Master Financial Education

Financial Planning Daily Commentary 2017
The  most intensive and extensive on the Web

E. F. Moody Jr.

 
PhD, MSFP, MBA, LLB, BSCE
click above for bio

EFM@EFMoody.com
   


USA Today- "This is a high-powered personal bookmark list that spans the spectrum of the truly useful."

FORBES- "You'll find some great information."

BUSINESS WEEK: "For an Expert, Click here" 



Uniform (Im)Prudent Investor Act- Waaaaaaaaaaaaaaaaaay Out of Date


World Statistical data  

 

7/27: Cholera

Yemen is experiencing an outbreak of "unprecedented scale," according to the World Health Organization (WHO). Since April, more than 400,000 people have been infected, and close to 2,000 have died. More than 5,000 Yemenis are estimated to contract the disease, or have symptoms of cholera, on a daily basis. Children under age 15 account for more than 40% of all cases, and people over age 60 make up a third of all deaths from the disease.

"This outbreak is being driven by conflict, the collapse of the basic public services and malnutrition,"

EFM- you may wonder what tte issues on health are for. Forsaking the obvious, in 2050 there will  another 1.5 billion people on this earth. Certainly by then and guaranteed thereafter, a 'pox on your house' will decimate the world's population. If the climate gets much hotter, there will be no place to hide. Mother earth is standing by to take over once again.

7/27:
Sleep apnea

More info and a free questionnaire.

No reasons, logic, rationalizations, or excuses make it okay to publicly embarrass colleagues or subordinates.

“Leaders take heed, it is quite simple but against the grain: Thou shalt not provoke public loss of face in employees.

The price to be paid is typically steep.

And the act of publicly demeaning employees is toxic, and it ultimately seeps into organizational culture.

It is not fun to be a member of a workplace where disapproval means a public flogging.”

Alan Goldman, a professor of management

7/27: Foot care: Pay attention. I am driving a neighbor to doctors after having part of both feet amputated. But she is not paying attention to what she knows she should do. Still smoking is the worst. No exercise. Eats wrong foods

Never soak your feet.

Never apply heat of any kind to your feet.

Never cut your own toenails, refer to a podiatrist or medical doctor.

Never go barefoot.

Never assume that the circulation or sensation in your feet is normal.

Never use strong medications on your feet (be careful of over-the- counter preparations).

Never allow corns or calluses to go untreated.

Never perform bathroom surgery on your feet.

Never wear shoes that do not fit properly.

Always wear white socks, as colored socks contain dyes.

Wear acrylic fiber socks, which are actually more absorbent than cotton as it "wicks" moisture way from the skin.

Never keep your feet too moist or dry.

Seek medical attention immediately if you have any questions about or problems with your feet.

7/27: Wound Care

Solid and detailed.  My neighbor isn't following this as well.

But the main problem is smoking. If she keeps this up, the next amputation will be the legs.

7/26:


7/26:
North Korea will be able to launch a nuclear-capable intercontinental ballistic missile as early as next year, U.S. officials warn in new assessment

Trump will state that it was Clinton's fault and that Sessions counted down the firing.
I try to keep politics out of the commentary but Trump crossed a red line months ago.

7/26: The statistics are overwhelming. Will football be banned?? All the world's attorneys will file against the league owners from now on for allowing serious injury to continue.

• 111 N.F.L. brains. 110 with disease.

An overwhelming number of football players in a new study were found to have chronic traumatic encephalopathy, the degenerative disease linked to repeated blows to the head.


7/26: USA taxes compared to OCED countries



7/25: The downward spiral to dementia
Mary Muir, M.Ed.

This week has taken me on a journey I never wanted to take. For the first time, my mother does not know me. She has lost all connection to my face, my identity and my voice. For the past five years, Mom has been living with Alzheimer’s and lives in a rest home nearby. Every day, my husband and I have visited her and taken her out for a ride or for tea. It has been a special ritual that helped her quality of life and provided sensory stimulation Likewise, it has given us the satisfaction of knowing she looked forward to our times together.

In December, she became 100 years old. Even then, she was able to walk without a cane and chat about the simple joys of nature, trees, sunshine, clouds and changing weather. I often joked that she is my best teacher on focusing and coming into the present moment.

July 2009 will long live in my memory. It is the beginning of an ending. It marks the beginning of an end of life as we knew it and an ending of a life as her only child, her daughter.

