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Palin vs. Kennedy December 23, 2008

Posted by A Texan In The Professional World in Uncategorized.
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Ok…. so I try not to get too caught up in politics on this blog… I’m trying to become more disciplined about writing about my life in the professional world.  However, something hit me earlier today which I had to share:

What does Caroline Kennedy have over Sarah Palin?

It’s a great question.  After all, what qualifies, or has prepared, Kennedy to be a senator?  She’s been a good fundraiser… and she cares about education.  Whoop-de-doo.  YUP.  I think Sarah Palin was 10 times more qualified to be VP than Kennedy is to be senator.

In other news… the economy really is dragging.  I was reading the Kiplinger Letter today and finished it feeling entirely depressed.  Then I had a fellow broker come in and make an entirely way too low of an offer on one of my listings.  Nada.

And what about next year… well… one word comes to mind: lean.  Yep, I graduated from college to enter the work force in one of the worst times possible.  Well, at least it is from a hiring/pay standpoint.  Since I have a job, I can work safely in the knowledge that I’ll be able to eat and function.  However, the social lifestyle is nothing compared to what one expects to have when entering the professional work force.

A reminder to my readers… I’m on a largely commission focused job.  So… no deal flow equals low pay.  However, one must remember to be patient and to look for the opportunity in ever situation.  This one is that I get to prepare myself to be roaring when the market turns around.  After all… if you can make it in the tough times… you’ll do great in the easy times.

Goofeth and Gallant: Stimulus Edition December 23, 2008

Posted by A Texan In Grad School in Economic Theories.
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Check out Mankiw’s post, ask yourself which sounds most like the WPA.

Who throws a shoe? Honestly! You fight like a woman! December 16, 2008

Posted by A Texan In Grad School in Uncategorized.
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“But ask yourself this question: How would al-Zaidi have fared if he’d hurled a pair of shoes at Saddam?”

Megan McArdle Takes the UAW Down a Notch December 14, 2008

Posted by A Texan In Grad School in Unions.
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McArdle explains the different cost structures of banks and car companies.  Before this, she has quite a good response about the failure of the automotive bailout:

I’m hearing the truly bizarre argument that the UAW didn’t scuttle the negotiations; it was the Republicans unreasonable insistence that they cut their wages to levels comparable to that of their competition.  After all, the UAW was perfectly willing to negotiate their compensation package–in 2011, when their current contract expires.

And I think that’s perfectly reasonable.  We’ll just wait until 2011 to give them the money, then.

Real Clear Markets has a good chart to keep in mind during these discussions.

Savings Rate December 13, 2008

Posted by A Texan In The Professional World in Personal Development.
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No…. I’m not going to talk about how low our national savings rate is… although I believe it’s finally rising again!

As the end of the fiscal year begins to start taking up more room in the back of my mind I’m reminded about my obligations and those of every other new professional in the work force.   A close office buddy of mine told me at the end of last quarter about when he first entered the work force.  He and I are both independent contractors and thus “technically” self employed.  This, of course, has tax ramifications.  We have to pay our quarterly estimate every three months. There’s a plus side to this of course!  It’s very helpful with preventing one from spending money that one will end up owing Uncle Sam.

Well, my buddy got in without realizing the special tax requirements of a self employed person.  To make a long story short, he ended up paying ridiculous tax penalties last year!  We’re talking about money which is very valuable to a kid right out of college.

So, how does someone new to all of this stay out of the hot water?  Well, here’s how I do it:

1) Learn (ask questions!) about all of your financial obligations!  All of them.  Ask coworkers for advice and forewarning on future expenses even!

2) Budget your stable monthly intake, and don’t make assumptions that you’ll receive any additional commission payments.

3) Don’t spend beyond what you’ve budgeted for a certain category in a given month.

4) Pay the credit card bill EVERY Friday.  This helps keep one very aware of how much is going out (and helps you keep a running tally for the month).

5) Anything beyond my regular monthly allotment, goes into savings.  Savings may only be used (in my case) for “one time” purchases such as needed clothes/shoes, fantasy sports payments, and emergency payments (i.e. car repairs).  Even Christmas gifts come out of the regular monthly budget!  It’s up to you to decide what is worth tapping the “savings account” for…  but I strongly encourage you to lay the ground rules down in the beginning.

