Skjellifetti

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    • Tue May 27th 17:23 PM | Rating: 0 0
      Commented on:
      When Will American Realize the World Has Changed?
      The energy problem is not the fault of the Republicans. Neither is it the fault of the Democrats. It is not the fault of Presidents Reagan, GHW Bush, Clinton, or GW Bush. It is not the fault of the U.S. House of Representatives or the U.S. Senate.

      It is entirely the fault of the American voter. For the past 30 years, our oil dependence has never been a priority for anyone except a few lonely visionaries (Jimmy Carter comes to mind). The Republicans, the Democrats, the Congress, and our Presidents have done exactly what the American voter wanted: NOTHING!
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    • Fri May 23rd 13:36 PM | Rating: 0 0
      Commented on:
      On Stimulus Checks and Encouraging Financial Irresponsibility
      Methinks that both the author of this article and the WSJ piece both need to look up the definition of the word fungible.

      Q1: Why does it matter exactly what products are bought with the stimulus? Spending is spending.

      Q2: From a stimulus perspective, why does it matter if folks pay down debt rather than spend? Data from past stimulus pkgs have shown that folks who choose to pay down debt today will often just buy more on the card in the following months and often have the same amount of debt withing a few months of the stimulus as before.

      Q3: On what basis do you claim that we don't have a financially healthy middle class? 40% of U.S. households have no credit card debt. The debt problems seem to be concentrated in the lower and lower middle classes and even there, it is a minority of households which have large problems, typically a result of a lost job, health care emergency, or a divorce. You can't make meaningful claims about the health of the U.S. household based on average credit card debt. You need to look at medians and the distribution of the debt.
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    • Tue May 20th 11:43 AM | Rating: 0 0
      Commented on:
      In Praise of Headline Inflation
      Since the difference wasn't statistically significant, how can you claim that "core-PCE, also turned out to fare worse than headline PCE in predicting future inflation."
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    • Mon May 19th 12:52 PM | Rating: 0 0
      Commented on:
      Oil Bubble: How Speculation May Contribute to Recent Moves in Oil Prices
      I've been waiting to see someone bring all of the important bits and pieces (Hotelling's rent, Krugman's excess supply graph, Iran's ship tieups, stagnating production, etc.) together into a coherent holistic argument.

      Now we just need to add monopolistic/oligopoli... supply theory to the mix since the Saudis and other large suppliers can affect prices and, IIRC, have an incentive to prevent the price from rising too rapidly in order to reduce incentives for technology changes that would ultimately reduce demand. I wonder if the Saudis are worried that demands to stop global warming will finally provide the incentives for alternative technologies and have decided that keeping the price low is no longer in their long term interest.
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    • Fri May 16th 11:21 AM | Rating: 0 0
      Commented on:
      A Conversation with Nobel Laureate William F. Sharpe
      Another question I'd like to hear an answer to is Sharpe's long run expectation for the equity risk premium. Stocks go up either because earnings go up or because the risk premium of holding stocks goes down. There has been a fair amount of research in the past decade or so arguing that the equity risk premium is too high and should be much lower (thus reducing long run returns to equities). What is his take?
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    • Thu May 15th 17:26 PM | Rating: 0 0
      Commented on:
      The Credit Card Time Bomb Is Ticking
      Instead of guessing, the author should learn to use Google:

      www.stlouisfed.org/pub...

      40% or so of U.S. households have no credit card debt. The data seems to show that the problems are concentrated among lower and lower-middlle income households.
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    • Thu May 15th 14:15 PM | Rating: 0 0
      Commented on:
      1990 All Over Again?
      Tom Lindmark --

      Good point. That is why it pays to read the footnotes:

      Please note breaks in data: Data prior to 2003-01-01 include adjustment, extended, and seasonal credit. Data from 2003-01-01 to 2007-11-01 include primary, secondary, and seasonal credit. Data from 2007-12-01 to 2008-02-01 include primary, secondary, seasonal, and term auction credit. Data from 2008-03-01 forward include primary, secondary, seasonal credit, primary dealer credit facility, other credit extensions, and term auction credit.

      This is a graph that has apples up until it has apples and oranges.
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    • Wed May 14th 14:32 PM | Rating: 0 0
      Commented on:
      Inflation Falls for Fourth Straight Month
      Flash Gordon -- "Clearly TIP buyers, Social Security recipients, etc., are getting the shaft by not including energy and food in the cpi, which adjust to the cpi."

      Contrary to popular conspiracy theory, food and energy are indeed included in the CPI used to calculate the COLA allowances for SS and other programs. Core CPI, which excludes food and energy, is used by the Fed as its preferred measure of inflation for rate decisions because food and energy are often too volatile from month-to-month to tell how long-term inflation is behaving.

      An article that is worth reading:

      www.nytimes.com/2008/0...

      The interactive graphic is fun, too:

      www.nytimes.com/intera...
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    • Wed May 14th 10:44 AM | Rating: 0 0
      Commented on:
      Consumer Price Index: More Detached from Reality Each Day
      Best recent article on the CPI...

      www.nytimes.com/2008/0...

