Political Calculations
Unexpectedly Intriguing!
August 30, 2006

Maybe we're just inspired by the example set by Seth Roberts who, after years of self-experimentation, came up with the Shangri-La diet (and whom we learned about from Freakonomics' Steve Dubner and Stephen Levitt), but we've found another enterprising individual who may be to physical fitness what Seth Roberts is to dieting!

Meet Reinhard Engels - or rather, read about how a rainy day and necessity intersected to lead to his invention of the shovelglove:

It was a rainy Sunday. I hadn't gone to the gym in over three months, and I was feeling painfully out of shape and antsy to do some kind of exercise. But I didn't want to go out in the rain, and the prospect of subjecting myself to the boring torture of the gym seemed even drearier. I wanted an exercise I could do right there, in my bedroom, without any fancy equipment.

But I didn't want to do sit-ups or pushups. I didn't want to grovel on my stomach on the floor, like some degraded beast. "There must be some kind of movement I can do standing up, with the dignity of a human being," I thought, "some kind of movement that is natural and interesting, that my body would like to do."

I started making all kinds of spastic movements, hoping to come across something that resonated. I remembered reading something in some French novel about coal shovelers having the best abdominal muscles of anyone the author had ever seen. I started making shoveling motions.

Now there are a few problems with shoveling, from an exercise perspective. For one, if I actually went outside and started shoveling, I'd get all wet (remember, it's raining). The neighbors would think I was crazy, and if I did it at the wrong time I'd actually annoy them. I'd also have to have something to shovel, a waste of space, at least (our backyard is more of back alley). So outdoors is out. But I couldn't really shovel indoors, either. Even if I just did a pantomime with a shovel, I'd need some kind of weight to move, and I'd need some way of keeping it from scratching the floors or killing the cats.

That's when it occurred to me: what I needed was a shovel with a weight attached to it, and a fuzzy glove to keep it from scratching the floors or killing the cats. At first I thought I'd call it "fuzzy shovel," but "shovelglove" seemed catchier.

Now I had to make the darn thing. I went to the local hardware store, and after some experimenting, I wound up with something that worked: a sledgehammer with an old sweater wrapped around it. It had the right shape, just enough weight, and the requisite softness. And it was pleasingly simple.

There's a lot more, including video! Go see, and then decide if a trip to the hardware store is in order....

Update: 6:57 AM PDT: Criminy, Dubner's fast!...

August 29, 2006

The Arbitron books have recently closed on the Spring 2006 ratings period for radio stations across the country, so we thought we'd update our previous look at how Air America Radio is doing.

The ratings below were transcribed from Radio & Records' online listing for the Spring 2006 period. The ratings represent the percentage of each local market's listening population (Age 12+) over an Average Quarter Hour (AQH) time period. To estimate the potential size of AAR's audience in each of its local markets, we took the average rating for each market over the past year (treating it as a percentage) and multiplied it by that market's Age 12+ potential listening population.

We've summarized our results in the following dynamic table. You may click any of the column headings to sort the data from low to high or vice versa (by clicking the column heading again).