After returning from a few days’ vacation, my husband and I were both shocked to find that my mom has “lost” any memory of us or the fact that we are married. She has forgotten entirely that we have been coming to see her daily for the past five years. She continues to ask me who I am, if I know where her daughter is and why her daughter never comes to visit.

I am familiar with the symptoms of Alzheimer’s. I knew that this could happen one day, although one is never prepared for the emotional impact of becoming a total stranger to your own mother.

These changes are further evidence that the disease in now progressing full scale to take away even the smallest consolations we had as caregivers and that she had lviing with Alzheimer’s.

Unless one has had an “up close and personal” encounter with a family member who has dementia, it is difficult to imagine the heartbreak it creates and the amount of emotional readjustment it demands from both caregiver and loved one.

I have been told that the best way to approach our visits now is to avoid making any reference to being her daughter. Unless she brings it up, I do not mention that I have been there to see her. In spite of the personal pain I am feeling, it is important to confront the reality and not walk away from her at a time when she is most vulnerable.

Consequently, I must now try to focus on the calmness and comfort I can bring to her. We have let go of titles and relationships. We are now just two pilgrims on this journey and our focus is on how to relate purely at the heart level. I am holding on to the moments of comfort in the midst of pain and suffering over a lifetime of lost memories.


7/25:



7/24: This should worry us all.

IMF cuts growth forecasts for UK and US The IMF has cut its growth forecast for the UK economy this year to 1.7 per cent, citing tepid economic performance and uncertainty over Brexit. The 3 percentage point downgrade was the biggest it made to any of the advanced economies, although it also cut its forecast for the US to 2.1 per cent. The eurozone is expected to outperform the UK economy with 1.9 per cent growth. (FT. )

EFM- I do not believe the U.S. will see 3% growth for a long long time. The U.S. budget is in taters. 4% growth is a fabrication at best.

7/24:
Ehlers-Danlos Syndrome

is a group of disorders that affect connective tissues, which are tissues that support the skin, bones, blood vessels, and other organs. Defects in connective tissues cause the signs and symptoms of Ehlers-Danlos syndrome, which vary from mildly loose joints to life-threatening complications.

7/23:

"The Economics of Value Investing" Fee Download
NBER Working Paper No. w23563

KEWEI HOU, Ohio State University (OSU) - Department of Finance
Email: hou_28@cob.osu.edu
HAITAO MO,
E. J. Ourso College of Business, Louisiana State University
Email: haitaomo@lsu.edu
CHEN XUE,
University of Cincinnati
Email: xuecx@ucmail.uc.edu
LU ZHANG,
Ohio State University - Fisher College of Business, National Bureau of Economic Research (NBER)
Email: zhanglu@fisher.osu.edu

The investment CAPM provides an economic foundation for Graham and Dodd’s (1934) Security Analysis. Expected returns vary cross-sectionally, depending on firms’ investment, profitability, and expected investment growth. Empirically, many anomaly variables predict future changes in investment-to-assets, in the same direction in which these variables predict future returns. However, the expected investment growth effect in sorts is weak. The investment CAPM has different theoretical properties from Miller and Modigliani’s (1961) valuation model and Penman, Reggiani, Richardson, and Tuna’s (2017) characteristic model. In all, value investing is consistent with efficient markets.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.


7/23"
Near death awareness

“They are very common among dying patients in hospice situations,”. “Those who are dying and seem to be in and out of this world and the ‘next’ one often find their deceased loved ones present, and they communicate with them. In many cases, the predeceased loved ones seem [to the dying person] to be aiding them in their ‘transition’ to the next world.”

EFM: Do NOT argue with them or tell them no one is really there. Find some nice way of moving the conversation elsewhere but there is no sense at all to try to get them to 'understand' reality. Most of that is gone already,



What can one say?????

