Spectacle!

By | 2017-07-17T12:35:16+00:00 April 28th, 2011|Global Market Update|

In America we love spectacle. We love a parade. Especially when someone else is paying for it. Today all sets will be tuned to the Royal Wedding. Also Twitter feeds, Facebook posts, and blog entries. I counted over 100 Apple App Store applications dedicated to the event, and who knows how many online news stories. There’s something deeply satisfying about a grand celebration. From graduations to weddings to funerals, they all have similar characteristics: an introductory procession, a series of speeches, and a party [...]

Boring Ben

By | 2014-09-11T13:35:10+00:00 April 27th, 2011|Global Market Update|

Zzzzzzzz. The Fed is hosting a snooze-fest. The outcomes of recent Fed meetings have recently been about as exciting as watching paint dry. Month after month we hear the same story: interest rates will remain exceptionally low for an extended period. Recent energy and food price increases are expected to be transitory. The economic recovery is proceeding at a moderate pace. Blah blah blah. Encouraged by the sleepy character of Fed statements, Ben Bernanke has decided to up the ante by offering a press [...]

The Rose of Education

By | 2014-09-11T13:34:21+00:00 April 25th, 2011|Global Market Update|

Is education the future? Economists of all stripes have trumpeted education as a key to improving economic outcomes. Whether it’s literacy, math skills, or technical knowledge, our society has become so technological, they state, that an extensive education is necessary to take advantage of our productive potential. But this is nothing new. Education has been considered a critical element of any state since Plato wrote The Republic 2400 years ago. In fact, Plato expected that a complete course of education would take about 40 [...]

A Tale of Two Health Care Plans

By | 2014-09-11T13:31:59+00:00 April 23rd, 2011|Global Market Update|

It was the best of plans, it was the worst of plans. Everyone agrees that Medicare has to be changed. Why? Put simply, it’s not paying for itself. Outlays are already greater than payroll tax receipts, and a combination of demographics, economics, and technology are expected to make the gap balloon. Over the next ten years, the deficit in Medicare funding is expected to average $340 billion annually, in an economy that should average about $19 trillion. In other words, the funding gap qill [...]

Global Growth Generators

By | 2014-09-11T13:31:10+00:00 April 22nd, 2011|Global Market Update|

Where will global economic growth come from in the next 40 years? Right now the world economy is about $75 billion. By 2030 it’s expected to more than double to $180 billion, and by 2050 it could double again to $380 billion. That’s a 4.1% annual growth rate. At the same time, population is only supposed to grow .6% annually to about 9 billion people. This means that global wealth is increasing like never before. The policies that generate wealth in developing nations are [...]

Right and Left

By | 2014-09-11T12:29:21+00:00 April 21st, 2011|Global Market Update|

Why do business people lean right and academics lean left? It’s not that business people are greedy exploiters and academics are compassionate analysts. And it’s not that business people are practical realists and academics are idealistic dreamers. We’ve all seen plenty of counter-examples to put the lie to these stereotypes. One possibility has to do with status. In business your status comes from market acceptance. Holding onto your status requires you to compete for consumer acceptance. In academics, status comes from credentials. Achieving higher [...]

Philadelphoa Story

By | 2014-09-11T12:28:42+00:00 April 20th, 2011|Global Market Update|

Chalk up another victim of the recession. On Saturday the Board of the Philadelphia Orchestra voted to file for bankruptcy. The Orchestra said that their operating balances are dwindling and that without relief they will run out of cash by the middle of May. The Orchestra has no long-term debt and has an endowment valued at over $110 million, but the endowment is restricted to paying for musician salaries and educational outreach. This is not uncommon among nonprofits, where endowed chairs are funded, in [...]

Downgrade?

By | 2014-09-11T12:28:14+00:00 April 19th, 2011|Global Market Update|

Can the US be downgraded? The philosophical answer is, of course. Three decades ago I heard someone asked a political speaker how a nuclear-tipped ICBM could become obsolete, and he flippantly said, “knock it out with a laser.” When the practical obstacles to such an anti-missile defense were raised, he got philosophical, and said that any weapon can become outmoded. The point of that discussion is that missile defense and obsolete ICBMs were political issues. S&P’s lowering of the outlook on US debt from [...]

Of Horses and Riders

By | 2014-09-11T12:27:43+00:00 April 18th, 2011|Global Market Update|

Do you bet on the horse or on the rider? When you evaluate a company, which matters more, the business model and competitive landscape, or the managers that run the company? It’s a question that has plagued analysts for years. For one thing, measuring management effectiveness is difficult. “Hard” skills like use of performance evaluations and budget goal are tough enough, let alone “soft” skills like effective communication and integrity. It’s enough to make many researchers give up on the question. But that doesn’t [...]

Understanding the Sell Side

By | 2014-09-11T12:27:08+00:00 April 13th, 2011|Global Market Update|

Never mind when or what to buy. Do you know when to sell? Knowing when to sell a stock or bond out of your portfolio is critical to managing your money. But most people don’t think about it very much. They figure that if you own the right stocks, the rest will take care of itself. A quick survey of the literature comes up empty. And when did you ever see the financial press feature “Stocks to sell in the next year?” But few [...]