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  • Leading Economic Freedom: Hong Kong, Singapore, New Zealand, Switzerland

    Hong Kong again topped the rankings, followed by Singapore, New Zealand, and Switzerland. Australia and Canada tied for fifth, of the 144 countries and territories in the Fraiser Institute’s 2012 Economic Freedom of the World Report.

    “The United States, like many nations, embraced heavy-handed regulation and extensive over-spending in response to the global recession and debt crises. Consequently, its level of economic freedom has dropped,” said Fred McMahon, Fraser Institute vice-president of international policy research.

    The annual Economic Freedom of the World report uses 42 distinct variables to create an index ranking countries around the world based on policies that encourage economic freedom. The cornerstones of economic freedom are personal choice, voluntary exchange, freedom to compete, and security of private property. Economic freedom is measured in five different areas: (1) size of government, (2) legal structure and security of property rights, (3) access to sound money, (4) freedom to trade internationally, and (5) regulation of credit, labor, and business.

    Hong Kong offers the highest level of economic freedom worldwide, with a score of 8.90 out of 10, followed by Singapore (8.69), New Zealand (8.36), Switzerland (8.24), Australia and Canada (each 7.97), Bahrain (7.94), Mauritius (7.90), Finland (7.88), Chile (7.84).

    The rankings and scores of other large economies include: United States (18th), Japan (20th), Germany (31st), South Korea (37th), France (47th), Italy (83rd), Mexico (91st), Russia (95th), Brazil (105th), China (107th), and India (111th).

    When looking at the changes over the past decade, some African and formerly Communist nations have shown the largest increases in economic freedom worldwide: Rwanda (44th this year, compared to 106th in 2000), Ghana (53rd, up from 101st), Romania (42nd, up from 110th), Bulgaria (47th, up from 108th), and Albania (32nd, up from 77th). During that same period the USA has dropped from 2nd to 19th.

    The rankings are similar to the World Bank Rankings of easiest countries in which to do business. But they are not identical, the USA is still hanging in the top 5 in that ranking. The BRICs (Brazil, Russia, India and China) do just as poorly in both. The ranking due show the real situation of economies that are far from working well in those countries. China and Brazil, especially, have made some great strides when you look at increasing GDP and growing the economy. But there are substantial structural changes needed. India is suffering greatly from serious failures to improve basic economic fundamentals (infrastructure, universal education, eliminating petty corruption [China has serious problems with this also]…).

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  • Ethical Failing of Finance Company Boards and Executives Continue

    As I have said, the behavior (driven by the poor ethical standards of the “leaders” of our financial institution) of our financial institutions means, as a a customer, you have to be on guard for their tactics to trick you out of your money. Essentially you have to expect them to behave like a pickpockets and be on guard against them at all times. This is an extremely sad state of affairs: that the ethical failings of such critically important players in our economy are so widespread, long-lasting and accepted. However, as we have seen, they profit from this behavior and their long track record of such behavior provides evidence they will continue acting in this way.

    Discover to refund $200 million to credit card customers

    More than 3.5 million Discover credit card customers will share $200 million in refunds in the wake of a federal investigation that determined the bank tricked people into signing up for payment protection plans and other add-on services.

    The Consumer Financial Protection Bureau and Federal Deposit Insurance Corp. found that Discover Financial Services telemarketers often talked faster when explaining fees and terms as they pitched the services, leading customers to think there was no additional fee, the regulators said Monday.

    It is very good to see the Consumer Financial Protection Bureau taking action to protect the consumers from the financial institutions continued efforts to evade the law and take a little bit from millions of consumers. This type of behavior has been tolerated previously, and should never have been. The financial institutions strategy to take small amounts from millions of people was a wise way of dealing with the tendency of law enforcement to ignore such “small infractions” – they didn’t seem to bother seeing that taking small amounts from millions of people results in hundreds of millions of dollars in ill gotten gains.

    Far too much of the bad practices are continuing. And when they are caught the consequences are far too small (which is why they keep behaving unethically). Discover is only being charged $14 million in civil penalties for their lapses (and has to return $200 million it took unfairly).

    It is good to have police to try and catch literal pickpockets. And it is good to have the Consumer Financial Protection Bureau to catch financial institutions that take far more than pickpockets can dream of away from the wallets of consumers.

    Related: Capital One Bank Agrees to Refund $150 Million to 2 Million Customers and Pay $60 Million in Fines – Very Bad Customer Service from Discover Card – Credit Card Regulation Has Reduced Abuse By Banks – Continued Credit Card Company Customer Dis-Service – I Strongly Support the Consumer Financial Protection Bureau

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  • Easiest Countries in Which to Operate a Businesses (2011)

    Singapore is again ranked first for Ease of Doing Business by the World Bank.