7/23:

"Making the House a Home: The Stimulative Effect of Home Purchases on Consumption and Investment" Fee Download
NBER Working Paper No. w23570

EFRAIM BENMELECH, Northwestern University - Kellogg School of Management, National Bureau of Economic Research (NBER)
Email: e-benmelech@kellogg.northwestern.edu
ADAM M. GUREN,
Boston University - Department of Economics
Email: guren@bu.edu
BRIAN MELZER,
Northwestern University - Kellogg School of Management - Department of Finance
Email: b-melzer@kellogg.northwestern.edu

We introduce and quantify a new channel through which the housing market affects household spending: the home purchase channel. Using an event-study design with data from the Consumer Expenditure Survey, we show that households spend on average $3,700 more in the months before and the first year following a home purchase. This spending is concentrated in the home-related durables and home improvements sectors, which are complementary to the purchase of the house. Expenditures on nondurables and durables unrelated to the home remain unchanged or decrease modestly. We estimate that the home purchase channel played a substantial role in the Great Recession, accounting for one-third of the decline in home-related durables spending and a fifth of the decline in home maintenance and investment spending from 2005 to 2010, together totaling $14.3 billion annually.

7/23:

Can You Put Your Retirement Plan on Autopilot?
"Having quality service providers is a good idea but they cannot relieve you, your company or your other in-house fiduciaries from all responsibility for investment and administrative decisions. Second, some financial advisory firms charge extra to act as 'investment managers.' You may find that the 'extra protection' afforded by this arrangement is not really worth the additional expense. Finally, consider other alternatives to mitigate fiduciary liability. This may include steps like adopting a suitable investment policy statement or obtaining fiduciary insurance."


EFM- actually you can. I just filed a patent showing how it can and should be done.

7/23: Potential” output forecasts are actually worthless


There are only two ways to interpret these forecasts. Either economists were ridiculously optimistic at the beginning of the millennium or the US economy spent the first decade of the 2000s operating far below its “potential”.

Standard theory* suggests the first interpretation is closer to the truth: technocrats at the central bank and the budget office were deluded into believing the anomaly of the late 1990s would continue indefinitely.

Their error seemed plausible at the time because both institutions had spent the second half of the 1990s consistently under-estimating the economy’s ability to grow.

Back in 1996, for example, the CBO expected “potential output” would only grow at a yearly average rate of “about 2.1 percent” from 1997-2006. That was about a percentage point slower than what actually happened, and about two percentage points slower than the average growth rate in 1997-2000. Similarly, the Fed’s staff economists thought potential output had a “2 percent trend” back in 1996.

By the time they’d finally corrected their earlier errors the world had changed again and they were left looking as foolish as people buying the S&P at a Shiller earnings multiple in the 40s.

EFM- You have seen my comments about long term trends. You may have to make some guesstimates when looking at retirement over 30 years or so. But you can only do so with  a range of probabilities.

But looking past 5 years for being definitive is a losing bet. If I come close  with inflation, returns, budget et al after 5 years I'd like to say I was good at projections. But it might be pure dumb luck as well.
That said, my warnings for recessions in 2000 and 2006 were 'spot on'.
Know why?????????????????/
7/23:Fewer children globally (Alana Semuels)

The explanation for the country’s low birth rate, one that has implications for the U.S.: Japan’s birth rate may be falling because there are fewer good opportunities for young people, and especially men, in the country’s economy. In a country where men are still widely expected to be breadwinners and support families, a lack of good jobs may be creating a class of men who don’t marry and have children because they—and their potential partners—know they can’t afford to.
“The gender stuff is pretty consistent with trends around the world—men are having a harder time,”  “The birth rate is down, even the coupling rate is down. And people will say the number-one reason is economic insecurity.”

Since the postwar years, Japan had a tradition of “regular employment,” as labor experts commonly call it, in which men started their careers at jobs that gave them good benefits, dependable raises, and the understanding that if they worked hard, they could keep their jobs until retirement. Now, according to Jeff Kingston, a professor at Temple University’s Japan campus and the author of several books about Japan, around 40 percent of the Japanese workforce is “irregular,” meaning they don’t work for companies where they have stable jobs for their whole careers, and instead piece together temporary and part-time jobs with low salaries and no benefits.

In a culture that places such an emphasis on men being breadwinners, this has serious implications for marriage and childbearing. Men who don’t have regular jobs are not considered desirable marriage partners; even if a couple wants to get married, and both have irregular jobs, their parents will likely oppose it, according to Ryosuke Nishida, a professor at Tokyo Institute of Technology who has written about unemployment among young workers. About 30 percent of irregular workers in their early 30s are married, compared to 56 percent of full-time corporate employees, according to Kingston. “Japan has this idea that the man is supposed to get a regular job,” said Nishida. “If you graduate and you don't find a job as a regular employee, people look at you as a failure.”

