March 17, 2020 at 8:19 pm
My column this week is a response to David Brooks, who had claimed that pandemics kill compassion and that they "inflame class divisions." Please read the entire column (mine, not Brooks, though if you want to read Brooks don't let me stop you) at the New York Sun (here), Reason (here), and Newsmax (here). The column was also quoted by the New York Post here.
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March 16, 2020 at 6:58 am
One factor I haven't seen written about much in explaining the wild day-to-day gyrations we have been seeing in the stock market is target-date retirement funds. The New York Times recently reported that there is more than $1 trillion in workplace retirement plan money, 21% of the total, in target-date funds, up from $185 billion in 2009. The Wall Street Journal put target-date funds at $1.1 trillion, up from $158 billion in 2008.
Say you run a target-date fund aimed at people retiring in 2040 that is supposed to be 50% in U.S. stocks. Then suppose we have a day like Friday when the stock market is up more than 9%. All of a sudden, your stock allocation is over the target. You've got to sell to get back down to the 50% level.
March 13, 2020 at 8:56 am
An addendum is needed to my post from the other day about "The Eight Ps of Coronavirus Reaction" — preppers, portfolio mangers, politicizers, psychosomatics, panicked, patients, and philosophers. The ninth P is for precedent.
At Education Next, in "Searching for Precedents in Pandemics Past," I write about the Spanish Flu and the Black Plague:
Harvard in a pandemic, even more than in usual times, is a peculiar place.
Other places have runs on hand sanitizer or bottled water. Here people have stocked up on those practical preparedness supplies, too. But here we have also had a run on books, as scholars research relevant precedents to the challenges posed by the novel coronavirus.
March 10, 2020 at 4:19 am
Joe Biden's fundraising for his presidential campaign from plantiff's lawyers is the topic of my column this week. Please check out the full column at Reason (here), the New York Sun (here), and Newsmax (here).
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March 7, 2020 at 10:41 pm
People have different ways of reacting to the coronavirus or Covid-19 situation. I have identified at least eight of them, all starting with the letter "P," in a taxonomy that I hope is at least somewhat useful in making sense of a somewhat unusual situation.
Preppers go out and buy things to prepare for a potential quarantine or supply chain disruptions. (more Ps: Purell, peanut butter, painkillers, pasta.) Easily mocked, perhaps, but at least adhering to the Boy Scout motto of "Be Prepared."
Portfolio managers are mainly focused on the economic fallout of the virus. They are short-selling airline stocks, or rebalancing their portfolios, or buying gold, or checking their retirement accounts, or going to cash, or taking a buying opportunity, or refinancing their mortgages. They see the situation mainly in financial terms.
March 6, 2020 at 7:46 am
How Covid-19, or the coronavirus, will affect the presidential campaign is the topic of my column this week. Please check out the full column at the New York Sun (here) or Newsmax (here).
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March 5, 2020 at 6:53 am
Michael Bloomberg's exit from the presidential race makes it more legally complicated for him to carry out his announced plan of spending millions of dollars to defeat President Trump.
Here is how an NBC news article summed it up:
February 27, 2020 at 6:08 am
How big a victory margin will Trump have if Bernie Sanders is the Democratic presidential nominee? That's the topic of my column this week. Please check out the full column at the New York Sun (here), the New Boston Post (here), and Newsmax (here).
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February 25, 2020 at 10:37 pm
The Washington Post reports on Elizabeth Warren's campaign finances: "New financial reports show the campaign took out a $3 million line of credit and drew out $400,000 that it ended up not using."
I scoured her campaign's latest Federal Election Commission report and other press coverage of this line of credit. The name of the person or financial institution providing this $3 million line of credit is not something I was able to find.
If it's a bank, though, it's a good example of how the financial industry provides valuable services to customers in ways that Warren and her ideological comrades are often too reluctant to acknowledge.
February 24, 2020 at 7:53 pm
A New York Times editorial about tension on the Syria-Turkey border says "Turkey is already burdened by almost four million Syrian refugees, whose presence is increasingly becoming a political liability for Mr. Erdogan."
February 23, 2020 at 8:56 pm
"Two French economists," the New York Times reports, "are the driving force behind proposals for a wealth tax, an idea embraced by Senators Bernie Sanders and Elizabeth Warren."
The Times reports that "Four years ago, Mr. Saez and Mr. Zucman pitched the leading Democratic candidates, Hillary Clinton and Mr. Sanders, on their wealth tax proposal, but both campaigns passed. This cycle has been different. Mr. Sanders and Ms. Warren have both proposed wealth taxes."
The New Yorker in October 2019 ("The French Economist Who Helped Invent Elizabeth Warren's Wealth Tax") reported more details of how Zucman and Saez interacted with the presidential campaigns:
February 22, 2020 at 9:33 pm
Warren Buffett's latest annual Berkshire Hathaway shareholder letter, out this weekend, is the usual mix of self-serving hype and genuinely insightful commentary. In the insightful category seems to be this, on why stocks are a "much better long-term choice" than bonds:
If something close to current [interest] rates should prevail over the coming decades and if corporate tax rates also remain near the low level businesses now enjoy, it is almost certain that equities will over time perform far better than long-term, fixed-rate debt instruments. That rosy prediction comes with a warning: Anything can happen to stock prices tomorrow. Occasionally, there will be major drops in the market, perhaps of 50% magnitude or even greater. But the combination of The American Tailwind, about which I wrote last year, and the compounding wonders described by Mr. Smith, will make equities the much better long-term choice for the individual who does not use borrowed money and who can control his or her emotions.
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February 22, 2020 at 9:03 pm
Paul Krugman writes in his New York Times column about Michael Bloomberg:
he got rich by selling equipment to destructive wheeler-dealers.
For those who don't know what I'm talking about, I'm referring to the famous Bloomberg Terminal, a proprietary computer system that gives subscribers real-time access to large quantities of financial data. This access is incredibly expensive — a subscription costs around $24,000 a year. But it's a must-have in the financial industry, because traders with Bloomberg Terminals can react to market events a few minutes faster than those without.
It's an extremely profitable business. But is it good for the economy? No.
After all, does getting financial information a few minutes earlier do anything significant to improve real-world business decisions that affect jobs and productivity? Surely not. Bloomberg has, in effect, made his billions off a financial arms race that costs vast sums but leaves everyone pretty much back where they started.
February 19, 2020 at 8:14 pm
February 18, 2020 at 7:40 pm
Back on September 4, 2017, I wrote a column headlined "Trump's Next Pardons: A Short List of Convicts Deserving To Be Cleared."
There were seven names on the list in that column: Michael Milken, Martha Stewart, Conrad Black, Dinesh D' Souza, I. Lewis "Scooter" Libby, Larry Franklin, Sholom Rubashkin.
With this week's pardon of Michael Milken, President Trump has now either pardoned or commuted the sentences of five of those seven.
As I wrote back in 2018, when the Dinesh D'Souza pardon was announced:
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