AAR's Ratings in Top 100 Radio Markets
Summer 2005 - Spring 2006
Rank State City Station(s) Age 12+ Pop. SU 05 FA 05 WI 06 SP 06 Avg. Rating Est. Audience
1 NY New York WLIB 1190 AM 15,332,000 1.2 1.4 0.8 1.0 1.1 168,652
2 CA Los Angeles KTLK 1150 AM 10,790,100 0.9 0.7 1.0 1.0 0.9 097,111
3 IL Chicago WCPT 850 AM 07,698,300 0.7 0.8 0.7 0.9 0.8 061,586
4 CA San Francisco KQKE 960 AM 05,829,700 1.2 1.2 1.2 0.8 1.1 064,127
5 TX Dallas-Fort Worth KXEB 910 AM 04,730,200 0.0 0.0 0.4 0.6 0.3 014,191
8 DC Washington WWRC 1260 AM 04,132,800 0.0 0.5 0.0 0.6 0.3 012,398
9 MI Detroit WDTW 1310 AM 03,892,600 0.0 0.5 0.4 0.4 0.3 011,678
10 GA Atlanta WWAA 1690 AM 03,860,100 0.0 0.4 0.4 0.0 0.2 007,720
11 MA Boston WKOX 1200 AM & WXKS 1430 AM 03,841,100 0.2 0.3 0.5 0.4 0.4 015,364
12 FL Miami WINZ 940 AM 03,505,100 1.5 1.9 1.2 1.4 1.5 052,577
14 WA Seattle KPTK 1090 AM 03,204,800 2 2.3 2.8 1.7 2.2 070,506
15 AZ Phoenix KXXT 1010 AM / KPHX 1480 AM* 02,938,500 1.5 1.2 1.1 1.3 1.3 038,201
16 MN St. Louis Park KTNF 950 AM 02,632,400 1.2 1.1 1.0 1.1 1.1 028,956
17 CA San Diego KLSD 1360 AM 02,484,900 1.8 3.1 1.6 2.1 2.2 054,668
22 CO Denver KKZN 760 AM 02,157,700 1.9 1.8 1.4 1.3 1.6 034,523
24 OR Portland KPOJ 620 AM 01,963,400 4.4 4.1 4.1 3.5 4.0 078,536
27 CA Riverside KCAA 1050 AM 01,799,900 0.0 0.0 0.0 0.0 0.0 000,000
28 OH Cincinnati WCKY 1530 AM 01,705,200 1.3 1.3 0.9 0.6 1.0 017,052
30 TX San Antonio KTXX 103.1 FM 01,552,100 0.0 0.0 0.0 0.0 0.0 000,000
38 OH Columbus WTPG 1230 AM 01,401,300 0.9 1.1 1.3 1.4 1.2 016,816
42 TX Austin KOKE 1600 AM 01,204,800 0.7 0.8 1.0 0.7 0.8 009,638
43 NC Chapel Hill WCHL 1360 AM 01,143,700 0.0 0.9 0.6 0.0 0.4 004,575
49 TN Memphis WWTQ 680 AM 01,047,900 0.5 0.5 0.6 0.7 0.6 006,287
52 NY Buffalo WHLD 1270 AM 00,989,400 0.0 0.0 0.0 0.0 0.0 000,000
54 NY Rochester WROC 950 AM 00,941,600 1.4 0.8 0.9 1.1 1.1 010,358
57 LA New Orleans WSMB 1350 AM 00,862,700 N/A N/A N/A 0.9 0.9 007,764
63 HI Honolulu KUMU 1500 AM 00,774,500 0.0 0.4 N/A N/A 0.2 001,549
66 CA Fresno KFPT 790 AM 00,711,700 0.4 0.4 0.8 1.1 0.7 004,982
67 MI Grand Rapids WTKG 1230 AM 00,703,400 0.8 1.2 0.4 1.1 0.9 006,331
70 NM Albuquerque KABQ 1350 AM 00,654,200 1.6 2.2 2.0 2.0 2.0 013,084
73 OH Akron WARF 1350 AM 00,597,200 0.6 0.6 0.9 0.8 0.7 004,180
74 FL Bradenton WSRQ 1450 AM 00,591,500 N/R 1.1 N/R 1.4 1.3 007,690
76 TX El Paso KHRO 1650 AM 00,573,600 1.0 0.6 0.5 0.3 0.6 003,442
79 CA Monterey KOMY 1340 AM 00,555,100 0.0 0.4 0.6 0.0 0.3 001,665
82 MA Springfield WHNP 1600 AM & WHMP 1400 AM 00,533,700 1.6 N/A N/A N/A 1.6 008,539
83 LA Baton Rouge WYNK 1380 AM 00,529,100 N/A N/A N/A N/A N/A N/A
90 SC Columbia WOIC 1230 AM 00,485,400 0.9 0.9 0.5 0.0 0.6 002,912
92 WA Spokane KPTQ 1280 AM 00,480,800 1.0 2.0 1.3 1.0 1.3 006,250
96 WI Madison WXXM 92.1 FM 00,461,700 2.3 3.8 2.2 3.1 2.9 013,389

  • N/A = Ratings Not Available at Time of Posting
  • N/R = Ratings Not Collected for Indicated Period
  • Average Ratings for each market determined by taking the average of available ratings beginning with the Summer 2005 period (SU 05) and ending with the Spring 2006 (SP 06) rating period as of August 29, 2006.
  • Age 12+ Listeners per Average Quarter Hour determined by converting Average Ratings for each market into a percentage and multiplying by total population of Age 12+ listeners in radio market as documented by Radio & Records.
  • Average Ratings for each reporting period were determined by finding the average of all measured ratings in that reporting period.
  • * AAR programming in Phoenix moved from KXXT 1010 AM in the Winter 2006 period to KPHX 1480 AM, which provided the ratings shown in the Spring 2006 ratings period.

The following table provides the overall average ratings for each period, as well as the estimated audience in the Top 100 U.S. Radio Markets:

Sums and Averages for AAR Ratings in Top 100 U.S. Radio Markets
Age 12+ Pop. SU 05 FA 05 WI 06 SP 06 Avg. Rating Est. Audience
99,294,200 0.9 1.1 1.0 1.0 1.0 957,297

Overall, these ratings provide a good indication that AAR's ratings are flat across its major local markets, neither showing significant erosion nor significant growth. We anticipate this will change for the worse when AAR moves from WLIB in New York to the much lower powered WWRL.

Previously on Political Calculations

The Future of Air America

We kicked off our series of posts analyzing Air America Radio viability as a business with this post. We really didn't think it would go much further than this!

