Tag Archives: CPI

The Time Has Come For Southern California House Prices To Take A Rest

By Richard Green, Contributor

DataQuick today reported that house prices in Southern California have risen 28 percent from the last year.  A year ago, people who were buying houses in this part of the world were getting a good deal.  Now, the deal is so-so.

Take a look at the table below (it is something I constructed for my class on mortgages and mortgage backed securities).  The numbers on the vertical axis (.03,.05,.05..)are cost of capital numbers–the financing costs of owning a house.  Generally speaking, the cost of capital for owning a house is the mortgage rate plus one percent, which reflects that the cost of the equity in the house (the down-payment) is higher than the cost of the mortgage.  The numbers across the horizontal access (10, 15,20…) are rent-to-price ratios.  Suppose you can own a condo for $360,000; the rent on the same unit is $1500 per month or $18,000 per year.  The price to rent ratio is then 20.

In the example given here, we are looking at a household that pays a federal marginal tax rate of 25 percent, a state marginal tax rate of 7.9 percent, faces closing costs of 3 percent, annual maintenance cost of 2.5 percent, a property tax rate of one percent, a Realtor commission of 5 percent, and expects to hold the property for five years (feel free to email me at richarkg@usc.edu if you wish to put your own assumptions in the spreadsheet that produced the numbers listed below).

As it happens, I have been looking at costs and rents in Westwood, a neighborhood just west of Beverly Hills and on the other side of the 405 from Brentwood.  Rents on 2 bedroom units run around $28 per year per square foot; prices are around $650 per square foot, so the price to rent ratio is around 23.  With current mortgage rates at 4.5 percent, the cost of capital is 5.5 percent.  So lets look at the cells that are bolded: a price to rent ratio of 23 and a cost of capital of 5.5 lies in the middle of them.  The numbers in the cell is the amount of appreciation that is required each year that one holds a property for renting and owning to break even with each other.

So right now, for owning to be a better financial deal than renting, prices must rise around 4 percent each year.  Is this feasible in the long run for Los Angeles?  Yes, because over the long term, prices in LA tend to rise by about the rate of inflation plus one percent, so if we think 3 percent steady state inflation is in our future, we should be fine.  But will it rise much more than inflation plus one percent for a long time?  I doubt it.  And of course, CPI growth is less than two percent right now.  House prices are about where fundamentals say they should be, but it is time for increases to slow down.

Price to Rent Ratio
10 15 20 25 30
0.03 -0.031 0.003 0.020 0.030 0.036
0.04 -0.024 0.010 0.027 0.037 0.044
0.05 -0.017 0.017 0.034 0.044 0.051
Cost of Capital 0.06 -0.009 0.024 0.041 0.051 0.058
0.07 -0.002 0.031 0.048 0.058 0.065
0.08 0.005 0.039 0.055 0.066 0.072
0.09 0.012 0.046 0.063 0.073 0.079
0.1 0.019 0.053 0.070 0.080 0.087

Source: FULL ARTICLE at Forbes Latest

Surging Gasoline Prices Push CPI Inflation Higher, But Weak Core Fuels Taper Uncertainty

By Agustino Fontevecchia, Forbes Staff

With the market’s attention focused on Fed Chairman Ben Bernanke and the possible tapering of quantitative easing this year, Tuesday’s inflation numbers must have been slightly disconcerting for investors.  The Bureau of Labor Statistics announced the consumer price index (CPI) jumped 0.5% in June, accelerating since May and breaking a dangerous deflationary trend that had been building up.  Most of the increase, though, came from a surge in gasoline prices, which directly affects consumers across the nation.  The more closely watched core CPI reading, which excludes food and energy, gained a more tepid 0.2%. …read more

Source: FULL ARTICLE at Forbes Latest

Consumer Prices Driven Higher by Jump in Gas Prices

By Reuters

consumer prices gasoline june inflation cpi

Filed under: , , , ,


WASHINGTON — U.S. consumer prices rose more than expected in June as gasoline prices jumped, but underlying inflation pressure remain benign against the backdrop of lukewarm domestic demand.

The Labor Department said Tuesday its Consumer Price Index increased 0.5 percent, the largest increase since February, after nudging up 0.1 percent in May. Gasoline prices accounted for about two thirds of the increase in the CPI.

