My brother e-mailed me recently to question why I hadn't blogged about the botched Kerry joke about troops in Iraq, and more specifically, the Republican attack on what was obviously a botched joke. Well, quite frankly, because I don't expect anything else. Neither side can afford to pass on any opportunity at this stage in the game, and will use any weapon it can to try to eke an edge out.
Frankly, I'm at a stage in the campaign where I'm mostly filled with disgust! You'd think I'd be used to having to endure attack ads rather than a discussion of the issues, but I'm weakhearted enough to keep expecting politics to be about the issues that matter to the people.
So who will I be rooting for tomorrow? Well, this will shock the frequent readers to my blog, but I don't know. Part of me would like to see the Republicans pay for their arrogance, but that would imply the Democrats would win, and I don't know which Democratic party would take control of the House or Senate. If it is the wing that is pro-business, for fiscal discipline and in favor of tax cuts - the constituency Harold Ford seems to be shooting for - I say yay! But if it is the left-leaning tax-the-rich business-is-bad liberals like Nancy Pelosi, then we have something to be gloomy about.
Monday, November 06, 2006
Wednesday, November 01, 2006
Tyranny of the Majority
I have been contemplating on the nature of democracy recently, and it strikes me that there's a fine line seperating democracy from its less desirable peers. In all forms of government, abuse of power is a concern. In democracy, we often worry about our elected officials abusing their office, but we seldom fret about we, the people, doing the same.
What do I mean by that? We love to crone about the influence of money on politics, yet as a polity, we vote on issues where you have an equal say independent of how much the action will cost you. I have ranted previously that contrary to the rheoteric, the rich in America pay a disproportionate share of our taxes. The top 5% that Democrats love to crone about pay 30% of their income in taxes, while the lowest 25% wage-earners pay less than 5%. Why should politicians get to pander to that larger voting block promising freebies, paid for by the smaller voting block? To borrow an analogy from a columnist I can't remember, that would be like you going to a bar and offering to buy a homeless man a drink, and asking the bartender to put it on the tab of the guy across from you.
But the tyranny of the majority stretches past taxes. Think of our medicare system. In a free society, we each should be allowed to make choices, and part of me really dislikes restrictions on smoking or other behavior. If you want to kill yourself, you go right ahead.
But hold on a minute! Unfortunately, it isn't quite as simple as that. Medicare (ok, humanity too, but I'm trying to be economic here!) means I do care about your actions. There was a woman on the news who wasn't thrilled about KFC's recent decision to eliminate trans-fats, worried it might compromise the flavor of the dishes she loves. Good for you, woman... unless you are on a medical assistance program. Overweight and obesity problems cost over $75 billion a year, and over half of it is paid for by Medicare and Medicaid (source) Given that under 10% of the population uses this benefit (in insurance terms) paid for by the entire taxbase, one could argue there's some justifiable outrage at the frequent visitors to your neighborhood artery-clogging fast food joint. The same holds for smoking, which it has been estimated costs Medicare over $20 billion.
By the way, I'm not suggesting that fat people are always guilty for their fate. However, it does help to pause and think about the issues in this light. Democrats would do well to consider the fairness of their proposals on spending and taxes. Republicans may want to consider that their policy avoiding restrictions on businesses that kill, while consistent with a society where individuals make decisions for themselves, fails to take into account that we as taxpayers are having one major decision made for us - the decision to fund other people's behavior.
What do I mean by that? We love to crone about the influence of money on politics, yet as a polity, we vote on issues where you have an equal say independent of how much the action will cost you. I have ranted previously that contrary to the rheoteric, the rich in America pay a disproportionate share of our taxes. The top 5% that Democrats love to crone about pay 30% of their income in taxes, while the lowest 25% wage-earners pay less than 5%. Why should politicians get to pander to that larger voting block promising freebies, paid for by the smaller voting block? To borrow an analogy from a columnist I can't remember, that would be like you going to a bar and offering to buy a homeless man a drink, and asking the bartender to put it on the tab of the guy across from you.
But the tyranny of the majority stretches past taxes. Think of our medicare system. In a free society, we each should be allowed to make choices, and part of me really dislikes restrictions on smoking or other behavior. If you want to kill yourself, you go right ahead.
