Author Archive

It was nice to see that the FOMC considered US treasury bond trading on October 15 at its October FOMC meeting. More than a month later, there still isn’t much by way of consensus on what caused the “crash” nor how to interpret the events of that day. Even the “crash” itself was odd in that what occurred was not a precipitous drop in price, but the exact opposite. In terms of yields on treasury bonds, it was there where the usual convention about such things related.
To say it was an extraordinary event is to be severely understated, though attention is limited outside the immediate rungs…

More…

Comments No Comments »

While California’s official November 4th election results won’t be finalized until the end of the month, we can still gauge the success of certain economic competitiveness messages. With national Republicans failing to pick up any California Congressional seats, the national messaging largely proved ineffective, even with a seemingly Republican-friendly electorate. Instead, it would appear that despite the lackluster gubernatorial election, California issues reined. But that doesn’t mean all of them were successful.
The Messages That Succeeded
Pension Reform: San Jose and San Diego are…

More…

Comments No Comments »

In the four years since the passage of Dodd-Frank, the financial regulators have written a lot of new rules. Throughout the implementation period, at least one of the chambers of Congress has been under the control of the party that passed Dodd-Frank. Agencies therefore have been spared some painful scrutiny of their Dodd-Frank implementation programs. This month’s election changed that, and agencies are likely to face a lot more uncomfortable oversight in the upcoming Congress. But the new Congress, not as wedded to Dodd-Frank as its predecessors, could also make life more bearable for…

More…

Comments No Comments »

A new Congress is arriving, and it is time to reform FSOC, the “Financial Stability Oversight Council.” FSOC is part of the efflorescence of regulatory bureaucracy created by the notorious Dodd-Frank Act of 2010– a typical political over-reaction, as happens in every cycle.
FSOC is a committee of regulators assigned the high-sounding job of identifying and preventing the threat of “systemic risk.” This is probably not possible. The utter failure of central banks, notably including the Federal Reserve, regulators and economists in general to diagnose the great 21st century bubbles in the…

More…

Comments No Comments »

Now that the midterm elections are over, the Department of Labor is getting ready to release new proposed rules on overtime pay. These rules will fulfill President Obama’s promise to raise the salary level at which employers are required to pay overtime. In March, at the White House, the President said, “Overtime is a pretty simple idea: If you have to work more, you should get paid more.”
But this promise contradicts other promises the president has made, most specifically towards working women. The president wants working women to have flexible hours and to be able to telecommute, job…

More…

Comments No Comments »

President Obama has claimed that income inequality is the “defining issue of our time.”
There is no doubt that income inequality is growing. A recent CBO report that traced market income (before taxes or government transfer payments) shows that 80 percent of U.S. households had a smaller share of market income in 2007 (before the Great Recession) than in 1979. Even the top 20 percent, taken as a whole, increased its share of market income by less than half a percentage point. The winners were the top 1 percent of earners. Their share of market income leaped from 10.5 percent in 1979 to 21.3…

More…

Comments No Comments »

It’s perhaps apocryphal, but in his classic 1982 book The Economy In Mind, the late Warren Brookes referenced the arrival of a famous Keynesian at New York’s JFK airport in 1979. Upon reaching customs, the customs’ official checking passports said to the economist “I don’t know whether I should let you back, Professor, considering what you economists have done to this country.”Brookes’ story bears relevance in light of the aggressive actions taken by economists at the Fed, and at central banks around the world. To witness their machinations is to marvel at the damage being done, and to…

More…

Comments No Comments »

Trying to invest like Warren Buffett has such a long history that numerous columns have been written about how to construct portfolios of companies that the writer posits Warren Buffett would like. Other investors or money managers simply build portfolios of companies in which his Berkshire Hathaway has substantial holdings. Multiple books have been written on how to invest like Buffett. Still, it is always worth reminding, particularly as the subject of tax reform bubbles up in Washington, D.C. once again, that while imitating Warren Buffett can come with large rewards, listening to him is a…

More…

Comments No Comments »

The greatest economic challenge of our time is how to restore economic growth. Over the past dozen years, average real growth has slowed to 1.8 percent annually, under both Republican and Democratic presidents and congresses. It’s a bipartisan problem.
And it’s a new one. For the past 50 years or so, the American economy grew at just less than 3.5 percent per year. But we’re now experiencing one of the longest slow-growth periods in the past 100 years. Excluding the Great Depression, I bet it is the longest slow-growth period in a century.
There are any number of fiscal and monetary…

More…

Comments No Comments »

There are a great many curiosities that set up this current economic era, particularly as unsatisfying as it is to the vast majority that participate in it. It may not be a common topic of conversation to even those with a passing interest in economic affairs, but it is noteworthy in its own right that more than a few orthodox economists have taken to bashing the US dollar as an imposed burden upon these very United States.
Without detecting a hint of irony, these very same people detest the gold standard for its supposed restrictions on the flexibility, to use Ben Bernanke’s phrasing, of…

More…

Comments No Comments »

Some influences on the stock market are casual, subtle or open to interpretation, but the catalyst behind the current stock market rally really shouldn’t be controversial. As far as stocks go, we have lived by QE. The only question now is, whether we will die without it. A larger version of this article appears in the fall edition of Euro Pacific Capital’s Global Investor newsletter. Since the financial crisis of 2008 stock prices have only risen when the Fed is either expanding its balance sheet, hinting that it is about to do so, or actively recycling assets to hold down long term interest…

More…

Comments No Comments »

It has been over 6 months since we learned about the secret waiting list forcing thousands of veterans to wait months for their doctor’s appointments at the Phoenix Veterans Affairs health system. Since then, there has been a management shakeup at the VA and Congress enacted a $17 billion initiative to help reduce the backlog. The good news: waiting times seem to be down. The bad news: there is nothing to prevent delays and rationing from returning once public attention shifts elsewhere.
The VA has long had trouble providing veterans with adequate access to care, going as far back as…

More…

Comments No Comments »

Quickly following on the heels of the November 4th elections, a select few policy issues made it to the top of Congress’ priority list. Mitch McConnell (R-KY), Senate Minority Leader and presumed majority leader for the 114th Congress, has indicated that the medical device tax is a key target, inspiring confidence within the medical device industry that a repeal is, in fact, possible. Below is a basic primer about the tax, its contentious history and how it may fare in the 114th Congress.
1. What is the medical device tax?
Included in the Affordable Care Act (ACA) and launched in 2013, the…

More…

Comments No Comments »

When an American president goes to China, topics of conversation are rarely in short supply. President Obama’s current visit is no different: Security issues bubbling in the South China Sea, charges of cyber-hacking flying both ways, and stultifying engagement on the challenges and realities of climate change; laid before him is a bona fide Thanksgiving dinner of geopolitical indigestion.
But what should cause a real peptic ulcer for the president is the state of our two countries’ deeper economic relationship, which, from the American point of view, has grown nothing short of…

More…

Comments No Comments »

The Affordable Care Act’s legal troubles are far from over. The Supreme Court’s announcement that it will review King v. Burwell, the case challenging health insurance premium subsidies for those who buy their insurance on the 36 federal exchanges, increases the priority of reforming the most destructive aspects of the Act. This announcement comes just over a year after Judge James R. Spencer of the U.S. District Court for the Eastern District of Virginia agreed to rule in the case, then called King v. Sebelius.Last year, few had heard of King v. Sebelius or its parallel case, Halbig v….

More…

Comments No Comments »