Archive for March, 2010

Stocking Up On Food: Kooky, Clever, or Just Plain Clunky?

Monday, March 22nd, 2010

In the wake of 2008’s financial crisis and the ensuing recession, speculation about total financial collapse is rife in unofficial circles. Armageddon scenarios are familiar to most Americans. In our lifetimes, we have faced nuclear annihilation, attack by extraterrestrials, collision with asteroids, nuclear winter, global cooling, global warming, various other eco-catastrophes and killer viruses.
 Authorities invariably scoff at such predictions, but in this case they have only themselves to blame. In the fall of 2008, Treasury Secretary Paulson and Fed Chairman Bernanke cooked up their own doomsday scenario in order to terrify Congress into passing bailout legislation. Apparently, this kind of [...]

Why Do Funds Make Stocks Safer, But Bonds Riskier?

Tuesday, March 16th, 2010

Suppose you had $100,000 to invest in the stock market. How would you go about it?
Stock Investing: Diversification is the Name of the Game
For decades, the orthodox advice to average investors has been to put the money in one or more mutual funds. And sound advice it is, too. Putting the money in the stock of any one company – no matter how sound, no matter how “hot,” no matter how currently profitable – would be the wrong thing to do. Any information affecting the company’s future stock price is already reflected in its price, which means that changes in [...]

Die Rich or Die Happy?

Tuesday, March 9th, 2010

Economist Steven Landsburg noted that policy wonks want people to die rich while economists want them to die happy. Is it better to die rich or die happy?
 “Why die at all?” will be the reaction of some. Science has not advanced quite far enough to make this attitude practical, although that may change shortly after we die. Others will find it impossible to separate the two outcomes, let alone treat them as mutually exclusive. How could one die happy without dying rich? Then there are those of us who would cheerfully settle for either outcome.
 The reason for pondering the question [...]

The Trade Deficit is Falling. Should We Care?

Wednesday, March 3rd, 2010

A few weeks ago, The Wall Street Journal announced that the U.S. trade deficit had fallen for the second consecutive month. Should we care about that datum? The trade deficit is one of several economic indices that receive stylized media treatment: They are solemnly reported, their accuracy is taken for granted and their importance is assumed. In the case of the trade deficit, none of this is appropriate.
 What is the Trade Deficit?
The term “trade deficit” relates to a line item on the U.S.’s balance of international payments. The balance of payments is a double-entry accounting summary of aggregate economic transactions [...]