But hold on a minute! Unfortunately, it isn't quite as simple as that. Medicare (ok, humanity too, but I'm trying to be economic here!) means I do care about your actions. There was a woman on the news who wasn't thrilled about KFC's recent decision to eliminate trans-fats, worried it might compromise the flavor of the dishes she loves. Good for you, woman... unless you are on a medical assistance program. Overweight and obesity problems cost over $75 billion a year, and over half of it is paid for by Medicare and Medicaid (source) Given that under 10% of the population uses this benefit (in insurance terms) paid for by the entire taxbase, one could argue there's some justifiable outrage at the frequent visitors to your neighborhood artery-clogging fast food joint. The same holds for smoking, which it has been estimated costs Medicare over $20 billion.
By the way, I'm not suggesting that fat people are always guilty for their fate. However, it does help to pause and think about the issues in this light. Democrats would do well to consider the fairness of their proposals on spending and taxes. Republicans may want to consider that their policy avoiding restrictions on businesses that kill, while consistent with a society where individuals make decisions for themselves, fails to take into account that we as taxpayers are having one major decision made for us - the decision to fund other people's behavior.
Monday, October 30, 2006
Numbers
Some interesting numbers to ponder over the next time you hear a story about the Federal Reserve or its chairman, Ben Bernanke. (Due to some unknown HTML artifact, you may have to scroll down some white space to see the rest of this post)
For insight into the miniscule size of the Federal Reserve Bank, I am thankful to Dr John Hussman of Hussman Econometrics and manager of the Hussman Funds.
| United States GDP | $12.49 trillion | source |
| Market capitalization of companies listed on the NYSE | $21 trillion | source |
| Money supply (M2) in the US as of August 2004 | $9.26 trillion | source |
| Total assets held by the Federal Reserve Banks, which supposedly control the US economy (FY2005) | $0.065 trillion | source |
For insight into the miniscule size of the Federal Reserve Bank, I am thankful to Dr John Hussman of Hussman Econometrics and manager of the Hussman Funds.
Sunday, October 29, 2006
Democracy, Thy Name is Chaos!
Oh what a runup to the mid-terms it has been. You have liberals potraying Bush as the devil, and conservatives potraying Nancy Pelosi as ... the devil! You have liberals embracing a Reagan Republican in Jim Webb and a self-proclaimed "Jesus-loving gun-carrying" congressman in Harold Ford, Jr and the conservatives embracing a stem-cell bill they voted against! It's an anything goes environment, where Republicans point out correctly that for all his Jesus antics, Ford is on the guest list at the Playboy mansion, while also fudge the truth by running an ad claiming that a Democrat used taxpayer money to dial a phone-sex line, while it has been proven that it was an accidental misdial. And then in my own state, Jim Webb, whose writings range from the completely acceptable Sidney Sheldon-esque sexual content, to the much more disturbing writings involving dads and sons, and moms and sons in sexual encounters. But due Republicans have a limb to stand on, given that Dick Cheney's former chief of staff, "Scooter" Libby is himself the purveyor of sexual literature, including pedophilia?
In all this chaos, the one thing that rarely gets talked about are the issues. A discussion of the issues would correctly criticize the current administration for botching the war in Iraq, but would also question the specifics of what the Democrats would do. It would involve a discussion of what each party intends to do about entitlements, which is the single largest financial threat that threatens the US (see footnote). It would challenge each party for a pragmatic energy policy, or a plan to control skyrocketing healthcare costs ... economic policy, including taxes, minimum wages, ... oh, I could go on, but none of these issues are ever discussed. Democracy is supposed to be the people electing their representatives to implement their agendas. Funny, looking at our elections, I could be fooled.
Footnote: How serious a crisis entitlement spending is depends on how much of a commitment you think it is. Those who chose to play it down point to the fact that it isn't a contractual requirement, and if it ever causes serious economic harm, the US government could always chose to redefine its commitments. True, but that argument ignores the social unrest such an action might produce.
In all this chaos, the one thing that rarely gets talked about are the issues. A discussion of the issues would correctly criticize the current administration for botching the war in Iraq, but would also question the specifics of what the Democrats would do. It would involve a discussion of what each party intends to do about entitlements, which is the single largest financial threat that threatens the US (see footnote). It would challenge each party for a pragmatic energy policy, or a plan to control skyrocketing healthcare costs ... economic policy, including taxes, minimum wages, ... oh, I could go on, but none of these issues are ever discussed. Democracy is supposed to be the people electing their representatives to implement their agendas. Funny, looking at our elections, I could be fooled.
Footnote: How serious a crisis entitlement spending is depends on how much of a commitment you think it is. Those who chose to play it down point to the fact that it isn't a contractual requirement, and if it ever causes serious economic harm, the US government could always chose to redefine its commitments. True, but that argument ignores the social unrest such an action might produce.