      Be sure and look at the interactive graphic...

      www.nytimes.com/intera...
      View article »
    • Tue May 13th 14:56 PM | Rating: 0 0
      Commented on:
      Consumer Price Index: More Detached from Reality Each Day
      "ss recipients deserve their ss checks and the proper increases each year for living costs"

      Yes, they do. For real increases in the cost of living. Not imaginary increases due to improved quality of the goods available in the economy.

      Were you aware that SS was indexed in the 1960s under LBJ to take account not just of the increased cost of living, but of the increase in real average hourly pay rates as well? That means that SS became no longer a retirement benefit, but a requirement that younger generations were going to have to fork over part of their pay increases due to improved productivity to the previous generation. That change did, in fact, make part of SS a welfare payment from the young to the old instead of just a retirement plan.

      TANSTAAFL
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    • Tue May 13th 12:50 PM | Rating: 0 0
      Commented on:
      The Case For Further Inflation
      The resulting figure is 11.25%, substantially above the 8% that occurred during the 1970s. Therefore, we can plainly state that if oil remains at these high levels for the remainder of the year, the percent of GDP spent on oil expenditures will likely surpass the former peak that was achieved in the early 1980s. As a result, it should be clear that rise in the price of oil is clearly inflationary and could lead to similar inflation problems as the ones that occurred in the 1970s and early 1980s.

      You have failed to account for the reduced demand caused by the increase in the price of oil. You simply can't take a linear extrapolation of a non-linear phenomena and expect to get anything close to a meaningful result.
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    • Tue May 13th 12:14 PM | Rating: 0 0
      Commented on:
      Consumer Price Index: More Detached from Reality Each Day
      icandoitdon --

      "mandated costs that reduce consumer choice should be fully measured."

      This is a valid point.

      "it would take a disproportiotely large price increase to force such changes in consumer behavior."

      Er, no. This depends on the good in question. Substitution effects between, say, beef and chicken as relative prices change are well documented. Gas use has measurably declined in recent months.

      "my issue with the CPI is that it is a "black box" that is easily subject to manipulation"

      The CPI is in no way a black box. See www.bls.gov/CPI The amount of research done every year on the CPI and consumer demand for products such as food, gas, autos, and housing by gov't, academia, and private enterprise is prodigious and usually available for anyone to review.

      Mike Stathis --

      "But ask yourself how many TVs, cars or consumer electronics you buy every year. Yet, this is where most of the deflationary effect of hedonics arises."

      CPI is an aggregate measure, and in aggregate, people buy an awful lot of TVs every year.

      "Ironically, the consumers who have the best feel for inflation are unfortunately the ones who are struggling the most since even the smallest of price increases are felt immediately."

      The CPI has to measure everyone's consumption costs, not just the poor. It must include the middle class and the rich as well. In fact, the BLS does provide sub indexes for different groups of consumers.
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    • Mon May 12th 17:46 PM | Rating: 0 0
      Commented on:
      Consumer Price Index: More Detached from Reality Each Day
      In other words, this author does not want to correct the CPI for quality changes even though the car you buy today is much safer (and therefor not the same car) as the one you bought 30 years ago. Ignoring the quality differences means that costs today cannot be compared to costs yesterday because you are not comparing the same goods, thus rendering the CPI a meaningless measure of actual cost changes faced by consumers over time.

      The author sounds like he thinks all SS recipients should be entitled to purchase flat panel HDTVs at the same cost as their soon-to-be-outdated analog vacuum tube model or else they might starve to death.
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    • Mon May 12th 14:23 PM | Rating: 0 0
      Commented on:
      Did Reagan End the Era of Free Markets?
      I wonder if Joseph Lewis, who bought just shy of 10% of Bear Sterns and lost something on the order of a billion dollars when Bear was bought, would consider JP Morgan's purchase of Bear a bailout?

      This article is, like most conspiracy theories, built upon half baked innuendo and deliberately misinterpreted statements taken out of their complete context.

      Personally, I think articles like this are deliberate plants by those in power to keep us from focusing on the threat that is posed by UFOs working in cahoots with the CIA. You can read all about it here: weeklyworldnews.com/
      View article »
    • Thu May 8th 15:37 PM | Rating: 0 0
      Commented on:
      Why Banks Are Hoarding Money
      The MM funds on strike view would seem to be a reasonable argument. Vanguard's Prime Money Market Fund (VMMXX) with almost $110 billion in assets, for example, has 54.1% in short-term U.S. Government & Agency debt, 34.3% in CDs, and 10.1% in commercial paper. This is a MM fund that should be primarily invested in commercial paper. Vanguard has a separate Federal Money Mkt Fund that invests almost exclusively (92.8% currently) in short-term U.S. Government & Agency debt. This also explains why the SEC yield of the various Vanguard tax-exempt MM funds is actually more than the SEC yield of the Prime MM fund. I'm surprised that there hasn't been a wholesale move out of the Prime into the tax-exempt funds.
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