Congress to Deficit Panel- "What, Me Worry?"

Freeman, here.

Way back in April-- prior to this blog being hijacked by jocks and World Cuppers-- I talked about the President's bi-partisan Deficit Panel in conjunction with the Greek Tragedy. In light of the recent Irish Tragedy and the mid-term elections here on the Continent, it seems austerity is once again fashionable (if it ever was). To think that my concept of inputs (tax dollars coming in) and outputs (government spending) was not lost on the Deficit Panel's collective brains. I want to give thanks today on the eve of our great national holiday- I feel like a trailblazer.

Stephen Colbert, Silly Congressional Tool

Stephen Colbert testified before the House on Friday on migrant farmworkers (the video of his testimony is below). Really this was a testimony to California Democrat Zoe Lofgren's (pictured left) feelings on her work in Congress- Lofgren invited Colbert to speak after he spent one day as a migrant worker. That is just great.

Ayn Rand and Christianity: Glazing Chicken, Not Sausage-Making

Clearly not all Christian thought is in line with Randian thought- however its possible there are ideas that A.) Rand would sympathize with and B.) that Christians can sympathize without being heretics. In fact, its perfectly reasonable for Christians to appreciate free markets, dislike government intervention, and find value in individual decision making while simultaneously loving God and loving thy neighbor.

There is obvious tension between Randian and Christian thought, but there also seems to be a fair amount of overlap to this Venn diagram. Sure, Freeman can cherry pick Rand quotes and they sound bad, but agreeing with the whole body of Rand's work is unnecessary to find sympathy for Rand's ideas on markets and individual choice.

Ayn Rand and Christianity- Creating Loving and Selfish Sausage

Freeman here.


I am feeling a bit sheepish. A friend gave me a copy of Christianity Today this week and the front cover said Ayn Rand's Alternative Religion- the article was titled "Ayn Rand: Goddess of the Great Recession" written by Gary Moore, founder of The Financial Seminary. Generally, I have always liked Rand, her literature and her relatively ridiculous philosophy "objectivism" because it prized the individual and placed a high value on hard work and self-determination. I was a typical, perhaps naive, Christian that thought I could easily mix her economic opinions with my faith, and separate out ideas that were anti-thetical (or anti-Christian) to my beliefs. Undoubtedly the article points to Randian ideas that are much closer to Nietzsche, Marx or Hegel than Jesus Christ or St. Paul.

A Conversation Hardly Worth Having: On Ron Paul, Mosque Locations and Soccer Fields

A couple weeks ago, some friends and I had a collective discussion about Ron Paul's comments on the location of a Ground Zero mosque. It was interesting to me because we are normally in agreement on many political issues. I have published the email conversation below with the permission of the participants.

Short on Debate, Long on Conclusions: A Commentary on the American Bar Association

I am a new attorney and member of The Federalist Society. I like the group not necessarily because of it's politics, but because they believe in open, multi-sided and lively debate on particular issues, sometimes political but sometimes not. This allows the audience to hear more than a single opinion on an issue so that a listener is able to make an informed decision, and not just a decision. As my favorite college professor, the late Glenn Martin used to say...

For O'Reilly, the Rain in Spain Falls Mainly on Obama

Bill O'Reilly somehow thinks the Obama's "lavish" vacation to Spain is worth discussing during his nightly, one-hour, no-spin zone. Apparently since we are experiencing an economic downturn, Mr. and Mrs. POTUS should pretend they they are unemployed or at the least, that they go to bed hungry some nights.

Dodd-Frank Financial Overhaul: Ignoring the Giant Elephant in the Room

The Dodd-Frank Act (DFA) financial reform bill was signed earlier this month and stretches over 2300 pages long, but no where does it spend a sentence to regulate two of the major players in the financial meltdown- government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. Both are exempted. The bill means very little if a primary cause of the 2008 crisis was ignored.

Don't Fix My Wage, Bro! The Unintended Consequences of a Wage-Price Floor

Freeman here.

From the 2008 election, perhaps you remember Andrew Meyer, a University of Florida journalism student that went on an unintelligible rant at a John Kerry event, had his mic cut off, got arrested, and famously pleaded "Don't tase me, bro!" as the police proceeded to tase him and drag him out of the event. Poor guy. He just wanted to ask a question...

Tasers can be harmful for young adults, but even more harmful are price floors.

No Double Dipping or "What's Past is Prologue"

Freeman here. Ben Bernanke, please read this post.