Tuesday, October 24, 2006
Debts and GDP
While I was driving home last night, I had the Diane Rehm show on NPR, who had two supposed "experts" on the deficit and debt. And yet, they were stunningly ignorant when it came to some issues, or maybe they had a political agenda? There was one caller who complained about the public debt approaching $9.6 trillion dollars, close to our GDP and the crisis it entailed, and the experts "concurred".
Stop right there! I dislike the deficits too, but cannot allow the propogation of falsehoolds! So I thought I'd try my lay-man's explanation of debt and deficits. (I'm not an economist, so if you think I'm wrong, please correct me!)
To simplify the issue, I am going to shrink all the numbers by 300 million, the population of the US. So we consider John Doe, making about $44,000 (source of 2005 GDP), having a debt of about $28,500 ( source), some investment-oriented e.g. mortgage on a home, loan for a small business) and some unproductive (credit card). A problem? Not exactly. The debt is not what is owed annually but the sum total of liabilities. The former number is the interest expense - about $1,350 a year( source). Turns out Mr. Doe's credit rating is so great that he will probably never ever have to pay back his debt - he could always borrow from another bank to return his debt from the present, the Banks of Japan and China. The interest expense is small compared to the annual pay hikes of about 3% post-inflation (so currently 6%), whereas his debt is currently accruing interest at about 4.5%, so compounding works in Mr. Doe's favor.
Another way to compare numbers is to match up the debt of $28,500 with Mr Doe's total assets, over $300,000 if I remember (I couldn't find my original source for this) - a debt to equity of under 10%. Nothing to lose any sleep over.
I will soon post why then I brood over the deficits, but for now, rest easy in the realization that we are not going to have the Chinese confiscate our properties!!
Stop right there! I dislike the deficits too, but cannot allow the propogation of falsehoolds! So I thought I'd try my lay-man's explanation of debt and deficits. (I'm not an economist, so if you think I'm wrong, please correct me!)
To simplify the issue, I am going to shrink all the numbers by 300 million, the population of the US. So we consider John Doe, making about $44,000 (source of 2005 GDP), having a debt of about $28,500 ( source), some investment-oriented e.g. mortgage on a home, loan for a small business) and some unproductive (credit card). A problem? Not exactly. The debt is not what is owed annually but the sum total of liabilities. The former number is the interest expense - about $1,350 a year( source). Turns out Mr. Doe's credit rating is so great that he will probably never ever have to pay back his debt - he could always borrow from another bank to return his debt from the present, the Banks of Japan and China. The interest expense is small compared to the annual pay hikes of about 3% post-inflation (so currently 6%), whereas his debt is currently accruing interest at about 4.5%, so compounding works in Mr. Doe's favor.
Another way to compare numbers is to match up the debt of $28,500 with Mr Doe's total assets, over $300,000 if I remember (I couldn't find my original source for this) - a debt to equity of under 10%. Nothing to lose any sleep over.
I will soon post why then I brood over the deficits, but for now, rest easy in the realization that we are not going to have the Chinese confiscate our properties!!
Sunday, October 22, 2006
Stupid in Omaha
Sometimes you can take a good idea too far, even to the point of stupidity. It seems that what Omaha police have done, asking people to report violations of an anti-smoking law by calling 9-1-1. The good idea is to place some restrictions on smoking in public places. I feel uncomfortable with how far that idea has been taking. I am a health freak, eating only whole-wheat products and working out several times a week, but I do enjoy the occasional cigarette. Silly, some people say, but I'd suggest people would do better to cut out all the fats in their diet than overreact to the occasional cigarette.
But this isn't even a rant of public smoking policy and the infringement on our freedoms under a fake pretext of public safety. It's a rant of the stupidity of crowding out 9-1-1 queues with these non-emergencies. Thankfully, so far the call volume related to this "crime" has been small, but I'd hate to think of the day (oh, and there will be one if this policy persists!) when a serious crime (you know, murder, theft ... what we used to call crimes before we started including petty nonsense) is not stopped because of someone reporting a public smoking offense!
But this isn't even a rant of public smoking policy and the infringement on our freedoms under a fake pretext of public safety. It's a rant of the stupidity of crowding out 9-1-1 queues with these non-emergencies. Thankfully, so far the call volume related to this "crime" has been small, but I'd hate to think of the day (oh, and there will be one if this policy persists!) when a serious crime (you know, murder, theft ... what we used to call crimes before we started including petty nonsense) is not stopped because of someone reporting a public smoking offense!