Economists polled by Reuters had expected consumer inflation to increase 0.3 percent last month.

In the 12-months through June, consumer prices advanced 1.8 percent after rising 1.4 percent in May. It was also the largest increase since February.

Stripping out volatile energy and food, consumer prices increased 0.2 percent for a second straight month. That took the increase over the 12 months to June to 1.6 percent, the smallest increase since June 2011. The so-called core CPI had increased 1.7 percent in May.

While both inflation measures remain below the Federal Reserve’s 2 percent target, details of the report suggested the recent disinflation trend had probably run its course, with medical care costs rising.

There were also increases in the prices for new motor vehicles, apparel and household furnishings. That could keep on track expectations the U.S. central bank will start scaling back its massive monetary stimulus in September.

Fed Chairman Ben Bernanke, who last month said the central bank would start cutting back the $85 billion in bonds it is purchasing each month to keep borrowing costs low, has viewed the low inflation as temporary and expects prices to push higher.


Permalink | Email this | Linking Blogs | Comments

…read more

Source: FULL ARTICLE at DailyFinance

What Is Inflation?

By Selena Maranjian

Filed under: ,


April is Financial Literacy Month, and our goal is to help you raise your money IQ. In this series, we’ll tackle key economic concepts — ones that affect your everyday finances and investments — to help you make smarter choices with every dollar decision you face.

Today’s term: inflation.

You probably think you’ve got the term down pat: Inflation means prices rising over time. Well, yes, that’s pretty much right. But there’s much more to inflation, and it’s much more relevant to your life than you might think. Inflation can go in the opposite direction, for example, and it can spiral out of control.

First, a quick review.

Inflation is about purchasing power. It’s a way to measure the changing purchasing power of our currency by tracking changes in the prices of things we buy. The national banks of various countries try to keep inflation under control through their actions and policies (such as via the interest rates they set); many aim for an annual inflation rate of about 2 percent to 3 percent.

If inflation is at our long-term national average rate of about 3 percent, you can expect that something that costs you $100 today will cost you $103 next year, and $116 in five years. Plenty of online inflation calculators can give you a peek into the past, too. For example, per the U.S. Department of Labor’s calculator, it would cost you $62 in 1993 dollars to buy what costs you $100 today.

It’s not as simple as it seems

While the concept of inflation seems simple, as in the examples above, it’s actually a bit more complicated. For one thing, prices of various goods and services tend to grow — and sometimes shrink — at significantly different rates.

Think of college tuition, room and board, for example. Between the 2000-2001 and 2010-2011 school years, that cost has grown by an annual average of 5.5 percent overall, at both private and public schools combined. Meanwhile, the average selling price of a new vehicle rose just 1.7 percent, on average, annually between 2001 and 2011, and the price of gas averaged 8.9 percent annual growth during that same period.

Changes can be quite different in different time periods, for different items, and even in different regions — think of the housing market, for example.

Inflation is calculated in different ways, too. Its most basic form, as calculated by the Bureau of Labor Statistics, is the Consumer Price Index or CPI, which reflects the changes in prices of a basket of goods and services, such as food, gasoline, newspapers, postage, lodging, furniture, dental services, socks, cigarettes, pet food and more. There’s also the “Core CPI,” which excludes energy and food prices, as they can be especially volatile.

Another key thing to understand is that each of

From: http://www.dailyfinance.com/2013/04/17/inflation-definition/

Big Mac Index Shows Official CPI Underreports Inflation

By David John Marotta, Contributor

In “Better to Bank with Cyprus Than the United States?” we wrote: In 1996 the government began measuring inflation differently, lowering the reported number significantly. … The average Big Mac costs 83.5% more. Even though the cost of a Big Mac has risen from $2.36 to $4.33, the CPI index has only adjusted to pay $3.49 for a Big Mac leaving seniors $0.84 shy of smiling.

From: http://www.forbes.com/sites/davidmarotta/2013/04/16/big-mac-index-shows-official-cpi-underreports-inflation/

The 10 Latest Ways Obama Plans To Screw You

By Floyd Brown

Ford Racing Aluminum Driveshaft

Earlier this week, I explained how the latest Obama budget would impact the wallets of Social Security recipients. Now, I want to explain how several other new Obama tax hikes will impact you in the near future.

