Sunday, October 4, 2015

Hey Paul Krugman: Typical Bronx Household Spends 66% on Rent

One out of three Americans now live in a housing market where rent for a three-bedroom home eats up more than 30% of the monthly median income, the traditional threshold for affordability, according to RealtyTrac. And in some cities, residents are doling out a much larger percentage of their paychecks.

In New York City's borough of the Bronx, the typical household spends nearly 66% of their monthly income to rent a three-bedroom house -- by far the highest percentage of any U.S. county, RealtyTrac found.

With an overall median income of less than $35,000, not only does the Bronx contain some of the nation's poorest communities, but average rent is high at nearly $1,800 a month.

Similar trends are occurring in other cities that are home to large pockets of low-income residents. Renters in Philadelphia, Brooklyn, Baltimore and Miami are paying nearly 50% of their income toward rent, RealtyTrac reported.

So while New York Times columnist Paul Krugman continues to fret over potential price deflation or price inflation below the Fed's "target" 2% inflation, the biggest expenditure for many households, especially low-income households, rent, is climbing at well over 2.0%


Saturday, October 3, 2015

Buchanan Likes Trumps' s Neanderthal Proposal

On this weekend’s broadcast of “The McLaughlin Group,” Pat Buchanan touted Trump's neanderthal idea of putting tariffs on some imported goods.

“His best idea is...tariffs on manufactured goods coming into the country and using that revenue to cut taxes on small businesses across America,” Buchanan said.


Michael Moore’s New Film a Factually Challenged Ode to Socialism

The film might have a bit of anti-military-industrial-complex, but overall, judging from the Kyle Smith story (below), it;s pretty horrific.  -RW

By Kyle Smith

Michael Moore’s latest film is shallow and superficial, betraying at best a dim understanding of politics and economics. I’d call him a “dime-store political scientist,” except I don’t have to.

Those are the exact words he used to refer to himself when presenting his forthcoming film, “Where to Invade Next,” at the New York Film Festival on Friday afternoon.

“Where to Invade Next,” despite its bellicose title, is Moore’s paean to the socialist wonderlands of Europe (and North Africa). Its sense of wonder at the delights of Eurosocialism can only be termed “collegiate.” Moore sounds like a kid who just wore out his first Eurail pass.

The movie, Moore’s dullest yet, was rejected by all major distributors and bought by a startup that doesn’t even have a name yet and plans to release it in December.

It explores Finland, Iceland, Germany, Slovenia, Italy, France, Norway, Portugal and even Tunisia to illustrate supposed advantages of the socialist mindset, in each case accompanied by an explicit comparison to how the US bungles each point.

Read the rest here.

Lefty Economists vs. Elizabeth Warren

Lefty economists are circling the wagons against super-lefty Elizabeth Warren, after she went for the scalp of one of their own.

WSJ's James Freeman has the details:
At least some Democrats are resisting Sen. Elizabeth Warren’s purge of the liberal intelligentsia. This week Ms. Warren succeeded in forcing the resignation of respected scholar Robert Litan from the Brookings Institution after he revealed that a new Labor Department regulation could cost investors billions. Now five Democratic economists have authored a letter to protest Warren’s bullying. Robert Lawrence of Harvard’s Kennedy School and Bowman Cutter of the Roosevelt Institute are among those writing “to express our concern over our colleague Bob Litan’s treatment at the hands of the Brookings Institution and Senator Elizabeth Warren.” Also signing the letter are Everett Ehrlich, Joseph Minarik and Hal Singer.

Ms. Warren had falsely claimed that Mr. Litan had been “vague” about the funding for research showing the new regulation would limit choices and raise costs for investors. In fact, he had clearly disclosed that it was sponsored by a financial-services company. According to the new letter from Democratic economists, “Businesses sometimes finance policy research much as advocacy groups or other interests do. A reader can question the source of the financing on all sides, but ultimately the quality of the work and the integrity of the author are paramount. In Bob’s Litan’s case, both have been impeccable over a career of four decades. And, in keeping with those standards, he has been completely transparent about the support for, and conduct of, the study in question, as both Brookings and Senator Warren were well aware from the day he first testified before the Congress on the matter.”

