Finance Geek

Economic data are subject to error, and employment statistics are no exception. Each month the employment figures are reported and discussed in the media down to the last digit as though blessed with divine perfection. But they’re not.
The U.S. Bureau of Labor Statistics (BLS) reports two monthly employment series: nonfarm payroll jobs collected from employers, and civilian employment collected from household interviews. Both are valuable in assessing the condition of labor markets and guiding policy decisions. But users would be better off, and gain better perspective, if they…

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Many people, observing the severe problems caused by Greece and other financially weak members of the European Union, wonder why the United States is not similarly afflicted. After all, the structures seem quite similar; the EU is united through a treaty into a single political grouping, while the U.S. is a union of states in a constitutional system.
In addition, the U.S. federal government has no control over the budgets, taxing or spending of the various states, just as the European Union’s government in Brussels has no control over the similar fiscal decisions of the various sovereign…

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“The past is a foreign country: they do things differently there.”
- L.P. Hartley, English novelist
It must now be obvious that, economically speaking, we’re in another country. Things we once took for granted no longer apply; things we never imagined occur all the time. We’ve entered a zone of ignorance where familiar experience and ideas count for less. “Thirty years ago, if you’d said that the United States and Europe were going to be the centers of financial crises, people would have thought you were crazy,” says economist Fred Bergsten. The unforeseen…

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Was Friday’s “Employment Situation” report from the Bureau of Labor Statistics (BLS) good news? Sure, if you live on Fantasy Island. Back here in America? Not so much.
The BLS reported that the closely followed “headline” (U-3) unemployment rate fell to 8.3% in January. This represented a decline of 0.2 percentage points from the previous month’s level and the lowest level since February 2009. So, why isn’t this good news?
The problem isn’t just that the employment report wasn’t good news, it’s that the employment report wasn’t even news….

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Politicians and journalists sure seem to believe that voters have the attention span and reasoning ability of a two-year old. Convinced that we are unable to hold multiple concepts in our minds long enough to judge how they fit together, you can count on being barraged with disconnected appeals to raw emotions.
Nowhere is this more apparent than in the way Washington concocts its complex tax and regulatory policies, and in the media’s childish analysis. As dumb as they think we are, do politicians really believe that they are smart enough to fine tune the economy, counting on their media…

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Message to Mitt: A rising tide lifts all boats.
That great phrase was coined by the late Jack Kemp, who believed that growth and opportunity for all is the answer to poverty. In fact, Kemp believed it was the answer to all things economic. And he was right. The best anti-poverty program is the one that creates jobs. The answer to large budget deficits? Grow the economy, create jobs, watch incomes rise, and let the tax revenues come rolling in.
Partly from Jack Kemp’s work, and partly from his own experience, Ronald Reagan believed the same thing. He knew that growth is the single best…

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Over the last several decades, the character of international trade has changed dramatically. Drastic advances in communication and information technologies have allowed businesses to slice the production process into pieces which are then located in their most efficient locations. Supply chains are formed that stretch across the globe, and individual parts, components, and even tasks, are traded from one country to another within these chains.
In his State of the Union Address, President Obama condemned this practice, saying, “It’s time to stop rewarding businesses that ship jobs…

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It has been an interesting week in the markets. There are several developments that compete for rightful and careful consideration. The Swiss franc is perilously close to its 1.20 peg to the euro, perhaps inviting more currency intervention (the last time the franc strengthened as much was late July/early August - a time of great turmoil). In addition to money seemingly moving toward the relative safety of the franc, the ECB announced that dollar swap usage with the Federal Reserve Bank of New York (FRBNY) rose to a level not seen since 2009 (higher than even those desperate summer days of…

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In a recent Financial Times op-ed (”Charity Needs Capitalism to Solve the World’s Problems”), former President Bill Clinton makes a murky, mealy-mouthed case for capitalism where he basically argues that while we need some capitalism to solve our current socio-economic problems, he questions how much capitalism is a good thing.
Clinton writes:
“While our global economic system has brought benefits to many it has also exacerbated inequalities, both within and among countries. Too much inequality not only hurts the poor and stifles the dreams of the middle-class, it also…

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On Thursday the House Transportation and Infrastructure Committee marks up its new transportation bill, the American Energy and Infrastructure Jobs Act.
The bill, sponsored by Chairman John Mica of Florida and Rep. John Duncan of Tennessee, both Republicans, authorizes $260 billion in spending over the next five years.
It’s about time that Congress considered a transportation bill. The last one expired in September, 2009. The new draft, subject to changes in committee, on the House floor, and then in conference with the Senate, looks like an improvement.
It streamlines the federal…

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Economy: The media’s “improving economy” this election year exists only in Democrats’ talking points. A new congressional report shows that joblessness is underestimated, while debt skyrockets.
Thirty-six pages into the Congressional Budget Office’s “Budget and Economic Outlook: Fiscal Years 2012 to 2022,” released Tuesday, is the news that “the unemployment rate in the fourth quarter of 2011 would have been about 1 1/4 percentage points higher than the actual rate of 8.7%” once the “unusually large decline over so short a time” in labor…

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Once again, the regulators in California have decided to lead the nation in terms of vehicle emission standards, proposing to require that 15.4 percent of all vehicles sold by 2025 must be electric cars, plug-in hybrid cars, or (currently non-existent) fuel cell cars.
In case you’re wondering why this all sounds familiar, it’s because California is re-running the same delusional program that it ran in 1990 (Yes, 22 years ago) when “Specifically, the Air Resources Board (ARB) required that at least 2 percent, 5 percent and 10 percent of new car sales be zero-emitting by 1998,…

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By now Americans have heard just about every idea on how to fix our dismal economy, and we’re only half way through the presidential election campaign. Much of the talk has centered on seemingly technical issues: the best tax policy to create jobs, the right design for programs to retrain those out of work, the best ways to measure and improve our schools in their jobs of educating the next generation of worker.
A worker’s economic fortunes, however, aren’t solely a function of his training and intelligence, or of the opportunities around him. They are also the product…

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“I’m telling you that the cure is the disease. The main source of illness in this world is the doctor’s own illness: his compulsion to try and cure and his fraudulent belief that he can. It ain’t easy to do nothing, now that society is telling everyone that the body is fundamentally flawed and about to self-destruct.” The Fat Man, The House of God, by Samuel Shem, p. 215
When doctors are asked what novel best describes what it’s like to work in a hospital, Samuel Shem’s 1978 classic, The House of God, is frequently the answer offered up. Though television…

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Whatever else they are, the super-rich have now become political props. We can thank President Obama and Mitt Romney for this. Obama thinks he can ride resentment against the rich into the White House for a second term; and Republican Romney’s fortune, estimated at $190 million or more, qualifies him as super-rich.
By all means, Congress should pass the “Buffett Tax,” named after billionaire Warren Buffett, who noted that his 2010 tax rate (17.4 percent) was about half his secretary’s. The explanation is that Buffett’s income comes mostly from dividends and capital…

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