In the just-released budget, there’s a mountain of new taxes the size of Everest. President Obama is a guy who has never met a tax he didn’t like. These new taxes would bring the national tax load to a staggering 20% of our economy.

The following are ten new Obama taxes that, if they pass, will have a huge impact on you and will certainly hurt the already sluggish economy.

1.  The “Chained CPI”

Of the new tax increases, the “chained CPI” is the most insidious.  Obama’s budget would benefit by manipulating and altering the definition of inflation for all federal budget uses – including federal taxation.

Currently, income tax brackets are indexed to rising prices. By changing the number used to calculate inflation, we face a very real income tax hike.

This is a tax increase for everyone paying income taxes, including middle-class Americans.

It’s my belief that inflation is currently underreported, and experts in the field agree. The “chained CPI” will only make it worse.

Your taxes go up not because of real earnings, but phony earnings that simply keep you on pace with inflation. Congress’ Joint Committee on Taxation estimates that if enacted, a “chained CPI” would cause a $100 billion tax increase alone.

2.  Itemized Deduction Cap

Also included in the Obama plan is a cap on itemized deductions. The deductions, such as those for charitable donations and mortgage interest, are usually the sacred cows of Congress.

But not any longer. The cap will directly hurt charities, the housing market, and (of course) taxpayers. Regardless of which tax bracket you belong to, this provision ensures that you can’t benefit any more than if you were in the 28% bracket.

There are three tax brackets above 28% – the 33%, 35%, and 39.6% brackets. Thus, many families will not be able to fully deduct mortgage interest, charitable deductions, or state taxes, among other expenses.

3.  Increased Death Tax

The Obama budget would raise the estate tax rate from the current 40% to 45%. And the budget would also reduce the inflation-indexed death tax “standard deduction” from $10.3 million for married couples to $3.5 million with no inflation allowance.

4.  The “Buffett Rule”

The Obama budget would inflict the newfangled “Buffett rule” on taxpayers whose adjusted gross income is above $1 million.  These taxpayers would suffer an average tax rate of 30%.

5.  Increased Tobacco Tax

Tobacco users face a more than 93% increase in the tobacco tax, from $1.01 to $1.95 per pack.  On average, a typical smoker in America makes about $40,000 per year, meaning this tax directly targets middle-class Americans.

But this is not the first time Obama has raised tobacco taxes. In 2009, he signed into law a 156% increase in the tobacco tax.  The tax hit on smokers will total $78 billion.

6.  IRA and 401k Plan Tax Hikes

There are

From: http://www.westernjournalism.com/the-10-latest-ways-obama-plans-to-screw-you/

How the Obama Budget Would Change Your Taxes

By Dan Caplinger, The Motley Fool

Filed under:

President Obama released his budget proposal yesterday, and as expected, it included a number of new provisions that would dramatically change the tax laws once more, with impacts on taxpayers up and down the income scale. The Obama proposal comes as a clear disappointment to anyone who believed that the resolution to the fiscal cliff crisis at the beginning of the year would prove to be the last word on the tax front, but for those who want to see further revenue increases as part of a broader solution to address the national debt, the budget’s tax provisions address some of their concerns.

Let’s take a look at some of the budget’s most important tax proposals and the impact they could have on both individual and corporate taxpayers, as well as the businesses that serve them.

Limited tax savings for itemized deductions and municipal-bond interest
The biggest revenue-raising part of the Obama budget would limit the value of itemized deductions, including the mortgage interest deduction, to 28%. That would impact only high-income taxpayers above the $200,000 and $250,000 income thresholds for single and joint filers, respectively, costing them as much as 11.6 percentage points in tax savings. Because of the high-end focus, the impact on industries like the homebuilding sector that benefit from customers taking advantage of those deductions would be limited, with luxury-oriented companies Toll Brothers and Ryland more at risk than homebuilders aimed at lower price points.

Implementing the Buffett Rule
The budget also wants to ensure that those with taxable income above the $1 million mark pay an effective tax rate of 30%. The mechanics of implementing what’s become known as the Buffett Rule would include a phase-in of the tax for incomes between $1 million and $2 million, representing a further increase for those highest-income taxpayers with extensive deductions other than charitable contributions.