7/23: Very low volatility



7/23:

Since the 1950s, 8.3 billion metric tons of plastic have been produced, about half of it since 2004.

A new study analyzes the material, most of which doesn’t naturally degrade.




7/23: Trump threw Sessions under a bus. Maybe Rex Tillerson???

ExxonMobil has sued the US Treasury in an attempt to stop a fine for allegations it behaved with “reckless disregard” for violating Russian sanctions while Rex Tillerson, now US secretary of state, was chief executive in 2014.

The Treasury’s Office of Foreign Assets Control fined Exxon the maximum penalty of $2m in what it called an “egregious” case, saying it had failed to disclose breaches of sanctions over deals with Igor Sechin, chief executive of Russia’s state-controlled oil group Rosneft. (FT)

7/23: I had no idea of the average cost of a wedding was this high. I could buy a whole mess of fishing gear with that amount of money. (A number of fish are now laughing hysterically since my catch rate ability recently is terrible.)

the average cost of a wedding in the US in 2016 was $35,329. The site also found that Americans spend an average of $6,162 on an engagement ring, and estimates that a plain gold or platinum wedding band will run you about $1,000, depending on the retailer.

7/23"
7 best, 7 worst regions in U.S. for life expectancy

the county in which you live can add—or subtract—as much as 20 years, or even more, from your lifespan.


7/20: Just too high. When this bubble breaks,  the losses could be/will be worse than 2008

(FT) US tech stocks have broken a record, surging past their dotcom bubble peak. The S&P 500 information technology index, which measures the largest companies in the industry, rose for the ninth consecutive day on Wednesday, closing up 0.6 per cent at 992.29. That compares with the previous record of 988.49 on March 27 2000. The rally continued in Europe on Thursday, but at a gentler pace. The Euro Stoxx technology index was 0.2 per cent higher by late morning. All eyes will be on Microsoft today, when the world’s largest software company reports earnings.

It is 17 years since the crash of tech stocks after dotcom mania and the long crawl back by the sector. “Earnings are a lot more solid now,” one expert said. But money managers are still hesitant on the sector. Banks have overtaken tech stocks as the most overweighted sector, according to Bank of America Merrill Lynch’s most recent fund manager survey

7/18:
Why Your Weight Is a Bigger Cancer Risk Than Smoking

7/18: Social Security’s Financial Outlook: The 2017 Update in Perspective

The brief’s key findings are:

7/18: When caregiving ends

Grief is often a foreign feeling for most until they are faced with it head on. When you lose a loved one, it can be hard to do much of anything, but life must go on. From the heirloom furniture passed through generations to old love notes, choices are thrust into your lap whether you are ready or not. Decisions are immense or can be something as simple as what to do about the food in your loved one’s cabinets.

For some, settling an estate and sorting through the items left behind brings closure. For others, it can make a difficult time even worse. Here are five tips to honor your loved one and yourself during this difficult time:

Take a moment

After the initial loss, grief is forefront to other emotions and life feels chaotic. Advice comes from every direction whether you ask for it or not. Many will tell you to hurry through the sorting and delegating of items. Personally, I advise clients to take a moment, and a deep breath before you make hasty decisions. This will prevent future family arguments and possible regrets.

If finances and circumstances allow, give yourself a good 30 days before jumping into any major decision-making in the dissolution of your loved one’s legacy. Also, you need to use this time to move through your grief and find healing. If you push it away or ignore it, grief will manifest in disruptive and painful ways. This is your time to process it in its freshest state.

Don’t do it alone 

If your family works well together, use this time to revisit old memories. Choose what physical talismans of those memories you wish to hold onto.

If you find yourself explaining and justifying your choices to your friends or family, they are not the right ones to assist you during this time. Look for someone who is empathetic. Try to involve individuals around you that allow you to make choices without judgment.

Ideal supporters at this time are organized and show up with an open and clear mind.

Honor their memory.

Of the items you will keep or distribute to friends and family, there is likely to be a surplus of belongings that can be useful to someone not in the immediate family. Not every member of the family even wants to take your loved one’s items. But who should get these items?

Focus on local organizations. Small non-profits and thrift organizations can thrive from your donations. Make choices that feel good and honor the wishes of your loved one. Think about organizations that were important to them, and their beliefs. If they did not have a connection with any organization, what charities are important to you? Through selecting organizations that resonate with you or your loved one, the entire process can be a healing one that benefits many.

