Markets, Business, and the Economy – Page 3

Financial Illiteracy

Many thanks to Cara Delany for this terrific infographic.

Way back when I went to high school, I was required to take a trimester long class called Personal Finance. Among the topics were how to write a check and balance a checkbook, how to put together a family budget (this lesson might as well have been called “Don’t get pregnant unless you like poverty”), what color cars were safest, how to calculate cost per unit (with the bizarre aside that a longer cassette tape was cheaper per minute than a shorter one of the same cost, the quality of the music being irrelevant), and Why Capitalism Is Better Than Communism (it was during the Reagan Administration, I even remember the propaganda filmstrips). I think we might have spent a day or two on different kinds of insurance. Topics that in retrospect I would have liked to have seen but didn’t include how to decipher utility bills, how interest works, credit cards and other short term debt (pay it off ASAP!), secured debt such as car notes and mortgages, and basic investment vehicles (stocks, bonds, mutual funds, etc).

Have a great weekend, folks!

Another Month, Another Mediocre Jobs Report

Sadly, I’ve written on this topic many times over the last 10 years. This time it’s the June employment report. I’ll let Bill McBride summarize it for you:

The good news: This was the best first half for private employment gains since 1999. Also hourly and weekly wages increased 0.4% in June, and hourly wages are now up 2.2% over the last year (weekly wages are up 2.5% year-over-year).

Some bad news: the employment-population ratio for the 25 to 54 year old group (prime working age) declined, the number of part time workers (for economic reasons) increased and U-6 (an alternative measure of labor underutilization) increased to 14.3%.

Be sure to scroll down for The Scary Chart showing that there are still 2% fewer jobs than there were at the beginning of the Great Recession. At least — theoretically — there may have been enough jobs created to absorb the new people in the workplace. Or rather, there would have been if it hadn’t been June, a month when both high school and college graduations occur.

So let’s dig into the bad news. A lot of people are working part time because that’s the best they can do right now. Some employers think they are getting around benefits such as health care costs doing this, but the fact is that if the economy ever really recovers, workers will demand little things like full time work at decent wages with benefits.

Many of those workers are also in low wage jobs — or worse yet, temporary jobs that might vanish next month. It’s dishonest to say a job was “created” if it’s not worth actually hiring someone to do it. These are the kind of jobs where they can get away with giving workers a debit card instead of a paycheck, because they know the worker has no choice but to suck it up.

Now, I’m hesitant to bring up this story, but it seems that some “Doctors” licensed in other countries are having a hard time getting licensed here. I’m finding it difficult to swallow the idea that our standards are just too high for typical FMGs (Foreign Medical Grads). If Depak Desai could get licensed in the states, it can’t be that hard. However, these “doctors” are taking jobs that could be done by someone with a fraction of the education. Maybe we could find them jobs as medical or nursing assistants pending their actually passing the exams, and free up those menial jobs for others? At least this story is another stake in the heart of the idea that we need H1B guest workers.

The good news today masks another sad truth: the percentage of us “in the workforce” has declined. That means that more of us are staying home with the kids, more of us have gone back to school, more of us have tried to get disability benefits, and more of us have just plain given up on the idea of finding gainful employment.

I will wrap up with two related stories. First, unemployment benefits don’t increase unemployment, no matter what some conservatives want you to think. Second, some advice for the kids: employers don’t want to hear from or about your parents. Be a grown-up.

In Closing: All the NSA and Snowden you can stand; follow up on the 4th.

Prep Your Guest Room

Because if Mr. Obama gets his way, your parents will eventually have no choice but to move in with you.

CNN/Money describes Chained CPI as “The Geeky Debt Fix That Might Work.” It will do no such thing. The assumption is that “CPI overmeasures inflation” when in fact, inflation has been systematically undermeasured for many years. So the answer — according to people who don’t have to balance their own checkbooks — is to adjust inflation yet again so we don’t have to pay more going forward.

That means lower cost of living raises for Congressmen, sure. It also means lower raises for mail carriers, IRS auditors, soldiers and sailors (support our troops, right), and everybody on Social Security. So relative to real inflation, all their paychecks will feel smaller and buy less. In general, wages in this nation haven’t kept up with inflation for most of the last 50 years, so that’s going to hurt even more.

And it’s not going to cut deficits. Even if it works as planned, it will only reduce the rate at which the deficit gets bigger. That’s like going on a weight loss plan and bragging that you’re only gaining 2 pounds a month instead of 5.

Never mind that Social Security does not contribute to the national deficit in any way. Never mind that if the eggheads in Washington were really worried about the idea that at some hazy date in the future, Social Security will pay out more than it pays in, they would suggest raising the maximum contribution.

