Tag: Prof Note

27 August 2018

 

Question: According to MSN:Money, what 8-step plan do financial planners recommend for paying off credit card debt?

 

Price of Trump’s tariff war likely to be paid by consumers, warn Fed chiefs – Pg. 1

–          Moves by US companies to shift the cost of President Donald Trump’s tariffs to their customers risk complicating monetary policy decisions as the Federal Reserve seeks to keep inflation steady,…

 

Tinkering at the edges will not deliver a stronger euro – Pg. 9

–          …idea of establishing a competitor to the Society for Worldwide Interbank Financial Telecommunication – the global payments and financial information system better known as Swift

–          Since it began operating in 1977, Swift has provided a vastly more efficient cross-border payment infrastructure than the previous system based on communication by telegraph messages.  A modern competitor to Swift may or may not be useful, …

–          The Russian central bank has already set up an alternative, for domestic use mainly

–          The reason why European companies are vulnerable to US sanctions has nothing to do with Swift

–          Swift is based in Belgium and subject to Belgian law.  The US exercises no formal control over its governance

–          …the true source of US power lies in the global role of the US dollar and the predominance of the American financial system

–          The Trump administration is also in the position to cut foreigners out of US financial markets, or stop them from travelling to the US if they continue to do business with Iran.  These are known as secondary sanctions…

–          The euro is the world’s second largest currency, but is trailing the dollar on all important metrics by wide margins: for central reserves, cross-border payments and investments; for foreign exchange; and in debt and loan markets

–          It does not seem possible for the euro to strengthen its global role without a single safe asset – a Eurobond.  Modern financial markets require the presence of risk-free securities to function effectively

 

Burden of knowledge/US student debt surges – Pg. 13

–          The US student loan burden has swelled past $1.5tn, despite lending volumes falling for more than half a decade, as graduates fall behind on payment plans and debt relief programmes fail to offer sufficiety succor

–          The overall size of US student loan debt has grown by $500bn since the 2010-11 academic year, ….but the credit rating agency notes that loan origination has declined every year since then

–          The student loan delinquency rate – how many loan balances are overdue by 30 days or more that were not delinquent the previous quarter – fell to a 12-year low of 8.8% in the second quarter of 2018,…

–          The unemployment rate for graduates with a bachelors degree or higher stands at just 2.2%, compared with 5.1% for those with less than a high-school degree.  Nonetheless, student debt remains the worst-performing area of consumer credit

–          (Prof Note: How can young people possibly understand the ramifications and consequences of this crushing debt when I (sorry if this is perceived as arrogant…not meant to be) when my own thoughts (I am well into my 40s) are still maturing on amortization and debt?!  One things I say in class, “Debt <> Debt”.  That is true but also very complicated to understand and I am still maturing in my understanding an defining.)

 

Answer: (1) Change your spending patters (Prof Note: Track Starbucks to the penny); (2) Figure out what you owe (Prof Note: Identify, Quantify, Fix); (3) Roll your balances into a new form, such as a lower APR card; (4) Tap into your assets (Prof Note: Be careful with tax consequences when selling the bonds Aunt Ida left you in her estate.  Be prudent); (5) Choose your debt paydown strategy (Prof Note: Speak with several advisors/experts.  You must learn!); (6) Focus on one card at a time (Prof Note: Small battles, lead to bigger, lead to winning the war); (7) Break down big paying-off-debt goals into smaller ones (Prof Note: I call this making it palatable.  Get a calendar, build an income statement with budget, and plan.  I still do this with projects today.  It is never as scary when written down with a plan.); (8) Promise yourself to never carry a credit card balance again (Prof Note: I learned from attorneys to never make “absolute” statements.  Promise yourself that without a medical emergency, etc, you will never…)

23 August 2018

 

Question: According to MSN: Money, what are the downsides of retirement that nobody talks about?

 

Trump lashes out at Cohen as prosecutors close on inner circle – Pg. 1

–          …Paul Manafort, the former campaign boss found guilty of tax evasion, bank fraud and hiding foreign bank accounts

–          (Prof Note: Just a comment but, I believe, Mr. Manafort’s personal spending habits were on trial.  I have no conclusion but I will be thinking twice about how I make any luxury purchases (I make very few, if any) in the future.  Are points on a credit card worth the loss of privacy?  I must ponder.)