So, what has this resulted in?  Well, it teaches one how to say “no” to both oneself and to other people.   People who often spend more than you might.  Discipline is a good thing and it will serve everyone very well for down the road.  Also, it will help you build up your financial independence…. which is always a good thing.

I Vote Optimism on Interest Rates December 13, 2008

Posted by A Texan In Grad School in Economic Statistics, Economic Theories.
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It’s finals fortnight for me so I won’t be posting as much.  But, I highly suggesting reading everything over at www.cato-unbound.org.  This month’s topic is What Happened? Anatomies of the Financial Crisis.  The latest entry by U of C Econ Prof Casey B. Mulligan explains that low short-term interest rates had an effect on housing prices, but alone don’t come anywhere close to explaining the boom.  He claims that optimism of some sort is the only way to explain it.   Out of the options he gives, I think the main factor was future interest rate optimism.  But I also think he is underestimating the role of low short-term interest rates.

The people fueling the housing boom weren’t people who generally understand the implications of future interest rates.  After all, they took out adjustable rate mortgages, which is basically a short position on long-term interest rates (i.e. they imply a belief that long-term interest rates will come down and the home-owner won’t be hit with higher monthly payments).

But the part I believe Dr. Mulligan leaves out is that the low short-term interest rates allowed banks and other lending industries to vastly increase the amount of capital they could lend out.  With more capital to lend, they expanded into riskier mortgages.

I’m looking forward to the rest of the discussion at Cato Unbound, I’m worried though that December will end right when the discussion is on the verge of a real break-through.

Charith Cutestory is Putting in More Overtime December 10, 2008

Posted by A Texan In Grad School in Uncategorized.
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Like a good Arrested Development fan I have been thinking about this ever since piracy started to make headlines.  And now the WSJ offers a story on maritime lawyers and the current oceanic issues.  Very interesting to me was the fact that in some countries it is illegal to just flat out pay the ransom.

Stiglitz on the Current Crisis December 10, 2008

Posted by A Texan In Grad School in Economic Theories, Friedman.
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Nobel-laureate Joseph Stiglitz gives his account of the financial crisis in Vanity Fair.  He has some interesting ideas, but I think most of them don’t hold up.  His main claim is that markets, especially financial ones, require a lot of regulation.  Stiglitz singles out Greenspan quite a bit for the bubble.  No doubt, the low interest rates that Greenspan presided over were a huge factor in the housing bubble.  As Lawrence White points out at Cato Unbound,

Credit-fueled demand both pushed up the sale prices of existing houses and encouraged the construction of new housing on undeveloped land. Because real estate is an especially long-lived asset, its market value is especially boosted by low interest rates.

But Stiglitz doesn’t see this as an argument for Friedman Monetarism, rather, as is typical of modern liberal thought, Stiglitz believes that if only the right person was in charge.  Stiglitz leaves out any idea that Public Choice Theory may explain that politics doesn’t really do a better job than markets – even market failures.

It’s like asking: Who do you want to send to jail first? December 10, 2008

Posted by A Texan In Grad School in Uncategorized.
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This was how one of my professors in Chicago described Illinois gubernatorial elections.  And, truth be told, it applies to almost all Illinois politics.  This morning Illinois governor Ron Blagojevich was arrested.  I do wonder about this part of the article:

When asked by reporters whether he had any contact with Blagojevich about the Senate seat, Obama said he had no contact with the governor or his office.

“I was not aware of what was happening,” he added.

Really?  Obama was not talking AT ALL with Blagojevich about his successor?  Onward and upward!  Don’t look back at your previous jobs?  I have a feeling/audaciously hope that Obama was talking to Blagojevich, just that he wasn’t talking about any bribes.

Buy Local or Don’t Buy At All December 10, 2008

Posted by A Texan In Grad School in Economic Theories, Environmentalism.
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Megan McArdle calls it a sign of the times that scrip, local community-based currency, is starting to make a come back.  She compares this to the instances of scrip during the Great Depression.  She asks if this is a negative sign regarding Bernanke’s helm at the Fed.

Personally, I think this is more demagogueing with regard to the current recession.  Every political movement is trying to capitalize on the strife.  Environmental groups are pushing a “Green” New Deal.  Now, the buy local movement is trying to grow also.  Check out this great episode of Econtalk about buying local with Russ Roberts and Don Boudreaux.