The letter adds that “Senator Warren’s approach (and Brookings’ complicity with it) threatens ad hominem attack on any author who may be associated with an industry or interest whose views are contrary to hers. Those who differ with Litan instead should offer a substantive rebuttal to the paper in question, which would do much more to clarify the issue than implicitly depicting him as being inherently corrupted by the sponsorship of his work.”

‘The Big Bang Theory’ Has Hidden Jokes Down to a Science

By Jo Craven McGinty

“The Big Bang Theory,” the CBS sitcom about a pair of socially awkward physicists from the California Institute of Technology, their egghead friends, and the one normal person they socialize with, has serious geek cred.

But what casual viewers may not realize is the lengths to which producers have gone to ensure that the whiteboard equations and physics jokes that make up the witty banter between nerdy roommates Sheldon Cooper and Leonard Hofstadter are scientifically accurate.

A lot of the humor is over the heads of the general audience. But there are jokes inside of jokes, and for those who recognize the science, they’re hilarious. The show takes this stuff so seriously that it employs a UCLA physics professor to make sure it gets it right.

Case in point: In a 2009 episode, “The Jiminy Conjecture,” Sheldon and Howard heard a chirp and then argued over which variety of cricket made the sound.

On the whiteboard in the background is Dolbear’s law, which states the relationship between the air temperature and the rate at which crickets chirp.

“I went to a Dolbear presentation at Tufts, and they talked about this, in like 1989,” says one high-profile fan of the show, Seamus Blackley, one of the creators of Microsoft’s original Xbox game console. “I remembered it!”

“Once I realized what was going on, it was awesome,” added Mr. Blackley, who is also trained in physics. “It’s the No. 1 show, and it has actual physics in it.”

Sometimes, the whiteboard equations relate to the characters’ conversations. Other times, they simply depict interesting problems that would captivate real physicists. And occasionally, there is an inside joke—one based on serious numbers and not phony equations.

To kick off the new season, which started Sept. 21, Dr. Saltzberg shared some of his past whiteboard humor with The Numbers and hinted at a couple of things viewers can look for this season.

For those who haven’t seen the show, here’s the premise: Sheldon and Leonard are a pair of brilliant physicists who work at Caltech along with their friends, aerospace engineer Howard Wolowitz and astrophysicist Raj Koothrappali. The women in the show—especially Leonard’s love interest, Penny—provide the social skills and common sense the men lack.

Last year, in episode 10, Leonard, Raj and Howard were sent to catalog the work of a deceased colleague only to find out that it was all outdated or disproved.

“There had to be stuff on a chalkboard that was appropriate for an old professor,” Dr. Saltzberg said. “There is a piece of physics that more senior faculty work on. It’s no longer fashionable. If somebody knew that, they’d get a chuckle.”

The old professor’s chalkboard—itself a joke—is never mentioned, but the equation on it relates to an outdated particle physics concept called the Pomeron.

Read the rest here.

Analyst: Fed Will Never Raise Rates

Chris Rupkey, chief financial economist at Mitsubishi UFJ Financial Group, in an email blast Friday wrote that "rates will never go up again."

This is completely absurd. You have to believe that the Fed can print money forever without price inflationary consequences or that, if price inflation does climb to 5%, 10%, whatever, that the Fed won't raise rates under these conditions. These scenarios make no sense.

The lack of fundamental; understanding of what the Fed can and can't control is quite stunning, even among some pretty good Austrian school thinkers. I named and discussed one in Friday's EPJ Daily Alert.

I have never seen such an across the board perspective in decades of watching markets. When the turn occurs, on rates and inflation, it is going to be spectacular. There is almost no one ready for it or believes it will happen quickly. It is going to take nearly everyone by surprise.


Jack Lew Moves His Plotting and Intimidation Operation to Lima, Peru

Treasury Secretary Jacob J. Lew will travel to Lima, Peru for the Annual Meetings of the International Monetary Fund and the World Bank Group. While in Lima, Secretary Lew will also meet with regional and G-20 Finance Ministers and Central Bank Governors.

He will be in Lima from Thursday, October 8 to  Saturday, October 10.