Lower inflation adjustments for tax-related provisions
The same proposal to link Social Security benefits to the chained Consumer Price Index would also have an impact on taxes. The budget would use the chained CPI to adjust tax brackets, personal exemptions, and standard deductions, leading to slower increases in those figures going forward. Unlike the limits on itemized deductions, the inflation adjustment provisions would affect all taxpayers.

Maximum amounts in IRAs and other retirement accounts
The budget would limit IRA, 401(k), and other tax-favored retirement balances to about $3 million. Combined with increases on carried-interest tax rates, this provision would capture hedge-fund managers and other investors who’ve used retirement accounts as successful high-growth investing vehicles.

A new cigarette tax
The Obama budget would hike federal taxes on cigarettes by $0.94 per pack. Altria and other cigarette manufacturers would inevitably get hurt by such an increase, as it would add yet another impediment to cigarette demand that has already been falling sharply for decades.

Lower estate tax exemptions
The budget

From: http://www.dailyfinance.com/2013/04/11/how-the-obama-budget-would-change-your-taxes/

WaPo Editors Super Excited About Chained CPI Cuts To Elderly Benefits, Giving GOP Political Cover

By The Huffington Post News Editors

If President Barack Obama‘s budget offer is primarily an attempt to win over members of the Centrist Hack Pundit Community, and perhaps get them to train their fire on congressional Republican instransigence instead of constantly indulging in leadership surrealism, here’s some good news: The Washington Post editorial board is on board. Sure, chained CPI does not nearly go far enough in depriving Social Security recipients of the money that helps stave off destitution, but it’s a rollicking good start, apparently:

Though far from perfect, the budget President Obama released Wednesday represents the best hope for replacing sequestration with a bipartisan deficit-reduction deal before the federal government hits its statutory borrowing limit in late summer — and before Congress gets paralyzed by the politics of the 2014 elections.

The editors, naturally, refer to the chained CPI cuts, as well as reductions to Medicare, as the “most important” parts of the deal. (More important even than sparing the country from “excessive domestic-spending cuts falling most heavily on those Americans least able to afford them.” They are a little put out, however, that even as Obama offers these cuts to earned benefit programs, he doesn’t seem to actually want it bad enough, in his heart of hearts: “Mr. Obama too often casts entitlement reform as a concession to extract Republican assent to higher taxes, rather than a worthy end in itself.”

Read More…
More on Obama’s Budget

Source: FULL ARTICLE at Huffington Post

Greg Walden Chained CPI Remarks Break From GOP Leaders (VIDEO)

By The Huffington Post News Editors

Rep. Greg Walden (R-Ore.) broke from Republican leaders’ rhetoric on Wednesday, criticizing President Barack Obama‘s decision to include entitlement cuts in his 2013 budget proposal.

In an interview with CNN’s Wolf Blitzer, the National Republican Congressional Committee (NRCC) chairman classified Obama‘s decision to include chained CPI as a move that comes “on the backs of seniors.” Chained CPI is a method that adjusts spending — in this case, Social Security benefits — to current inflation rates.

“I thought it’s very intriguing in that his budget really lays out kind of a shocking attack on seniors, if you will,” Walden told CNN.

Read More…
More on GOP

Source: FULL ARTICLE at Huffington Post

The Liberal Case for Entitlement Reform

By Len Burman, Contributor

As expected, the President proposed modest cuts in Social Security benefits in the Budget released today. Liberals were incensed. When the proposal was first leaked, Stephanie Taylor of the Progressive Change Campaign Committee expressed the left wing’s angst, and a threat: ‘You can’t call yourself a Democrat and support Social Security benefit cuts. The president is proposing to steal thousands of dollars from grandparents and veterans by cutting cost-of-living adjustments, and any congressional Democrat who votes for such a plan should be ready for a primary challenge.’ The specific proposal to “steal thousands of dollars from grandparents” would basically cut a few tenths of a percent off the annual adjustment to Social Security Benefits (and many other revenue and outlay programs) by replacing the standard inflation measure with an alternative called the “chain-weighted Consumer Price Index (CPI).” Unlike Classic CPI, the new measure accounts for the fact that when prices rise unevenly, consumers will substitute cheaper items for those whose prices rise. As a result, the real burden of inflation is less than measured by the static CPI market basket. Most economists think this version is a better overall measure of the true cost of living.