Air America, Again

We found that AAR doesn't just have competition from the right - it has it on the left as well....

The Financing of Air America Radio

A throw-away post that let us fill space with some information on where AAR got its financing that we had come across in our previous analysis.

Time to Harvest or Divest

As AAR appeared to be running into significant turbulence, we updated our original strategic business analysis, finding that what AAR's management needed to do was to find "white knight" financing or to start making moves to significantly cut its costs.

A Top Ten Countdown

We couldn't resist applying a list a bankruptcy lawyer came up with for a failing company to AAR's known problems - lucky thing AAR has benefitted from the generosity of multi-millionaires with deep pockets.

Profiles in Semi-Obscurity

Another space-filler post where we just unloaded background information about various members of AAR's Board of Directors that we had come across in previous analysis.

Air America's Ratings in the Top 100 Radio Markets

Our look at AAR's ratings through Arbitron's Winter 2006 period.

A Bigger Footprint

An intrepid e-mailer let us know that AAR's flagship affiliate WLIB had a bigger footprint than just the New York City market - plus, we find that roughly half of AAR's audience is in just five cities.

Profiling a Handful of AAR's Local Affiliates

Once again, we unload information we collected in other analysis. This time, we estimate just how many local AAR affiliates there are by determining where they're not.

August 28, 2006

Not long ago, index fund pioneer John Bogle challenged Wharton business school professor Jeremy Siegel's claim that an index fund whose component stocks are weighted within the fund according to a fundamental business metric, such as revenues or dividends, would outperform a traditional market capitalization-weighted index. (HT: Greg Mankiw.)

The core of Bogle's argument is that the new investing strategy represented by the fundamentally-weighted indices is little more than the latest in a long series of investing fads, with a major knock against it - namely, higher expenses in the form of taxes and fees.

Leaving aside the "investing fad" argument, which only time can judge, a question we can better answer with the data on hand is this: "Will a fundamental-weighted index fund outperform a traditional market index enough to cover its additional costs?"

The oldest fundamental-weighted index fund is the RAFI 1000 index exchange traded fund, which trades under the symbol PRF. This ETF has been trading since December 2005 and offers the longest track record against traditional indices involving real money as opposed to historical data mining. (Note: WisdomTree, with whom Siegel is affiliated, has only been offering its own line-up of fundamental-weighted ETFs since June of this year, which doesn't really allow enough time to see how well its funds are performing.) The following chart shows the PRF's performance as of August 25, 2006 against the "big-three" stock market indices: the Dow Jones Industrials (DJI), the S&P 500 (GSPC, which which the ETF is most comparable), and the Nasdaq (IXIC):

Is PRF's better performance over the time from when the ETF was launched on December 19, 2005 enough to cover its premium in costs compared to the traditional index funds?

In the chart above, we see that the fundamental-weighted PRF has outperformed the DJI by roughly 1.5-2.0%, the S&P 500 by roughly 3% and the Nasdaq by roughly 10%. All while demonstrating less volatility than these other indices.

The RAFI 1000 index is rebalanced annually, which means its costs from tax-based events (capital gains and losses from the stocks it sells) should be equivalent to those of the other major indices. It does however have a much higher expense ratio than that of a traditional index fund - 0.60% compared to 0.15% for a typical S&P 500 index fund. What this means is that PRF must outperform other indices by at least 0.45% to be able to cover these costs.

So far, it seems its performance is justifying its premium, as its returns are high enough to outweigh its higher costs. Not a bad start, but again, only time will tell if fundamental-weighted indexing turns out to be an investing fad.

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August 25, 2006

Carnival Midway from The Jerk Welcome to this week's edition of On the Moneyed Midways, the only one-stop shop that provides a weekly review of the best posts from the money and business-related blog carnivals. And as we do each week, one post from the hundreds we read is declared to be The Best Post of the Week, Anywhere!(TM)

We're not kidding about reading hundreds of posts! We draw material from some 10-15 blog carnivals to consider for each week's edition - so we see quite a few. But it's not really that bad - as it happens, a lot of writers will submit the same post from carnival to carnival, making our task go much faster after we make it through the first carnival we go to each week (the Carnival of the Capitalists, the first and still the best).

Still, reading about what we do isn't why you're here, so let's get to the best posts of the week!....

