| Current Net Worth | ||||
| Assets | Feb-13 | Mar-13 | Change | % change |
| Savings Account 1 | $4,958.78 | $3,539.13 | ($1,419.65) | -28.63 |
| Savings Account 2 | $1,570.66 | $1,525.66 | ($45.00) | -2.87 |
| Savings Account 3 | $14,630.00 | $17,055.99 | $2,425.99 | 16.58 |
| Investment Linked Fund | $8,111.76 | $8,550.42 | $438.66 | 5.41 |
| Schroders Commodity Fund | $10,074.46 | $9,992.27 | ($82.19) | -0.82 |
| Stock Holdings | $9,910.00 | $10,140.00 | $230.00 | 2.32 |
| Phillip Money Market Fund | $15,008.43 | $15,013.63 | $5.20 | 0.03 |
| Physical cash | $1,000.00 | $1,000.00 | $0.00 | 0.00 |
| Market Value Of BTO Flat (to be built in 2016/2017) | $750,000.00 | $750,000.00 | $0.00 | |
| Total Assets | $815,264.09 | $816,817.10 | $1,553.01 | 0.19 |
| | | | | |
| Liabilities | | | | |
| Home Loan | $617,500 | $617,500 | $0.00 | 0.00 |
| | | | | |
| Net Worth (including flat to be built in 2016/2017) | $197,764.09 | $199,317.10 | $1,553.01 | 0.79 |
| Investible Net Worth | $65,264.09 | $66,817.10 | $1,553.01 | 2.38 |
Sunday 31 March 2013
Net Worth Update (March 2013)
Saturday 30 March 2013
The Next Step in Europe's Implosion
Rome wasn't built in a day and the Eurozone will not collapse in a day. But, the Eurozone will collapse. It's just a matter of time.
Consider the stronger countries in the Eurozone -- Germany and France. Both economies are now contracting. Meanwhile their debt levels, acknowledged and unacknowledged, have exploded to new levels. Both countries are now in the situation that faced Greece four years ago. So, how is their future going to be any different that what is now taking place in Cyprus, Greece, Spain and Italy?
The ECB ministers are a group of political hacks who know little or nothing about economics (something they share with the Obama advising team). Their idea of improving the economic plight of the Eurozone is to increase the level of debt, continue to implicitly guarantee profligate spending and bureaucratic regulations, and plunge the Eurozone into the economic dark ages.
GDP is falling, debt is rising, unemployment is rising, and recriminations are flying. The Eurozone is coming apart at the seams. Civil society has broken down in Greece and is in the process of breaking down in parts of Spain and Italy. Cyprus is entering a dark period. Nothing good lies ahead for the Eurozone.
So, what happens next?
Deposits will begin to seep out of the Eurozone -- most notably from Spanish and Italian banks -- but from other Eurozone countries as well. After all, the ECB bureaucracy has changed the rules. Deposits are now legitimate targets for the bureaucrats. It wasn't the ECB that decided not to confiscate insured depositors in Cyprus, it was the Cypriot parliament who refused to ratify the ECB and IMF policy of confiscating insured depositors. The confiscation of government insured deposits is now a legitimate policy weapon in the Eurozone, overturning a long past history of FDIC-like guarantees in the Eurozone. Nothing is sacred to the bureaucrats.
The genie cannot be put back in the bottle. The European banking sector cannot recover from this bureaucratic policy blunder. Deposits in the Eurozone can never be considered secure, even in circumstances where the bank that houses them is secure. The government can confiscate deposits wherever they may be. This is now a legitimate Eurozone policy weapon. It is also an IMF (read USA) policy tool as well. Even US FDIC-guaranteed deposits may be fair game to the bureaucrats when US debt woes become a front page crisis. An eventuality that must come in time.
Consider the stronger countries in the Eurozone -- Germany and France. Both economies are now contracting. Meanwhile their debt levels, acknowledged and unacknowledged, have exploded to new levels. Both countries are now in the situation that faced Greece four years ago. So, how is their future going to be any different that what is now taking place in Cyprus, Greece, Spain and Italy?
