Category: Business

The Plain Truth about Government Spending

Core differences about how society spends that really need to be understood.

Government spending is fundamentally a different animal than private spending!

Private spending is the essence of the freedom of choice.  When you mull over the decision to purchase an item, you are making a very personal decision based on your current income or resources, the prices of the other goods and services you currently purchase or may purchase, and your personal tastes, risk preferences, needs, and wants.

You make so many mental comparisons and tradeoffs when you consider a purchase that they truly cannot be listed.  And then you live with the consequences of your choice, for better or worse.  If bad, you learn.  If good, you enjoy.  And the process repeats itself every time you make a buying or investing decision, updated with new personal, private information on the circumstances, choices, and preferences of the individual.

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Health Care vs. Health Insurance

Being clear about the terms Care and Insurance when it comes to US health.

The issue for the day is the distinction between health CARE and health INSURANCE.

As we all know, they are not the same thing.  But, as we all have noticed, the two are often confused and the distinctions ignored by many, if not most, in the media, Congress, and the White House.

Health Care and Health Insurance are certainly interdependent. But it helps first to separate the two and take each in turn.

Let’s start with health insurance.  And let’s think of it first as just any “insurance,” like a policy on your house or car.

What is insurance?  It’s a contract that you buy to limit your losses if a bad event happens, even though the likelihood of the bad event occurring is usually very low.

Read more about this important issue

Very few really saw this crisis coming; are we still in the dark?

Who really understood the forces of destruction building up in the global economy?

(This Post is longer than usual but doesn’t lend itself to being divided into multiple Posts – trust it is worth the read.)

Part One – How investing in the 80s was so hit and miss.

My education with respect to the sound management of one’s wealth came from a propitious mistake by a global insurance company, one of Britain’s largest insurance companies as it happens.  Here’s the story.

Read the rest of this Post

Another one of the few who saw the crisis coming.

Steve Keen – Associate Professor of Economics & Finance at the University of Western Sydney.

I know didly squat about economics.  I know a lot about the effect of economics in the sense of government policies, of inflation and debt, international trade and much more only in how they have impacted me over a lifetime of working, buying homes, raising a family, running a couple of businesses and now contemplating retirement.  I can sum up my personal strategy – LUCK!  I have been lucky.  The other Post out today shows an example of that luck.

Frankly, economists haven’t figured widely in my role call of people that I admired, probably because I don’t really understand what they are talking about.  (That’s why this Blog has a real live economist as part of the team, to help educate me and all the rest of the readers who come to this Blog!)

The other Post on this subject spoke of David Kauders, who clearly saw it coming.  Now here’s an economist who also saw it coming, Steve Keen.

Read more about Steve Keen

Growth of eBooks

Expansion or replacement of the traditional book?

My guess is that most people still value the convenience and sheer pleasure of holding and reading a traditional paper book.  It is difficult to think of a more pleasurable activity than browsing the shelves of a book-store or library.  But the eBook also is carving out a valuable niche, it appears.

Thus it was a delight to come across a ‘store’ devoted to eBooks.  Based in Paris, that virtual store is called Mobipocket.  New to me but, perhaps, not to many others (I can sometimes be a little behind the new technology drag-curve!)

Nevertheless, a veritable labyrinth of virtual book shelves with prices often well below print prices.  Here’s the WikiPedia background.

By Paul Handover (who has no commercial interest in promoting Mobipocket, not even a cent is earnt if you click through.)

The smallest hint of oil surplus leads to a real fall in oil prices

The fragility of the economy shows in many areas.

Last Thursday, the mere hint of a fairly insignificant surplus in U.S. oil reserves pushed down current oil prices and energy-related futures and other speculative plays.

Oil prices have fallen sharply as weak US home sales data and high US oil inventories prompted doubts about a potential recovery in fuel demand. Source: BBC News, 24th September.

Can you imagine the reaction to an announcement of a new source of U.S. oil reserves?  Or of renewed off-shore drilling capacity?  Relaxed EPA standards? Additional refinery capacity?Oil field

Our energy prices would be cut in half and we’d be so much less likely to war with oil-rich nations on whom we now depend for the functioning of our economy and who, indirectly or not, limit our economic and personal freedoms.

By Sherry Jarrell

Starting a business

Looks like a nice series from USA Today newspaper.

Just happened to be staying in a hotel last week that offered free copies of USA Today.  Too mean to buy my own copies!

Anyway, that Monday was the start of a small business entrepreneur’s series running for 6 weeks.

Don’t worry if you missed the paper version, all available online.  Week One is here, Week Two here.  Bookmark it if you want to follow all 6 weeks – seems well thought out and mostly relevant to both sides of the Pond.

By Paul Handover

Unemployment, Part Three

How much is “too much” Unemployment?

How much unemployment “should” our economy have?  How much unemployment is too much, and how much is just right?  How high does the unemployment rate have to go before significant changes are made in government policy and approaches?

The question of the optimal level of unemployment has generally been answered by reference to the so-called “natural rate” of unemployment.  The natural rate of unemployment is measured as the long-run average rate of actual unemployment in an economy over time; it is a “trend line,” as seen in this graph below:

unemployment3

Read more of this Essay

More on that ‘passion’ word!

Passion may be the key to many, many areas of success.

Following John’s Post on Sunday about passion, two other items passed my virtual desk that seemed to resonate with the theme.

The first was my regular Sunday ‘newsletter’ from Philip Humbert.  Sometime it comes across as a bit too good to be true but that may be a little bit of cultural mismatch from an Englishman’s eyes. Philip describes himself as a “Personal Success Coach!” and offers a free weekly newsletter that is worth trying out.

Anyway, to the point of this Post.

Read more about Passion

Understanding unemployment, Part Two

Examining unemployment in more depth.

In an earlier post, I explained how the reported U.S. unemployment rate, which was 9.6% in August of 2009, is unemployedmeasured. This post will explore the reported unemployment rate in more depth, distinguishing between the short-term, temporary sources of unemployment and the long-term, more structural, and troubling aspects of the unemployment rate.

The 9.6% U.S. unemployment rate remains the same next month if no one changes their employment status.  But the rate also remains unchanged if the same number of people hired get fired.  In truth, the U.S. unemployment rate nets out enormous flows of people into and out of the labor force and, for those in the labor force, between being employed and unemployed.

A representative month in the unemployment statistic tells the story.

Read more about unemployment