Archive for April 2012
Pyramid Scheme
Egypt’s foreign reserves are shrinking fast, from $36 billion in late ’10 to just $15 billion now. FRs are declining because foreign currency earned through tourism has collapsed. If this trend is not soon reversed the Egyptian pound will have to fall in value to curb demand for imports. But, that will cause inflation. To…
Read MoreOdd Indicators
The Friday File: Economists use many indicators to estimate economic activity. Here are some of the oddest. Times are bad when; there is a spike in the reselling of cemetery plots, when the number of NFL games that are not blacked-out rises (because games are not sold out), when advertisements for the Marines highlight toughness,…
Read MoreTaxing Policy
The brain-dead DC Cab Commission recently decided to let hackers charge a dollar for each additional person only if they drive a van. This will, at the margin, cause large groups to squeeze into smaller cabs while letting individual riders enjoy the comfort of spacious vans. This perverse allocation of resources could be avoided by…
Read MoreIt’s a Gas!
With the price of natural gas ($2.20/million BTUs) plumbing depths not seen in a decade, and the price of diesel fuel nearing an all-time high, Shell (and other large oil companies) are finally considering investing the necessary $10-$15 billion to build natural gas to diesel processing facilities in Louisiana. This potential investment shows that firms…
Read MoreZombie Banks
Spanish bond yields are up again as the short term benefits of the ECBs massive, easy-money lending program (LTRO) dissipate, and the reality of a recession in Euroland sets in. Making things worse, some European banks used the cheap 1% LTRO money to buy lots of Spanish sovereign debt yielding 5%. As a result, if…
Read MoreBarely Better
Not only did employers create just 120K jobs in March but, average weekly hours worked fell from 34.6 to 34.5, average weekly wages fell from $807.56 to $806.96, temp employment fell by 7.5K, retail trade shed 33.8K workers and the percentage of industries with employment increases is at lowest point in four months. The only…
Read MoreBetting on the House
The Friday File: In an inexplicable move, the CFTC denied a request by the North American Derivatives Exchange to offer futures contracts on which party will win control of the House, Senate and White House. The CFTC said these derivates involve gaming and are thus contrary to the public interest. What? Every financial instrument can…
Read MoreNot A Lotto Money
While income tax and sales tax revenues declined 10% in the past recession, regressive lotto sales fell just 2%, making them recession resistant. New research shows that as jackpots grow, lotteries become less regressive as more upper income households are lured by wild wealth. As for budgets, in NV gaming revenues are 12% of the…
Read MoreBanking the Bucks
Despite what you think, monetary policy has not been expansionary, and that’s the problem. While the Fed’s assets grew from $0.8 trillion to $2.8 trillion between 10/08 and 7/11, it was matched, almost dollar for dollar, by a $1.6 trillion increase in commercial bank deposits at the Fed. The money supply cannot expand when banks…
Read MorePolitical Payoffs
According to an article in Party Politics, President Obama gave $6,409, on average, to 100 Democratic superdelegates, while Hillary Clinton only gave $5,266 to 47 SDs. There are 840 SDs and they comprise 20% of the Democratic delegate total. In the end Obama got 66% of the SDs. Looks to me like Hillary did not…
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