Don't Quit Your Day Job…

Now we’re betting with house money. In the second quarter of 2009, Americans’ net worth increased by $2 trillion dollars. Yes; the run-up in the stock market was felt by a large number of you – your stocks increased by 22% and your mutual funds by a solid 15% in the quarter. What’s not to like?

Carnivals and posts for your required reading list.

Think this will become a fad? Commerce, a restaurant in New York’s Greenwich Village, no longer accepts cash. Think about that. They accept credit and debit cards, but not paper cash or change. Check it out in today’s Wall Street Journal.

From the Wall Street Journal yesterday: the bear market has taken a swipe at college savings rates. In fact, it’s taken more than a swipe; 47% of parents are savings less than before or nothing towards the education of their children. Ouch.

In my previous article I explained why, theoretically, tax rate decreases may in turn increase taxes collected. This article leaves out a number of other interesting observations. First, lower tax rates combined with reinvestment and research and development can lead to increases in the theoretical maximum GDP in an economy. Additionally, I obviously left out any evidence which supports the hypothesis that “Increasing Tax Rates Does Not Increase Revenue”. This article will clear up those oversights.

When the United States, and even the individual states find themselves in turbulent financial times, a commonly repeated theme they tend to repeat is that taxes need to be increased in order to shore up revenues. When states and countries find themselves with budget gaps, instead of trimming programs (so called ‘belt-tightening’ in the private population) they tend to attempt to keep the same level of programs by increasing the tax rate. Is this practice sustainable?

I will write this article in two pieces. First, in this article, I will cover the theoretical aspects of why this is not automatically true. In the next article I will give you some empirical data which you can examine and either agree or disagree with me. Let’s begin.

A collection of awesome articles and carnival hosts for the week.

Feel like the United States isn’t saving enough money? Well, so does the current administration. With personal savings rates hovering at a pitiful 4.2% for July, (compared to almost 50% for China) it seems like a reasonable proposal. So, what will some of the new programs to increase savings look like?

Feeling lucky? The Wall Street Journal recently ran an article suggesting investors take a look at health care stocks. The article makes the argument that an aging population and potential congressional mandates for people to buy health insurance make the health care sector a decent place to look for some growth in the medium to longer term. Politically, it’s impossible to read the tea leaves. However, could the story be on to something?

Consider this my public service announcement: your opportunity to pocket $8,000 if you buy a new home as a ‘first time homebuyer’ is almost over (12/1/2009). The stimulus (which comes on behalf of taxpayers not buying their first homes) has spurred investments in entry level homes. Silicon Valley’s prices haven’t come down enough, (as viewed by the rent vs. buy ratio) so I’ll be sitting this one out.