Archive for December 2012
‘Mazing Messi
The Friday File: Lionel Messi recently set a record by scoring his 86th goal in a calendar year for Barcelona and the Argentine national team combined. This broke the record of 85 set by West Germany’s Gerd Muller in 1972, who broke the previous record of 75 goals set by Pele in 1958. Messi scored…
Read MoreAngry in Athens
By 12/31/13 the Greek economy will be 30% smaller than it was in 2008! And, it may not be done shrinking. Thus, the most recent Greek bailout is simply the latest “fix” with more to come! Worse, this tragedy becomes more costly the longer the wealthy nations ignore reality and pretend Greece can “grow out”…
Read MoreMade in China
The US trade deficit widened by $2 billion from September to October and now stands at $42.2 billion. While Sandy is partly to blame for some of the 3.2% decline in exports, so is a slowing global economy. This means exports won’t boost GDP for a while. The October trade deficit with China hit a…
Read MoreDoing the Laundry
After failing to monitor trillions (with a T) in wire transfers over a period of years, from very unsavory characters and regimes, HSBC agreed to a $1.92 billion settlement. HSBC encouraged vast illegal transactions because there’s so much money to be laundered, profits are very good and the chances of being caught are low as…
Read MoreLaboring On
Last Friday’s mediocre employment report gives the Fed (meeting this week) ample reason to continue buying Treasuries and mortgage-backed securities at the rate of about $80 billion/month for the foreseeable future. As for the employment report, average hourly earnings rose only 1.7% over the past 12 months, while the CPI increased 2.2%! The workweek remained…
Read MoreBad Baby
The Friday File: Male bosses with newborn daughters pay themselves 3.5% more than childless bosses; those with sons pay themselves 6.4% more! The problem is they take it out of the pay raises of their subordinates! If the boss has a boy, male underlings can expect 0.5% less salary than would otherwise be the case,…
Read MoreLotto Luck
Lotto Luck Lotteries are designed to raise government revenue and bigger jackpots lead to more sales. To that end, 42 states now cross-sell both Powerball and Mega Millions and while prices for each were doubled to $2 on 1/1/12, sales have soared 35%. After taxes, winners keep just 33% of all revenues. Despite that, people…
Read MoreDevil in the Deductions
If all 1040-Schedule A deductions, including the mortgage interest deduction are capped at about $35,000, then homeowners with houses priced north of $500,000 would be the ones primarily affected, and their homes would fall in value. Interestingly, they might respond by reducing charitable giving. If, however, the deductible amount is limited to 80% of total…
Read MoreCost-Benefit Analysis
Higher taxes on the rich will reduce their incentives to work, save and invest, clipping maybe 0.5% off of GDP. But that’s not the end of the story. The relevant question is: will the benefit to society of redistributing some income from rich to poor (which will hopefully result in better trained workers, improved high-school…
Read MoreDown GDP, Down!
With personal income growth flat, savings rates up and real disposable income down 0.2% in October, it’s not surprising personal consumption grew just 1.4%! The weak pace of income growth will limit Q4 GDP growth to less than 1.5% and GDP growth will be yet weaker in Q1 ’13 (1.2%) as disposable incomes will fall…
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