Aug 14 2016

Is College Worth It? The $1.4 trillion question gets harder to answer as a record number of Americans attend universities.

One of the most perplexing questions on the minds of young Americans today is whether college is worth the associated tuition cost.  It is rather humbling to see that $1.4 trillion in student debt is outstanding today.  That is more than auto debt and credit card debt.  College tuition has outpaced virtually every category that is tracked in our inflation measures.  It has out run housing prices.  It has left healthcare in the dust.  It has crushed wages which are stagnant for nearly a generation.  The last item is probably the most important measure to examine.  If college is worth it, why have wages gone stagnant all the while tuition prices continue to go up?  Is it because of federal loans?  Is it because of mega complexes being built?  Or is there something else going on?

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Aug 6 2016

95 million Americans not in the labor force: The army of non-workers in the United States.

The United States now has 324 million people.  Of that we have a large labor force.  70 million cannot work and most of those are children.  But what about the rest?  The media largely ignores a massive contingent of people.  This group is made of those not in the labor force.  Today we have a stunning 95 million Americans that are not in the labor force.  So the unemployment rate looks healthier than it is because many of these people are yanked out when calculating the unemployment rate.  It is still the case that we have 1 working person supporting 2 other Americans overall.  This ratio seems to pan out when we break down the numbers.  What are we to make of these 95 million Americans that are not in the labor force?

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Jul 31 2016

The American Dream has imploded with the Homeownership rate hitting another low: Most Americans too broke to buy a Home.

Owning a home is symbolic with having a piece of the American Dream.  The stereotypical picket white fence with a nice lawn is easily conjured up in the minds of many.  Yet for many, this is only a dream because it will never become reality.  The American Dream has imploded with many other areas of the economy.  We have hit another low when it comes to the homeownership rate.  Americans are too broke to purchase homes even with record low interest rates.  Home prices have increased hand and hand with the stock market but the problem is, most of the gains have gone to big investors and not families purchasing a place to live.  The big bet from Wall Street was to convert many foreclosures into rentals and push rents higher.  This is all interconnected like an intricate spider web and the public is the fly trying to break free.  The only problem is the housing market has transformed into another trophy for big money investors.

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Jul 26 2016

The largest pension fund in the country CalPERs continues to underperform: Weakest return since 2008-09 financial crisis.

The two largest public pensions in the U.S. are Calstrs and Calpers and collectively they oversea $484 billion for public workers in California.  Pensions have a hard time surviving in a low return world.  For example, these pensions seek out a 7.5% annual return which is simply unrealistic to do in a market that is volatile (by definition, markets are meant to be unpredictable).  Not only is the market volatile but we find ourselves in a low return environment.  Pensions trying to seek out guaranteed returns are going to have a tough time finding a sure bet when bonds are producing such a low return.  Unfortunately these guarantees become contractual and the shortfall needs to be closed by the taxpayer.  It is no surprise that pensions have become a rarity in this market.  The 401k model of investing was supposed to help workers transition from this guaranteed return to a more market based approach.  The only issue with that is most people never save on their own and make bad investment moves.  When you are dealing with high frequency traders and other advanced investment techniques, the regular family stands no chance.  Recently Calpers posted a dismal return, the worst since the 2008-09 financial crisis.

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Jul 19 2016

Gallup Economic Confidence Index plunges while stock market near record: Stock Market decoupled from financial well being of average Americans.

Gallup releases an Economic Confidence Index which should reflect the overall sentiment of Americans as it pertains to the economy.  With the stock market near record highs and the housing bubble market soaring, you would expect average Americans to be smiling from ear to ear with glee.  But when you click on over to Gallup, the chart looks downright gloomy like finding out you just failed a midterm exam you studied so hard for.  While Gallup may be stumped and scratching their head as to why this divergence is there, I feel we have touched upon a few points as to why this is occurring.  First, half of Americans don’t even own one stock.  Next, you have many U.S. companies making large profits abroad.  Good for the company but that doesn’t translate necessarily into a better financial position for most Americans.  Housing values being inflated only keeps Americans from buying as reflected in a generationally low homeownership rate.  In other words, crony capitalism is working as it should.

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