CERF Blog

President Obama tells us that the highest return investment you can make is in your own (or your children’s) education.  The aggregate statistics appear to bear this out with college graduates earning about 50% more than high school graduates.  Even after taking into the direct cost of four years of higher education along with the… Read more

After the market close last Thursday, JP Morgan Chase (JPM) announced that it had incurred a large loss in a “hedge” position.  The loss is rumored to be approximately $2.3 billion.  If it was truly a hedge position then there presumably is a gain on the item being hedged.  I did not see any mention… Read more

The two candidates for president in this fall’s election had very different perspectives on last Friday’s jobs report.  President Obama pointed to the 26th month in a row of private sector job gains and the  cumulative four million job gain over this period.  On the other hand, putative Republican nominee Romney assailed the paltry 115,000… Read more

This morning I ran across this piece on five people who have left the labor force.  It a why-and-how-are-they-dealing-with-it type of thing.  What struck me was that four of the five were either back in college or planning on going back to college, some for advanced degrees. Improving human capital is a reasonable response to long-term unemployment,… Read more

Some financial innovations are good ideas and make large contributions to economic growth and prosperity.  Others are not so good and can lead to bad outcomes including excessive leverage, financial fragility and even financial crises.  Economists Posner and Weyl1 suggest that it is possible to assess the potential benefits and costs for new financial products… Read more

The first release of GDP data came out this morning with an advance estimate of 2.2 percent growth for quarter 1. Contributions of growth from the major components were: Consumption Expenditures                       2.04 Investment Expenditures                           0.77           Fixed Investment                             0.18           Inventory                                          0.59 Government Expenditures               … Read more

Student loans now total over $1 trillion and delinquency rates are rising.  Many young people are burdened in their 20’s with tens of thousands of dollars of student debt.  Some commentators have pointed to student loans as the “next subprime.”  What does this mean?  Does it mean that student loan defaults are expected to cause… Read more

I am worried that societies and/or their governments have chosen to commit taxpayers to underwriting the solvency of banks. Economic research has shown clear benefits to financial intermediation. The collection of savings creates a pool of funds that can be used to finance business expansion. Banking is very important to economic activity. The United States… Read more

Last month the Federal Reserve released minutes from the March 13 FOMC meeting.  These minutes suggest that the members perceived the economy to be improving.  The knee jerk reaction of market observers was to conclude that Fed easing policy was closer to being over than they thought before the release of the minutes.  Treasury yields… Read more

The United States Employment Situation for March indicates a cooling of job growth that is consistent with our forecast, although somewhat more pronounced than our forecast. It was the services part of the economy that had the greatest slowdown in job creation, from 204 thousand in February down to 90 thousand in March. And, a… Read more

David R. Henderson has a nice piece on property rights.  The title of this post is a quote from Henderson’s article. It’s a nice piece with three example of “policy issues’ that cause conflict and one that does not cause conflict.  Here’s his first paragraph: Should restaurants allow smoking or not? Should schools teach evolution… Read more

The Fed’s Flow of Funds (FOF) report shows that household sector net worth is approximately $60 trillion.  This wealth in concentrated in households headed by people aged 50 or older.  After all, for most people it takes time to build up wealth in the form of stocks, bonds, real estate and other tangible assets.  The… Read more

The title of this post is the title of a paper by Madeline Zavodny.  In the paper, Zavodny tests  to see if immigrants, especially educated immigrants, create jobs for resident Americans or take jobs away from them.  She finds big positive impacts.  That is, her work indicates that educated immigrants create jobs for resident Americans.… Read more

A couple weeks ago the Federal Reserve announced results of the latest Comprehensive Capital Analysis and Review (CCAR), aka stress test, for large banks.  The stress scenario included 13% unemployment, a 50% drop in stock prices and a further 20% drop in housing prices.  Basically, the scenario is a severe double dip recession.  In order… Read more

Dan Walters has a piece on California’s proposed licensing of interior designers, and I recommend you read it.  Here’s his concluding paragraphs: Is there any public interest need for such licensing? If an interior designer botches a job – painting a wall magenta instead of puce or some such – it’s not a matter of life… Read more