Oh, what a difference one-fifth on one percent makes . . . . immediately knocking 600 points off the Dow and making three-quarters of one percent increase in interest costs later this month a virtual certainty. This morning, the CPI report for August was issued, showing it increased 0.1% instead of decreasing 0.1%, for a disappointment of two tenths or one fifth of one percent. …
Do you think poor people are poor because they are lazy? If so, what percentage? What percentage are just plain stupid? What percentage are emotional refugees? As a former Texan, I enjoy reading former Senator Phil Gramm (R – TX) whenever I can, and he had a recent opinion piece in The Wall Street Journal, along with John Early of the American Enterprise Institute. It…
Going from G.O.A.T (greatest of all time) to Goat (stupid mammal) in just two years requires more than bad luck. Two years ago, the head of the Fed Reserve, Jay Powell, was celebrated for his actions getting us past the pandemic. He dropped rates and greatly expanded the money supply. Facing soaring job losses from Covid-19 and in concert with Congress, he injected trillions into…
Your choice . . . do you slowly peel-off a band-aid or do you prefer to simply rip it off? Economists have long believed the only certain tool to end inflation is a recession. Paul Volcker proved it! He was Chairman of the Federal Reserve from 1979 to 1987 and ushered in two recessions, by raising interest rates from 11.2% to 20% during 1980 and…
For those who like to see a conspiracy behind every tree, here is a fresh one . . . So, assume President Biden wants increased spending, but that causes more inflation. Further, assume Fed Head Jerome Powell wants less inflation and drives up interest costs to slow inflation. Is it possible they floated down the Snake River in Jackson Hole this week and conspired that…
I have a young cousin who is dumb as a stump . . . maybe dumber? Fortunately, he lives six hours away, and I have rarely seen him over the years. Unfortunately, his downward slide began when he was expelled from school about fifteen years ago for smoking pot and started hanging out with a bunch of losers. Shortly afterwards, there was a large family…
Anybody who have ever been to Jackson, Wyoming, has fallen in love with it — truly a remarkable place for lovers of nature. It’s also a remarkable place for nerds. In fact, the Federal Reserve System holds their annual Economic Symposium there in late August of every year, and it is jokingly referred to as The Nerdfest. I suspect all the attendees still have their…
I’ve spent almost two decades guessing whether the National Association of Business Economics (NABE) is conservative or progressive. The membership of the competing American Economics Association consists of academics and is clearly progressive. However, the NABE membership consists of working economists, and I think there is a mere 51% probability that NABE is also progressive. Here are some examples from their most recent survey of…
My nomination for the best television commercial of the year goes to the search engine “DuckDuckGo,” which competes with Google’s search engine and others. The commercial shows a young man wearing a T-shirt that says Google. It shows him looking over the shoulder of Americans using search engines to find things online. The 1983 musical classic by the Police, “Every Breath You Take” is perfect,…
In the fourth century BC in Greece, there was a legend that a rope-knot was so entwined and complicated that it was impossible to unwind. That legend promised control of Asia to anybody who could undo the knot, which became known as Gordian’s Knot. Along came Alexander the Great, who didn’t waste time trying to untie the knot. He simply took out his sword and…
The poorly-named “Inflation Reduction Act” was just passed by Congress. Democrats rave that it will reduce inflation. Republicans crow it will not! They’re both right . . . a little! Think of it this way: If you own a $1,000 CD, you get paid interest. The money spent buying the CD is called principal. The interest paid by the bank is called income. Now, remember…
Yesterday’s monthly “jobs report” was a good example of when good news is not so good. Expecting a healthy 258 thousand jobs were created last month, Wall Street was stunned to see twice as many jobs were created. It was a blow-out number, suggesting the economy was still strong, but why did Dow futures suddenly drop 220 points. Shouldn’t investors be happy that America was…
My ex-wife was fond of saying that one of the biggest problems with men is that they just can’t stop competing with other men . . . even dead men. Paul Volcker (1927-2009) was the Chairman of the Fed from 1979 to 1987, when he was succeeded by Alan Greenspan. A product of Princeton and Harvard, he is still widely regarded as the greatest “Fed-Head”…
When I was a young boy, my father told me to NEVER discuss religion or politics with other people. What he meant to say was NEVER discuss subjects that make other people react emotionally. If such subjects must be discussed, just don’t be inflammatory. Good Advice! A recent blog entry was about a quote from Ross Perot about abortion, when he answered a reporter’s question…
The short answer on how to handle inflation is simple . . . create a recession and hope you don’t get stagflation. The longer answer is that you have three tools to handle it. First, one cause of inflation is a sustained period when demand exceeds supply. If you cannot increase supply with targeted tax cuts or targeted regulatory relief, you can decrease demand by…
One of the best and most venerable market strategists is Dr. Jeremy Siegel of Wharton. His thoughts are always well-informed and well-crystalized. Today, he thinks we may have seen the worst in inflation. CPI and PPI numbers are backward looking – what has been, not what will be. The Fed has both shut down the growth in money supply and aggressively raised interest rates. Historically,…