 

Manafort faces years in prison after dramatic fall from grace – Pg. 3

–          The jury found Mr Manafort guilty of eight of the 18 charges levied against him by the US government: five counts of tax fraud, one count of hiding foreign bank account and two counts of bank fraud

–          A business law graduate of Georgetown University…

–          …Mr Manafort failed to pay tax on at least $16.5m

–          Next month, Mr Manafort will stand trial again – this time in Washington – as he confronts a separate set of charges…

–          (Prof Note:

 

Mortgage bond investors warm to retail sector after reversal of ‘big short’ trade – Pg. 17

–          Commercial mortgages of US retail properties are making up an increasing percentage of the loans that are bundled together in bonds for sale to investors, reflecting a thawing of sentiment towards the sector

–          The percentage of retail mortgages in new, so-called conduit commercial mortgage-backed securities, where multiple loans are combined for sale, have risen to 32% since the start of July, after almost two years of weak interest among investors

–          The figure so far this quarter compares with 24% in the second quarter and a low of 22% in the first – and with 24% for 2017 as a whole, …

–          Investors have worried about the ability of shopping mall owners to make mortgage payments and repay loans in an age where ecommerce is taking a toll on traditional retailers

–          Many bricks and mortar retail chains have pulled out of second-tier malls as they cut store numbers and lay off staff

–          The newly issued CMBS appear to include a narrower range of loans from the retail sector, excluding many of the regional malls most reliant on big-name “anchor” tenants to draw shoppers and focusing instead on top-tier properties

 

Answer: (1) Your net worth becomes meaningless when you retire (Prof Note: What have I been saing???!!!  Passive Income Baby, Passive Income!!!); (2) Taxes can take a big bite out of retirement income; (3) Inflation can impact your retirement income needs  (Prof Note: Did you really need those two Starbucks a week for 20 years?); (4) You might outlive your savings (Prof Note: Passive Income Baby, Not principal); (5) Long-term care costs could wipe out your savings (Prof Note: Look at family history, if possible); (6) You might not be prepared for high healthcare costs; (7) Living on social security alone will be challenging; (8) You might become bored; (9) You may have to keep working (Prof Note: Peter D, “Do what you love and you never work again!”; (10) You might have to move in with your kids (Prof Note: Ask yourself, would you child have rather you paid for their University or be self-sufficient in retirement?); (11) You might feel guilty about spending your savings; (12) You may be forced to withdraw retirement money you don’t need; (13) Moving might be a bad idea; (14) Keeping up with your friends may be harder (Prof Note: Friendships and relationships become more and more important to me as I age.  People are what matter!)

Question: According to MSN:Money, what are items that no man over 40 should have in his home?

 

Venezuela devalues currency by 95% in effort to save off collapse – Pg. 1

–          Venezuela resorted to desperate measures to arrest economic collapse yesterday, lopping five zeros off the bolivar, devaluing it by 95% and tying it to an obscure state-run cryptocurrency

–          As it tries to curb hyperinflation – by some measurements, the worst in Latin American history – the government is also slashing fuel subsidies are raising the minimum wage by 3,000%

–          Annual inflation is running at more than 80,000%, and the IMF has predicted it will hit 1m% this year.  Prices are doubling every four weeks, making life desperately hard for millions of poor Venezuelans, many of whom are going hungry or fleeing

–          The massive rise in the minimum wage is to compensate workers for the dizzying price rises and comes into force next month.  It will take the monthly minimum wage from less than a dollar to about $30.  Business owners say it will have a devastating impact on employment

 

Germany to record world’s largest surplus for third years – Pg. 2

–          Germany is on course to have the world’s largest current account surplus for the third year in a row – a situation likely to bring further international pressure on Berlin to rebalance its economy

–          …7.8% of the country’s GDP, in 2018.  The figure is only slightly below the 7.9% recorded for 2017

–          The size of Germany’s surplus partly reflects its competitive companies and years of wage restraint, and the eurozone’s largest economy has also benefited from a relatively weak single currency

–          The US was set to record the biggest deficit at almost $420bn…

 

US banks tap the brakes on consumer credit – Pg. 12

–          …at the beginning of last year, household debt surpassed its last peak, in 2008, many pundits speculated about the possibility of a new financial crisis.  But US household debt – all $13.3tn of it, according to the New York Fed – is much lower, relative to both GDP and disposable income, than it was in the run-up to 2008

–          Quarterly write-offs of bad credit card debt at US banks peaked at nearly $19bn in the first quarter of 2010 and bottomed at below $5bn in 2015, … since then they have crept back above $8bn

 

Answer: (1) Figurines in boxes; (2) Posters without frames; (3) A condiment drawer; (4) Frozen dinner or snacks; (5) Instant coffee; (6) Sugary treats; (7) Soft drinks (Prof Note: GUILTY!); (8) Bar Décor; (9) Sports trophies; (10) Fake foliage; (11) Plastic shelves; (12) A futon; (13) A recliner with built-in cup holders; (14) Threadbare sheets and towels; (15) Clutter; (16) Sheets used as curtains; (17) A beer can or bottle collection; (18) A mattress with no frame; (19) Mismatched dishes; (20) A Bean Bag chair; (21) Sports paraphernalia; (22) DJ equipment; (23) Christmas lights as decoration; (24) A video game station (Prof Note: I just placed NES and SNES in my houses and was just playing MarioKart Saturday night.  Perhaps I should not admit to this!); (25) Novelty anything; (26) Glassware with Logos (Prof Note: I do have my Hopkins mugs!); (27) A grilled cheese maker; (28) Blankets as clothing; (29) A flimsy knife set; (30) Huge speakers; (31) Mounted weaponry; (32) Socks with holes; (33) Cheap cologne or body spray; (34) Ill-fitting clothing; (35) Wire or plastic hangers; (36) Fluorescent bulbs; (37) Bowling shirts; (38) A mess (Prof Note: I did very well on this one!)

