Finance Geek

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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Today we consider the political economics of establishing a permanent colony on the moon, the price offered by disgraced former Congressman and rehabilitated presidential candidate Newt Gingrich in exchange for victory in Tuesday’s Florida Republican primary.
In his quest to convince us he is the best man to return our nation to fiscal sanity, Newt made the astute observation that space exploration is to Florida what ethanol is to Iowa. Recognizing a good deal when he sees one, the handsomely-paid Freddie Mac historian promised the rump space-industrial complex, moldering in its misty…

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You would think that with one of the weakest economic recoveries on record, President Obama would be desperately searching for ways to promote economic growth. It is, after all, an election year. Most pundit and pollsters agree that it’s the economy stupid.
But instead, Obama used his State of the Union speech to rail on about fairness, inequality, and redistribution. The Obama strategy is simple: Tax the rich because they don’t pay enough.
The problem is, they do pay enough. According to the Tax Foundation, Americans making $1 million or more pay a 25 percent average tax rate….

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The IMF is clearly not satisfied with the current state of affairs in Europe. Not only has the global “agency” reduced growth forecasts across the board, it is predicting a global contraction absent comprehensive solutions to the PIIGS problems. Setting aside the obtuse idea that the world’s economic problems only reside within the PIIGS, the stakes are very high in the manner and method that Greece pioneers before its March zero hour. The entire banking structure awaits some kind of agreement, knowing full well that this is the test case that decides how the multi-trillion…

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In his State of the Union Address Tuesday evening, President Obama repeated his call for tax increases on high income earners-even though some of these same tax increases failed to get through Congress in 2010 when the Democrats controlled both Houses.
This is part of the politics of class warfare that has become the defining feature of Mr. Obama’s presidency.
American manufacturing has fled offshore due to some of the highest corporate tax rates and the most stringent regulations in the world. Millions of jobs have gone offshore.
Mr. Obama is desperate to get manufacturing to return, so…

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Good news: economic activity is picking up. Not so good news: economic growth remains anemic and the pace of job creation too slow to make a meaningful dent in the unemployment rate. And there are potential external shocks - the fiscal crisis in Europe or an oil crisis in the Persian Gulf — that could stall the modest recovery now underway.
What’s really needed is a “grand bargain” - near-term stimulus focused on investments in infrastructure, R&D, and human capital, accompanied by a credible long term plan to reduce the federal deficit to sustainable levels. But, in…

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Regulation: Tuesday’s GOP debate moderator was shocked by the front-runners’ broadside against Dodd-Frank banking rules. He seemed to think they were hyping their damage. They weren’t.
The media elite are under the assumption that all government regulations are good. So when both Mitt Romney and Newt Gingrich took shots at Dodd-Frank, NBC News anchor Brian Williams was flabbergasted. He expressed skepticism that its new rules posed any problem.
Gingrich straightened him out, arguing the media and the public don’t know how “bad” the Democrats’ law…

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Though the title of this piece would perhaps suggest a dislike of hedge funds, nothing could be further from the truth. If hedge funds didn’t exist, we’d have to invent them.
They’re essential to a smoothly functioning economy for the traders in their employ endlessly searching for market mispricings to fix through the commitment of capital. Price signals tell those with capital where investment is and is not needed, and as hedge funds correct what’s not right in markets, their existence ensures that less capital is destroyed on a daily basis.
And while commentators who…

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Despite frequent, dire warnings about the unsustainability of government budget deficits in the United States, Europe and Japan, investors are lining up to lend to some governments at very low interest rates. Interest rates on 10-year U.S. treasury notes are about 2%, close to record lows. The same is true in Germany and interest rates on Japan’s 10-year government bonds are below 1%.
This outcome is all the more surprising when, added to fear over oversupply of government debt, are warnings that the support given to debt markets by central banks amounts to the printing…

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Bob Davids is an outspoken and provocative American entrepreneur who has launched six highly successful companies over the course of his storied career.
His myriad business successes include building Radica Games, the third most profitable toy maker in the world which was purchased by Mattel in 2006; launching Sea Smoke, his world-class vineyard located in Central California (featured in the Academy Award-winning movie “Sideways”); and his latest venture, “Villa Keliki”, a luxurious 8,000 square meter resort located on the breathtaking island of Bali.
Davids has been…

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The recent release of the 2006 transcripts of the Federal Reserve’s main policy-making body stimulated a small media frenzy. “Little Alarm Shown at Fed at Dawn of Housing Bust,” headlined the Wall Street Journal. The Washington Post agreed: “As financial crisis brewed, Fed appeared unconcerned.” The New York Times echoed: “Inside the Fed in ‘06: Coming Crisis, and Banter.”
Comments from members of the Federal Open Market Committee (FOMC) now seem misguided. The first 2006 meeting was the last for retiring Fed Chairman Alan Greenspan. Janet Yellen - then…

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“The federal government is the only entity left with the resources to jolt our economy back to life.” - President Barack Obama, Confidence Men, p. 186It’s often been said in various ways by economic thinkers of the classical school that booms and bull markets don’t die of old age, rather they succumb to policy failure. Economies, and by extension stock markets, in this certain sense do best when policy barriers to productive economic activity are light. But with policy from fallible politicians ever present irrespective of political party affiliation, mistakes are…

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Let me build on Charles Krauthammer’s great Friday column, “The GOP’s Suicide March.” Krauthammer argues that just as President Obama’s class-warfare, soak-the-rich mantra started lagging in the polls, some Republicans on the campaign trail started making the case that Mitt Romney’s Bain Capital was involved in nothing more than vulture capitalism, looting companies, and destroying jobs. Keeping class envy alive.
I’m not going to name names, because everybody knows who these Republicans are. Instead, I want to go positive, and commend Mitt Romney himself….

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