Finance Geek

“Out of the river there came up seven cows, sleek and fat, and they grazed among the reeds. After them, seven other cows, ugly and gaunt, came up out of the Nile…. And the cows that were ugly and gaunt ate up the seven sleek, fat cows.” - Genesis 41
This is of course Pharaoh’s famous troubling dream, which Joseph correctly interpreted as meaning there would be seven good years followed by seven bad years -a dream highly relevant to 21st century housing finance.
The fat years of the housing bubble lasted from 1999 to 2006 - seven years. The bubble was deflating by the…

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If you shake out the Obama budget in terms of bold headlines, it’s really a class-warfare, tax-the-rich budget. Layer upon layer of tax hikes are piled on successful investors, small-business owners, and corporations.
The capital-gains tax goes from 15 percent to 24 percent (including Obamacare). The dividends tax goes from 15 percent to nearly 40 percent, and that’s not including the double tax on corporate profits embodied in dividends and capital gains. The Bush tax cuts for top earners are repealed. There’s the 30 percent Buffett-rule minimum tax on millionaires. The…

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At the announcement of the President’s Budget, many budget observers are wondering if it matters much anymore. There was a time when Presidents’ Budget Requests to Congress had some meaning, and were not just opening bids in a political auction where no sales are final.In those days, Congress usually responded with a Budget of its own, often quite similar. The real battles were later fought over Appropriations. The Budget/Appropriations Process has always been a confused, competitive exercise. That was before Debt and Deficits became overwhelming.The competitive exercise has become…

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In an interview years ago, Whit Stillman, arguably the greatest modern director of films sadly never seen by most Americans, was asked about purchasing an apartment in New York City. Though the memory here is hazy, Stillman channeled the vision of the prudent over the decades; that he would wait for a decline in prices before putting in his bid for a Manhattan apartment.
To Stillman perhaps, and presumably millions of other Americans who chose to be responsible during the recessionary rush to housing earlier in the new millennium, the political class has implicitly told them to drop dead….

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Social Security’s disability program is a political quagmire - and a metaphor for why federal spending and budget deficits are so difficult to control. The numbers are too big; the details, too complicated; and the choices, when faced, too wrenching. President Obama’s new budget, estimated at $3.5 trillion or more, will raise all these problems. Experience suggests that little will be done to rein in long-term spending and deficits.
Social Security’s disability program opens a window on this larger paralysis. Created in 1956, more than two decades after Congress authorized…

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While taking in my morning helping of news and commentary, I was struck by a certain similarity in every article touching on economic policy. It wasn’t just the trampling of the Constitution, the abandonment of rational accounting principles, or the futility of the search for logic behind the proposals coming out of Washington that was so disturbing. There is nothing new about such sad developments. We long ago began to adapt to life without these bygone bulwarks against chaos.
It was the progressive destruction of the English language that prompted coffee to come out of my nose. Without…

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Switzerland is in the unfortunate position of being bullied and harassed by the U.S. government. The crux of the problem is that the United States arguably has the world’s worst tax system for international activity, and this creates conflict with other nations, particularly ones that have good tax laws that attract investment.
This has resulted in a number of different attacks against Swiss sovereignty. On the multilateral front, the Obama Administration is actively supporting the anti-tax competition project of the Organization for Economic Cooperation and Development.
On the…

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Out on the campaign trail, Fed head Ben Bernanke is an unpopular guy.
Mitt Romney and Newt Gingrich have both said they would replace Bernanke, not reappoint him. Congressman Ron Paul would swap the whole Federal Reserve monetary system for a gold-linked dollar, making the yellow metal legal tender. And it was Gov. Rick Perry of Texas, before he dropped out of the race, who said more quantitative easing by the Fed would be “almost treasonous.”
Republicans in Washington are equally unimpressed by Bernanke. Rep. Paul Ryan recently criticized the Fed for bankrolling our huge budget…

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Last week’s payroll report had me thinking of Alexander Pope’s 1733 “Essay on Man”, particularly the well-known line of “Hope springs eternal in the human breast.” Pope’s book was a critique of science, particularly the hubris that was seeping into it as it unlocked knowledge of the governing dynamics of the world and universe (those bristling days of Enlightenment). For the “science” of modern economics, and its unshakable belief in its ability to manage the unmistakably unscientific system that is the real economy, last Friday was the latest…

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With Senator Rick Santorum’s triple win in three Republican presidential contests on Tuesday, following his Iowa victory last month, President Barack Obama needs to watch out.
Santorum has a solid base of grassroots support, a base that the other Republican candidates may have a hard time attracting and that a Republican winner will need.
Rick Santorum’s views on economics are solidly within the core of conservative thought. In the coming days and weeks, his political adversaries on both sides of the aisle may try to caricature his beliefs. They won’t succeed.
Presidential…

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Worldwide wealth seems to be a bygone concept. But is it? Though the global marketplace is alive and vibrant, oppressive regulations, mismanagement, and outright corruption have damaged wealth creation. But it hasn’t been eliminated. Today’s global marketplace still provides opportunity for discerning investors and companies who are willing to look beyond obstacles of ideology and culture.
There is an old financial adage that says “Capital is coward.” It is true. Capital does not like to be inconvenienced, restricted, or threatened. Those who control capital know…

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Though the interim years make the late ‘90s increasingly hazy, back then cash management via money market funds was a fairly simple concept. Investors to varying degrees wanted easy access to cash, and they enjoyed yields on cash holdings that seemed to fall in the 4%-5% range.
Of course in the late ‘90s 5% returns were seen as all-too-boring given a stock market that kept testing new highs. Still, investors who wanted to be cautious with at least a portion of their wealth could count on reasonable compensation for the short-term use of their cash.
Notable for central…

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Tax reform perpetually tops policymakers’ lists for ways to grow the economy, but a generation has passed since the last successful effort, the Tax Reform Act of 1986. This is because of a simple political reality-it’s hard. But not, I believe, impossible. In the 26 years since the last reform, both our economy and the global economy have changed so significantly that the case for reform has never been stronger. In addition, the level of political interest in tax reform is the highest it has been since the mid-1990s, with Presidential candidates, Members of Congress, and the…

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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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