I am sick and tired of reading about sports, so I thought I would take a second to speculate on the near future of the stock market. I mean, seriously, I leave for one month, and the entire editorial board becomes a bunch of meat-heads. So be it, sports are popular, and my articles are not. But that is not going to stop me from publishing.

Shakespeare taught us in The Tempest, that "past is prologue"- or in layman's terms- "history repeats itself." If this is the case, the market will be bearish (bad) in the foreseeable future.

LeBron economic effect is a myth?

One follow up thought to The Decision and what it means for the cities Cleveland and Miami.  We discussed the media and the basketball impact last time and now for the rudimentary economics.

Much was said about how LeBron would rejuvenate a city if he came or how the Cleveland economy would collapse after he left (more so than it already has...just kidding Cleveland...relax).  Well the reality is that Lebron has little impact over the economy aside from lining the pocket's of the owner.  Maybe that's why Dan Gilbert got a little upset.  While the linked article below provides more insight, I suppose we'll have to see if Miami undergoes a rapid economic expansion next year.  Maybe with the pulling power of all three (James, Wade, and Bosh) it will happen, but I doubt it.  I have the feeling the only people who will get pulled into the Miami economy will be Sly Stallone, Will Smith, and any other celebrity who thinks it is now cool to take a private jet into South Beach to watch a Heat game.

Why LeBron Won't Bring the Benjamins $$$$$

LeBronathon comes to an end: James to take supporting role on USA Network's hit show: Burn Notice

The Decision.  An hour long TV special devoted to LeBron telling everybody what he had planned on doing since the 2008 Olympics.   Admittedly, The Logic of Choice is a bit late on getting to this news but we never claim to be breaking stories.  

Lebron James will join his b-ball frat brothers in the heat of South Beach this fall.  Is anyone surprised?  Well, anyone except the cursed region that is Northwest Ohio?  I don't think so.  Our news cycle is soo fast now that we knew with a strong confidence that Lebron was ditching his snow boots for a gold chain, open shirt, and chest hair? (Oh, wait he already has all that?  Maybe he should get some flippy floopies.)  

I want to briefly discuss the social media and news cycle impact on this story and a bit about the basketball.  There are plenty of places to read more about the basketball issues.  I'll link a few at the bottom.

World Cup predictions aka "NCAAs: the International-edition"

We've provided a pick for every game so far in this tournament and we aren't doing half bad. Twelve of sixteen second-round participants were wisely selected for their style of play, group opponents, and of course, the color of their jersey's. One hour before the second-rd match between Uruguay-South Korea, we have to finish off the predictions based on the teams that made the final 16:

World Cup Commentary aka "1994: I Want to Look Like That"

Predictions:

Group A: Uruguay, Mexico
Group B: Argentina, Nigeria
Group C: England, US
Group D: Germany, Serbia
Group E: Netherlands, Cameroon
Group F: Paraguay, Italy (on goal differential over Slovakia)
Group G: Brazil, Portugal
Group H: Spain, Chile

Actual:
A: Uruguay, Mexico
B: Argentina, South Korea

C: US, England
D: Germany, Ghana

E: Netherlands, Japan

F: Paraguay, Slovakia (Italy finished last in the group, wow...)

G: Brazil, Portugal

H: Spain, Chile

So we are doing well- 12 of 16 in the second round. Asian tsunamis are unpredictable, and I did not see South Korea and Japan coming down the pipe or we would have been a suave 14/16.

But what I really want to talk about is World Cup haircuts.

World Cup Commentary aka "No Need to Get Your Knickers in a Twist With Your Facetiousness"

So I just read an article at the UK news site Guardian.co.uk about the US Men's national team and its recent success- "World Cup 2010: Thank the MLS for the rise of USA and Landon Donovan: It is easy to poke fun but the US game has come a long way – mainly because of Major League Soccer"

World Cup predictions aka "Relax, Landon" aka "Don't Let Koman Coulibaly Get You Down"

Wow- even with Koman Coulibaly's best efforts, the U.S. could not be prevented from winning their group.

Our predictions:

Group A: Uruguay, Mexico
Group B: Argentina, Nigeria
Group C: England, US
Group D: Germany, Serbia
Group E: Netherlands, Cameroon
Group F: Paraguay, Italy (on goal differential over Slovakia)
Group G: Brazil, Portugal
Group H: Spain, Chile

Actual:
A: Uruguay, Mexico
B: Argentina, South Korea

C: US, England
D: Germany, Ghana

E: to be played this afternoon

F: Parguay, Slovakia (Italy finished last in the group, wow...)

We are 7 for 10 on group predictions thus far, so you will certainly want to be checking this blog once we get around to stock predictions.