Keep track of your decisions.

Six months to a year after you dissolve your loved one’s material legacy, when the dust clears from the darkness, different individuals might inquire about particular objects. How about dad’s golf clubs? Mom’s crystal glasses? The family photos?

This is where your helpful, empathetic friend comes into play again. Have them help you keep track of your decisions. You are then able to look back and know what decisions you made. Knowing what went where will be incredibly efficient in the long run. List each item and assign it a number, then add the location the item came from and who/where the item is going. This offers peace of mind, and prevents future arguments.

Take care of yourself

This process is difficult, but you need to prioritize your needs, too. Your basic needs such as hydration, nutrition, and rest are essential during this period. You might not feel like doing much of anything, but covering the basics will preserve your future well-being and health. It is easy to be distracted by the emotions and the intimidating amount of work that lies ahead.

Sickness is common in this period, as your body responds to the grief and stress. Don’t neglect your health, job, friends, other family members and the need to grieve. Taking care of yourself not only honors you, but your loved one as well


7/16:
Senior Housing 101: Senior Care Types Explained

assisted  living. nursing home. continuing care,  facilities, more

7/16: Perhaps his election will really help the lower caste

India elects president

India’s political establishment is set to elect Ramnath Kovind, a lawyer-turned-politician with the ruling Bharatiya Janata party, to the presidency. Mr Kovind is from a family of Dalits — those on the lowest rungs of Hinduism’s hierarchical caste ladder. He has practised as a Supreme Court lawyer and served two terms in parliament’s upper house, and is unopposed. The presidency is primarily ceremonial but becomes important during any political or constitutional crisis. The president is elected by members of parliament and state-level legislators

7/16:
Traveling with dementia

Airports Educating Staff on How to Be Senior-Friendly

London’s Heathrow Airport has committed to training its 76,000-strong workforce to build their understanding of dementia and other disabilities.

The goal is to create a more calm and comfortable environment for any passengers living with the disease.

Security, with its long lines and metal detectors, can be one of the likeliest places to trigger anxiety and frustration for passengers with dementia. Heathrow is now examining how security personnel can carry out their job without adding unnecessary stress.

The Lanyard System and Quiet Rooms

Not only has Gatwick Airport (south of London) implemented a similar training campaign, they’ve offered passengers the option of wearing hidden disability lanyards. The voluntary program allows passengers to indicate discretely that they might require additional assistance.

The lanyards are recognizable to staff without any logos or other information, so passengers maintain a sense of privacy. It can also be removed, so caretakers and travelers can choose to only display it when they feel a situation might become especially challenging.

If lanyards aren’t suitable, badges, bracelets and pins are also available. These accessories indicate that the wearer might:

  • Need more time to process information
  • Need to remain with family
  • Need staff to use clear verbal language as it may be difficult to understand facial expressions and/or body language
  • Need staff to be visual with instructions
  • Need a more comprehensive briefing on what to expect as they travel through the airport
  • React to sensory overload

The bustle of airports can also cause passengers living with dementia to become overstimulated. Heathrow plans to create designated “quiet areas” and rooms so passengers can recover from the confusion and stress of the airport there.

Tips for Navigating the Airport

The trend toward dementia and senior-friendly airports will hopefully spread to North America soon, but regardless, it pays to keep the following in mind when traveling with someone living with dementia:

  • Arrive early and avoid the unnecessary stress of rushing
  • Go through security behind your companion, so you will be on hand to assist them
  • Have your companion carry a copy of your name and phone number in case you get separated
  • Speak with airport staff – be clear about the situation, and the capabilities of your loved one
  • Seek out a quiet place – if the airport does not have a designated quiet space, a prayer room can also give you time and space to calm down
  • Travel light – taking less luggage allows you to easily keep within touching distance

Dementia does not have to stop someone from traveling. Even if an airport has not fully adopted dementia-friendly practices, we can learn from the ones that have and take steps to ensure the well-being of our loved ones living with dementia.

What travel tips do you have for someone traveling with a loved one who has dementia? What changes would you like to see in airports to make travel more accessible to those living with dementia? Share your thoughts with us in the comments below. 