On the Moneyed Midways for August 25, 2006
Carnival Post Blog Comments
Carnival of Business My Top 4 Mistakes as an Entrepreneur I Got News For You Ben Yoskovitz failed in four big ways with his business back in the 1990s - go learn what he learned!
Carnival of Career Intensity Your Job Isn't Your Girlfriend. Date Other Jobs. Blueprint for Financial Prosperity Jim has excellent advice for helping you find the ideal relationship with an employer.
Carnival of Debt Reduction No Debt for You No Credit Needed NCN lists the advantages and disadvantages of several different debt reduction methods, then combines them for a uniquely tailored plan.
Carnival of Investing Diversification: How I'm Learning the Hard Way! My Money Path Daniel takes good advice from Jim Cramer. Yes, that Jim Cramer.
Carnival of Marketing The ABCs of Writing Good Ad Copy All Tips and Tricks All Tips and Tricks shares the three things that you need to put into writing your ads to make them work better for you!
Carnival of Real Estate The Re-listing Phenomenon as Housing Demand Indicator Altos Research Real Estate Insights Altos Research looks at why and where homes have been re-listed on the market.
Carnival of the Capitalists 10 Reasons You Should Never Get a Job Steve Pavlina As if you needed any more reasons for not looking for a job, Steve Pavlina provides ten more! The Best Post of the Week, Anywhere!
Festival of Frugality Vegas Wedding Baby! It's Just Money lamoneyguy offers advice for those going to an out-of-town wedding on how to avoid major expenses - even if you're the one getting married!
Personal Development Carnival What Can We Learn from Hollywood Movies? rdoctor Alexander Kovokin translates the lessons Russians have learned over the years from Hollywood, noting that "a good laugh is worth a thousand of pills."
Personal Growth Carnival How to Deal with Losing Your Job Improving My Life Newbury is about to lose his job and is amazed at how positive his response is to the news.

Previous Editions

August 23, 2006

Yesterday, Political Calculations looked at the value of U.S. imports and exports from January 1992 through June 2006, we noted that the U.S. trade deficit didn't begin significantly widening until mid-1997. Today, we thought we'd take a closer look to pin down exactly where it began.

A trade deficit, or a trade surplus for that matter, is defined as the difference between the value of a country's imports and exports. A country has a trade deficit if the value of the goods and services it imports is greater than those of what it exports. Conversely, a country has a trade surplus if the collective value of what it imports from other countries is less than the collective value of what it exports to other countries.

The weakness of this approach is that it doesn't provide any real context to how significant a nation's trade deficit or surplus may be in terms of its trade. For example, a trade deficit of one-trillion dollars could either be really huge or really small, depending upon the actual volume of a nation's trade.

Another way to easily evaluate the balance of a nation's trade is to look at the ratio of the value of what it exports to the value of what it imports. Expressed as a percentage, this ratio provides a quick measure of the degree to which a nation is in balance. Here, a nation's trade is in balance if its trade balance ratio is 100%, which occurs when the value of what it imports is equal to the value of what it exports. A value above 100% indicates not only that there is a trade surplus, and a value below 100% indicates that there is a trade deficit.

The real advantage of using this trade balance ratio is that the percentage values provide a good indication of to what degree a nation's trade is either in balance or out of balance. The greater the difference from 100%, the more unbalanced is that nation's trade.

So, that's what we did for U.S. trade data from January 1992 through June 2006. Our chart summarizing our results is below:

This chart clearly shows that the U.S. trade deficit was largely stable as a percentage of exports to imports during the first four and a half years of the Clinton administration (January 1993 - July 1997), but began rapidly widening thereafter. In fact the degree of the difference between these first four and half years (a one percentage point drop) to the Clinton administration's last three and a half years (an additional 20 percentage point drop) indicates that a significant change in how the U.S. government managed its trade policy during this time must have occurred.

The problem is, we can't find the smoking gun for such a sea change in U.S. trade policy that would coincide with this massive widening of the U.S. trade deficit. The most significant trade agreement of the Clinton administration, the North American Free Trade Agreement (NAFTA), took effect in January 1994, with little apparent effect on the U.S. trade balance. Meanwhile, the timeline of major trade agreements is silent during this period.

Since then, the trade deficit has widened during the Bush administration, but by less than a third of the change during the Clinton administration. The lag in U.S. aerospace exports following the September 11, 2001 terrorist attacks, combined with the sharply higher value of oil imports during this period largely explains this widening. Again, where's a similar explanation for the opening of this trade gap during the Clinton administration?

What did Bill Clinton do?

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August 22, 2006

Don't you hate it when newspapers have headlines like USA Today's recent "U.S. trade deficit narrows slightly in June on record exports?"

Because regardless of whether you're for or against the free trade of goods and services around the world, that kind of headline is just not going to make you very happy. If you're against free trade, that whole "record exports" thing just flies in the face of your worldview that the U.S. can't successfully produce and sell anything other people in the world want to buy. Meanwhile, if you're in favor of free trade, you know that the words "trade deficit" means that you have to put up with even more demagoguery from the anti-free trade crowd about how those foreigners are winning and Americans are losing.

And because of those demagogues, you know there are people out there just looking to do everything they can to pin the blame somewhere. For example, the USA Today article was accompanied by a graphic that clearly showed that the trade deficit has doubled since George W. Bush was sworn into office in January 2001. We were unable to locate the graphic online, so we've taken the liberty of reproducing it from U.S. Census trade data for imports and exports:

Looks bad, right? It's just as if the current occupant of the White House went out of their way to open up a $29,642 million gap between the value of U.S. imports and exports. But is President Bush responsible for the U.S. trade imbalance?

