So, this is a recovery?

Unemployment is at its highest level in 26 ½ years at 10.2%, but this understates the fact it has only reached double digits twice since the 1930’s (1982 and today). Housing prices are down, bankruptcies are up and yet commentators keeping yelling “recovery!” at every turn. Is this what a recovery feels like?

TARP update and a few afterthoughts on the crisis of '08

There has been a flurry of activity lately surrounding TARP. You remember "TARP" don't you? The legislation that was passed with great debate and outrage in early October 2008. It was derided as a massive "bank bailout" sure to cost the taxpayers hundreds of billions. Even more important, many politicians, pundits and commentators shouted that in addition to the cost, it wouldn't work. Not only would TARP fail, but the proper course of action was to do nothing. Mostly Republican and free-market purest voices were heard to repeat, to varying degrees, that such intervention was futile- simply letting events unfold as they may is the only truly prudent course of action. No "bailout" was needed, they said; the system would right itself, they said; we aren't really facing a complete financial meltdown they argued.

Raising Taxes on Hedge Fund Managers

Ever wonder how hedge fund managers can become centi-millionaires or even billionaires in relatively short time spans? It isn't uncommon for a hedgie to build such a substantial net worth in less than a decade. Besides the extremely generous fee structure they command (I blame the customers for actually paying it), there is another factor that contributes to their wealth accumulation: a tax break. (In case you forget what a hedge fund is, see our older post on hedge funds.)

Do Ads Like This Really Work?

Over the holiday weekend, I caught a Dodge commercial on TV. It happened to be from one Melloy Dodge in Albuquerque, New Mexico. It was your typical car commercial with a loud announcer's voiceover highlighting the unusual and amazing (always "amazing"!) deals on new cars. You better hurry or you'll miss the special deal.

This particular commercial was advertising a full 80% off MSRP! To be honest, that 80% figure is the only reason the commercial caught my attention as I am thoroughly immune to stupid commercials. How could that be? Was Melloy going out of business? Even if they were, no new car is ever 80% off unless it's a scam, like say a stolen or flooded vehicle.

It didn't take long to hear it was indeed a scam. The particular foul? You may have already guessed- "MSRP" had a special definition just for this commercial. Instead of the standard "manufacturer's suggested retail price" to which everyone is accustomed, they slipped in their fabricated definition of "manufacturer's suggested retail profit". I nearly spit out my coffee at the audacity. Yet one wonders, does such blatant nonsense work as a marketing gimmick? Is there anyone who actually thought this was a real deal?

Personally, I try hard not to do business with people or companies that operate this way.

New Long Run Blog Feature - Favorites

It is "Cyber Monday" and you are probably shopping online at work. If you aren't shopping, your co-workers probably are. Since the office is generally unproductive, why not indulge in some personal reading time? May I suggest checking out our newest feature, a page called "Favorites & Most Popular"? Here you'll find lists of each author's favorite posts along with a list of the most popular posts as measured by views. You can find it near the top right corner of the TLRB page. Enjoy!

Some bearish news for the dollar

Since I wrote the 3-part piece about the dollar (parts I, II, III), some nasty things have occurred in Washington. It was just one-month ago that I made the following warning in "Part III: Can the Dollar Weaken Anyway?"

"Another very bad outcome for the dollar may happen if Congress starts dismantling the Fed’s independence"

Guess what?

Can you afford the subway increase?

Toronto has a subway system. It used to be a pretty decent subway system. Clean, modern, fast, and reasonably priced. These days it's dirty, has not kept pace with Toronto's expansion, break downs are common, and the fare box price has been seeing big jumps in price, well above annual inflation rates. When prices jump way above inflation, that sounds pretty counter intuitive.

[caption id="attachment_1295" align="aligncenter" width="300" caption="The subway only gets you about half way across the city these days"][/caption]

What's going on?