Quote of the Day
Vahan Janjigian in his blog, MoneyMasters, on Google's stock price:
One valuable lesson I have learned over the years is that overvalued stocks can get a whole lot more overvalued before coming back to earth.... Google makes good money. But is it really worth 15 times sales and 45 times projected earnings? Amazon.com might provide a basis for comparison. At its peak, the stock was selling for 30 times sales. Today it sells for only 1.5 times sales.
Wednesday, October 18, 2006
Say No to a Minimum Wage
I have a new journo who I like - Tim Worstall of the Technology, Commerce and Society or TCS Daily. His latest offering, Spinimum Wage is a fascinating critique of the much-hyped letter from economists demanding an increase in the federal minimum-wage. He points to studies suggesting that the minimum wage is a relatively inefficient instrument to alleviate poverty, when compared with other federal programs. The reason: very few of those in poverty actually work full-time. Those few who do would move out of poverty with a minimum wage hike, but they would lose federal benefits such as Medicare. The net result: zilch! But no, actually negative, because the elevated costs would cause a reduction in the number of jobs available.
Liberals love to crone about how great Europe is, and how the US needs to be more like them, never mind the economic prosperity and low unemployment rates enjoyed by those of us on the right side of the ocean. In another piece here, Worstall points to data from the liberal Economic Policy Institute to show that for all the cries of how bad the poor in America are, the poor in America perform comparably to those in Europe. True, the disparity is greater, because the rich in America do so much better, but switching to a repressive regulatory regime like Germany would not improve the lot of the poor in the US, only serve to make the rest of the country see their standard of living to come down. Oh, and take this:
Liberals love to crone about how great Europe is, and how the US needs to be more like them, never mind the economic prosperity and low unemployment rates enjoyed by those of us on the right side of the ocean. In another piece here, Worstall points to data from the liberal Economic Policy Institute to show that for all the cries of how bad the poor in America are, the poor in America perform comparably to those in Europe. True, the disparity is greater, because the rich in America do so much better, but switching to a repressive regulatory regime like Germany would not improve the lot of the poor in the US, only serve to make the rest of the country see their standard of living to come down. Oh, and take this:
Wouldn't it be interesting if we were urged to adopt some other Swedish policies? Abolish inheritance tax (Sweden doesn't have one), have a pure voucher scheme to pay for the education system (as Sweden does), do not have a national minimum wage (as Sweden does not) and most certainly do not run the health system as a national monolith (as Sweden again does not). But then those policies don't accord with the liberal and progressive ideas in the USA so perhaps their being glossed over is understandable, eh?
Quote of the Day
Keith Whyte of the National Council on Problem Gambling, on the Unlawful Internet Gambling Enforcement Act:
I found the discussion on the Newshour on this Act very interesting - you can read the transcript or watch it online here.
I think the best way to sum up this bill is that it makes illegal what is illegal and it legalizes what is legal ... So, really, the prohibition of this bill -- it's illegal to gamble on the Internet in states where it illegal to gamble on the Internet. And in states where it is legal or that might want to legalize it, it's perfectly allowable.
I found the discussion on the Newshour on this Act very interesting - you can read the transcript or watch it online here.
Monday, October 16, 2006
Sanctions Don't Work ... Are You Ready for What May?
Much has been made about sanctions since North Korea's nuclear test. The sad reality is that it doesn't work. The present sanctions on Kim Jong Il's regime include a ban on luxury items, including jewellry and nuclear materials. Hmm, call me a skeptic, but how exactly will banning items the powerful will have access to anyway, and other items that were already banned prevent North Korea from going forward with their nuclear program?
There is one way that might work, but it is simply too hideous for anyone but thugs like Kim Jong Il. That is to stop the subsidy we are providing the Korean nuclear regime. You shaking your head wondering what I'm talking? Well, we provide the food needs of the Korean people, allowing the North Koreans to divert those resources to a military program. A cessation of food aid would cause massive starvation, but might lead to a revolt. But not even the most radical neocons would be able to digest that scenario. Alas, that's how the thugs win every time - because we in the civilized world are unable to call their bluff!
There is one way that might work, but it is simply too hideous for anyone but thugs like Kim Jong Il. That is to stop the subsidy we are providing the Korean nuclear regime. You shaking your head wondering what I'm talking? Well, we provide the food needs of the Korean people, allowing the North Koreans to divert those resources to a military program. A cessation of food aid would cause massive starvation, but might lead to a revolt. But not even the most radical neocons would be able to digest that scenario. Alas, that's how the thugs win every time - because we in the civilized world are unable to call their bluff!
How the Other Half Lives
I was recently stunned to read Roger Lowenstein's column in Smart Money magazine, even if my conclusions were somewhat different from the author's.