Source: FULL ARTICLE at Forbes Latest

White House Admits Obama Budget Has Middle Class Tax Hike

By Breaking News

Barack Obama between flags SC White House Admits Obama Budget Has Middle Class Tax Hike

Last Friday, April 5, White House spokesman Jay Carney confirmed at a press briefing that Barack Obama’s budget would raise taxes on middle class Americans. The confession arose from an exchange between Carney and Major Garrett of CBS News, in which Garrett noted that the implementation of chained CPI as the method of measuring the consumer price index would hurt middle-class Americans:

MAJOR GARRETT, CBS NEWS/NATIONAL JOURNAL: “A follow-up on Jim’s question — you do not and the White House does not dispute that if the chained CPI were put in — to be put into effect, it would raise taxes on middle-income Americans?”

JAY CARNEY: The chained CPI, which is a technical adjustment to how we measure the consumer price index –

GARRETT: But its practical effect would be –

CARNEY: Again –

Read More at breitbart.com . By William Bigelow.

Source: FULL ARTICLE at Western Journalism

Has Obama Finally Gone Too Far?

By Floyd Brown

Obama Feeds America SC Has Obama Finally Gone Too Far?

Obama is having great political success by opposing wealth accumulation.

He’s doing it by attacking the rich. You might be a victim yourself!

According to the president, it’s unfair that some Americans have been able to stash away more money than others.

Now, based on information obtained by Capitol Hill Daily, President Obama’s latest move is likely to infuriate you.

His fiscal year 2014 budget – to be released this week – will target tax deductions associated with popular Individual Retirement Accounts, or IRAs.

These accounts are used by millions of Americans to reduce current taxes and augment retirement savings.

Under Obama’s proposed changes, a tax-preferred retirement account shouldn’t produce more than $205,000 per year.

Obama also wants to heap other major tax increases on the wealthy. (To him, the significant tax increases that were passed as part of the Fiscal Cliff deal in January weren’t steep enough.)

He’s demanding that Congress raise additional taxes and stop people from stashing away (what he considers to be) too much money.

Of course, this is just the beginning of the government’s latest actions to swipe money out from under us…

They’re Robbing Grandma, Too

The budget also includes significant cuts in Social Security benefits.

The cuts to Social Security include a sly reform called a “chained CPI.” This would change the numbers used to calculate the annual cost-of-living adjustment.

You see, the government currently uses the Consumer Price Index (CPI) to measure inflation. According to the Department of Labor, the CPI measures how much the cost of a “market basket of consumer goods” changes over time. That basket includes things like food, clothing, computers, and other consumer goods.

The new chained CPI adjusts the traditional CPI for potential changes in goods purchased as a result of price increases.

For example, with a chained CPI, the Labor Department would suppose that – if the cost of fish increases – you’ll likely choose to eat chicken instead. And when chicken prices go up, these all-knowing federal employees speculate that you might (again) choose a less expensive alternative.

As a result, they’re constantly changing the basket of goods to minimize the appearance and effects of inflation on government finances.

Yet this same deceitful move proliferates the impact of price increases on grandma’s social security check.

It Gets Worse: The Buried Taxes of Inflation

If you use U.S. dollars, then your money is taxed by inflation.

Here’s how…

If inflation is running at 3% – and you don’t get a 3% raise – you’re making less money in real terms by the end of the year.

Your money buys you less food, less gas, less real estate, and less anything than it did at the start of the year.

Translation? You’re literally poorer.

And not only are you paying more in prices, but you’re paying higher taxes on these goods, too…

That’s because inflation relentlessly pushes taxes up. When prices increase, the sales tax on all goods sold goes up as well.

When real estate prices rise, real estate taxes go up. When prices on imported goods increase, the duties and fees on these goods grow, too.

Makes sense, right? Well, it gets more complicated than that…

What most Americans

Source: FULL ARTICLE at Western Journalism

How 'Chained CPI' Will Hit Your Pocketbook

By Chuck Saletta

Filed under: , , , ,

Getty Images

President Obama’s new budget proposal includes changing a couple of key inflation calculations to something called a “chained CPI.” The shift is getting a lot of attention right now because of the expected effect it will have on individuals.