The ECB ministers are a group of political hacks who know little or nothing about economics (something they share with the Obama advising team). Their idea of improving the economic plight of the Eurozone is to increase the level of debt, continue to implicitly guarantee profligate spending and bureaucratic regulations, and plunge the Eurozone into the economic dark ages.
GDP is falling, debt is rising, unemployment is rising, and recriminations are flying. The Eurozone is coming apart at the seams. Civil society has broken down in Greece and is in the process of breaking down in parts of Spain and Italy. Cyprus is entering a dark period. Nothing good lies ahead for the Eurozone.
So, what happens next?
Deposits will begin to seep out of the Eurozone -- most notably from Spanish and Italian banks -- but from other Eurozone countries as well. After all, the ECB bureaucracy has changed the rules. Deposits are now legitimate targets for the bureaucrats. It wasn't the ECB that decided not to confiscate insured depositors in Cyprus, it was the Cypriot parliament who refused to ratify the ECB and IMF policy of confiscating insured depositors. The confiscation of government insured deposits is now a legitimate policy weapon in the Eurozone, overturning a long past history of FDIC-like guarantees in the Eurozone. Nothing is sacred to the bureaucrats.
The genie cannot be put back in the bottle. The European banking sector cannot recover from this bureaucratic policy blunder. Deposits in the Eurozone can never be considered secure, even in circumstances where the bank that houses them is secure. The government can confiscate deposits wherever they may be. This is now a legitimate Eurozone policy weapon. It is also an IMF (read USA) policy tool as well. Even US FDIC-guaranteed deposits may be fair game to the bureaucrats when US debt woes become a front page crisis. An eventuality that must come in time.
Friday 29 March 2013
Are Personal Bankers Qualified Enough?
Personal Bankers / Personal Financial Consultants / Personal Wealth Managers are the sales people in a bank branch who promote all kinds of banking products which include unit trusts, insurance, loans, structured deposits, etc. Walk into any bank branch and you will see young and driven personal bankers dressed in corporate wear soliciting walk-in customers or sitting in their cubicles servicing the mass market customers.
Since personal bankers are on the front line of a bank recommending financial products to potentially ignorant consumers, we naturally assume they have adequate financial knowledge or at least a degree in finance or other related majors. However, a simple search on JobStreet will reveal that the minimum qualification for personal bankers is a degree or diploma in any discipline. In addition, candidates are required to have a minimum 1 year of sales experience.
Personal bankers are required to pass the CMFAS exams (all MCQs) and go through some form of sales training for about a month before they are eligible to start selling banking products. I personally have taken the CMFAS HI, M5, M8 & M9 exams and I can say that the exams alone are insufficient to equip a person with sufficient financial knowledge. The bulk of the CFMAS syllabus is on rules and regulations rather than finance topics.
From what my personal banker friend told me, there are a number of personal bankers who have non-finance related degrees such as geography, engineering, etc. With insufficient financial knowledge, personal bankers might not be able to fully comprehend and explain the inherent risks of certain products to customers. In a desperate attempt to hit sales target, some personal bankers start using past performance to paint a bright outlook on a fund's future performance or comparing interest rates on savings deposits with potential returns of a bond/equity fund without emphasizing on the risks involved.
The Lehman Brothers saga in 2008 exemplified this problem. Investigation findings on the sale and marketing on structured notes linked to Lehman Brothers released by MAS stated that there were insufficient steps taken by some financial institutions to ensure that all their financial advisory representatives were properly trained before marketing and selling the product. Also, from the many descriptions given by investors with regards to the information the received from sales representatives, it is clear that there were misrepresentation of this product.
Banks should have more stringent requirements on hiring personal bankers and have a more detailed and extensive training program. The sales target of personal bankers puts them under such high pressure that closing the deal overrides everything else. It is well known that retail banks have a high turnover rate for front line staff as many of them are unable to hit ridiculous sales target. For example, bankers of local bank XXX are given monthly sales targets which are denominated by 'revenue points'. Each dollar of sales charge or revenue earned equates to 1 revenue point. Monthly sales target could be to achieve 30,000 revenue points or more. This means that a personal banker will have to sell at least $20,000 worth of unit trusts everyday!