Friday, October 2, 2015

Understanding the Labor Participation Rate

By Robert Wenzel

There is much excitement, by many. over the decline in the labor participation rate. They see it as some kind of signal that the economy is crashing. But why would the participation rate crash in this phase of the business cycle (the up phase), rather than for non-cyclical structural reasons? Is there some kind of new magical downward economic force that is preventing workers from finding jobs?  Is it somehow causing the Fed to "run out of bullets"?

Markets clear. thus, it is only when we are moving from the bull phase of the business cycle to the bear phase,that we see sudden cyclical jumps in unemployment. So what is going on now? Let's take a look at the data.

The participation rate in August 2015 (62.4 percent) is the lowest since October 1977. But the rate was lower than that every month between 1948 and 1978. The low point came in December 1954, when the rate was 58.1 percent.

The period 1948-1978 was a generally strong period for the economy, so a low participation rate does not necessarily mean a troubled economy. During the period real GDP climbed by more than 300%. (It even climbed during periods of steep downturns in participation, see for example the 1960 to 1965 period and the greater 1956 to 1965 period)

So if a "bad" economy isn't driving workers from the labor force, what is?

A report from the Bureau of Labor Statistics issued in November 2006 studied those in the non-participation category and found they generally fell into these categories:
1) The aging of baby boomers. A lower percentage of older Americans choose to work than those who are middle-aged. And so as baby boomers approach retirement age, it lowers the labor force participation rate.
2) A decline in working women. The labor force participation rate for men has been declining since the 1950s. But for a couple decades, a rapid rise in working women more than offset that dip. Women’s labor force participation exploded from nearly 34 percent in 1950 to its peak of 60 percent in 1999. But since then, women’s participation rate has been “displaying a pattern of slow decline.”
3) More young people are going to college. As BLS noted, “Because students are less likely to participate in the labor force, increases in school attendance at the secondary and college levels and, especially, increases in school attendance during the summer, significantly reduce the labor force participation rate of youths.”In In 
In a report from Shigeru Fujita at the Federal Reserve Bank of Philadelphia on Feb. 6, 2014, Fujita concluded:
Almost all of the decline (80 percent) in the participation rate since the first quarter of 2012 is accounted for by the increase in nonparticipation due to retirement. This implies that the decline in the unemployment rate since 2012 is not due to more discouraged workers dropping out of the labor force.
These studies fit with theory. Markets clear. In a boom cycle employment improves, if there is a climb in non-participation, it is for reasons outside the business cycle.

If you don't believe this, you don't believe Austrian school business cycle theory.

 Robert Wenzel is Editor & Publisher at and at Target Liberty. He is also author of The Fed Flunks: My Speech at the New York Federal Reserve Bank. Follow him on twitter:@wenzeleconomics

The Most Famous Band of All-Time From Every State

The now global elitist controlled Business Insider claims to have the answers. (But I am suspicious now of anything they put out. Why, for example, is the best band in Washington D.C. where all major threats emerge, a banned I have never heard of that is called Minor Threat?)


The Reality Behind the Numbers in China’s Boom-Bust Economy

By Yonathan Amselem

Last year, the world was stunned by an IMF report which found the Chinese economy larger and more productive than that of the United States, both in terms of raw GDP and purchasing power parity (PPP). The Chinese people created more goods and had more purchasing power with which to obtain them — a classic sign of prosperity. At the same time, the Shanghai Stock Exchange Composite more than doubled in value since October of 2014. This explosion in growth was accompanied by a post-recession construction boom that rivals anything the world has ever seen. In fact, in the three years from 2011 – 2013, the Chinese economy consumed more cement than the United States had in the entire twentieth century. Across the political spectrum, the narrative for the last fifteen years has been that of a rising Chinese hyperpower to rival American economic and cultural influence around the globe. China’s state-led “red capitalism” was a model to be admired and even emulated.
Yet, here we sit in 2015 watching the Chinese stock market fall apart despite the Chinese central bank’s desperate efforts to create liquidity through government-backed loans and bonds. Since mid-June, Chinese equities have fallen by more than 30 percent despite massive state purchases of small and mid-sized company shares by China’s Security Finance Corporation.
But this series of events should have surprised nobody. China’s colossal stock market boom was not the result of any increase in the real value or productivity of the underlying assets. Rather, the boom was fueled primarily by a cascade of debt pouring out of the Chinese central bank.