    Country 2011 2008 2005
    Singapore 1 1 2
    Hong Kong 2 4 6
    New Zealand 3 2 1
    United States 4 3 3
    Denmark 5 5 7
    other countries of interest
    United Kingdom 7 6 5
    Korea 8 23 23
    Canada 13 8 4
    Malaysia 18
    Germany 19 25 21
    Japan 20 12 12
    France 29 31 47
    Mexico 53 56 62
    Ghana 63
    China 91 83 108
    India 132 122 138
    Brazil 126 122 122

    The rankings include ranking of various aspects of running a business. Some rankings for 2011: starting a business (New Zealand 1st, Singapore 4th, USA 13th, Japan 107th), Dealing with Construction Permits (Hong Kong 1st, New Zealand 2nd, Singapore 3rd, USA 17th, China 179th), protecting investors (New Zealand 1st, Singapore 2nd, Hong Kong 3rd, Malaysia 4th, USA 5th), enforcing contracts (Luxemburg 1, Korea 2, Iceland 3, Hong Kong 5, USA 7, Singapore 12, China 16, India 182), paying taxes (Maldives 1, Hong Kong 3, Singapore 4, USA 72, Japan 120, China 122, India 147).

    These rankings are not the final word on exactly where each country truly ranks but they do provide a valuable source of information. With this type of data there is plenty of room for judgment and issues with the data.

    Related: Easiest Countries from Which to Operate Businesses 2008 – Stock Market Capitalization by Country from 1990 to 2010 – Looking at GDP Growth Per Capita for Selected Countries from 1970 to 2010 – Top Manufacturing Countries (2000 to 2010) – Country Rank for Scientific Publications – International Health Care System Performance – Best Research University Rankings (2008)

  • USA Housing Rents Increased 5.4% in the Last Year

    US Zillow Rent Index

    The USA economy is still in very fragile ground. The continued problems created by policies focused on aiding too big too fail institutions and continued huge federal budge deficits are dangerous. And the continued problems in Europe and mounting problems in China are not helping. Still, rental prices continue to rise across the USA.

    The graph above shows housing rents (as shown by the Zillow rent index) have increased 5.4% in the last year (through July) across the USA. In Boston the increase was 4.5%; Grand Junction, Colorado -4.9%; San Francisco up 8.8%; Washington DC up 7.3%; Raleigh, NC up 1.8% (though the last one couldn’t be added to the graph for some reason). I just picked some cities I found interesting – with some diversity.

    Housing prices are up 1.2% in the same period, according to the Zillow price index.

    When looking at data on rental prices and home prices you will notice different sources give different readings. Judging these changes across the nation is very difficult and requires making judgements. Even at the local level the measures are imprecise so the figures you see will vary. Taking a look at several different measures, from reputable sources, is often wise.

    Related: USA Apartment Market in 2011 – Top USA Markets for Buying Rental Property – Apartment Vacancies Fall to Lowest in 3 Years in the USA (April 2011) – Apartment Rents Rise, Slightly, for First Time in 5 Quarters (April 2010)

  • Curious Cat Investing, Economics and Personal Finance Carnival #37

    I am reducing the Curious Cat Investing, Economics and Personal Finance Carnival to being published once each month. If I get some decent contributors that want to host it I would consider going back to twice a month.

    Also see related investing and economics books and articles.

    • A controlled break-up of the euro would be hugely risky and expensive – “Estimating the price of a “Grexit” is guesswork, but Germany’s share might reach €110 billion of this, about 4% of the country’s GDP.”
    • Personal Finance: Minimal Budgeting by John Hunter – “I just leave that in my checking account and what is in checking is what I have to spend… I couldn’t spend any more, I didn’t have it. If I were to go over (I never did), but if I were to have (say my credit card bill exceeded my checking account balance), I would have had to reduce my cash the next month.”
    • Are Dividend Stocks Overvalued? Four Reasonable Blue-Chips to Consider by Matt Alden – “Although I do think the market as a whole is modestly expensive (via the Shiller P/E for an overview as well as inspection of individual securities), dividend stocks in general do not appear to be at dangerous valuations.” [Aflac has been on my almost buy list for over a year – John]
    • Actually, The U.S. Lost 1.2 Million Jobs Last Month by Jacob Goldstein – “Everyone (including us) is saying this morning that the U.S. economy gained 163,000 jobs last month. Strictly speaking, this is a lie. In fact, the U.S. economy actually lost 1.2 million jobs last month. There were 134.1 million jobs in June, and 132.9 million jobs in July… the government releases “seasonally adjusted” jobs numbers every month. The basic idea is to correct for these predictable fluctuations.”
    • Current crisis exposes weakness in China’s economic system by Jim Jubak – “The current obvious fakery is degrees of magnitude different from the usual distortion in Chinese economic data. So, for example, the Public Safety Bureau has simply stopped publishing data on new car registrations because the numbers show such a big drop in new car sales that they can’t simply be fudged. Data on the steel industry has been revised and revised again because the government can’t come up with a methodology that disguises the drop in steel sales and yet isn’t completely unbelievable. And, of course, the government hasn’t published data on the number of vacant apartments in China—a reflection of the country’s real estate boom and bust—since 2008.”
    • For the first time since 1998 more money leaves China than enters it – “more than 16% of China’s rich have already emigrated, or handed in immigration papers for another country, while 44% intend to do so soon. Over 85% are planning to send their children abroad for their education, and one-third own assets overseas.”