So are personal bankers considered finance professionals? Or are they just typical sales people? Many of my friends in university have applied to retail banking programs such as UOB Personal Banking Associate Programme or Standard Chartered Consumer Banking Fast Track Programme. What they might not understand is that it might not be as prestigious as it sounds and the chances of moving from retail banking to private banking are slim.
Since personal bankers are on the front line of a bank recommending financial products to potentially ignorant consumers, we naturally assume they have adequate financial knowledge or at least a degree in finance or other related majors. However, a simple search on JobStreet will reveal that the minimum qualification for personal bankers is a degree or diploma in any discipline. In addition, candidates are required to have a minimum 1 year of sales experience.
Personal bankers are required to pass the CMFAS exams (all MCQs) and go through some form of sales training for about a month before they are eligible to start selling banking products. I personally have taken the CMFAS HI, M5, M8 & M9 exams and I can say that the exams alone are insufficient to equip a person with sufficient financial knowledge. The bulk of the CFMAS syllabus is on rules and regulations rather than finance topics.
From what my personal banker friend told me, there are a number of personal bankers who have non-finance related degrees such as geography, engineering, etc. With insufficient financial knowledge, personal bankers might not be able to fully comprehend and explain the inherent risks of certain products to customers. In a desperate attempt to hit sales target, some personal bankers start using past performance to paint a bright outlook on a fund's future performance or comparing interest rates on savings deposits with potential returns of a bond/equity fund without emphasizing on the risks involved.
The Lehman Brothers saga in 2008 exemplified this problem. Investigation findings on the sale and marketing on structured notes linked to Lehman Brothers released by MAS stated that there were insufficient steps taken by some financial institutions to ensure that all their financial advisory representatives were properly trained before marketing and selling the product. Also, from the many descriptions given by investors with regards to the information the received from sales representatives, it is clear that there were misrepresentation of this product.
Banks should have more stringent requirements on hiring personal bankers and have a more detailed and extensive training program. The sales target of personal bankers puts them under such high pressure that closing the deal overrides everything else. It is well known that retail banks have a high turnover rate for front line staff as many of them are unable to hit ridiculous sales target. For example, bankers of local bank XXX are given monthly sales targets which are denominated by 'revenue points'. Each dollar of sales charge or revenue earned equates to 1 revenue point. Monthly sales target could be to achieve 30,000 revenue points or more. This means that a personal banker will have to sell at least $20,000 worth of unit trusts everyday!
So are personal bankers considered finance professionals? Or are they just typical sales people? Many of my friends in university have applied to retail banking programs such as UOB Personal Banking Associate Programme or Standard Chartered Consumer Banking Fast Track Programme. What they might not understand is that it might not be as prestigious as it sounds and the chances of moving from retail banking to private banking are slim.
Saturday 23 March 2013
Little Cyprus
So how big is Cyprus? 800,000 people with a GDP of about 18 billion Euros -- less than 10 percent of the size and wealth of the State of Virginia. So, how can Cyprus rock the Eurozone?
Easy. Let politics substitute for economics and anything can happen.
The grand Euro scheme of bailing out country after country is rapidly running up against reality. The sacrifices that the bailers require are politically unacceptable to the bailees.
Austerity traded for more debt -- this is the bailout scheme devised by politicians. This scheme is an effort to change reality and it won't work.
The reality is that Cyprus banking is history. Who, in his right mind, would willingly leave their money in a Cypriot bank after the events of the past week? It doesn't really matter what solution is imposed, the Cypriot financial community will not recover.
Meanwhile, institutions with deposits in Italian and Spanish banks now face a new reality, hitherto not contemplated. The European Central Bank and the IMF have this week endorsed a new policy tool for dealing with debtor nations -- confiscation of bank deposits. Who would have thought? But now the thinking begins. Should I or shouldn't I move my cash deposits from Italian and Spanish banks for the safer confines of London or New York or Geneva or Singapore? No doubt such thoughts are now extant in the minds of all institutional investors across the globe.
