Don't Quit Your Day Job…

Last week, we gave you an interesting chart on political donations from Wall Street firms by election cycle, dating back to 2004. This week, we’ll follow it up with an equally interesting chart on the amount of investments in Wall Street firms (again, ‘Securities & Investments‘ from Open Secrets) by Democrats and Republicans. Read on to find how much the two parties invest in Wall Street!

We haven’t been following the ‘Occupy Wall Street‘ (and ‘Occupy Other Cities‘) stories too closely, but they do seem to be picking up steam in the main stream media. When we heard that Unions, a core Democratic constituency, were taking up the cause of the protesters it piqued our interest. We had to ask: what party stands to benefit most from the “Occupy Wall Street” Movement? Following is a chart of political donations from Wall Street (labeled ‘Securities & Investment’ companies in the data at Open Secrets). Read on!

Australia, Austria, Canada, Denmark, Finland, France, Germany, Guernsey, Hong Kong, Isle of Man, Liechtenstein, Luxembourg, Netherlands, New Zealand, Norway, Singapore, Sweden, Switzerland, and the United Kingdom.  What do all of these sovereign states have in common?  As of yesterday, Standard and Poor’s rates their debt as a lower default risk than debt from the United States.

Anytime there is a ‘Grand Bargain’ in American politics pundits like to rush to one particular question: Who won and who lost?  Although many editorials have approached the question from the political side, little attention has been paid to the macro vision.  After the market rout yesterday, maybe we have our answer?  The loser of the debt limit showdown was us.

Great attention in major media sources has been called to the recent dip in oil prices (CL1Q) which peaked at over $114 per 159 liters of light crude. It is hovering around $94 now, which is a decrease of over 16% from the peak. Traditional thinking claims that gas prices typically peak in the summer months due to more gas being used during holiday travel times such as the 4th of July and Memorial Day (and Earth Day: irony?). One of the recent developments is a claim by OPEC companies that the International Energy Association (IEA) released emergency oil stocks to alter the oil prices. In response, some observers believe that Saudi Arabia will not follow through on their promise to increase oil production by as much as originally claimed (some reading here and here). The confusion as to how each individual country will respond to this creates very different incentives for each of the countries in OPEC.

A recent article reviewed the new debt agreement as follows: “It’s like a 400-pound man boasting that he plans to drop 20 pounds over a decade, while his doctors warn about the risks of losing weight so fast.” I found that analogy grossly misinformed. It’s much more like a 400-pound man who is gaining 50 [...]

“In the past, raising the debt ceiling was routine. Since the 1950s, Congress has always passed it, and every President has signed it. President Reagan did it 18 times. George W. Bush did it 7 times.” – President Barack Obama, July 26, 2011.

In the United States, Congress controls the purse strings.  Congress sets the amount of spending that the United States will embark upon, setting the maximum amount with a number called the Debt Ceiling.  The Debt Ceiling is a relatively modern concept – before there was an aggregate debt limit, Congress would authorize borrowing one bill at a time.  In 1939 and 1941 the Public Debt Acts changed us to the system we have today – where maximum borrowing is authorized in the debt ceiling (and consolidated under the Treasury Department) while bills which spend money are voted on separately.

Sorry to miss the news cycle (I bought a house, as I alluded I might in my slightly pessimistic earlier real estate postings), but I wanted to share the perfect example of the incentives and disincentives of tax laws.  As predicted a while ago, California finally passed a law which stated that any out of state businesses which had affiliates in California would have to collect taxes when consumers in California purchased goods from the mother company.  A few other states have already passed similar laws, nicknamed ‘Amazon Taxes’.  Overstock.com and Amazon.com (disclosure: this site was technically an Amazon affiliate) immediately announced plans to cut off California affiliates.

Excuse me for posting consecutive articles on the same theme, but I thought that this would be a very enjoyable topic for many of our readers. As of right now, the State Controller of California, John Chiang, is refusing to pay California Lawmakers a salary until they can agree on a balanced budget for the most populous state.  Of course, this has attracted the attention of many people (including yours truly) as an interesting example of voter anger – the law that allows Chiang to withhold pay until a balanced budget is submitted was passed just last year by California voters.

In this article, Cameron Daniels explains that the small decrease in poverty levels from 13.3% to 12.8% from 1967 to 2003 (36 years!) is not so bad as it initially seems as Simpson’s Paradox rears his ugly head.