How Successful People Stay Calm Under Pressure

By Travis Bradberry
Most of us have experienced that sickening moment when you realize you’ve made a serious mistake. Perhaps it was a typo that threw off a financial forecast, or maybe you forgot to reserve a venue for an important meeting that’s scheduled for the following day. The details are different for everybody, but at some point, we’ve all felt that rising tide of dread and panic.
Mistakes and pressure are inevitable; the secret to getting past them is to stay calm.
New research from the Harvard Business School shows that most of us go about staying calm the wrong way. People who welcome the challenge of a crisis—so much so that overcoming the challenge excites them—perform far better than those who try to force themselves to be calm.

Suppose Donald Trump Proposed Legislation Outlawing the Employment of Any and All Hispanics

By Donald Boudreaux

Here’s an open letter to Cafe Hayek commenter Thomas Hutcheson:

Dear Mr. Hutcheson:

Commenting on a post of mine at Cafe Hayek, you say that those of us who argue that the minimum wage destroys some jobs miss the point.  The real point, you insist, is “the amount of harm to low income workers compared to the benefits going to other low-income workers.”

You do raise an issue separate from the one that I normally discuss, but the one that I normally discuss remains hotly disputed.  Support for the minimum wage would likely decline significantly if the public understood that raising the minimum wage prices some of the poorest workers out of the labor market.  (How many pro-minimum-wage politicians today have you heard admit the likelihood, or even the possibility, that raising the minimum wage will destroy some jobs?  They never do.  They either do not mention the issue or they stoutly deny that any such job destruction occurs.)  It’s true that one can still support the minimum wage even if one understands that it destroys jobs.  But one must understand this downside in order to weigh properly the merits of any potential upsides.  Yet the fact remains that most politicians and pundits, and even many professional economists, still contend that there are no downsides of the minimum wage for workers.

Now to your point.  Suppose that Donald Trump were to propose legislation outlawing the employment of any and all Hispanics.  Do you think that, before we are justified in opposing such legislation, we must first gather data to see what its result would be on the distribution of income among minority workers?  If econometric studies find evidence that such legislation would raise the aggregate income of blacks by more than the resulting fall in the aggregate income of Hispanics, would this legislation pass a proper cost-benefit test and, hence, be legislation that ‘the facts’ show to be justified?

I trust that you’d oppose such legislation regardless of the resulting amount of measured harm to some minority workers compared to the measured benefits going to other minority workers.  For the very same reason, I oppose minimum-wage legislation regardless of its measured effects on the distribution of income among workers.  I oppose it because it is unethical (and, for reasons apart from income distribution, also economically harmful to society) for government to strip some people of economic opportunity in order to artificially enhance the opportunities available to other people.

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

In short, the most relevant, and least subjective, empirical fact (as I see it) – which also has ethical content – is that minimum-wage legislation almost certainly inflicts harm on some individuals.  (And contrary to some suppositions, no conceivable empirical data can alone determine whether this harm is objectively outweighed or not by some corresponding benefits.  Ethical judgments are simply unavoidable.)

The above originally appeared at Cafe Hayek.

Power and Privilge

The real problem isn't "white privilege" it is privilege related to government power.

I discuss at Target Liberty.


How to Live on $500 a Month

Bill Bonner had his team run the numbers;

We continue to get emails from readers who have suffered fender benders – or serious accidents – on life’s financial highway.

More than any other factor, divorce seems to leave the pavement slick and treacherous. Now, readers report that they are at or near retirement age… with few resources.

What should they do?

You will not miss the irony: Your editor is not a poor man, far from it.

What expertise has he in this area?

But he remembers with fondness the poverty of his youth. And he uses his imagination to think about how he might recapture the poverty, if not the youth.

And he put the question to his team of crack researchers: What if you wanted to live well on $500 a month? What would you do?

We take $500 as a starting point. Most of the readers we’ve heard from report struggling to live on around $1,000 a month in income.

We will aim to live on $500… and save $500. In five years, we will have $30,000 (the significance of which will become apparent later on).