When economics no longer guides economies and the politicians take over, this is the outcome -- collapsing GDP, rising debt levels, and growing political anarchy. We are just at the early stages of the coming demise of Europe.
Easy. Let politics substitute for economics and anything can happen.
The grand Euro scheme of bailing out country after country is rapidly running up against reality. The sacrifices that the bailers require are politically unacceptable to the bailees.
Austerity traded for more debt -- this is the bailout scheme devised by politicians. This scheme is an effort to change reality and it won't work.
The reality is that Cyprus banking is history. Who, in his right mind, would willingly leave their money in a Cypriot bank after the events of the past week? It doesn't really matter what solution is imposed, the Cypriot financial community will not recover.
Meanwhile, institutions with deposits in Italian and Spanish banks now face a new reality, hitherto not contemplated. The European Central Bank and the IMF have this week endorsed a new policy tool for dealing with debtor nations -- confiscation of bank deposits. Who would have thought? But now the thinking begins. Should I or shouldn't I move my cash deposits from Italian and Spanish banks for the safer confines of London or New York or Geneva or Singapore? No doubt such thoughts are now extant in the minds of all institutional investors across the globe.
When economics no longer guides economies and the politicians take over, this is the outcome -- collapsing GDP, rising debt levels, and growing political anarchy. We are just at the early stages of the coming demise of Europe.
Friday 15 March 2013
5 Things to Know before 13th General Election
Are you bored of the recent elections hoo-haa ? It's all coming from either party from different side, some NGOs, and some political related persons. How about foreigners? What are they thinking about our Malaysia General Election? Here you go...
In this note, Morgan Stanley outline the 5 things they think investors need to know regarding Malaysia elections:
- What's upcoming? Setting the context
The 13th General Elections are due to be held very soon in Malayia. Parliament needs to be dissolved no later than April 2013, and elections need to be held no later than 60 days from date of its dissolution. - Which are the key states to monitor?
They are Kedah, Penang, Selangor, Perak, Johor, Sabah and Sarawak. - Election scenarios and macro implications
BN Parliamentary seat share of > 63% would be seen as a positive surprise for investors. BN Parliamentary seat share of < mid 50% would be seen as a negative risk event by investors and could have implications for leadership and government stability. The political landscape will determine momentum of reform agenda. - Policy comparison: Pakatan Rakyat (PR) vs Barisan Nasional (BN)
The broad economic thrust of PR policy is fairly similar to that of BN. However, PR campaign proposals have a more leftist slant and also focus on policy devolvement to state governments, more geographically balanced economic development, and strengthening of decentralization in Sabah and Sarawak. - What to expect in UMNO Party elections?UMNO elections have to be held by Jun-2013. The president of UNMO is historically the prime minister, and hence, this will determine whether there is leadership stability. Forthcoming elections will take place amid constitutional amendments which makes the process more democratic.
* NO abusive comments were allowed. Thanks.
Source: Morgan Stanley research report dated 18th Feb 2013
Wednesday 13 March 2013
OSK-UOB Dana KidSave
One of the most desired by an investor, is to achieve diversification in his or her portfolio and what better way to do so then by investing in a balanced fund. A balance in an investment portfolio is also fundamental to appease an investor in times of uncertainties and volatility. Such a balance can appeal to the investor of any age regardless of his or her objectives. Thus, with market uncertainties continuing to prevail over the Eurozone debt crisis and its contagion effect on the global economy, investors remain cautious with their investment choice, seeking to invest in low to moderate risk investments such as a balanced fund.
Hence, OSK-UOB offer you a Shariah-based fund with its balanced asset allocation strategy in equities and investments comprising sukuk, islamic money market instruments, deposits and collective investment schemes. The investment in equities will enjoy potential capital appreciation upswings while any downswings will be cushioned by its investments in the latter which are defensive in nature.
