Archive for September 2011
Baked by Regulation
The Friday File: The latest Easy Bake Oven comes with a new instruction: no light bulb needed! Consider it an unintended consequence of the government’s move to phase out incandescent bulbs. Designers of the EBO adapted and the ovens now have a heating element. But, parents may balk at the new price; $49.99 compared to…
Read MoreFlight of (Expensive) Fancy
Starting 1/1/12 Europe will impose a cap-and-trade system on airlines to reduce their greenhouse gas emissions. Airlines will initially get free permits to cover 85% of their existing carbon-dioxide emissions but will have to buy any additional permits. While the permit price is still TBA, it seems it will be based on a price of…
Read MoreMerchants of Death
The DE Supreme Court has ruled that insurance companies can challenge the legitimacy of life insurance policies that have changed hands. This has dampened enthusiasm of investors who buy policies from people in order to collect the proceeds when the insured dies. This makes sense as buyers in this life-settlement business have every incentive for…
Read MoreGovernment Failure
Government action is touted as a solution to “market failures” like imposing a tax on polluters to make them aware of the costs they impose on those who inhale their fumes. But, the cure (government intervention) may be worse than the ailment (the market failure). This is because there is also “government failure.” So, before…
Read MoreShow me the Money
While tough mortgage-lending standards are hurting housing, so is a lack of wealth. A census report shows 33% of Hispanics have zero or negative net worth in ‘09 up from 23% in ’05. For blacks the portion rose to 35% from 29%, for whites it increased to 15% from 11%. 25% of all black and…
Read MoreArtful Heist
The Friday file: Because Rembrandt was an economical painter, his works tend to be small and portable. And, because his works sell for tens of millions, Rembrandt’s are stolen more often than any other artist save Picasso. About 80 of his works have been stolen in the last 100 years. The portrait of Jacob de…
Read MoreCan I Interest you?
While low interest rates are designed to encourage consumers and businesses to borrow and invest (with little success) the policy has hurt millions of older and retired persons. With money market funds paying 0.10%, 5-yr Treasuries paying 1.0% and 10-yr Treasuries paying 2.0%, interest income has drastically fallen. These folks now eat out less, buy…
Read MoreWell Bowl me Over
Recently there has been massive realignment in college football resulting in fewer “major” conferences with more teams. I wonder if Congress will get involved. Might a Senator from a jilted school get the DOJ/FTC to investigate the idea that these super conferences — that lack any regional basis and involve interstate commerce — are a…
Read MoreThe Shrinking Work Weak
The August Employment Report showed the average work week for all employees on private non-farm payrolls fell by 0.1 hour to 34.2 hours. While seemingly uneventful, the decline equates to the loss of 325,000 jobs across the broad economy. The Report also noted that the unemployment rate for men is 8.9%, is 8% for women,…
Read MoreRisky Business
The recent $2.3 billion trading loss reported by UBS begs the question, what are these guys doing? The activity is called Delta One (D1) trading and involves trading derivatives. It’s appealing because buying derivatives is more lucrative than buying the underlying asset and it gives clients exposure to investments regulators prohibit. A pension fund might…
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