Archive for July 2015

The Friday File: Since first appearing in the early 1800s, poker has become increasingly complex. Originally, five cards were dealt followed by one round of betting. That’s boring, and the chance of having a good hand, very low. By introducing more cards and betting, the chances of a big pot and a good hand grow…

The just negotiated temporary arms control agreement has several vulnerabilities that must be dealt with. When Iran cheats in small ways, and they will, the penalties must hurt. We must also prevent Iran from becoming a nuclear state by building up Saudi Arabia and the Gulf states, mending fences with Israel and threatening military action…

The number of FDIC insured institutions peaked at 18,083 in Q1/1986. As of Q1/2015 they numbered 6,419, a 64.5% decline. Bank employment was 1.6 million in Q1/1986, peaked at 2.2 million in Q1/2007, and is now 2 million. Quarterly profitability in Q1/1986 was $4.2 billion. It peaked at $39.8 billion in Q2/2014, and was $39…

With half of Chinese-listed companies having suspended trading, with short selling prohibited, the Chinese Central Bank giving money to firms to buy shares, and the government relaxing rules on mortgage borrowing to encourage stock purchases, it’s clear the Communist Party is panicking. But controlling markets is a fool’s errand, and if equities stay overpriced, these…

The Friday File: Taking Alexander Hamilton off the $10 bill is a travesty! He consolidated the debts of the states, gave us federalism, wrote most of the Federalist Papers, saved us from a Burr administration, set up a strong federal fiscal infrastructure, founded the country’s first major bank and proto-central bank which was eventually de-chartered…

While crude prices decline, pump prices are up. It’s because in summer we drive slightly more and refiners must switch to summer-blends which evaporate slower and cost more. Moreover, because there are many different summer fuel-blends required by the EPA, refiners have more pricing power than in winter when there are few. Thus, the average…

Oil has suddenly fallen from $60/bbl to $52/bbl, near the multiyear low of $45/bbl set in Q1/15. This is because: Iran plans to increase exports once sanctions are lifted, OPEC is increasing production, US oil-rig counts rose for the first time in 29 weeks last week, US production is the highest since 1971, crude oil…

Household spending should remain healthy for four reasons. First, household net worth hit a record $84.9 trillion in Q1/15, up $1.6 trillion from Q4/14 and the ratio of household net worth/personal disposable income (PDI) is at its highest level since Q3/07. Second, household debt service as a percentage of PDI is 9.92%, its lowest level…

Given the huge victory handed to Greek PM Tsipras, he can’t accept a proposal that is largely similar to the one already rejected. He must show the Greeks one that is better. Europe doesn’t wish to make a much improved offer as that would encourage Spain and Portugal to copy the Athenian approach. Thus, Tsipras…