There are two key places where a chained CPI — short for consumer price index — will have a direct impact on your pocketbook: income taxes and Social Security benefits. All else being equal, over time, your income taxes will be higher and your Social Security benefits will be lower than they are under current inflation calculations.

The key difference between the chained CPI and the traditional consumer price index is how the index measures consumer behavior. The chained CPI assumes that as prices rise on one product, some portion of consumers will be willing to substitute less expensive alternatives for what they used to buy.

That changes the product weightings used in the inflation calculation. By incorporating information from those new product weightings, the chained CPI typically produces a lower inflation level.

Here’s how it works.

The Impact on Income Taxes

If you pay income taxes, your tax bracket is determined by the amount of taxable income you make. The cutoffs for each bracket generally rise over time with inflation.

The two charts below show the IRS “Schedule X” brackets for single taxpayers; the first is for 2012, and the second is what’s currently expected for 2013:

Chart for 2012 from the U.S. Internal Revenue Service
Chart for 2013 from the U.S. Internal Revenue Service

While the 39.6 percent tax rate is new for 2013, note that the other brackets have higher cutoffs for 2013 than they did for 2012. That’s thanks to the inflation adjustment made to the tax brackets.

If the law is changed so that the chained CPI is used, the tops of those brackets are expected to rise more slowly, exposing more of your income to higher tax rates than under current law.

The Effect on Social Security Benefits

Similarly, Social Security benefits are increased based on the inflation rate. By tying the payment increases to the chained CPI — an inflation rate that grows more slowly than the current measure — those benefit payments will grow less quickly as well. As a result, over time your Social Security checks will be smaller than they would have been under the old inflation calculation.

The annual changes aren’t too extreme — they’re estimated to be somewhere in the vicinity of 0.1 percent to 0.3 percent per year, depending on what the future brings. But …read more

Source: FULL ARTICLE at DailyFinance

What Happened to the First 12 Stocks on the Dow?

By Alex Planes, The Motley Fool

Filed under:

The Dow Jones Industrial Average has been around since 1896, and its antecedents date to 1884. This venerable index has refused to stand still ever since Charles Dow first sought to represent the American economy in a handful of companies. To date, the Dow has changed 49 times, with many moves occurring in clusters early in its history. What has become of the original Dow Dozen? Does any trace remain of the most notable industrial stocks of mid-1896?

Let’s take a look to see just how important the Dow’s original components actually were to the American economy and what eventually happened to them once they fell out of favor.

American Cotton Oil
This company was originally formed as a cotton oil trust in the 1880s, and it quickly dominated its niche. However, the American Cotton Oil Trust was dissolved in 1889 following a Louisiana antitrust lawsuit and reconstituted as a corporation. This company’s stay on the Dow was brief, and it was gone in 1901. Following removal, the company was absorbed by a former subsidiary in 1929, changed its name to Best Foods in 1931, and merged with Corn Products Company — now Ingredion — in 1958. Corn Products, which had changed its name to CPI, split into Bestfoods and Ingredion in 1997, and Bestfoods was acquired by consumer products giant Unilever three years later.

American Sugar
Formed in 1891, American Sugar quickly became the dominant sugar-refining trust, and at one point it controlled virtually all processing capacity in the United States. The company remained a Dow component until 1930, by which point its power had waned. After first changing its name to Amstar in 1970, the company still exists today as Domino Foods.

American Tobacco
Added in 1896, removed in 1899, added again in 1924, and removed again in 1930 before grabbing a spot in 1932 that it would retain until 1985, American Tobacco has a history almost as convoluted as its Dow membership. It was the original Tobacco Trust, but it was broken up in 1911 on the same day the Standard Oil Trust lost its antitrust suit. The Tobacco Trust became American Tobacco, R.J. Reynolds, Liggett and Myers (now a subsidiary of Vector Group), and Lorillard.