That stunned me, but I reassured myself that the average Joe and Jane probably has money socked away in retirement accounts, and a house - one of the elements of an American Dream. Well, maybe not ... more from Lowenstein:
That is incredible, when you think that the median family probably earns more than $35,000. How do they imagine they can retire on less than one year's earnings?
SHAME ON THE REPUBLICANS for not pushing financial education. An ownership society only works when you have informed participants - it is clear we do not, and the coming acopolypse will have to be funded by (horror!) taxpayers and tax increases!
SHAME ON THE DEMOCRATS for not seeking to push this issue either. If they really cared about the average Joe rather than electoral politics, they will stop ranting about outsourcing and start focusing on what really matters!
SHAME ON THE DEMOCRATS for not recognizing that the way to a better future for workers is not to try and hold blue collar jobs in the US; it is to improve educational opportunities to transition American workers to college and beyond.
SHAME ON THE REPUBLICANS for not investing adequately in our future. Since our economy is tied to the wages of our workers, there is a simple market to boost wages - encourage market participants to move up the skill ladder. However, as we have seen, participants aren't rational, which is why we need the government to educate and inform, and help people move along the path ... there are things a market doesn't efficiently do by itself!
precisely 21 percent of Americans have direct investments in listed stocks. And among those who do, the median portfolio value is $15,000... [Mutual funds] are owned by an even slimmer population - 15 percent. And among those who do own them, the median holding is $40,000.
That stunned me, but I reassured myself that the average Joe and Jane probably has money socked away in retirement accounts, and a house - one of the elements of an American Dream. Well, maybe not ... more from Lowenstein:
[Half of all families] have an indirect ownership in stocks and mutual funds via retirement accounts such as 401(k)s and IRAs. But the median value of such accounts is only $35,000...in fact, half of all families have total financial assets of less than $23,000.
That is incredible, when you think that the median family probably earns more than $35,000. How do they imagine they can retire on less than one year's earnings?
SHAME ON THE REPUBLICANS for not pushing financial education. An ownership society only works when you have informed participants - it is clear we do not, and the coming acopolypse will have to be funded by (horror!) taxpayers and tax increases!
SHAME ON THE DEMOCRATS for not seeking to push this issue either. If they really cared about the average Joe rather than electoral politics, they will stop ranting about outsourcing and start focusing on what really matters!
Among those who drop out of high school, median income is $19,000; for those who graduate $36,000. Among college graduates, the median is a respectable but hardly lavish $73,000. However, seven of 10 Americans are not college graduates. Why so few people go to college, given the rewards, is a mystery economists are yet to solve.
SHAME ON THE DEMOCRATS for not recognizing that the way to a better future for workers is not to try and hold blue collar jobs in the US; it is to improve educational opportunities to transition American workers to college and beyond.
SHAME ON THE REPUBLICANS for not investing adequately in our future. Since our economy is tied to the wages of our workers, there is a simple market to boost wages - encourage market participants to move up the skill ladder. However, as we have seen, participants aren't rational, which is why we need the government to educate and inform, and help people move along the path ... there are things a market doesn't efficiently do by itself!
Wednesday, October 11, 2006
Heads Must Roll!
I have waited to see what happens in the scandal where Rep. Mark Foley is alleged to have sexually solicited pages working for Congress. I'm amazed that this has become a partisan issue in some quarters. There are few values we hold higher than child protection and anyone involved must go, including the following:
Mark Foley from any position of any value (he has already resigned from Congress)
Speaker Denny Hastert and other committee chairs who may have known about the issue. It isn't enough to simply claim that they didnt know about the sexually explicit e-mails. In this day and age, simply the appearance of inappropriate conduct with children should have had alarm bells ringing, and triggered a thorough investigation.
Members of the FBI, who after having received e-mails that Foley sent the page 2 years ago, chose to do nothing. Even if the FBI is correct that the source's motives were questionable (see next bullet), it could have chosen to do some independent digging by at the very least dispatching some agents to talk to pages in the program. Oh, and it isn't ok to claim you weren't going to move if you didn't know how the source obtained the information!
Members of CREW and other liberal associates, if it turns out that they had access to e-mails Foley to the page as early as April, and (as the FBI claims) redacted several sections of the e-mails, and only sent the information to the FBI last month. Hmm, I smell a rat!
Overall though, there's plenty of blame to go around. But we need to go past partisanship and protect our children. Otherwise, slogans of freedom and liberty are meaningless!
