Learning to Spend

By |2014-09-11T14:23:58-04:00February 25th, 2011|Global Market Update|

Why does college cost so much? It’s a relevant question as students await the “fat envelope frenzy” that accompanies college acceptance and their parents fill out confusing financial aid applications. Increases in tuition have long outpaced inflation. In inflation-adjusted terms, tuition is roughly triple what it was in the ‘70s. A small, private college in Sewanee, Tennessee made national headlines when it cut its total price tag by 10%. When’s the last time we saw that? And it’s not just private residential schools. For-profit [...]

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Yesterday’s News

By |2017-07-17T12:35:17-04:00February 24th, 2011|Global Market Update|

So the Huffington Post took over AOL. Or, wait, did it go the other way? Yawn. Newies have gotten all het up over the AOL/Huffington Post transaction. For anyone outside the media echo chamber, the Huffington Post is the lefty New Media publication created by Arianna Huffington. Early this month, AOL announced that it would acquire the HP for $315 million in cash. AOL is a shadow of its former self. Once the titan that would combine content and delivery, it failed to embrace [...]

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Middle East Musings

By |2017-07-17T12:35:17-04:00February 22nd, 2011|Global Market Update|

In the past several weeks the Middle East has been rocked by successful anti-government protests in Tunisia and Egypt. In both cases, entrenched dictators were ousted by a popular uprising. This has not been an Islamist movement; rather, it has been a quest for jobs and an increased democratic voice. Now the demonstrations have moved to Bahrain, Algeria, Morocco, Jordan, Yemen, and Libya. Across the Arab world, people are taking to the streets to demand greater economic and political freedom. No one can predict [...]

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Inflation Nation?

By |2014-09-11T14:19:16-04:00February 18th, 2011|Global Market Update|

Is inflation overseas headed our way? That’s the question on a lot of people’s minds these days. In England, inflation is running at 4% and headed higher. In China inflation is 5%. In Brazil it’s 6%. Could their inflation come our way? Certainly the headlines are worrisome. Commodity prices are soaring: wheat, sugar, cotton, even industrial metals like zinc and lead are soaring. Growing economies in Asia and Latin America--notably China and Brazil—are boosting global demand for raw materials. But because poorer countries spend [...]

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Do the Continental

By |2014-09-11T14:18:43-04:00February 17th, 2011|Global Market Update|

Figures don’t lie, but liars sure can figure. That’s what I thought when I read about the proposed merger between the New York Stock Exchange and Deutsche Bourse AG. Apart from any new names—Wall Strasse, anyone?—the combination will strengthen the trend towards accounting convergence. What’s convergence? Up until now convergence has mostly been a theoretical exercise for senior accountants and academics that served as an excuse for five-star junkets to London, Tokyo, and Zurich. It’s an attempt to harmonize accounting rules around the world. [...]

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Simplify, Simplify?

By |2014-09-11T14:17:46-04:00February 16th, 2011|Global Market Update|

Is our financial life too complex? Among the various causes of the financial crisis, one of the least cited has been complexity. Complex financial firms bought complex financial instruments that had a complex relationship to less-than-ideal creditors and collateral. When the system began to unravel, investors switched to the simplest securities possible—US Treasury Notes—and shunned anything else even modestly complicated. We saw this borne out even within the US Treasury market. Inflation-linked securities (TIPs) fell dramatically in price relative to traditional notes. There is [...]

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A Little Perspective

By |2014-09-11T14:15:20-04:00February 15th, 2011|Global Market Update|

The global media don’t help us understand the relative importance of things very much. In a recent movie, a food critic asks the waiter at a much-hyped restaurant for a little perspective. “You supply the food, and I’ll supply the perspective,” he notes, dryly. It seems like that with many of the biggest news stories these days. Egypt is unquestionably important, but how many people know that this country of 85 million people only has an economy a little bigger than New Hampshire? It’s [...]

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Failure to Participate

By |2014-09-11T14:16:01-04:00February 14th, 2011|Global Market Update|

In “Cool Hand Luke” Strother Martin famously tells Paul Newman that his serial escape attempts are due to “failure to communicate.” Now our labor economy seems increasingly beset by a failure to participate. The monthly Employment Situation Report compiled by the Labor Department is filled with useful analyses. Some of them are less noisy than the headline numbers, and they can capture broad trends in the economy. One of the most interesting is the labor force participation rate. This is compiled from the monthly [...]

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Who’s In Charge, Here?

By |2014-09-11T14:16:34-04:00February 11th, 2011|Global Market Update|

Congress is mulling legislation that would allow States to seek bankruptcy. Is that a good idea? In the past couple of weeks several proposals have surfaced that would allow States to declare bankruptcy. Some lawmakers have said they are concerned that some fiscally challenged States may seek a Federal bailout. After all, isn’t California too big to fail as well? Under Federal law, only cities and localities in some states may file. If a town fails to pay principal or interest in a timely [...]

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AIG – “All In, Guys”

By |2014-09-11T14:10:41-04:00February 10th, 2011|Global Market Update|

At the heart of the Financial Crisis AIG needed over $80 billion in support from the Federal Government. Now they’re talking about paying it all back. What’s going on? Was AIG simply a group of well-run companies that was undone by a rogue trader who got onto the wrong side of the Credit Default Swap market in residential mortgages? No, they also made massive investments in residential mortgages throughout the company. AIG and its far-flung operations were part of a financial machine, where money [...]

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