The problem using charts like this to demagogue the trade issue is that they invariably fail to present historical events in context. Selective use of data, such as the period of recorded data doesn't provide much insight into what was going on either politically or economically during the time in question. How, for instance, did the trade deficit get to $35,162 million when President Bush was sworn into office? What effect did the recession of 2001 have on trade? And so on!

So, returning to our source for the data, let's look at U.S. imports and exports going all the way back to January 2002 - long before the current occupant of the White House assumed office. And while we're at it, let's note some additional relevant events on the chart as well, for the sake of achieving greater clarity:

This chart tells us several things. Reading from left to right, we first see that the U.S. trade was very nearly in balance back in January 2002, as the value of imports and exports was nearly equal. Next, we see that the North American Free Trade Agreement between the U.S., Canada and Mexico really had no effect on the overall balance of U.S. trade.

Then, we get to where it really gets interesting. Beginning in mid-1997, the U.S. trade deficit really began to widen. We next see that both imports and exports declined in step with the decline in overall U.S. economic activity during the recession of 2001.

Finally, we see that following the recession of 2001, the growth of U.S. exports lagged the growth of U.S. imports until mid-2003. Although not indicated on the chart, this may be explained by the September 11, 2001 terrorist attack upon the U.S. and the corresponding negative effect it had on the world's air transport industry (we chose not to present this information on the chart given the congestion of events around the 2001 recession.)

Since aerospace products, such as commerical jetliners, represent such a major part of U.S. exports, this single factor largely accounts for the widening of the trade deficit in recent years. Otherwise, the growth of the U.S. trade deficit has largely moderated from when it boomed during the second term of the Clinton presidency.

We'll take a closer look at all this in upcoming days....

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August 19, 2006

Carnival Midway from The Jerk Welcome to a special Saturday edition of On the Moneyed Midways, the only weekly wrapup of the best posts from the business and money-related blog carnivals. As always, one post each week is declared to be The Best Post of the Week, Anywhere!(TM)!

Why a special Saturday edition? In one word - "fracturation" (yes, we're prone to making up words here at Political Calculations!). Once upon a time, there was only one blog carnival dedicated to covering money and business related matters on the web - the Carnival of the Capitalists. But, with the growth of the blogosphere, and the ease of creating new carnivals, the blogosphere has become "saturated" with new carnivals (today's edition features more carnivals than ever before.) These newer carnivals have tended to focus on narrow areas of interest, with the result being that carnival content has "fractured". Take the two key words involved, and we get "fracturation!"

But that's enough about the state of blog carnivals. This week's issue awaits below....

On the Moneyed Midways for August 19, 2006
Carnival Post Blog Comments
Carnival of Business Why "Better" Products Don't Sell trizoko It takes more than top-notch features to drive product sales - Trizoko highlights what "more" means.
Carnival of Career Intensity Are You Using This One Essential Rule to Sky-Rocket Your Career? Motivation for Success Tyler McKinna has a simple rule for jump-starting your career path toward the top.
Carnival of Debt Reduction How I Reduced My Credit Card Interest Rates Blogging Away Debt Tricia walks through the steps you need to take to lower your debt interest payments.
Carnival of Future Millionaires Before Your Idea Can Take Off J. Timothy King's Blog Running a small business means doesn't mean you need to become three different people to sell, advertise and market your wares. J. Timothy King thinks you just need to be a salesman.
Carnival of Investing Illumination Through Research Abnormal Returns How should you go about your approach to making an investment decision? Abnormal Returns says a rigorous approach is needed to travel a potentially "treacherous" path.
Carnival of Marketing Readability as an Online Marketing Tool Kicking Over My Traces Are you writing at the level of your desired audience? Cehweidel provides links to resources you can use to determine if your hitting your mark!
Carnival of Personal Finance Career Allocation… Asset's Estranged Cousin InvestorGeeks Have you ever considered diversifying your career the way you would your investment portfolio? Vince of InvestorGeeks discusses how to determine your career allocation.
Carnival of Project Management When Everything Goes Wrong Software Project Management Pawel Brodzinski provides leadership tips for what to do when everything goes wrong in your project.
Carnival of Real Estate Two Real Estate Cycles Real Central VA Jim Duncan shares his theory that "we are in the midst of two separate, distinct yet interconnected real estate cycles."
Carnival of the Capitalists Negotiate to Win (But Let Your Opponent Win Too) Bouncing Back Jeannie Bauer oulines three steps to make your negotiations more successful. The Best Post of the Week, Anywhere!
Cavalcade of Risk A 95% Failure Rate HealthFlux Wellness programs reduce health insurance costs, but their not catching on with businesses. Justin says providers need to bundle the programs with their insurance offerings to realize their benefits.
Festival of Frugality Cut College Costs GraceGarth Grace Garth has a fantastic way to cut your or your child's cost of college - don't take classes at college (if you can help it!)
Investing Carnival Buying the Right Franchise BOB - Business Opportunities Blog Looking to launch your own business by buying into a franchise? Marcus Markou advises you to perform all the due diligence you can do!
Personal Development Carnival Can We Copy Our Heroes? David Maister's Passion, People and Principles David Maister asks the question - but the real challenge is in the answering!