Overall though, there's plenty of blame to go around. But we need to go past partisanship and protect our children. Otherwise, slogans of freedom and liberty are meaningless!
Friday, September 29, 2006
Come Up With a Plan, Dammit!
I'm sick and tired of Democrats whining about the "failed policy" in Iraq. Here's an idea ... come up with something better. The other day, NPR or PRI had an interview with some looney leftist member of the House of Reps, who used the usual cliches to complain about our failures. Her plan? One, withdraw troops from Iraq to the neighboring countries (which ones exactly would allow us to deploy there) Two, disarm the militia (ok, first it's a little hard to disarm the militia when you just left the country, and you really think the US army hasn't tried to do that?) And three, start a political dialogue (blah blah ... we have been doing that!)
In a nutshell, most Democrats don't have a plan. There are a few sensible ones out there, but if the leftist wing of the party siezes control like they did in Connecticut, then it will be the demise of the party, and possibly our democratic system!
In a nutshell, most Democrats don't have a plan. There are a few sensible ones out there, but if the leftist wing of the party siezes control like they did in Connecticut, then it will be the demise of the party, and possibly our democratic system!
I'm Ashamed of Hollywood
So one more Hollywood celebrity talks about being ashamed for his country - this time, the nutjob in question is Oliver Stone. Well, Oliver, too bad you're so ashamed. Maybe you should swap citizenship with one of those hungry immigrants who survives the tortures of the desert, risking death, drinking his own urine to stay hydrated, getting poked in the face trying to get water from a cactus, all so that he can move to this shameful country.
I mean, what do you mean we have to lose a few of our liberties? I mean, these are too precious for us intellectuals ... so what if a few average Joes die in terrorist attacks. Ideals count for more than lives! As Oliver notes, we should fight like the British or the Spanish ... slowly, allowing a ton of people to die in the process. We'll call them martyrs ... hey, we could make a few movies about it. I mean, you can't really make a movie about whipping some Taliban ass in Afghanistan ... that just doesnt sell. But a few more 9/11s ... we can do with. Movies about heroism inspire a nation, right? So what if some poor SOBs die in the process ...
Oh yeah, and there's always a cabal that's taken over the government. Don't you people read your literature? They are hand in glove with the "terrorists". It's all a grand big plot to take over our lives.
I mean, what do you mean we have to lose a few of our liberties? I mean, these are too precious for us intellectuals ... so what if a few average Joes die in terrorist attacks. Ideals count for more than lives! As Oliver notes, we should fight like the British or the Spanish ... slowly, allowing a ton of people to die in the process. We'll call them martyrs ... hey, we could make a few movies about it. I mean, you can't really make a movie about whipping some Taliban ass in Afghanistan ... that just doesnt sell. But a few more 9/11s ... we can do with. Movies about heroism inspire a nation, right? So what if some poor SOBs die in the process ...
Oh yeah, and there's always a cabal that's taken over the government. Don't you people read your literature? They are hand in glove with the "terrorists". It's all a grand big plot to take over our lives.
Monday, September 25, 2006
Watch Out for CapOne!
These days, surviving the financial world we live in seems to require a fair bit of due diligence! I learnt this the hard way when I discovered that Capital One reports your highest ever balance rather than your credit limit to credit bureaus, thereby potentially denting your credit score. (source)
Let me back up for a second and explain how credit scores work. One of the big factors that affect your FICO score is your debt utilization rate. What that means is that if you have a balance of $1,000 on a card with a $5,000 credit limit, your debt utilization is 20% (1,000/5,000 * 100). You want that rate to be as low as possible for each of your cards - any time that rate goes up over 50%, your credit score gets dinged! That's why it's better to have your balance split between 5 cards than on one card, all things being equal.
What Capitol One does is to report your highest ever balance rather than your credit limit. So if you currently have $50 on your card, and this is the first month you've ever charged on this card, a credit bureau will think I've maxed out my card, even if my credit limit is $100,000 (ok, it isn't, but you get the idea!) WHAM! So, I will have to pay off the Capital One card, which I was lured to get by a 0% introductory APR, defeating the purpose of getting the card in the first place. BOO to Capital One!
One more thing - if you do pay off on a card, DO NOT close the account; this will end up hurting your score, because your overall debt utilization just went up!
Let me back up for a second and explain how credit scores work. One of the big factors that affect your FICO score is your debt utilization rate. What that means is that if you have a balance of $1,000 on a card with a $5,000 credit limit, your debt utilization is 20% (1,000/5,000 * 100). You want that rate to be as low as possible for each of your cards - any time that rate goes up over 50%, your credit score gets dinged! That's why it's better to have your balance split between 5 cards than on one card, all things being equal.