Donovan's 91st minute goal was unreal, the buildup sublime, and the finish exhilirating. Take me back with a video highlight...please, take me back.

World Cup predictions aka "Suc Le Bleu! Le Sulk Gets Sent to Le Shower" aka "Diego Maradona is Bill Russell"

This week Le Sulk (Nicolas Anelka) got kicked off Les Bleus (the French National Team)- the big baby is pictured here incognito returning from South Africa. Apparently he lit into his head coach at half-time of a loss where he played poorly, was summarily dismissed from the team, his coach stood up for him before criticizing him, and then his teammates went on strike for one practice. Ohh, how very French of you, Monsieur Anelka...

World Cup Predictions aka "I will trade you one healthy Fabio for your injured Nani"

1. Fabio and Diego will hurt their teams.

No foreign-born coach has ever won the World Cup. English skipper Fabio Capello is foreign-born, and England is the only real power with a such a coach. You would think they knew this stat... Brazilians always coach Brazil, Germans always coach Germany and Diego (the hand-baller below) coaches Argentina. More on that in a second. In fact, 3 foreign-born coaches have made the World Cup final and they have lost each time-- 0-3. According to the WSJ, native coaches average a half round further advancement than foreign coaches. Is the English FA really saying that no Englishmen is even within a half-round of Don Fabio?

As for Diego, he is just strange. I read this week that he has requested his accommodations be decked out with high-end bidets. Does it seem like he is A) concentrated on winning the World Cup or B) keeping his kit clean? If I were picking sides in my under 55 footy league, he would be a top choice...but to coach my national team?

This is the gentlemen that was kicked out of international soccer twice for drugs- once a 15 month ban for cocaine, has had his stomach stapled for weight issues (stomach staples are widely thought to have ruined Charlie Weis' brilliant coaching mind), owes the Italian government over 35 million Euros in back taxes, has befriended Hugo Chavez, and his WORST coaching characteristic is that he is judged by many to be the best footballer ever. Do you really want the best player ever coaching a team of players that are not the best players ever?

The only person with worse judgment than Maradona is the guy that decided Maradona would coach the national team.

The crazy thing is, Argentina might have the best personnel of any team in the tournament-- Messi (consensus best player in the world), Higuain (27 goals for Real Madrid), Milito (most prolific scorer on the best club in the world)...but why would they jeopardize that by making a weird, crazy, fat, Argentinian Michael Jordan the head coach?

2. Group A is the real Group of Death...

No jokes about North Korea being in the so-called "Group of Death." The REAL Group of Death is Group A- France, Uruguay, Mexico and South Africa.

Group G has been dubbed the Group of Death because it has FIFA ranked #1 Brazil, #3 Portugal, #27 Ivory Coast, the highest profile African team, and one country that stinks at soccer (#105) but they are (un)fortunate enough to be run by an evil dictator, so FIFA thought it would be funny to put them in this group. I predict no fewer than 2 North Korean defections this Cup.

The issue is, Group G is waaay overrated and FIFA rankings in general might be overrated (possibly). No FIFA #1 entering a Cup has ever won the title (the FIFA rankings started in '92 so they are 0-4 in predicting a winner). Worse yet, in 18 Cups, only one favorite (W. Germany in '74) has ever claimed victory. This does not bode well for #1 Brazil. They are a target.

As for #3 Portugal, they tied the Cape Verde Islands recently 0-0 (yes, Cape Verde has at least 11 residents), and Ronaldo has not scored for his country in over a year. Portugal's second biggest name, Nani, is out of the Cup with a broken collarbone. Injuries plague Ivory Coast as well with Didier Drogba breaking his arm last week. Though he may play, he most certainly will not be up to snuff.

As for Group A, #9 France is a always top caliber squad, but have been performing mediocre lately- see last week's 1-0 loss to China (they got Jabulani-ized). #16 Mexico has made it out of the group stage in the last 4 World Cups, and #17 Uruguay score lots of goals and made the Cup by beating Costa Rica in controversial fashion. South Africa is ranked #83 but should get at least a 25 spot boost because they are host nation. No host nation has ever failed to make it out of the Group Stage, so South Africa will be a difficult ouster with the Jubulani knuckling and the Vuvuzelas buzzing.

In fact, if you remove S. Africa's ranking from the mix, Group A's teams average #14 in the FIFA rankings. I predict Mexico and Uruguay will finish #1 and #2.