Previous Editions

August 17, 2006

The answers to the 25 Most Important Questions in the History of the Universe are both surprising and entertaining. Will scientists working on the next set of 25 questions will be able to rise to the same level of achievement?

Phil Miller notes the use of video games as potentially valuable training resources in developing human capital. Unfortunately, he fails to note the inherent irony in his example where they're being used to train people to play a game....

Donny Baseball does a far better job than I could in showing where Greg Mankiw goes wrong in his recent criticism of fundamental-weighted stock market indices.

The AFL-CIO continues its streak of success!

When will the trunk monkey get to be a standard feature instead of a dealer add-on?

The summer's biggest movie event will finally be here this Friday - will it live up to the hype?

August 14, 2006

People tap the equity they've built up in their homes for a variety of reasons. While the two most popular reasons are to pay for home improvements or to consolidate debt, Bankrate notes several other options for which people put equity to use:

Sometimes, the easiest way to pay tuition and fees for the kids' private school, or for college or technical school, is to turn to home equity. This is especially true for families whose incomes are too high to qualify for grants or student loans. There are also student loans for this purpose.

An equity loan can be a godsend if you are hit with thousands of dollars in medical bills or you lose your job. Tax advantages and lower interest rates also make equity loans an option when financing a car, motorcycle or some other high-priced purchase. Many a homeowner even uses equity in the primary home to make a down payment (or the entire purchase price) on a vacation home.

Regardless of their reasons, people considering home equity loans have a basic question they need to answer: how much equity do they have? That's where Political Calculations' latest tool comes into play. We've worked out the back-of-the-envelope math to estimate how much equity you may have available to you, and put it together in the tool below!:

House Valuation Data
Input Data Values
House Purchase Price
Estimated Current Value of House
Mortgage Data
Mortage Amount
Interest Rate (%)
Term of Mortgage (Years)
Frequency of Payments
Number of Payments Already Made
Home Equity Loan Data
Amount Currently Borrowed Against Equity


Home Equity Component Estimates
Calculated Results Values
Original Equity in Home (Down Payment)
Valuation Driven Change in Home Equity
Equity Accumulated Through Mortgage Payments
Home Equity and Payoff Estimates
Total Equity in Home (Original + Accumulated + Valuation - Borrowed)
Mortgage and Home Equity Loan Payoff Amount

The only information that a homeowner wouldn't necessarily already have is a current estimate of the value of their house. There are several different tools available that might be used to calculate the value of your home online, including:

If you live in an area that has seen rapid price appreciation, you might want to take a conservative approach and multiply your current home value estimate by 75% if it's substantially above your home's purchase price. Lending institutions will often work with such a reduced home value appraisal amount to limit their exposure to housing market volatility, particularly where their customers are seeking to refinance an existing loan.

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August 11, 2006

Carnival Midway from The Jerk If it's Friday, and this August 11, 2006 is, it must be time for the latest edition of On the Moneyed Midways, the only weekly wrapup of the best posts from the business and money-related blog carnivals, where one post each week is declared to be The Best Post of the Week, Anywhere!(TM)!

This week marks the return of the Carnival of Entrepreneurship, which often features the best business related posts in the blogosphere! We're also welcoming the Carnival of Real Estate this week, so keep on scrolling down....