What Capitol One does is to report your highest ever balance rather than your credit limit. So if you currently have $50 on your card, and this is the first month you've ever charged on this card, a credit bureau will think I've maxed out my card, even if my credit limit is $100,000 (ok, it isn't, but you get the idea!) WHAM! So, I will have to pay off the Capital One card, which I was lured to get by a 0% introductory APR, defeating the purpose of getting the card in the first place. BOO to Capital One!
One more thing - if you do pay off on a card, DO NOT close the account; this will end up hurting your score, because your overall debt utilization just went up!
Thursday, September 21, 2006
Lift 'Em Weights
A new study in the Medicine and Science in Sports and Exercise (July 2006) shows that lifting weights can help to prevent and to treat diabetes (source). In the study, adolescent boys who implemented a twice-weekly weight training program for only 4 months built muscle, lost fat and decreased insulin resistance, dramatically reducing their risk of diabetes. So if you've been a couch potato, or even if you are one of those people who runs miles but never lifts, now is the time to pick up those weights. Studies have consistenly shown that there is no better way to lose weight than to lift weight!
Sunday, September 17, 2006
Viva Wal-Mart
As a grad student, I live on a pretty tight budget. Heaven knows what I would have done without Wal-Mart and Sam's Club (although recently the prices and choices at Kroger has me wondering if I should renew my Sam's Club membership). So it obviously annoys me when constituents like me are ignored by rich anti-Walmart liberals who love to bash the chain and all capitalism stands for. Enter George Will to the rescue, with a passionate piece that puts numbers behind some of my arguments...
Will notes that more than 25,000 people applied for the 325 openings for the Walmart at Evergreen Park, IL - a far cry from the cries of poverty level wages! In fact, Wal-mart hires 1.3 million employees, making it the largest private employer and with as many personnel as the US military. Saves shoppers $200 billion a year! Oh, I could go on, but just read the article for yourself... and say viva Wal-Mart!!
Will notes that more than 25,000 people applied for the 325 openings for the Walmart at Evergreen Park, IL - a far cry from the cries of poverty level wages! In fact, Wal-mart hires 1.3 million employees, making it the largest private employer and with as many personnel as the US military. Saves shoppers $200 billion a year! Oh, I could go on, but just read the article for yourself... and say viva Wal-Mart!!
Thursday, September 07, 2006
The Lie of Diminishing Wages
The other day, I was listening to the McLaughlin Group on PBS, and Eleanor Clift of Newsweek (not exactly my favorite journo!) made a claim that workers are getting screwed, and after adjusting for inflation, the average worker earns less than what he/she did in 1973. I immediately thought this was a stunning claim that, if true, would have me question the merits of the capitalist society we live in.
Time allows a more rational analysis. First, why 1973? It seems an arbitrary starting point. Any time anyone makes a claim relative to a murky baseline, be suspicious ... be very suspicious. So I used the Bureau of Labor Statistics web site to probe the data and produce the graphs used in this post. (All data is for the duration that earnings data is available)was dramatic
The first graph is a plot of the average weekly earnings in 1982$ (that is correcting for inflation). Now it becomes obvious why Clift uses 1973, it was the year of peak weekly earnings. Ok, but isn't her point true that the average worker makes less than he/she did in 1973? Well, yes it's true, but not because corporations have been screwing John and Jane Doe.
This second chart presents the Consumer Price Index for all urban consumers (CPI-U). As you can see, inflation (rate of change of the CPI-U) soared in the 1970s, thanks in large part due to oil prices and stagflation, until about 1983, after which the inflation rate has been relatively stable. The real wages of workers reflects that fact - tumbling in the years following 1973, and stabilizing after 1983 (yes, there have been ups and downs related to economic climate, but that's natural).
Critics of static wages use another subterfuge. They use a sleight-of-hand analogy to imply that the stagnant average weekly wages of a population imply stagnant wages for an individual worker. That is simply not true - people at the high end of the wage cycle retire, and are replaced by young men and women at the bottom of the cycle. The performance of average wages then is quite demographics of the population, and heaven knows Americans aren't having babies like there's no tomorrow. Then, in an ageing population, we should see real wages decline, and that we don't is a reflection of how the fruits of economic prosperity are translating into real wage improvements for the average worker!