Our researcher Nick Rokke responded quickly:

Here’s what I found for living on $500 a month. There is nothing conventional about it. But it could be done…

It is impossible to live on $500 a month in the U.S. the way we are accustomed to living. Forget about renting a house or apartment. Even if you had a roommate in a 1-bedroom apartment, you’d each pay $385 on average. That, together with an average $71 cellphone plan, and you only have $44 left for food.

A much cheaper alternative is to buy a used motor home. I found a 1998 Fourwinds Windsport for $14,500. You can finance that over 12 years at 5% interest, for a monthly payment of $135. You can get insurance for as little as $65 a month.

Your accommodation expenses = $200 a month.

A spot in a trailer park can run upward of $200 a month. But some Walmart stores allow you to park your RV in their parking lot for free. They think you will become their best customer if you live so close.

Now that you’re Walmart’s No. 1 customer, you should be able to buy some of their past-expiration food at a discount. By eating cheap, you could reasonably feed yourself for $150 a month. Include a multivitamin if you’re worried about malnutrition.

Total house and food expenses = $350 a month.

You are going to need a bike to get around to places. You can’t take your RV out for leisure rides. This will be important for errands or visiting friends. And to use a different bathroom to avoid getting funny looks from Walmart employees.
I found a used bike online for $1.
Other odds and ends:

$50 a month for RV and bike maintenance$25 a month for gas – that will get you 10 gallons of gas or about 80 miles in the average motor home$10 for gym membership (you need to shower somewhere).$10 for prepaid phone through Tracfone$0 for Internet – go to the library or other public area… or use data services such as Skype for your calls$10 for batteries to power things at night in your motor home$10 for soap and toiletries$35 miscellaneous expensesTotal = $500

There are few dinners at the Terminus Nord in this budget. But we’re making progress.

Bill Bonner founded Agora, Inc in 1978. It has since grown into one of the largest independent newsletter publishing companies in the world. He has also written three New York Times bestselling books, Financial Reckoning Day, Empire of Debt and Mobs, Messiahs and Markets.

The above article originally appeared at

EPJ Bestselling Books in the Month of September 2015

Combined list for and Target Liberty.

1. Science, Technology, and Government by Murray Rothbard, Because of this and this. (Second month on list)

2. Taking a Stand: Reflections on Life, Liberty, and the Economy by Robert Higgs. Because of this. (Second month on list)

3. Wealth, Poverty and Politics: An International Perspective by Thomas Sowell (First month on list)

4. Organized Crime: The Unvarnished Truth About Government by Thomas DiLorenzo (First month on list)

5. The Pith of Life: Aphorisms in Honor of Liberty by Jakub Bozydar Wisniewski. Because of this. (Second month on list)

Highly Recommended 6. Out of Poverty: Sweatshops in the Global Economy by  Benjamin Powell (First month on list)

7.Thinking as a Science by Henry Hazlitt, Because of this(Second month on list) 

8. Ideal  by Ayn Rand-Because of this. Third month on list.

9. The Road to Serfdom by Friedrich Hayek. On the Rand Paul scrubbed list (Second month on list)

10.  The Secret of Selling Anything by Harry Browne --On list because of this: If You Want to Get a Great Job, Read Harry Browne and Network, Network, Network. 17th appearance on list.

A Message for Donald Trump on Free Trade and Immigration

Under a system of completely free trade, capital and labor would be employed
wherever conditions are most favorable for production....

But the migration of capital and labor presupposes not only complete freedom of
trade, but also the complete absence of obstacles to their movement from one
country to another...

But whatever may be the prerequisites for the development of international trade,
protective tariffs can accomplish only one thing: to prevent production from being
carried on where the natural and social conditions are most favorable for it and to
cause it to be carried on instead where conditions are worse. The outcome of
protectionism is, therefore, always a reduction in the productivity of human labor.The freetrader is far from denying that the evil that the nations of the world wish to
combat by means of a policy of protectionism really is an evil. What he maintains is
only that the means recommended by the imperialists and protectionists cannot
eliminate that evil.
-Ludwig von Mises,  Liberalism: A Socio-Economic Exposition