When making investments, the manager may invest up to 30% of NAV in foreign markets. The fund will invest in Shariah-compliant securities/instruments listed on or traded in Asia Pacific ex Japan markets, including Shariah-compliant securities / instruments of companies that are listed on or traded in non-Asia Pacific ex Japan markets (such as NYSE and LSE).
How about Sukuk ?
At lease BBB rating sukuk issued by Malaysian incorporated companies at the point of purchase by RAM Rating Services Bhd or equivalent rating agencies. Foreign sukuk issued by corporations and financial institutions must carry a rating of BB or higher by S&P or equivalent, whereas sukuk issued by supra-nationals, governments and their agencies need not be rated.
Source: OSK-UOB IM
How Does Different Tenures of SIBOR and SOR Affect Borrowers?
The following is a guest post by Property Buyer
As Singapore Singapore Singapore
Explaining the framework of SIBOR or Singapore Inter-bank Offered Rate
When banks or financial institutions lend to each other, they usually refer to an interest rate to base their inter-borrowings. They use SIBOR as their inter-bank rate or inter-borrowing rate. The rate is actually set by the Association of Banks in Singapore Singapore
In Singapore
Understanding the SOR or Singapore Swap Offer Rate
The expected forward exchange rate of the US and Singapore US to Singapore Singapore
SIBOR and SOR pegged home loans
This refers to variable or market pegged floating loan packages offered by most banks using the SIBOR or SOR rates. The interest rate for these loans is the spread + SIBOR or SOR.
How do you define bank spread?
The profit margin that banks or other financing institutions use to gain income on top of the SIBOR or the SOR rate is called the spread. For example the SIBOR rate is 1%, then the bank would like to gain 2%. The 2% is the bank spread. This means that the client would get the SIBOR + spread = 1% + 2% = 3% rate. A few years after the start of the loan, the bank usually changes the spread. The revision usually reflects an increasing bank spread as shown below
| Period | Interest Rate (p.a.) |
| First Year | 0.75% + 1-Month SIBOR |
| Second Year | 0.75% + 1-Month SIBOR |
| Third Year | 0.75% + 1-Month SIBOR |
| Fourth Year | 1.00% + 1-Month SIBOR |
| Thereafter | 1.25% + 1-Month SIBOR |
What are the benefits of using either a SIBOR or a SOR rate?
We would like to correct the misconception of most people. You must understand that although the two correlate with each other, the SOR tends to fluctuate more and can be above or below the SIBOR rate. Please take a look at Figure 1, 2, and 3 below for clearer explanation
Figure 1: 1-Month SIBOR/SOR for Jan 2012-Dec 2012
Figure 2: 3-Month SIBOR/SOR for Jan 2012-Dec 2012
Source: www.iCompareLoan.com
Figure 3: 3-Month SIBOR/SOR for Dec 2006-Aug 2012
Source: www.iCompareLoan.com
Here is a piece of advice for those who are planning to apply for a housing loan: Always ask for the bank spread and evaluate the interest rate throughout the duration of the loan. Is the spread reasonable enough for you to take?
Differentiating the features of SIBOR and SOR
For both SIBOR and SOR, their tenures are usually inversely related to their rates. For example, a 1-month SOR will be lower than a 12-month SOR. This is because long term opportunities are more risky and normally incur higher opportunity cost.
A shorter tenure SIBOR is more volatile than a longer tenure SIBOR.
SOR fluctuates more than the SIBOR.
SIBOR tends to be preferred by risk-averse borrowers.
Recently banks started rolling out 1-month SIBOR packages which impact their administrative cost.
From Figure 4, we can see that the 1-month SIBOR is lower than the 3-month SIBOR. Take a look at the historical trend for the last 20 years in Figure 4.
Figure 4: 1-Month and 3-Month SIBOR for Jan 1989-Dec 2012
Source: www.iCompareLoan.com
When is the right time to choose a 1 month or a 12 month SIBOR?
