70 Words
Divinely Different
Why are Americans significantly more religious than Europeans? In Europe, there are state churches that receive subsidies, and thus the clergy focus on politics and perquisites and not proselytizing. In addition, state-sponsored churches face virtually no competition, all but eliminating religious diversity. By contrast, here there’s such intense competition in doctrines, services and levels of…
Read MoreLow Blow
US Interest rates this low are harmful. Investors buy higher-yielding foreign securities (and speculate in commodities) and foreigners borrow in US dollars (not local currency), putting upward pressure on foreign exchange rates. To prevent this, central banks buy US Treasuries to reduce appreciation of their currency and keep their own rates extraordinarily low. Unfortunately, these…
Read MoreBanks Behaving Badly
The LIBOR scandal is the result of greedy banks. But banks are no greedier today than they were decades ago. The difference is now banks are so big, and involved in so many activities (investment banking, commercial banking, insurance, underwriting and derivatives), they continually have large conflicts of interest and are unwilling to create meaningful…
Read MoreDown with Divorce
The Friday File: Decades ago women faced substantial workforce discrimination, had limited control over their fertility, and due to limited labor saving devices, housework was hard. Thus, women looked to find a working man to marry. Today both spouses work, women are independent, and enjoying “quality time” together is what matters. Therefore, like-minded people are…
Read MoreDread in Madrid
A month ago Europe bailed out Spanish banks but left Spain on the hook for the full $125 billion loan. Since there was immediate concern Spain might default on the debt, and that the new debt was senior to all private debt, private investors ran from Spanish bonds and Spanish borrowing costs spiked. Now Europe…
Read MoreBig Taxes, No Money
Tax rates on dividends will rise from 15% up to 43.4% on 1/1/13 if the Bush tax cuts aren’t extended. Due to behavioral changes, it won’t raise much in taxes. Firms will immediately use money planned for dividends for share buybacks. Some firms will borrow (at today’s low rates) to make one extra-large dividend distribution…
Read MoreI See Land!
The US has a total land area 2.3 billion acres. In ’07, the major land uses were forestland at 671 million acres (30%), grassland pasture and rangeland at 614 million acres (27%), cropland at 408 million acres (18%), parks and wildlife areas at 313 million acres (14%), misc uses (tundra and swamps) at 197 million…
Read MoreGDP = C+I+G+(X-M)
Q1 ’12 GDP was composed of personal consumption expenditures (C) totaling $11.0 trillion, private investment (I) of $2.0 trillion, government spending (G) of $3.0 trillion and net exports (E) of -$0.6 trillion. In Q2, G will be slightly lower, with E and I largely unchanged. So, overall GDP growth will be dependent on C. But…
Read MoreDoing the Mumbo Jumbo
The Friday File: Bureaucrats write regulatory orders that are generally incomprehensible because they try to obscure the fact that they’re forbidding you from doing what you want. Occasionally, a top regulator will force his/her agency to write in plain English. But, it doesn’t last because incomprehensibility creates bureaucratic invisibility. Thus, slowly standards of vagueness necessarily…
Read MoreMonetary Medicine
Things can’t possibly be good when yesterday, in less than an hour, the ECB, The Bank of China, and The Bank of England all offered monetary medicine to the weakening global economy. Problem is, easier monetary policy won’t help much. What’s needed is stimulative fiscal policy. Separately, while US labor market conditions are worse than…
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