On the Moneyed Midways for August 11, 2006
Carnival Post Blog Comments
Carnival of Business Giving Incentives to Employees..It's Not Just the Salary! The Good Human David of The Good Human delivers an excellent post that shows many of the factors that can help businesses retain good employees by focusing upon the things they value.
Carnival of Career Intensity Don't Read This Until You Are Irritated RadicalHop Peter Kua shows how irritations can be a motivational force that lead to success.
Carnival of Debt Reduction How to Tell If You're In Too Much Debt Free Money Finance FMF shares part of an MSNBC article that provides warning signs that you may be carrying too much debt.
Carnival of Entrepreneurship Ten Smart Moves to Improve Your Business Derek Featherstone's Box of Chocolates Derek Featherstone uses Item 1, combined with Item 3 for some thinking-outside-of-the-box advice for what it takes to make a small business successful. The Best Post of the Week, Anywhere!
Carnival of Investing Self Discipline and Investment Success Abnormal Returns Studies have shown that an individual's degree of self-discipline is a key factor in determining their future success in school - Abnormal Returns shows that's true for investing too!
Carnival of Marketing The Insider's Guide to Writing a Winning Proposal Spare Change Nedra Weinreich has been considering grants for approval by a government agency. Here, she shares what makes the difference between getting grant money or not!
Carnival of Personal Finance Kiplinger's Investor Profile: Dierdre Brazil, the Index Fund/Frugal Saver Strategy Free the Drones What if, after leaving school, you kept living at home and were able to invest 65% of your pay? For one recent graduate, that strategy has led to a six-figure net worth in just four years.
Carnival of Real Estate The Future of Real Estate Listings TruliaBlog The employees of the Trulia real estate search engine wonder if YouTube might be the direction that online real estate listings are heading in the future!
Carnival of Taxes 7 Habits of Highly Defective Taxpayers Gina's Tax Blog Did you ever want to really mess up your taxes? CPA Gina Gwozdz draws inspiration from her files.
Carnival of the Capitalists The Best Sports Deal in History Sportsbiz Mark uncovers the best business deal ever in the history of professional sports - imagine getting a share of TV revenue indefinitely without having to have a sports team!
Personal Development Carnival How to Give a Great Speech Brian Kim Public speaking is often one of the greatest challenges people ever face. Brian Kim delivers insight on how to make your presentations spectacular.
Personal Growth Carnival The Power of Personal Branding N2Growth Blog Matt Myatt says you should start building your own personal brand strategy yesterday - and he's right!

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August 10, 2006

The question seems obvious given all the news coverage related to the price of oil and the geopolitics related to its supply, not to mention the seemingly endless whining about SUVs on the roads of the United States from environmentalists, but really, how much gasoline is supplied to the average American, and how has that changed over time? Are individual Americans consuming more or less gas than they did in years past?

To find out, we first tapped the information available at the U.S. Energy Information Agency, which provided a nifty table showing the thousands of barrels of finished motor gasoline supplied to gas stations across the U.S. from 1945 through 2005.

Then, we consulted the estimates of the U.S. population over the same period provided by the U.S. Census Bureau (which we used in our previous tool for estimating the size of the U.S. population from 1900 through 2020.) Taking the total number of barrels of gasoline divided by the population provided the amount of gasoline supplied per capita in the U.S. shown in our chart below:

As can be seen in the chart, the amount of gasoline supplied per American in the U.S. rose steadily from 4.14 barrels per year in 1945 to a peak value of 12.2 barrels per year in 1978. Then, consumption fell off dramatically, reaching a low of 10.3 barrels per year in 1982. Since then, consumption has increased slowly, peaking in 1988 at 11 barrels per capita, dropping back to 10.4 barrels per capita in 1991, then rising slowly again to 11.3 barrels per capita in 1999 and holding essentially level ever since around 11.2 barrels per capita.

What that all means of course is that since 1999, even with the addition of some 26.4 million people to the U.S. population, Americans have become pretty good at conserving gasoline. In fact, the average American of 2005 got along on one full barrel less than the average American of 1978.

Maybe those whining environmentalists should turn their attention to more practical matters, like fighting clean energy producing wind farms....

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August 9, 2006

Since the Fed opted to keep (HT: William Polley) the Federal Funds Rate at 5.25%, and that the spread between the yields of the 3-Month (4.93%) and 10-Year (4.92%) U.S. Treasuries is flat at -0.01% as of market close yesterday, the current odds of a recession occurring in the U.S. sometime in the next 12 months is 37%. Or to be more precise, 37.3%.

Visualizing this data gives us the following picture:

For the odds of recession to reach the 50% threshold, the yield curve for U.S. Treasuries would need to invert by 0.44% for the current 5.25% Federal Funds Rate. In other words, for yesterday's 3-Month Treasury yield of 4.93%, the yield of the 10-Year Treasury would have to be 4.49% or less for the probability of recession beginning in the next 12 months to rise above a 1 in 2 chance of happening.

Question of the Day: For that kind of yield curve inversion to happen, what does that say about the bond market's expectations for inflation?

Update: Barry Ritholtz parses the Fed's statement!

August 8, 2006

Since Barry Ritholtz asked the question yesterday, we here at Political Calculations thought we'd take it on. And why not? We've got the tools - let's use 'em! Better yet, unlike certain alarmist analysts (HT: Arnold Kling) and their deeply partisan "echo chamber," (HT: Mark Thoma) we make them freely available so you can too!

