29 April 2019
Question: According to MSN: Money, what are twelve (12) budgeting myths you need to stop believing?
Hong Kong rallies to resist extradition law – Pg. 1
– Tens of thousands of people march to Hong Kong’s parliament yesterday, demanding that the government abandon its proposed extradition law that allows people from the former British colony to be sent to mainland China to stand trial
– The proposed law has spooked a cross-section of Hong Kong, including business leaders, lawyers, professional groups, journalists and human right agencies, who fear it might be used as a weapon against anyone passing through the international transport hub
Poor inflation data cloud Fed’s next rates move – Pg. 2
– Sluggish inflation numbers are over-shadowing firmer US economic growth and igniting a debate in the Federal Reserve over whether the next move in interest rates will need to be down rather than up
– …likely to keep policy unchanged at 2.25 to 2.5% when it meets tomorrow and Wednesday
– The US on Friday posted strong growth, with the economy expanding at 3.2% annualized pace, adding to signs that a slow growth scare earlier this year was overstated
– …US headline growth figures vastly overstated the economy’s underlying strength…
– A key measure of underlying private demand expanded only 1.3% in Friday’s Bureau of Economic Analysis report, down from 2.6% in the fourth quarter
– The core personal consumption expenditures price index rose at a 1.3% annualized pace in the first quarter…
– Inflation’s persistent weakness is troubling the Fed, given it has failed since the recession to keep price growth at its 2% target
EU students face fees rise in UK after Brexit – Pg. 3
– The proposal would see tens of thousands of EU students, who are currently charged the same tuition fees as home students, facing a big increase in fees from 2021 after Brexit
– The proposal to end the preferential treatment for EU students has been made by Damian Hinds, education secretary, a May loyalist,….
Brexit casts doubt on use of sterling as global reserve currency – Pg. 4
– Brexit is likely to threaten the pound’s status as a global reserve currency ….
– The pound’s history as one of the most important global currencies has meant central banks have long held assets denominated in pounds that can be sold quickly to curb swings in their own currency’s exchange rates
– Such a exodus from sterling would weaken the currency and raise borrowing costs for the UK government, which has long benefited from the pound’s popularity as a reserve currency
– The pound was the global reserve currency of choice until the middle of the 20th century, when it was superseded by the dollar
– Central banks choose reserve currencies from sovereign issuers that boast economic clout, stability and open financial markets. Today, sterling is the fourth most popular reserve currency after the dollar, the euro and the yen. Since the UK voted to leave the EU in June 2016, the pound has fallen from above $1.45 to below $1.30
– Assets denominated in the pound still make up about 4.5% of official reserves….
Fed patience faces test as US stocks rebound and dollar continues to rise against euro – Pg. 8
– The worst December for US stocks sicne 1931 caused the central bank to confirm a dovish turn in March, suspending interest rate increases and ending its programme to reduce assets held on its balance sheet
– The euro has already fallen below $1.12 against the US currency, a two-year low
The Arctic Ocean – Pg. 15
– One-tenth of all Russia’s economic investments are currently in the Arctic region…
– The message is clear. If you want to sail through the Arctic and travel to and from Asia faster, or have designs on the oil and gas assets beneath the sea, you will be under Russian oversight
– …during ice-free months, eastward shipment from Europe to China through the NSR is estimated to be around 40% faster than the same journey via the Suez Canal, lopping hundreds of thousands of dollars off fuel costs and potentially cutting carbon dioxide emissions by 52%
– With a fifth of its land inside the Arctic Circle, Russia has gone in search of more territory, claiming that underwater ridges mean it should be granted another 1.2m square kilometres of the Arctic Ocean
– This week the US announced it had ordered its first icebreaker for more than two decades, spending $746m on a ship to be ready in 2024
– Russia built the world’s first icebreaker, the Yermak, 120 years ago. In 1957, it build the first nuclear-powered version, the Lenin
– Arctic ice has shrunk by 12.8% a decade on average since 1979, …
– Russia has the world’s only fleet of nuclear icebreakers
Answer: (1) You absolutely cannot go overbudget (Prof Note: You must understand why you are overbudget and ALWAYS have a revenue offset); (2) Budgeting is a snooze (Prof Note: It is an active exercise and must be understood as dynamic); (3) Budgeting is another word for depriving yourself (Prof Note: You want more, get a side hustle, a higher paying job, work more hours…do not overspend); (4) Budgeting is a hassle. Who has time? (Prof Note: Make the time!); (5) You can just keep a budget in your head (Prof Note: Write it down and work the budget!); (6) I have math. There’s no way I can budget. (Prof Note: Really? First great math?! Revenue less expenses must be positive….”To Done”); (7) I have a good job, so I don’t need to budget (Prof Note: If you have a job you are working for someone else. You need a budget to ensure your investment passive income grows negating the need for a job!); (8) Budgeting’s not necessary if you’re debt-free (Prof Note: See #7); (9) Budgeting matters only if you’re saving for a big purchase (Prof Note: You never know when the financial catastrophe will occur….); (10) I have way too much debt, so what’s the use? (Prof Note: That is a defeatist perspective. Work the debt. Do you have the right type of debt?); (11) Budgeting can wait until I’m older (Prof Note: The longer you wait the more “free” money given up through compounding years); (12) I’ve never made a budget. Why start now? (Prof Note: If you are aged 65 or older, there is a point to this question. Younger: “Really???”)