You Heard it here first

I dunno, maybe someone else has already gone out on this limb, but have a look at this. I'm to cowardly to make it a prediction, but I would not be shocked one bit if gasoline is back to $3.00 within the next year.

Mark it, dude.

June 20, 2008:
............Reg.....Mid...Prem.
Curr. Avg..$4.075 $4.326 $4.482
Yesterday..$4.073 $4.325 $4.481
Month Ago..$3.807 $4.043 $4.188
1 Year Ago.$2.996 $3.181 $3.297

Those Enlightened Europeans!

Before you start thinking the Europeans are all enlightened, read these articles from yesterday's and today's New York Times, and you'll realize just how xenophobic the continent can be. The EU's European Parliament, which is basically set up to manage issues such as trade policy, immigration, and capital flows in and out of the EU, as well as other union-wide policy issues, has decided that it's OK to detain illegal immigrants for up to 18 months. I mean the economic BENEFITS of immigration aside, this is extreme. Many immigrants to European countries never get the right to vote or be citizens, and simply want to earn some small amount of money to send back home. Don't let Lou Dobbs see this story! He'll think it's a new great idea for making use of Gitmo!

It's All about the Children!

This is hilarious:


Study Finds Most Children Not In Favor Of Children2019s Healthcare

Enjoy!

I Told You So

Anytime my students hear me say something that doesn't affirm their bent for supply-sider cowtowing, they think I'm being a biased liberal political stooge, so this post goes out to them.

The Economist is considered pretty objective (this week's cover: "Iraq Starts to Fix Itself"), if not a bit rightish on economic issues. About a dozen times, when asked or when discussing an issue, I emphasized that there is often some ambiguity about the aggregate impacts of specific policies, and even if a policy is more efficient than the competing proposals it is not always the one that stands the test of democratic election cycles. So here are a few snips from an article on the competing proposals, as summarized by the Economist:

On June 9th Barack Obama began a two-week tour to battlefield states, his first as his party's anointed leader, with a big speech on economic policy. He accused John McCain of favouring George Bush-like profligacy by proposing tax cuts he can't pay for. Mr McCain shot back with a speech of his own next day, saying that Mr Obama will raise taxes and unwisely renegotiate trade agreements. Strangely, both of them may have a point.

So, as I've said, neither party has a monopoly on bad economics. The article concludes:

Mr McCain hopes he can avoid crushing deficits with mysterious spending cuts, while Mr Obama relies on varied measures his campaign claims would somehow raise almost a trillion dollars over a decade.
The figures are debatable, but there is one clear difference. Mr Obama's plan would redistribute cash to lower- and middle-income Americans, while Mr McCain's would skew benefits towards the wealthy. That's something voters may find it easy to take a view on.

In other words, the question is much more one of distrubution of economic benefits, not which are going to be greater on the balance of things.

Conscious Rap

I found this a pretty interesting audio from The Economist's "Democracy in America:"



I'm not sure what my take on it is, but it is funny to hear the British host use "gangsta" jargon in parts.

Pension and Protection

This Economist blog got me thinking about the differences between the US workforce in my generation vis a vis the last one.

So, I'm wondering how the change in how we save and contribute to our employer-sponsored tax-sheltered (kinda) retirement annuities affect the politics of trade protection. Maybe it's a stretch but a large part of the argument against trade agreements are thinking of the fifty something worker, many of whom have "defined-benefit" retirements - pensions - vest only after 5 or more years and are based on the tenure of service in the company (often times with 5- or 10-year "milestones" at which the monthly benefit takes a discrete jump). A fair case could be made that these are the folks most affected by the structural shifts brought by trade.

The generation that has followed them, saves for retirment in "defined-contribution" plans. These plans vest sooner, and usually do not require service with a single company over an entire lifetime to make a good retirment. The former plans are designed for liftime service to a company - the latter are designed for a mobile and flexible labor market. Workers who have pensions have a strong incentive to invest heavily in firm- and industry- specific knowlege and skills. These plans encourage worker loyalty, but also create the types of interest groups that would oppose changes to the economy that would render their industry skills less valueable.

I don't mean to say this in a way that "blames" workers because I feel for what their dilemma. They essentially entered into an implicit contract with their firm, industry, and town to keep their job viable while they work towards a pension that they've been promised. It may be stretch, but we've lived to see a decline in the political clout of unions as union membership has declined. As workers become more self-reliant for retirement, maybe there will be less lobbying to put up stumbling blocks to trade.

Consumption Smoothing and "Irrational" Savings

I'm just going to post a link to this, dedicate it to a certain special someone I know (who happens to feel strongly and differently about personal finance) and say nothing more than, "I'm not the only one out there who thinks this way."