But enough about us and politically-motivated economists. Using the following U.S. Treasury yield data from yesterday's market close (currently available here), and using our 12-month recession odds tool, we found the following probabilities of a recession occurring in the next 12 months for the potential actions the Fed might take at its meeting today (8 Aug 2006):

Monday, 7 Aug 2006 Closing U.S. Treasury Yield Data
U.S. Treasury Term Yield
10-Year 4.91%
3-Month 4.96%
Probability of Recession Occurring in Next 12 Months
Most Likely Fed Actions Odds
Raise Federal Funds Rate by 0.25% to 5.50% 41.8%
Leave Federal Funds Rate Unchanged at 5.25% 38.4%
Lower Federal Funds Rate by 0.25% to 5.00% 35.1%

Just for fun, we'll note that if the Fed followed a Taylor Rule much like Greg Manqiw recently outlined, they would raise the Federal Funds Rate by 0.17% to 5.42%, which would give the U.S. economy the probability of entering into recession in the next 12 months of 40.7%.

The three most-likely outcomes are illustrated in the following chart, which shows the Fed's most recent tightening cycle:

So, what does all this mean? Well, as far as we're concerned, we wouldn't consider a recession to be likely until that 50% threshold is crossed, and even then, we would need to see the probability of recession continue to increase substantially much as it has in preceding other recessions over the past 40 years - unlikely given the amount the yield curve would have to invert at these Federal Funds Rate levels.

Otherwise, we'd be just like all those other overly gloomy prognosticators with highly suspect and really pessimistic economic models, whom we suspect are really seeing things the way that dead people do.

But what else should we expect during an election year?...

August 7, 2006

Read what cows Tyler Cowen! Presumably, Alex Tabarrok, the other half of Marginal Revolution, would have no such reservations....

Barry Ritholtz' post on Demand Driven Inflation and its disproportionate effects on small businesses (and their customers) is right on.

The Skeptical Optimist shows why the mortgage payment analogy really doesn't work for discussions of the national debt.

Wishful thinking breaks out all over!

Perhaps the Best News Ever for the Darwin Award crowd!

Finally, why won't the New Coke just die, already?...

August 4, 2006

Carnival Midway from The Jerk Welcome to the August 4, 2006 edition of On the Moneyed Midways, an "ubercarnival" dedicated to compiling the best posts from each of the week's blog carnivals dedicated to money and business-related matters, where one post each week is declared to be The Best Post of the Week, Anywhere!(TM)!

Speaking of which, this week, we were absolutely surprised by the topic of the post we found to be The Best Post of the Week, Anywhere! Not so much the writing, but the topic, which we ordinarily find to be exceedingly dry.... Scroll down and see if you don't have the same reaction!

On the Moneyed Midways: August 4, 2006
Carnival Contributor Post Comment
Carnival of Business 7 Ways to Destroy Your Business OnlyOneMike.com Want to know how to kill your entrepreneurial efforts? Mike lists seven things you can do to ensure your business failure was not left to chance!
Carnival of Business 10 Career-Ruining Habits RadicalHop You may be smart and sassy, pretty or fine-looking, and may even graduate at the top of your class, but the rules change when you put yourself on the road to corporate success. Peter Kua shows 12 (not 10!) things you can do to trash your professional life.
Carnival of Debt Reduction How we paid down our debt and saved money at the same time..it can be done! The Good Human How can you pay down your debt levels and put aside money? David shows how making "weekly payments" can put you on the right financial track!
Carnival of Home Business Mindful Marketing on a Shoestring Budget eMoms at home Serial home-entrepreneur Wendy Piersall shares low-cost ideas for spreading the word about your business.
Carnival of Investing Technical Analysis: The Big Picture Professor Bainbridge Law professor Stephen Bainbridge *really* doesn't like technical stock market analysis.
Carnival of Marketing Are Your Products Good Enough To Give Away - For Free? StopBuyingCrap.com How do you know if your product has made it to the top? Cap says you should see if other people give it away for free!
Carnival of Personal Finance The One Armed Economist Ask Uncle Bill Uncle Bill picks apart alarmist Boston University Professor Laurence Kotlikoff, a man who sees economic disaster around every corner, and is offering some disasterously bad advice.
Carnival of the Capitalists How to Make Budgeting Simple and the Budgets Ambitious Aloys Hosman Lessons from a pro on how to make the budgeting process better. Surprisingly, The Best Post of the Week, Anywhere!
Cavalcade of Risk Risk Analysis Using Roulette Wheels Marginal Revolution Alex Tabarrok points to a Mahalanobis post showing how roulette wheels can be used to educate patients on the risks involved with prostate cancer treatment.
Festival of Frugality More Ways to Reduce Paper Pocket Change AJ highlights a new service that delivers money-saving coupons to your cell phone!
Personal Development Carnival Why the Simplest Solution May Not Be the Best Mike Nicholson.org Software programmer Mike Nicholson draws from his coding and life experience to show how a "quick fix" may come back to haunt you and goes on to show how "reprogramming" may help cure future problems.
Personal Growth Carnival 21 Ways to Be More Creative Christine Kane Singer/blogger Christine Kane provides 21 suggestions for unleashing your creative inspirations.

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