If kids ask tough questions, then grown-up kids ask even tougher questions. During a recent visit, my grown-up daughter asked me if I thought the 2024 presidential election would be the last one? Laughing at first, I realized she was actually quite concerned. First, I explained that even dictators stage elections, so if a dictator “wins” in 2024, he would continue the farce. Second, the…
My latest quarterly column for Inside Business can be found here: https://www.pilotonline.com/inside-business/vp-ib-expert-flinchum-0718-20220718-5v6iajiel5eatpjdqzcdpba4hm-story.html
Raise your hand if you were surprised by yesterday’s report that inflation during June was running at a steep 9.1% annualized rate! We all know it has become a problem. We also know how to stop it – bring on a recession! The hesitancy of the Fed to intentionally cause a recession is understandable, as they hope for a “soft landing.” Of course, the slower…
One of my favorite Republican writers has long been Peggy Noonan, who was the primary speechwriter for President Reagan. Last week, she wrote an article in The Wall Street Journal that deserves some thought. She argues that crime is more scary now, not because there is more crime, but because we no longer know the rules to keep ourselves safe. Quoting her: “Previous crime waves…
Blessed to live in a safe, peaceful country without the curse of the Second Amendment, Shinzo Abe was nonetheless gunned down, as he was speaking in a public square. He was a conservative leading a party named the Liberal Democratic Party. His family had a long history of being active in Japanese politics, similar to the Kennedy’s or Bush’s in this country. Abe was blessed…
When I enlisted in the Army long ago, I just wanted to kill those “godless Communists” in Southeast Asia. It was certainly not a business proposition. An article in ABC News last week discussed the recruitment problems of our military forces. To compete with private companies, the Pentagon is debating various options to increase enlistments. It’s the same problem facing the airlines or fast food…
Thank God the first half (H1) of this year is over! Forgetting the horror of Putin’s War on Ukraine and the never-ending clown show in Washington, inflation broke out with a vengeance, interest rates started increasing rapidly . . . and stocks stumbled into a bear market. The Dow Jones dropped 14%, while the S&P lost 20% and the volatile NASDAQ lost almost 30%. Unless…
Wall Street economists pay close attention to the growth rate of our Gross Domestic Product. For the first quarter (Q1) of this year, GDP growth was estimated at a negative 1.2%, which was the first quarter to shrink since the pandemic collapse two years ago. On the second reading, we found GDP shrank 1.5% instead. Yesterday’s final reading was a negative 1.6%. The commonplace definition…
One of the most important books I’ve ever read was the iconic “On Death and Dying” by Elisabeth Kubler-Ross in 1997. She demonstrated that there are normal emotional stages after hearing a terminal diagnosis. It is a useful exercise. Naturally, Dr. Kubler-Ross’s perspective on predictable emotions related to death is useful for other life events. Mark Hulbert of MarketWatch has written the very useful “Five…
Ross Perot was a HIGHLY-opinionated Naval Academy graduate and Dallas billionaire when he ran for President in 1962 and has been credited with the election of Bill Clinton, by draining Republican votes from the incumbent President George Bush. I watched one evening as he was arriving for a political rally and could see that he was visibly annoyed by the swarm of noisy reporters, pelting…
A recession and a bear-market are not the same thing, although they are friends and have often been seen together. A recession is to economics what a bear-market is to investing – bad news. A recession is loosely regarded as two consecutive quarters of decreasing GDP, and bear-market is loosely regarded as a 20% decrease in the stock market. Right now, it is not certain…
Last month, I was hoping the Fed would increase interest rates by 75 basis points or three-quarters of one percent. Unfortunately, they only raised it by 50 bps or one-half of one percent. This week, the Fed is likely to raise interest costs another 50 bps, which will disappoint me again. I hope they increase rates by 100 bps or a full percentage point. So,…
I SALUTE the ten Republican senators who had the courage to stand up to the NRA and reject the stupid “slippery-slope” argument that ANY, trivial restriction on guns would certainly lead to the confiscation of all 400 million guns in America.
The most powerful industry in America has long been the advertising business. Who else can “influence” you buy a particular deodorant or automobile or how to vote? It took many years for me get interested in sports. For me, sports is just another subsidiary of the advertising business. Take the PGA or Professional Golf Association as an example. Their apparent job is to promote golf,…
Life is nothing more than a series of binary choices . . . you know . . . “either-or” There’s “good or bad” — there’s “eat or exercise” ? Mothers . . . and other expert psychologists . . . warn us that “all work & no play” makes us dull, boring and unhealthy. Most cardiologists would agree. But, what is “work” and what is…
I just finished reading “Religion’s Sudden Decline: What is Causing It and What Comes Next” by Ronald Inglehart in 2021. He is a professor at the University of Michigan. The book is a scholarly work and, as such, is not easy reading. The first half of the book is full of references to the work of other professors, but the back half has interesting nuggets. …
Republicans and Democrats make lousy financial advisors. However, MODERATE Republicans and MODERATE Democrats make excellent financial advisors, but they are tough to find. That’s why it is necessary to say something NEGATIVE about a politician before saying anything POSITIVE. NEGATIVE: Neither President Biden nor the Democratic Party have any clue, much less any understanding, of the crisis on the southern border. It is too easy…