Time allows a more rational analysis. First, why 1973? It seems an arbitrary starting point. Any time anyone makes a claim relative to a murky baseline, be suspicious ... be very suspicious. So I used the Bureau of Labor Statistics web site to probe the data and produce the graphs used in this post. (All data is for the duration that earnings data is available)was dramatic
The first graph is a plot of the average weekly earnings in 1982$ (that is correcting for inflation). Now it becomes obvious why Clift uses 1973, it was the year of peak weekly earnings. Ok, but isn't her point true that the average worker makes less than he/she did in 1973? Well, yes it's true, but not because corporations have been screwing John and Jane Doe.
This second chart presents the Consumer Price Index for all urban consumers (CPI-U). As you can see, inflation (rate of change of the CPI-U) soared in the 1970s, thanks in large part due to oil prices and stagflation, until about 1983, after which the inflation rate has been relatively stable. The real wages of workers reflects that fact - tumbling in the years following 1973, and stabilizing after 1983 (yes, there have been ups and downs related to economic climate, but that's natural).
Critics of static wages use another subterfuge. They use a sleight-of-hand analogy to imply that the stagnant average weekly wages of a population imply stagnant wages for an individual worker. That is simply not true - people at the high end of the wage cycle retire, and are replaced by young men and women at the bottom of the cycle. The performance of average wages then is quite demographics of the population, and heaven knows Americans aren't having babies like there's no tomorrow. Then, in an ageing population, we should see real wages decline, and that we don't is a reflection of how the fruits of economic prosperity are translating into real wage improvements for the average worker!
Saturday, September 02, 2006
Respect the People
The decision of a British television network, More4 to show a movie about the assasination of President George Bush, including using doctored photos of his likeness, is shameful! The director's claims that the intentions are simply to present a gripping story cut no ice - this could just as easily have been achieved using a fictional character, like scores of others have done.
This is part of a worrying trend. Google failure, and the first hit you get is the bio of the President (the fact that Google hasn't fixed the problem is appalling!) You've heard liberals refer to Bush as the dictator and the autocrat, sometimes stretching it to the ridiculous. But whether you like him or not, you do need to respect his office and how he got there. As a lady from (I think) the United Press International berated Eleanor Clift (probably in the ranks of reporters I hate the most) of Newsweek for equating Bush with Putin and his thugs, President Bush was elected by a majority of the American people. Irrespective of his current popularity, we need to respect his office and all it represents ... the fact that the American people have chosen their leader, that they have a real choice (yes, if you are an independent, it's tough, but not impossible for you to win, and nobody breaks your bones for trying).
In their quest to bash Bush, many liberals are unwittingly taking stabs on the very foundation of the idea of America. If we lose our respect for our ideals, then we would have inflicted a much more calamitous blow to free society than Osama bin Laden or his cronies could ever have hoped.
This is part of a worrying trend. Google failure, and the first hit you get is the bio of the President (the fact that Google hasn't fixed the problem is appalling!) You've heard liberals refer to Bush as the dictator and the autocrat, sometimes stretching it to the ridiculous. But whether you like him or not, you do need to respect his office and how he got there. As a lady from (I think) the United Press International berated Eleanor Clift (probably in the ranks of reporters I hate the most) of Newsweek for equating Bush with Putin and his thugs, President Bush was elected by a majority of the American people. Irrespective of his current popularity, we need to respect his office and all it represents ... the fact that the American people have chosen their leader, that they have a real choice (yes, if you are an independent, it's tough, but not impossible for you to win, and nobody breaks your bones for trying).
In their quest to bash Bush, many liberals are unwittingly taking stabs on the very foundation of the idea of America. If we lose our respect for our ideals, then we would have inflicted a much more calamitous blow to free society than Osama bin Laden or his cronies could ever have hoped.
Friday, September 01, 2006
Interview with Warren
Wow, it has been over 3 weeks since I blogged! My life has been crazy busy recently, but I do hope to getting back to being somewhat frequent with this blog.
I read this article with Elizabeth Warren, author of the fascinating book The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke.While I have read part of her book and now the central thesis, this fact still stunned me:
I read this article with Elizabeth Warren, author of the fascinating book The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke.While I have read part of her book and now the central thesis, this fact still stunned me:
The data show that more than half of the families who file for bankruptcy do so in the aftermath of a serious medical problem. And three quarters of those people have health insurance at the onset of the illness or accident that ultimately landed them in bankruptcy. Sometimes it's hospital bills, but more often, it's about co-pay, deductibles, uncovered treatments, drugs, rehab, supplies, all the things that aren't covered by insurance. So part of the answer is that the financial impact of a serious medical problem goes beyond hospital bills. Lost jobs, drugs, physicians, rehab, health supplies. It's expensive to get sick in America today—too expensive for the average family.
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