American Tobacco became a subsidiary of holding company American Brands in 1985, as the latter had been buying up various businesses since 1969. At one point, American Brands produced office supplies, golf products, home improvement products, and spirits. The company sold its tobacco business in 1994 and renamed itself Fortune Brands in 1997 to focus on its spirits and hardware segments. These business units split in 2011 to become Fortune Brands Home & Security and Beam , one of the most diverse liquor companies in the world.

Chicago Gas
A component for only two years, Chicago Gas was bought (and replaced on the Dow) by regional competitor Peoples Gas in 1898. Peoples remained a component until 1915, shortly …read more

Source: FULL ARTICLE at DailyFinance

Why the Left Hates 'Chained CPI'

By Ruth Brown President Obama is making some concessions to Republicans in his new budget, and there’s one that has particularly rankled the Democrats’ ranks, reports MSNBC : A proposal to change the way Social Security benefits are determined by linking it to something called “chained CPI.” So what is it and why don’t… …read more

Source: FULL ARTICLE at Newser – Home

Japan's Money-Printing Frenzy and Today's Other Important Financial Stories

By John Maxfield, The Motley Fool

Filed under:

After a rough day yesterday, financial stocks are generally higher this morning. The financial stories below help to explain why.

1. Bank of Japan: Let the printing begin!
What’s the best way to get an economy up and going again? According to Japan‘s central bank, the answer is to print copious amounts of money. In the first policy statement since Haruhiko Kuroda took over as the head of the institution, the Bank of Japan outlined what’s being claimed as the most aggressive monetary policy since the Weimar Republic:

The Bank will achieve the price stability target of 2 percent in terms of the year-on-year rate of change in the consumer price index (CPI) at the earliest possible time, with a time horizon of about two years. In order to do so, it will enter a new phase of monetary easing both in terms of quantity and quality. It will double the monetary base and the amounts outstanding of Japanese government bonds (JGBs) as well as exchange-traded funds (ETFs) in two years, and more than double the average remaining maturity of JGB purchases.

Policymakers in Japan have been struggling for nearly two decades to find a solution to the deflation that’s hung over the country’s economy since the early 1990s. In the most recent election, it was a central facet of the new prime minister’s economic policy. And following his inauguration last December, he’s set upon accomplishing this objective by selecting Kuroda to chair the central bank.

According to the bank’s president, “Incremental steps of the kind we’ve seen so far weren’t going to get us out of deflation. I’m certain we have now adapted all policies we can think of to meet the 2 percent price target.” To read more about this, check out The New York Times article here.

2. MF Global Report
Thought you had heard the last about former New Jersey governor Jon Corzine and MF Global’s astonishing collapse? Think again.

This morning, the trustee for the failed commodity company’s bankruptcy issued its long-awaited report on what led to the collapse and how significant the damages were. As The Wall Street Journal noted, the bankruptcy trustee laid the blame squarely at Corzine’s feet, saying that a risky business strategy, inadequate systems, and “negligent conduct” contributed to the company’s unraveling.

“Corzine and his management team failed to strengthen the company’s weak control environment, making it almost impossible to properly monitor the liquidity drains on the company caused by Corzine’s proprietary trading strategy,” the report said. You can read the 124-page report here.

3. Jobs Data
According to data released today by the Labor Department, the number of Americans filing for unemployment benefits last week hit a four-month high. For the week ended March 30, the advance figure for seasonally adjusted initially came in at 385,000, an increase of 28,000 applications over the prior week. According to Reuters, economists had expected the …read more

Source: FULL ARTICLE at DailyFinance

Don’t Know What Chained CPI Is? That’s What The Politicians Are Counting On

By Breaking News

Dollar Bills SC Don’t know what Chained CPI is? That’s what the politicians are counting on

If you’re not sure what “chained CPI” is, you’re not alone. That’s a feature, not a bug. In fact, its wonky and innocuous-sounding name might just be the reason chained CPI could be included if some sort of grand bargain to reduce the deficit ever materializes.

A quick explainer: Right now, Social Security and other benefits are adjusted annually in order to keep pace with inflation (as measured by the Consumer Price Index). Switching to chained CPI would mean using a different (probably more accurate) formula, which assumes lower cost of living increases. The obvious result of switching would be that the government would have to pay out less in benefits.

The reason this idea is so appealing to green eyeshade numbers-crunchers and political strategists, alike, is simple: Most people don’t like to have their benefits cut, but since so few Americans understand what “chained CPI” is, it’s more politically feasible than other options.

