Tag Archives: Economics

Puerto Rico’s crisis illustrates the risks of minimum wage hikes

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“Only 40 percent of the adult population on the island is employed or looking for a job — versus a U.S. labor force participation rate of 63 percent.  Of course, many Puerto Ricans work for less than the minimum — in the black-market economy, which is untaxed. In other words, the minimum wage also helps explain Puerto Rico’s lack of revenue with which to service its debt.  Also killing the demand for, and supply of, labor are the island’s onerous overtime, paid-vacation and job-security regulations.  And even at the minimum wage, full-time work in Puerto Rico pays less than the combined package of welfare, Medicaid and food stamp benefits for which a family of three might qualify.”

https://www.washingtonpost.com/opinions/puerto-ricos-lesson-for-the-mainland/2015/07/08/24e63970-25ad-11e5-b77f-eb13a215f593_story.html

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Should Puerto Rico Shut Down Schools to Pay Its Debts?

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“The hedge fund report, authored by a trio of former International Monetary Fund economists, noted that Puerto Rico’s education spending had risen 39 percent in a decade during which school enrollment actually fell by a quarter. Surely, there must have been some unnecessary fat in the system to cut.  It’s easy to understand why this might seem outrageous. Firing teachers in the middle of what’s essentially a nine-year depression seems like a good way to further exacerbate Puerto Rican unemployment, possibly while sacrificing some childrens’ educations.”

http://www.slate.com/blogs/moneybox/2015/08/04/puerto_rico_s_debt_crisis_hedge_funds_say_the_island_should_shut_down_schools.html

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The Gig Economy Makes Karl Marx’s Dreams Come True

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“Marx should be delighted — oh, except that it’s capitalism, not communism, that’s allowing Joe to be a fisherman and a critic on his own terms.  The sharing or ‘gig’ economy is not only disrupting the way people live and work; it’s dividing the left considerably.  On the one hand, you have the nostalgic leftists who want Joe to work a nine-to-five job and skip the fishing. You know, like people did in the 1950s. [..] Should we be upset that the guy who founded Lyft is getting rich from the tech? Some people see the accumulation of wealth as taboo. But Joe’s life is better than it would have been in the absence of Lyft. The company allows him to live more of the life he wants to live.”

http://fee.org/freeman/detail/the-gig-economy-makes-karl-marxs-dreams-come-true

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The Man Who Sowed the Seeds of Puerto Rico’s Collapse

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“It is indeed a crisis but one that was, to an embarrassing extent, made right here in America.  It was foisted on Puerto Ricans by one lousy New Dealer in particular. His name was Rexford Guy Tugwell.  By 1941, Rexford Guy Tugwell had behind him a 20-year career of pontificating for big government and managing expensive government flops. Somehow that gave Franklin Roosevelt the idea of naming him governor of Puerto Rico. What Tugwell did for the mainland, he could now do for an island. Maybe this central planning stuff works better if you work small, right?”

http://fee.org/anythingpeaceful/detail/the-man-who-sowed-the-seeds-of-puerto-ricos-collapse

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Crisis and Opportunities: An Elliott Wave Overview of the Markets

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“Big market moves create sizable risks and potential rewards. Come hear what Elliott Wave International thinks about the markets for the remainder of the year and beyond.”

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Argentine small businesses turning to bitcoin

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“The prolonged use of capital controls in Argentina since 2011 has wreaked havoc for businesses operating in South America’s second-largest economy.  Under the leftist government of President Cristina Fernández, no immediate change is expected in Argentina’s complicated economic conditions, which have seen the use of bitcoin more than double over the past year, mainly among small businesses.  Recent raids on currency trading houses and new powers for the national spy agency to prevent speculative attacks pushed the peso’s black market value this week to its lowest levels since Argentina defaulted last year on its foreign debt for the second time this century.”

http://www.ft.com/intl/cms/s/0/b2a8cca4-2c11-11e5-8613-e7aedbb7bdb7.html#axzz3h7Y4tmqB

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John Hussman: Memorize This, Earn a Dollar

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“This is no time to be on autopilot. Look at the data, and you’ll realize that our present concerns are not hyperbole or exaggeration. We simply have not observed the market conditions we observe today except in a handful of instances in market history, and they have typically ended quite badly. In my view, this is one of the most important moments in a generation to examine all of your risk exposures, the extent to which you believe historical evidence is informative, your tolerance for loss, your comfort or discomfort with missing out on potential rallies even in a wickedly overvalued market, and your true investment horizon.”

http://www.hussmanfunds.com/wmc/wmc150727.htm

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Health Insurance Companies Seek Big Rate Increases for 2016

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“Health insurance companies around the country are seeking rate increases of 20 percent to 40 percent or more, saying their new customers under the Affordable Care Act turned out to be sicker than expected. Federal officials say they are determined to see that the requests are scaled back.  Blue Cross and Blue Shield plans — market leaders in many states — are seeking rate increases that average 23 percent in Illinois, 25 percent in North Carolina, 31 percent in Oklahoma, 36 percent in Tennessee and 54 percent in Minnesota, according to documents posted online by the federal government and state insurance commissioners and interviews with insurance executives.”

http://www.nytimes.com/2015/07/04/us/health-insurance-companies-seek-big-rate-increases-for-2016.html

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The World’s Biggest Economic Fallacies… and How to Profit From Them

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“As the long lines at Greek banks and ATMs attest to, banks don’t really have all of your money.  Bloated government spending in Greece also reveals the failure of Keynesian economics, which advocates a large state role in the economy. It reveals the failure of the bailouts, which did nothing constructive. They only delayed the inevitable. Greece reveals that government bonds are not sacrosanct.  All of these things – fractional reserve banking, Keynesian economics, the false safety of government debt, and the bailout model – are firmly embedded in today’s conventional wisdom. The crisis there helps to illuminate these fundamental flaws in mainstream economic thinking.”

http://www.internationalman.com/articles/the-worlds-biggest-economic-fallacies-and-how-to-profit-from-them

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Bank of Canada Admits Recession, The Solution: More Bubbles

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“What made the Canadian recession easy to spot was the Canadian yield curve inverted out to three years following a surprise rate cut by the Bank of Canada on January 21.  It remains to be seen if the US follows. The US contracted in the first quarter, but the second quarter rebound was a bit stronger than I expected.  I awarded Canada the ‘Blue Ribbon’ for the first yield curve inversion of any major country following the great financial crisis. I smell an ‘Operation Twist‘ type move by the Canadian central bank to rectify this horrific ‘recession-signaling’ condition.  If so, the sweet spot for banks and hedge funds to front-run the trade appears to be 5Y or 7Y notes.  Some banks may already be in on it.”

http://globaleconomicanalysis.blogspot.com/2015/07/bank-of-canada-admits-recession-shades.html

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