    More and more the ability to continue to delay the huge problems continued from the credit crisis (too big to fail fakery plus the decades of the USA and Europe living beyond their means) seems to be coming to an end. And onto that the problems in China and it is difficult to see how we avoid big problems. It is amazing the bad behavior in the USA and Europe has been only as bad as it has the last 4 years – but there is a very good chance that will not continue. China is not looking like it can be a savior. Certainly India is not doing much right recently. Japan continues to struggle. 2013 looks very tough economically. Eventually the central bank games of given essentially huge cash payments to bankers will cause people to lose faith in those currencies (frankly I can’t understand why they haven’t already). When that happens we will see some real problems.

  • Household Income Data in the USA Since the Credit Crisis Recession Began

    Big Income Losses for Those Near Retirement takes a look at some interesting data, including data on median income drops due to the too-big-too-fail credit crisis recession.

    Households led by people between the ages of 55 and 64 have taken the biggest hit; their household incomes have fallen to $55,748 from $61,716 over the last three years, a decline of 9.7 percent.

    The post also includes data showing the only groups with income increases as those 65-74 years old and, 75 and over which is surprising. 25-34 took the 2nd largest drop decreasing 8.9%.

    Another interesting tidbit is the percent of people over 65 with jobs. In 1960 20% of those over 65 had jobs. Which pretty much decreased steadily to 10% in 1986 and then has increased steadily to 17% in 2011.

    Related: USA Individual Earnings Levels: Top 1% $343,000, 5% $154,000, 10% $112,000, 25% $66,000 –
    Looking at Data on the Value of Different College Degrees – 60% of Workers in the USA Have Less Than $25,000 in Retirement Savings – Credit Card Regulation Has Reduced Abuse By Banks

  • The Poor Paying for Vocational High School Education

    I find it disheartening that it is necessary to take out a loan to pay for vocational school after graduating from middle school (this is in Indonesia but the same thing happens all over in those countries that are not the most wealthy). Indonesia has been doing extremely well economically (which many people do not realize).

    The economic conditions are not good and they are earning just enough for the basic daily needs. Mukinah feel scared because of the cost of the vocational school for her daughter Kafita. Mukinah does not want her to quit school so she is applying for loans through the Student Loan program from Kiva. In the picture, Mukinah and Kafita, her daughter.

    Kafita already graduated from junior high school and wants to go to vocational school.

    So essentially she is paying for high school. I sure hope it is financially beneficial. This is the kind of investment in the economic development of a country that I wish governments could make. If not, I sure wish the super rich would give money to fund this kind of education instead of giving trust fund babies millions for conspicuous consumption.

    It is disgusting how spoiled brats are such vapid people that they do what they do, while so many hundred of millions of kids lives could be changed with the most wasteful spending these trust fund babies that our politicians keep giving massive tax breaks to. Our politicians should be ashamed of themselves. And so should the spoiled brats.

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  • Personal Finance: Minimal Budgeting

    I’m really too lazy for any ongoing budgeting. This is the model I have used: write down your big expense (rent, car payment, required student loan payment…). Get the total take home pay each month subtract your big expenses. If that is negative you better do something else (make more money, get rid of big expenses).

    Big monthly expenses:

    • Rent: $900
    • Car payment + insurance: $300
    • Cash (miscellaneous spending food, gas, cloths, books…): $450
    • Utilities+ (heat, electricity, phone, internet…): $250

    Take home pay: $2,800.

