16 May 2019
Question: According to MSN: Money, what is the average net worth required to be considered “wealthy”?
Germany enjoys first-quarter rebound – Pg. 2
– The German economy expanded 0.4% in the first quarter of 2019, ending the slowdown of the second half of last year and dispelling fears of a more prolonged economic malaise
– The EU’s largest economy narrowly avoided a recession last year, with GDP flat in the final quarter, having contracted in the preceding three months
– Despite the positive performance, German bond yields fell, reflecting concerns over deepening Sino-US trade tensions and worries about global growth.
– The recent escalation of the US-China tariffs war looms over German growth for the rest of the year, although the German economy has been spared a hit from new US tariffs
– Growth was boosted by domestic factors, including strong data for construction and machinery investment as well as healthy private consumption
– Economists expect the economy to expand 0.8% this year, more slowly than the 1.3% forecast for France and 2.2% for Spain
– …number of jobs in the Eurozone rose by an annual rate of 1.3%, defying widespread expectations of a slowdown in the rate of growth
Brazil student protest against Bolsonaro cuts – Pg. 3
– At issue are Mr Bolsonaro’s plans to slash spending on federal universities and shift funds from the humanities to areas that he says can “generate immediate return to the taxpayer, such as veterinary, engineering and medicine” (Prof Note: I have often commented that it is possible to get as much borrowed $$$ for a liberal arts degree than a science degree despite there being a large differential in earning capacity, on average, for the student. I question the underwriting for students loans, i.e. I worry that many students have loans that will keep them in perpetual debt and prevent them from realizing the “American Dream”)
Alabama abortion bill sets stage for legal battle – Pg. 3
– …legislature that would ban most abortions in the state…
– …aimed at overturning the 1973 Roe v Wade ruling in the Supreme Court that gave women the constitutional right to terminate pregnancies
– The measure seeks to outlaw abortions at every stage of pregnancy unless the mother faces a “serious health risk”, after an amendment proposing limited exceptions in cases of rape and incest was rejected
– Alabama has some of the country’s most restrictive abortion laws…
– Women have to take a scan, receive mandatory counselling and wait 48 hours before the procedure
– By making abortion a felony offence, doctors who perform the procedure could face up to 99 years in prison. Women would not be held liable
– (Prof Note: I have tried to wade into intellectual discussions of abortion laws twice with two highly educated sets of women. I have found two things to be true: (1) This is a highly emotional issue and (2) On a personal note, it is just best for me to avoid this subject.)
Cost of US-China tariffs creep up on households – Pg. 4
– …estimated the administration’s decision to boost tariffs on $200bn of imports from China would increase the deadweight cost to $6.6bn a month, or $628 per household a year
– …prices on a basket of household products rose 2.5% in the year to the end of March, more than double the rate of a year ago. Good and drink prices rose 2%, up from 1.4% increase the previous year
– Overall inflation remains quiescent, with the core personal spending price index rising just 1.6% on year-on-year in March, et the Fed’s bigger concern in recent months has been low price growth
Law firms rife with bullying and sexual harassment, survey finds – Pg. 14
– Sexist and sexually suggestive comments were the most common form of harassment, while 22% of sexually harassed respondents had been subject to physical approaches
– Bullying was also reported as a significant problem, …
– The US, Canada, Australia, South Africa and Nigeria were the worst countries for sexual harassment…
Banks resist demand to shed more daylight on forex charges – Pg. 19
– Some of the biggest banks in the $5tn-a-day currency markets…
– Trading in currencies does not involve commissions. Banks make money by slapping a spread on transactions, make it somewhat more expensive for clients to trade with them than for banks to trade with each other
– Under rules brought in last year by the second Markets in Financial Instruments Directive, banks have to explain mark-ups and costs they impose through those means, with the aim of helping investors pick which banks to deal with
– …foreign exchange trading has been one of the steadier lines of business in the aftermath of the financial crisis, as other areas like credit and commodities have waxed and waned
Answer: $2.27m (Prof Note: This is absurd! It is NOT net worth that matters. For instance, assume one inherited a family property that had a market value of $25.0m. The property had NO debt. Assuming no other assets, the individual inheriting the property’s net worth is now $25.0m. Wealthy? Now assume the property is a family legacy property and the person refused to ever sell it. The property has annual operating costs of $250,000. Is the person wealthy? I argue, “no”. The individuals just inherited a $250,000/yr invoice. Wealth is more about passive income than asset valuation!)