You must understand that choosing a shorter tenure SIBOR also means greater instability. The rates are being changed or modified in shorter intervals. This means that if you take the 1-month SIBOR rate, depending on the financing institution, you can get a change of rate in every 1 or 3 months. However, if you choose the 12-month SIBOR rate, you have the confidence that you will pay the same SIBOR rate for the next 12 months. You may find it beneficial to seek the advice of an expert before you decide which housing loan package to take. Free advice and loan package consultation may be obtained from http://www.iCompareLoan.com/or simply fill up an enquiry form at http://www.iCompareLoan.com/contact
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Tuesday 12 March 2013
New Fund: Hwang AIIMAN Select Income
After the successful performance of AIIMAN series and the superb proven track record of Hwang Select Income fund, it's natural for Hwang to launch this new fund by riding on the story of these.
What is the Hwang AIIMAN Select Income fund?
This is a Shariah-compliant mixed asset (conservative) income unit trust fund that seeks to provide investors with regular income stream through Shariah-compliant investments. It also serves as an alternative investment for investors looking to diversify their portfolio into the fast growing Sukuk market and attractive Shariah-compliant equity market.
- Potentially Stable Returns and Regular Income by investing in prudently selected Sukuk and quality dividend yielding equities.
- Peace of Mind: Managed at Low Volatility rates. It aims to deliver positive returns at low volatility rates through various market cycles.
- A Diversified and Shariah-compliant Investment. Potential for enhanced return due to the opportunity to tap into new attractive Shariah-compliant investment in view of growing demand for Islamic securities, growth fueled by ample liquidity in the Gulf Corporation Council (GCC) and Asia, coupled with the increasing sovereign Sukuk issuers.
Source: HwangIM
New Fund: AmAsia Pacific Leisure Dividend
Do you like to go on a holiday spree in Asia Pacific region? If yes, then this fund may suit your appetite. On top of that, you can expect some dividends from this new fund launched by AmMutual. Please read on.
The fund aims to provide regular income and to a lesser extent capital appreciation over the medium to long term by investing in equities and equity-related securities of leisure industry across Asia Pacific region.
To achieve its objective, the fund seeks will be investing 70%-98% in a diversified portfolio of equities related to leisure industry. Who were they? They may include issuers engaged in the design, production and distribution of products and services related to leisure industry. These companies operate in the following sectors within the leisure industry such as hotel, retail, publishing, advertising, beverages, audio/video, broadcasting radio/television, cable and satellite, motion picture, recreation services and entertainment, toy, gaming and tobacco.
Where were they?
These companies are listed in the Asia Pacific region, which includes but not limited to Australia, Hong Kong, Malaysia, New Zealand, Singapore, South Korea, Taiwan and Thailand. However, the fund will not invest into Japan.
Investment Strategy...
The investment manager combines top-down asset allocation process with a bottom-up security selection process. The asset allocation will be reviewed periodically depending on the macroeconomic, industry trends, respective country's economic and stock market outlook. The asset allocation decision is made after a review of macroeconomic trends in Asia Pacific economies. As for bottom-up security selection, the investment manager will focus on undervalued companies which demonstrate sound corporate fundamentals, which are expected to provide dividends yield above market average, and sustainable dividend yield on a medium to long term basis. Stock valuation fundamentals considered are earnings per share growth rate, return on equity, price earnings ratio and price to book multiples.
Source: AmMutual
Tuesday 5 March 2013
3 Different Types of PRS Distributors
Finance Malaysia believes that after a series of publicity and roadshow by various parties, especially PPA and PRS providers, you should know what is Private Retirement Scheme (PRS) is all about. Since then, we received many inquiries on whom should potential contributor consult with and why?
It brings us to this topic, and hopefully by understanding the different types of PRS distributors, investors could make their decision confidently. There is no right or wrong. It's down to your own preferences and of course, the trust level you have on a PRS consultant. So, who are they?
- This is the most common practice in town, whereby a PRS consultant representing one PRS provider. So, in this case, he/she can only distribute PRS from one company.