20 August 2018

 

Question: According to MSN:Money, what are three (3) reasons you’re not making more money at work?

 

Beijing orders banks to support exporters as trade war fears rise – Pg. 1

–          China’s banking regulator has ordered banks to boost lending to infrastructure projects and exporters as Beijing seeks to counter mounting concerns about the intensifying trade war between the world’s two biggest economies

–          …disrupting US banks’ plans to expand in mainland China.  US lenders fear the dispute will hamper their scramble to take advantage of new rules allowing them full control of their mainland Chinese subsidiaries

–          China’s currency and stock markets have fallen since then, reflecting investor nervousness about slowing growth and the impact of the trade war

–          Pressure has been building on the renminbi, which fell almost 7% against the dollar….on August 15

–          So far about 10% of China’s annual exports to the US have faced punitive tariffs, …

–          (Prof Note: I do worry about this trade war.  In the last five years I feel as if much of the US educational system has been based on Chinese students.  If the students stop coming to the U.S., I am convinced many U.S. educational systems will implode!)

 

Mental health – Pg. 14

–          I could not have imagined how bad it would be for my self-esteem to be the only man in the school parents’ groups – recipient of emails routinely addressed to “Girls!”

–          He [the accountant] said he had done worth 25,000 (sterling), but had written off 50%.  (Prof Note: You MUST stay on top of bills and play experts off each other, e.g. How long should “X” have taken.  This is why, and I do realize this takes $$$, I always run legal bills through other counsel.  It is also easier to negotiate when one is on top of the bills.  I have found VERY unscrupulous lawyers and accountants that absolutely place their thumb on the scale when weighing their smelly fish!)

–          Nobody had seen this coming, because I had hidden my struggles from everyone

–          I resolved to do everything possible to get better: group therapy, cognitive behavioural therapy, drama therapy and art therapy, yoga and qigong

–          Being self-employed had been wonderful for several years, and in adversity I lost focus and felt alone

–          Sharing financial difficulties was excruciating, but I have learnt that if I need help I should have the humility to ask for it

–          (Prof Note: Mental health is important.  It is real and it is serious.  When my family was murdered and my five-year saga began the first thing I did was take my own, very difficult to take, advice.  I raised my hand, phoned trusted peers, and said, “I am in trouble, I need help.”  Without exception each provided me that help.  Some agreed to take payment as I insisted I needed to be a priority in their lives (I was/am blessed).  Occasionally I am blasted by a list-serve member, that is summarily deleted, for pushing everyone to earn and build and protect wealth.  Just as in this case, please read the entire article, assistance, the best assistance, often must be purchased.  Build your war chest, protect your war chest, it may be your recovery, your justice, your medical care, and can lead, in my opinion, to your finding happiness.  Just my opinion.)

 

How AI can spot exam cheats and raise standards – Pg. 11

–          Technology is being deployed by those who set and mark exams to reduce that fraud – which remains overall a small problem – and to create far greater efficiencies in preparation and marking, and to help improve teaching and studying

–            Coursera has patented a system to take images of students and verify their identify against scanned documents

–          Online publishers in some subjects, such as mathematics and finance, create unique questions by randomly changing the numerical variables used in exam questions

–          Isabelle Bajeux-Besnainou, dean of McGill University’s Desautels Faculty of Management, says algorithms can be used to update tests (Prof Note: I MISS ISABELLE!  How we let her go at GWU is a mystery!  How many GWU finance professors/deans have been featured in the FT?  This is the second time for Isabelle!  Go Isabelle, GO!!!)

 

Answer: (1) You’re not boosting your skills (Prof Note: I am a huge proponent of increasing skills so that employers fear one leaving rather than the employee fears being made redundant, etc.); (2) You don’t take initiative (Prof Note: Be strategic in the initiatives taken.  Does this advance both the corporation and my personal skill set(s)?  If you spend 5 years learning a proprietary system whose skills are non-transferable, have you placed your career and family finances at risk?); (3) You haven’t actually asked for a raise (Prof Note: I do not agree with this either.  I think the employer needs to be aware of market value and skills value.  Annual compensation should be reviewed and discussed and adjusted, as necessary.  Employees are the best asset!)