So go ahead and write or call your Representative and Senators. Send email to the White House too. Ask them point blank:

If Chained CPI is enacted, can my mom come live with you? Because I don’t think I can afford it.

Maybe if they get enough calls, they will notice that this is a bad idea.

In Closing: If this were a math test, they’d fail; Judge cuts political gordian knot; Too Big To Fail is Too Big To Exist; his little outburst earned him a $75k fine and a $100k bonus (explain again how sports makes money for colleges??); Kim, even Castro thinks you’re going too far; and huffing bears.

Follow Up: The Physician Assistants and Nurse Practitioners at Walgreens are a poor substitute for a Doctor. Some are so dangerous, they don’t even know what they don’t know.

Medical Problem: the Law of Supply and Demand is Still in Effect

As we all know, all too soon we Americans will be required to purchase health insurance from the highly profitable corporations that got us into the health insurance “reform” debacle. Even people who should know better think we just have to have mandatory insurance to abolish pre-existing conditions because after all “people would buy insurance on the way to the hospital!” Clearly people who can say this with a straight face have never attempted to purchase health insurance.

Here’s the problem, as Massachusetts has already found out. All those newly insured people? They are going to want value for their money! They are going to want to see a doctor! We already have a physician shortage — which is being made worse by Baby Boomer retirements. Nevada has had a shortage for a decade, and it’s not getting better (don’t get me started).

Now there is news that — officially — it’s not going to get better for at least 4 years. It seems that even though medical schools are churning out doctors, those newly degreed docs with six figures of student loan debt sometimes can’t find residency programs! No residency, no full license, no insurance reimbursement, no job as a doctor. What a waste. Gee, your doc doesn’t seem so greedy now that you know what bills he’s facing, does he?

Want to bring down medical costs? You’d better find a way to make more doctors, more ways to train them, and better ways to pay for their education.

In Closing: a couple comics; the cat film festival will return for a second year; oh well then I’ll just try not to look like a dissident; if anybody finds any follow-up on FPS Russia, please let me know; oh the things musicians will argue about; and duh.

Do you think these two things might be related?

Fact one: Home prices are up nationwide. By how much depends on which index you like to use.

Fact two: The number of available existing homes listed is down. Not down a little bit, but down about 17% in 146 metro areas (I think that qualifies as “nationwide”) and down over 25% in a couple dozen places.

Looks like the law of supply and demand is still in play. Keep this in mind if you think this is a great time to buy.

In Closing: Harvard points out the obvious; about a quarter of Americans have more credit card debt than money in the bank — not total debt, just credit card debt; the truth about low capital gains taxes; signs of autism can be found at birth (that’s long before anybody can get vaccinated, for those keeping score); strategy; and surely I am not the only person who thinks the timing here is odd. Do you really believe that the Pope mulled his decision to resign for health reasons for quite a while before suddenly making an announcement, then realizing too late that it’s the middle of Lent and somebody has to do his job?

No Reason to Subscribe to Fortune

Let’s cut to the meat:

[I]f America fails to enact historic, structural reforms in spending, an entirely new source of revenue will be needed. And it’s likely to be enacted in haste and near-panic, as the only option to forestalling a crisis. “The gap between revenues and outlays will be simply too large,” says J.D. Foster, an economist at the conservative Heritage Foundation and a former budget official under President George W. Bush. “Three points of GDP need to be closed to make budgets sustainable. Either government spending gets back near where it used to be, or we’ll need an completely new type of tax.”

The new levy will need to be big, so big that the most probable choice is a European-style value-added tax or VAT. That looming revenue machine is the phantom in the room, the tax that’s still invisible to most Americans, but that threatens precisely the group that’s supposed to emerge from all the deal-making as the Great Unthreatened, our middle class.

Now then, let me explain why a VAT — particularly a hastily enacted VAT — is absolutely not going to happen. It’s called the 16th Amendment:

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

Congress has two ways of taxing us. The first is a tax based on the number of people in the state. It should be obvious that it’s not entirely fair to make your tax bill based on state population without regard for your ability to pay (it seemed like a good idea in the 18th century), so the 16th Amendment had to be passed to make income tax legal. I am not a lawyer or a constitutional scholar, but I don’t see a damn thing in the Constitution or Amendment 16 that makes a national sales tax legal.

Anybody who wants a VAT had better start working on an amendment to the Constitution. That cannot be done in haste.