- Institutional PRS adviserBasically, they are bankers whom also licensed to distribute PRS schemes made available by respective banks. Bankers may distribute schemes from more than one PRS providers.
- Corporate PRS adviserCurrently, only financial planning firms holding this kind of licensed, whereby they can represent and distribute products from more than one PRS providers. They are individual acting on behalf of clients to source for the most suitable schemes for contributors.
Please take note also that not all unit trust consultants can distribute PRS. ONLY those already get their PRS license can distribute. Under the guideline, he/she may represent a PRS provider, which differ from his/her existing unit trust company. Example, a Public Mutual unit trust consultant can holds a PRS consultant license by Manulife. In this case, he/she can ONLY distribute Manulife PRS to clients.
According to Alex Yeoh (email: alexyeoh@vka.com.my), a licensed financial planner with a corporate PRS adviser, thinks that each channel has its own advantages. In the end, clients would choose the one, who can give them the best service they want.Finance Malaysia hopes the above info is useful for you to make informed decision. We believe service of adviser/consultant plays an important role in PRS distribution. However, if you intended to have different PRS funds from different PRS providers, it would be advisable to seek help from a corporate PRS adviser. It's more convenient, simple and effective. Thank you.
Schwartz's Quandary
Today's NYTimes features an interesting article by Nelson D. Schwartz headlined "Recovery in US is Lifting Profits, But Not Adding Jobs." Surprise, Surprise!
The main tool for solving unemployment by the White House is to figure ways to make employees more expensive. Businesses aren't dumb. If you make a factor of production much more expensive, businesses will use less of it. Machines aren't more expensive; outsourcing is not more expensive, but hiring American workers is much, much more expensive thanks to Obamacare and numerous "worker protection" rules, laws and regulations.
So, what to do? Obama now suggests raising the minimum wage from $ 7.25 to $ 9.00 -- almost a 25 percent hike in the minimum wage. That is in keeping with the philosophy of making employees more expensive.
The war on workers and the war on the middle class by this White House continues unabated. Schwartz is puzzled by the "golden age for corporate profits" unaccompanied by meaningful increase in the demand for workers. But why is there any surprise. This is the predictable result of White House economic policy.
The main tool for solving unemployment by the White House is to figure ways to make employees more expensive. Businesses aren't dumb. If you make a factor of production much more expensive, businesses will use less of it. Machines aren't more expensive; outsourcing is not more expensive, but hiring American workers is much, much more expensive thanks to Obamacare and numerous "worker protection" rules, laws and regulations.
So, what to do? Obama now suggests raising the minimum wage from $ 7.25 to $ 9.00 -- almost a 25 percent hike in the minimum wage. That is in keeping with the philosophy of making employees more expensive.
The war on workers and the war on the middle class by this White House continues unabated. Schwartz is puzzled by the "golden age for corporate profits" unaccompanied by meaningful increase in the demand for workers. But why is there any surprise. This is the predictable result of White House economic policy.
Sunday 3 March 2013
Three Cheers for Christina Romer
It has been somewhat of a puzzle that Obama's economists haven't rebelled at his Administration's assault on the US economy. Economics is, after all, economics. Finally!
In today's NYTimes, Christina Romer, former head of Obama's Council of Economic Advisors, questions the necessity of the minimum wage. She not only wonders openly about increasing the minimum wage, but questions the very idea of minimum wage legislation.
Romer is right that the minimum wage is not the way to go. While she doesn't go far enough to oppose the minimum wage outright, it is hard to see her op-ed piece as anything but a plea for sanity and clear opposition to Obama's recent call for a minimum wage increse.
In today's NYTimes, Christina Romer, former head of Obama's Council of Economic Advisors, questions the necessity of the minimum wage. She not only wonders openly about increasing the minimum wage, but questions the very idea of minimum wage legislation.
Romer is right that the minimum wage is not the way to go. While she doesn't go far enough to oppose the minimum wage outright, it is hard to see her op-ed piece as anything but a plea for sanity and clear opposition to Obama's recent call for a minimum wage increse.
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