    That leaves $900/month ($2,800 – $1,900). Decide how to allocate that – toward your IRA, saving to buy a house or take a vacation, eating out (above what was allocated above for cash), pay off debt (if you have it…), build up an emergency fund, save to buy a new MacBook Pro with Retina display…

    If I decided to allocate $300 to my IRA (or increase my 401k) I would just set that up automatically each month. Then say I decided to put $400 toward other savings I would have that go to my savings account each month. And I decided I could use the $200 to pamper myself I just leave that in my checking account and what is in checking is what I have to spend.

    I just don’t spend more than that. Just like when I was in college I had little spending money. I could spend that. I couldn’t spend any more, I didn’t have it. If I were to go over (I never did), but if I were to have (say my credit card bill exceeded my checking account balance), I would have had to reduce my cash the next month. I reality I would have something like $2,000 extra in the checking account so no bills would be a problem (and just view $2,000 as 0).

    In 6 months see where things stand. Is it really working? Did you mess up and forget some expenses… If you need to adjust, do so. Re-examine every 6 months (or every year, if you are doing pretty well).

    Take a portion of each raise (50% maybe) and devote it to personal finance goals (paying off debt, retirement savings, building up emergency fund, saving for big purcahse, investing, give more to charity…); don’t just use it to increase spending. Use no more than half (or whatever level you set) of the raise to increase your current spending.

    Related: Personal Finance Basics: Avoid Debt – Investing in Stocks That Have Raised Dividends Consistently

  • USA Adds 163,000 Jobs in July, Unemployment Rate at 8.3%

    After several poor months for job creation (adding well under 100,000 each month) we have some good news. Total nonfarm payroll employment rose by 163,000 in July, with the unemployment rate at 8.3%. Since the beginning of this year, employment growth has averaged 151,000 per month, about the same as the average monthly gain of 153,000 in 2011.

    The change in total nonfarm payroll employment for May was revised from +77,000 to +87,000, and the change for June was revised from +80,000 to +64,000. Which means the total job gains for this report is 157,000 (163,000 +10,000 [for May] and -16,000 [for June]).

    One of the continuing severe problems (since the credit crisis bubble burst) has been long term unemployment. In July, the number of long-term unemployed (those jobless for 27 weeks and over) was 5.2 million. These individuals accounted for 40.7% of the unemployed (a high figure historically).

    Given all the problems created by the financial system failure (created over the last 15 years – in the USA and Europe) it is actually fairly amazing that we have been adding jobs nearly as much as we have. But climbing out of the huge whole we created for ourselves (by continually re-electing those that allowed the too-big-too-fail financial mess – and those we elect continue to reward their friends that created the mess instead of fixing it) is a huge task. It requires much better job creation than we have had this year.

    Adding 150,000 jobs a month would be decent if we hadn’t created such a huge problem that digging out of it requires much better results. Moving back above that average is much better than being below it, but we really need to bring the new jobs created above 200,000 for a couple years to make a serious dent in the problems created earlier.

    Related: USA add 117,000 Jobs in July 2011 and Adjusts Previous Growth in May and June Up 56,000 More – USA Unemployment Rate at 9.6% (Sept 2010) – Unemployment Rate Drops Slightly to 9.4% (Aug 2009) –
    Over 500,000 Jobs Disappeared in November 2008
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  • Curious Cat Investing, Economics and Personal Finance Carnival #36

    Enjoy the 36th edition of the Curious Cat Investing, Economics and Personal Finance Carnival. This carnival is different than many blog carnivals: I select posts on those topics from what I read (instead of posting those that submit to the carnival as many carnivals do). If you would like to host the carnival add a comment below.

    • The Apple (Used) Premium? by Daniel Mrdjenovich – “In short, if the Apple product you desire is available refurbished, you are in luck. Refurbished Apple products seem to be a rare case of a great deal with very limited downside. If you can’t find a refurbished version of the product you are looking for, you have a more difficult dilemma. A 17% discount on a used Apple device is a nothing to sneeze at but it’s not enormous either.”
    • The fiscal cliff and rationality by James Hamilton – “Although the risks are real, the rational thing to expect is that the actual fiscal contraction next year will be significantly more modest than what is implied by existing law. But the cumbersome process of getting to that outcome will once again exact its own unique toll.”
    • Idle corporate cash piles up by David Cay Johnston – “newly released IRS figures show that in 2009 these companies held $4.8 trillion in liquid assets”
    • Case Shiller Home Price Indexes Surge – “The real estate market news keeps getting a little bit better as Standard & Poor’s reported big increases for the Case-Shiller Home Price Indexes in May, both the 10-city and 20-city indexes rising 2.2 percent for the month on an unadjusted basis after gains of 1.3 percent in April.”

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