surprised when I volunteered for the infantry in the Army. Backpacking with a buddy in the Appalachian mountains as a boy eventually led me to the majestic Muir Woods north of San Francisco as a man, where I developed great respect for John Muir, the iconic founder of the environmentalist Sierra Club. Following approval of Central Park…
One would not immediately think that the coronavirus would impact Social Security, but it will. Here’s the good news: From near bankruptcy in 1980, the Social Security Trust Fund now has $2.9 TRILLION. (Yea, Congress!) Here’s the bad news: This is the year – 2020 – that cash flow turns negative. From now until 2035, the trust fund will shrink, at which time benefits must…
I live in a perfect world, don’t you? Whenever you look out the window, don’t you see rainbows and lovely unicorns? In fact, at ground-level, little girls throw pretty flowers from their little baskets and sing pleasant little songs. It is a perfect world, indeed! One characteristic of this perfect little world is that shareholders actually control big corporations. Technically, yes – but actually, no. …
There is an anti-mask rally in Dallas today. People, who feel they have a right to spew water droplets on other people, will mass and swarm into various retail stores, overwhelming the store policy about wearing a mask. This is sick! Having been raised in an area with many Revolutionary War memorials . . . and having family members who hated Yankees during the Civil…
I love capitalism! Government can never be as resilient as business. As an example, with fewer people going to malls, there are many large parking lots being ignored. Brookfield Properties is turning those unused assets into pop-up drive-in movies with great success. (Can you believe that many people are too young to remember drive-in movies?) Social distancing is easy. You can eat in your car. …
My hero is dying. Over the last forty years, I have admired him and prayed for him, which makes it so painful to watch him now, crippled with arthritis and writhing in pain. Before he graduated, his professors adored him, especially his mathematical ability. Sadly, at his graduation, on January 1, 1994, he was shot in the leg, shattering the bone. My hero walked with…
YOU – yes, YOU – need a Certified Financial Planner! Nobody else can coordinate and synthesize the myriad advice thrown at people. I should know – after all, I was a CFP over 30 years. When I voluntarily relinquished that certification earlier this year, some friends thought I was retiring, which is not true. Some friends thought I had simply outgrown it, which is also…
Traditional conservatives (as opposed to Trump Republicans) tend to support the Austrian school of budgeting, largely based on the economic teachings of F.A. Hayek. He often pointed to the problem of economists and other scientists in predicting the future, particularly with quantitative models that presume human behavior. He called it “an ambition to imitate science in its methods rather than in its spirits.” I remembered…
For many years, I have enjoyed writing a quarterly column for Inside Business, the business journal of southeastern Virginia. My latest column can be found here: https://www.pilotonline.com/inside-business/vp-ib-expert-flinchum-0713-20200710-y7nfhs2dzjczbbtweon2lfou7q-story.html
For many years, I would buy or sell stocks only when the market opened at 9:30 each morning, because that was the only time of day that I could predict the market price, as indicated by the futures market. The world has changed. Futures are no longer a reliable indicator of market action. They flop constantly all night. A few years ago, I attended a…
Despite being crushed by the pandemic, the stock market just enjoyed one of the best quarters in 22 years, with the S&P 500 rising a whopping 20.54%. Before popping champagne corks, let’s look a little deeper. One of the most useful ways to look at stocks is the distinction between value stocks and growth stocks. Basically, value stocks use their profits to pay dividends to…
If you want to see a grown man cry, just watch my eyes when they play “taps” at a military funeral. As an existentialist, I don’t grieve for the veteran, as death is only one side a coin . . . one side with pain and one without. Of course, as a human, I do grieve for the family and loved ones of the veteran,…
If I had to say something nice about the current economic collapse, I would say — at least, it is NOT also a financial collapse. Our banking system has remained relatively strong, thank goodness. If not, this “flash-depression” would easily turn into another Great Depression. Keeping our financial system solid is desperately important. After the Global Financial Crisis of 2008, our Congress acted responsibly to…
On Wall Street, the favorite game is guessing what outcome is already “priced-into-the-market.” It is a game of guessing expectations. For example, I think the stock market currently expects Trump to lose the Presidency, while Republicans hold onto the Senate. Remember, Wall Street always over-reacts to surprises! If the Senate remains Republican, the Trump tax cut remains safe, but that is already priced-into-the-market. So the…