3. A European team will not win.

2010 is the 19th World Cup- the Cup has been held in Europe 1o times and European teams have won 9 of them. A seventeen-year-old Pele (left) beat 11 Swedes to win the title in 1958, but that is clearly an outlier in the data. When the Cup is played anywhere except Europe, South American teams have won. South Africa is not in Europe-- a European team will not win this World Cup.

My odds would be on Brazil (but they can't win because they are #1) or Argentina (but they are coached by the fat MJ...hmm). A 5-team possible-winners-pool would be Nigeria, Argentina, Brazil, Paraguay or....the U.S. Wow- never thought I'd say that. The U.S. defense is poor, but if they get on a roll, watch out.

4. The new Jabulani ball will create true parity.

This ball has been complained about because it knuckles and flutters like a hummingbird. I think this will allow some teams to win games they would not have ordinarily won. Watch for a first-time World Cup finalist in 2010 i.e. not the Usual Suspects of Brazil, Germany (who have been in the Final 7 times each), Italy (6 Finals).

World Cup Predictions aka "Dear English, our Jabulanis are sizeable compared to your Vuvuzelas"

Sorry about the silly title. Watching the US v. Australia pre-World Cup friendly this week, I was mildly startled by the incessant talk of problems with the "Jabulani"- Adidas' new ball for the 2010 World Cup (hereinafter "WC") (it moves like a wiffle ball- check out this goal on Youtube)- and the incessant drone of "Vuvuzelas"- the long slender horns that soccer/footy fans never get tired of blowing. See above.

So startled, I decided I needed to blog on the WC and predict every single match score for the tournament. Does any other financial blog do this? Maybe not, which will garner our's some well-deserved attention. This little stunt is similar to when a clever sports fan invents a slick-yet-homemade network acronym sign and gets on TV.
The similarity being 1. we are (probably) not doing anything original, 2. we are trying to capitalize on a sporting event to get our 15 seconds, 3. it's self-serving and 4. lame.


So without further ado and before you wonder whether you care about the Slovenia-Algeria game, score predictions for the Group Round that you will find on no other financial blog...

If You Choose To Be Sinful, Here Is Where You Should Go...

Freeman here.

Thanks to a terrific organization, The Tax Foundation, we can provide you choice-ophiles with the amount of "sin tax" you'll pay should you choose to indulge in sinful acts in a particular state. "Sin taxes" are so named because they are thought to be sinful activities- smoking cigarettes, drinking alcohol, gas consumption (?).

Interestingly enough, for beer, some of the lowest state rates are in Wisconsin, Missouri and Colorado, home to Miller, Anheuser-Busch and Coors respectively. But the lowest rates go to Wyoming- home to those brewing behemoths like Wind River Brewing, Snake River Brewing Company, Bitter Creek Brewery and Snowy Mountain Brewery. Strange indeed. And not only do those crazy Wyomans love cheap beer, but they also seem to have a state law requiring the inclusion of a flowing body of water or a geographical landmark in the name of every brewery in the state.

Recently, I moved from Ohio to Kentucky and observed that my sinful acts got cheaper across the board. Perhaps I can speak more about this a bit later... Freeman is a bit private.

Choice-ophiles-- tell us where you live and if your choice of residency was at all impacted by tax rates (sin taxes or otherwise).

Is there really a money tree? Delving into passive income

Seeing the automatic payroll deposit show up in your checking account every month is always a good feeling. (Unless, of course, it is late or less than you thought it would be.) Most of us just glance at it and use it to pay bills, save for a big purchase, or maybe even pay down our house. How long, if ever, do you think about what you did to earn that money? Did you work long or extra hours on a big project? Did you spend half you time at work looking at Facebook or checking your fantasy football team?  Did you have to sit in the lunch room and listen to your co-workers' incredibly boring weekends?  Many times our salary doesn't accurately reflect our contributions to or employer, for better or for worse. This is our active income.

Active income is how 90% or more of us get the majority of our income. There is another way to accumulate a substantial amount of earnings though. It is called a money tree, of course.  Did you know that your parents were actually holding out on you when they told you money doesn't grow on trees?  Well maybe not exactly, but there are people out there that would tell you that you really can plant a money tree.

It's called passive income.  Passive income is income that requires little or no effort to maintain.  (just like a fully grown money tree) Examples are income from rental property or dividend from a securities (stocks, bonds, etc) holding. Passive income tends to be a regular occurrence (see above examples) and can be relatively easy to maintain. Certainly this is not necessarily a recipe for easy or quick money. It can take a significant amount of work or research to produce passive income on the front end. This can include looking for rental property or researching companies in which to invest.