Democrats who might take heat for raising the retirement age, would probably elicit a collective yawn from their constituents if they voted to change how government calculates inflation.

As TPM’s Brien Beutler reported, Nancy Pelosi has even voiced support. “No, I don’t,” consider it a benefit cut, she said. “I consider it a strengthening of Social Security.” And the Wall Street Journal has also noted that, “President Barack Obama has expressed interest in the chained-CPI idea in the past.”

Read More at dailycaller.com . Matt K. Lewis.

…read more
Source: FULL ARTICLE at Western Journalism

Don’t Know What Chained CPI Is?

By Breaking News

Dollar Bills SC Don’t know what Chained CPI is?

If you’re not sure what “chained CPI” is, you’re not alone. That’s a feature, not a bug. In fact, its wonky and innocuous-sounding name might just be the reason chained CPI could be included if some sort of grand bargain to reduce the deficit ever materializes.

A quick explainer: Right now, Social Security and other benefits are adjusted annually in order to keep pace with inflation (as measured by the Consumer Price Index). Switching to chained CPI would mean using a different (probably more accurate) formula, which assumes lower cost of living increases. The obvious result of switching would be that the government would have to pay out less in benefits.

The reason this idea is so appealing to green eyeshade numbers-crunchers and political strategists, alike, is simple: Most people don’t like to have their benefits cut, but since so few Americans understand what “chained CPI” is, it’s more politically feasible than other options.

Democrats who might take heat for raising the retirement age, would probably elicit a collective yawn from their constituents if they voted to change how government calculates inflation.

As TPM’s Brien Beutler reported, Nancy Pelosi has even voiced support. “No, I don’t,” consider it a benefit cut, she said. “I consider it a strengthening of Social Security.” And the Wall Street Journal has also noted that, “President Barack Obama has expressed interest in the chained-CPI idea in the past.”

Read More at dailycaller.com . Matt K. Lewis.

…read more
Source: FULL ARTICLE at Western Journalism

TSYS Executive Honored by Commercial Payments International

By Business Wirevia The Motley Fool

Filed under:

TSYS Executive Honored by Commercial Payments International

COLUMBUS, Ga.–(BUSINESS WIRE)– TSYS (NYS: TSS) announced today that Keith Pierce, group executive of Commercial Services, has received the Most Influential Executive award at the CPI Global Awards for Excellence in Commercial Cards & Payments. Pierce was one of nine finalists for the award, which this year honors three exceptional professionals in the commercial payments industry.

TSYS is very proud of Keith and he is certainly deserving of this honor,” said Philip W. Tomlinson, chairman and chief executive officer, TSYS. “He was instrumental in creating and growing the commercial card division at TSYS, which is now recognized around the world as the leading provider of commercial payment services in the industry. This award is also a tribute to his team and the work they do on behalf of TSYS every day.”

“We are delighted the judges selected Keith Pierce as one of the most influential commercial cards and payments executives,” said Joanne Robinson, founder and chief executive officer Commercial Payments International (CPI). “Keith was one of the early pioneers in commercial payments, recognizing many years ago that these customers have requirements that are different from retail card issuers and customers. He has worked for many years to improve products and services available in this sector and continues to carry the banner for commercial cards and payments. CPI is grateful to have the support of TSYS and Keith as key partners in the industry.”

Pierce is responsible for the overall strategic direction and profitability of the commercial business at TSYS and has oversight of client relations, day-to-day operations, financial performance and business strategy.

Pierce was honored on March 20 as part of The Global Commercial Cards & Payments Summit 2013 in New York City.

About TSYS

At TSYS, (NYS: TSS) , we believe payments should revolve around people — not the other way around. We call this belief “People-Centered PaymentsSM.” By putting people at the center of every decision we make, with unmatched customer service and industry insight, TSYS is able to support financial institutions, businesses and governments in more than 80 countries. Offering merchant payment-acceptance solutions as well as services in credit, debit, prepaid, mobile, chip, healthcare and more, we make it possible for those in the global marketplace to conduct safe and secure electronic transactions with trust and convenience.

…read more
Source: FULL ARTICLE at DailyFinance