This article is supposed to scare you and I into insisting on austerity rather than implement this improbable, middle class “crushing” tax. Heaven forbid we should raise additional revenue through higher taxes on the wealthy at the rates they were under Reagan, or Nixon, or heaven forbid Eisenhower (all “conservative” Republicans of their day). Nope, easier to frighten you into giving up the things your taxes have paid for: well maintained roads; safe water coming out of your tap and safe food available at your local grocer; police and fire services; public schools that make sure businesses can hire literate employees anywhere in the nation; a minimal retirement income you already paid for. Nope, gotta cut back somewhere.

In Closing: scientific method suggests that when your experiment doesn’t work, you change the hypothesis; what a sleeze; let’s not lock kids up in solitary; wealth gap grows; agreed; women will die because their parents are afraid they will think sex is ok; I find it hard to believe that’s cost effective; “Just how many female-headed single-parent families with two children under 10 are there in the United States making $260K/year, anyway?”; and wouldn’t that be a waste.

On the Jobs Numbers

So I have some open tabs that I’ve been saving for a discussion on employment, unemployment, and job creation. Luckily for me, job creation and unemployment numbers came out today. Unemployment does continue to go down, and it looks like we [barely] create enough jobs to keep up with demand. However, many of those new jobs are low wage jobs that don’t actually help our nation at all. Wages are still kept artificially low, even though corporate profits are riding high (I bet higher corporate taxes would encourage those companies to pay people fairly).

But there’s a couple of things missing from the official figures. Well over half of employed people have their eyes open for better employment opportunities. There’s over 3 times as many job applicants as jobs to apply for.

That’s not the only reason it’s important to create more jobs. It seems that when people have jobs, they pay taxes.

In Closing: Russian small arms; depressing; Common Core; austerity; resume tips; good for her!; um no, it’s the blue “welfare” states supporting the red states; and irony.

Facebook

Facebook is a social media site that I don’t use. At all. Ever. You see a Bridget Magnus over there? It’s not me. Probably that lady from Vancouver.

Ok, disclosure out of the way.

So, it seems that their stock is at a record low. And it’s expected to dump more altitude in a couple of weeks when employee stock can start to trade.

Is it really relevant to talk about a stock being at an all time record low when it hasn’t even traded for 6 months yet?? Seriously?

If you want a real Facebook story, how about the fact that 80% of ad clicks might be bogus? That’s where Facebook makes it’s money; is it possible that their profits are padded by bot-generated activity? Which of course begs another question: who ever clicked on those ads? I had about 3 hours where I thought it might be a good idea to advertise over there, but then I came to my senses.

As for myself, I’m not buying their ads, not buying their stock, and not taking their free membership either.

In Closing: life lessons; Jill explains why the Post Office is really in trouble; enough with biometric security already (hello!); how far will this scandal reach?; sugar; Orwelling; nope, no such thing as global climate change (BTW it’s raining in Vegas today).

Sign of the Bankpocalypse

Praise Sandy Weill, for he hath told the truth — and delivered you from Shorties.

Seriously, I thought I’d have to resort to Shorties today until I saw this little gem: Sandy Weill, the same man who had a giant game of “chicken” with Congress, forcing them to pass laws that allowed his company to become a huge “financial supermarket” now says that we should go back to the way things were after the Great Depression and break up “too big to fail” banks “so that the taxpayer will never be at risk, the depositors won’t be at risk, the leverage of the banks will be something reasonable, and the investment banks can do trading… they can make some mistakes, but they’ll have everything that clears with each other every single night so they can be mark-to-market.” He goes on to drop a second bomb: “There should be no such thing as off balance sheet.”

Really, Sandy? Why the change of heart? Has it suddenly occurred to you that if We The People don’t have any money, we don’t put it in the bank and we don’t buy things? Perhaps you realized that Japan never got out of it’s doldrums until the “zombie firms” were allowed to fail? Have a “spiritual” moment where fair play and the bigger picture somehow seemed important? Don’t get me wrong, glad you joined the “common sense” bandwagon. Just wish you’d popped aboard in the 90s instead of pooh-poohing sensible and necessary banking laws as “archaic” and “not reflecting the needs of the next century.

Too Big To Fail simply must become Too Big To Exist. Seriously.

In Closing: 1 in 5 companies ~~misrepresents~~ freaking lies about their profits; a conservative would probably say they need to get jobs!; two must see video clips; outlawing abortion kills women; what’s retirement?; wasn’t expecting that one; no wonder the “news” doesn’t say anything anymore; what a coincidence [you don’t want to get me started about Pyschiatric Institutes of America and why you’ll never ever get mental health care parity]; Give a big LOL to the State Department Anti-Terror Troll Team; and neither will I.