Passive income is often touted as a mean to financial independence or an early retirement and thus is often associated with "get rich quick schemes" or late night infomercials.  You've seen the one with the guy in the cheesy suit standing in front of a mansion about to get into a convertible with two lovely ladies.  It certainly is true that some have made fortunes through real estate or smart (maybe lucky) investment in the stock market. That is not why I want to address this issue.  I'm not necessarily going out and reading The Millionaire Mind or Rich Dad, Poor Dad.  I just want to encourage you to think about it.  You may love your job and wouldn't want to stop working to pursue passive income or an early retirement. That is a great situation to be in. My question is where does passive income fit in your life? Do you currently have any? How could the pursuit of this type of income affect your life? The choice to pursue passive income should be considered first and foremost as a supplement to your current active income, not as an easy way to quit your job and makes millions in a few months.  (This doesn't happen very often.)

If any of this piques your interest do some of your own research, but do your self a favor and stay away from resources that claim you can make quick money with little effort.  Then again, maybe you'll end up in a cheesy suit on late night TV.

Learning From The Greek Tragedy, pt. 1

Freeman here.

Yesterday's NYT spoke to the meltdown in Greece and the resulting "JUNK" rating of their mounting debt. For those not aware of the rating agencies and the problem with this lower rating-when an entity's debt gets downgraded, it is more expensive to borrow money. So you can either temper your spending on your own, or the rating agencies will downgrade you (once your debt load gets too high) and borrowing the money becomes prohibitively expensive-- so hopefully, the sheer expense tempers said spending. Think "we can either do this the easy way, or the hard way."

Even on a micro level, this situation makes perfect sense- banks check creditworthiness with debt-to-income ratios, credit scores, etc. If someone's debt-to-income is spiralling out of control, a bank will not lend them money. If however, the person is willing to pay a much higher rate for a loan (credit card, check-in-go), the "bank" would be more likely to lend the money. Credit agencies look at the situation and assess the strength of an entity (Greece). Because Greece has huge amounts of debt, the agencies rate them JUNK which signals to the lenders that they need to charge higher rates (if you are going to lend Greece money at all) becasue they are marginally less creditworthy than a couple of days ago. JUNK status simply signals high risk.

The U.S. can learn a lot from the Greek situation.

President Obama said yesterday his brand new Fiscal Responsibility and Reform Commission (the "Deficit Panel") would study the deficit problem carefully and all options are "on the table." To be sure, the Deficit Panel should not have study the problem very carefully. The solution is relatively simple- there are INPUTS and OUTPUTS- money coming in (taxes) and money going out (spending). If you spend more money than what you are bringing in, you will be in debt. If you do that for a long period of time, it is likely you will have high amounts of debt. Currently the US deficit is just under $13trillion in debt. The 5th largest single item in the budget is Interest on Debt- this is just one of the ways the Greek Tragedy ties into our situation.

I believe in the Deficit Panel. These are smart people. We can do it. We can learn from the Greeks. We can take the easy way or the hard way.

Greek Tragedy to be continued- we will explain why ALL options (i.e. choices) should NOT be on the table.

How NOT to win friends and influence police officers

Freeman here.

I love reading other blogs and I thought you choice-ophiles would really appreciate this one.

Here a law student recounts that a police officer chose to pull him over, that he chose to remain silent and that he was very knowledgeable about various statutes-- the same statutes for which the officer allegedly pulled him over. My favorite part is when the student calls the officer's bluff "Officer, if you think it is illegal write me a ticket and we'll have a judge decide." Brilliant.

The Logic of Choice

How do bloggers choose the name of their blog? Why do we make certain choices everyday?

In attempting to name a blog that will encompass a variety of topics in the financial, political, and economic world (plus some pop culture), we looked at (and discarded) a variety of choices-- "Other People's Money" (too political and the name of a movie with Danny DeVito) "Dollars and Sense" (already taken) "Money Blog" (boring) "Incentives Matter" (confusing- "matter" as a verb or a noun?). Finally we landed on "The Logic of Choice." Odd, because if you read the preceding sentence, the name choice was made out of a collection of random thoughts and opinions of the contributors (in fact, one contributor really disliked the decision because he felted it harked of a science-based abortion blog).

The choices we make in the areas of finance, politics and economics are important and will have a major impact on our lives. With any choice, costs and benefits must be weighed before the choice is made. In order to make smart(er) choices, logic and strategic thinking- even intuition- will come into play. Hopefully the topics and opinions expressed here will aide our readers to apply a logical approach to the choices they make. Thank you and enjoy.