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7/13: Our banks did well- not so for the UK

The UK government’s finances fail the stress tests it applies to banks by a wide margin, Britain’s independent fiscal watchdog said on Thursday in an uncompromising report that laid bare the vulnerability of the public finances.

The Office for Budget Responsibility said weaker average growth rates, the near inevitability of recession in the years ahead, higher interest rates and inflation posed significant risks to the public finances, threatening to put them on an “unsustainable path”. Both main political parties will find the conclusions uncomfortable.

7/13 cremation
50% of burials are now cremations or as they say in thee south--BYOH

Bring your own hotdogs

7/13: WHAT???


Signs of Hearing Loss

Many loved ones will not tell their caregiver of an onset of hearing loss, for fear of losing independence. Instead, they become isolated, depressed, angry, lonely, frustrated and even physically ill. Some telltale signs are when a loved one withdraws from their normal social activities, refuses to attend family and friend gatherings, or doesn’t answer the phone anymore, saying they were busy or unavailable. Any avoidance of conversation is cause for concern.

The Minnesota Department of Human Services, Deaf and Hard of Hearing Services Division, offers these behaviors which may signal a struggle to hear properly.

A loved one may:

Some physical symptoms that may occur with hearing loss include a ringing, roaring, hissing or buzzing in the ear, also known as tinnitus; ear pain, itching or irritation; fluid or pus leaking from the ear; and vertigo. Caregivers can keep a watchful eye on their loved one for these behaviors and physical symptoms.

Excuses

If a caregiver suspects a hearing loss, it is important to have it checked soon, in order to prevent problems down the road. A loved one might resist, but this is where the “caregiver persistence” and tough love come in.

Here is how to handle some common objections a loved one may raise to having their hearing checked.The first common objection is that the “other people simply aren’t talking loud enough.”  In the ears of a person with hearing loss, everyone is mumbling. A caregiver can tell their loved one that it may be a simple medical problem such as wax buildup and an exam can rule out certain medical concerns and treat those conditions.

Second, many seniors are concerned with spending money. They may say, “It would cost too much to get a hearing aid!” The commitment associated with hearing aids or other devices is looked at as permanent and thus, a large cost. A caregiver must realize that while this is true, a quality of life has its own cost. Both caregiver and loved one must weigh their options once a hearing loss is diagnosed.

And third, people of all ages are worried about appearing “old.” A hearing aid only increases that perception in many minds. Caregivers should remind their loved one that continually asking people to repeat themselves and being left out of conversation can be a more visible indicator of age than a hearing aid. Also, with today’s technology, hearing aids are less imposing and noticeable than ever before.

If a caregiver is prepared to thwart excuses with a little preparation before, a loved one will feel that their caregiver is competent, educated and safe to care for them. It will instill a confidence in a loved one when a caregiver is knowledgeable and organized.

Maintenance

There are many ways to protect a loved one’s hearing and make living with the condition as comfortable and enjoyable as possible.

First, don’t shout! Many caregivers may think that talking louder and slower is helpful, but in actuality, it distorts the conversation even more for a person with hearing loss. Professionals suggest speaking at a normal speed and tone, with small modifications, is best.

Background noise is a huge deterrent for loved ones with hearing loss. Try to eliminate these distractions as much as possible. If at home and having a conversation, turn off the TV or radio, fan or other electric device. Shut windows if traffic noise is an issue.

After the noise is limited and a conversation can occur, talking face-to-face is best. A group setting may be hard for a person with hearing loss to catch multiple conversations.

In addition to these talking tips, there is some physical maintenance which can help maintain a loved one’s hearing. Begin by scheduling a yearly physical. Many times, caregivers are running a loved one to the doctor for a variety of ailments. However, a yearly physical is one appointment not to be overlooked. This is the best way to detect and also prevent many medical problems.

Just as a person makes a yearly trip to the eye doctor and needs a prescription to buy new glasses, every person in their senior years should have their ears checked as well. A hearing test will reveal what a loved one may have been “missing” and not even known.

Exercise and eating healthy are as important to ear health as to heart health. A healthy lifestyle leads to increased focus and response in all areas of life, including hearing. The body functions as a whole, so nourishing it properly will reap benefits for a long time. A caregiver should encourage a loved one to be healthy in all aspects.

A caregiver must be an advocate for their loved one with hearing loss. The first step is always education. Know the signs of hearing loss, and steps to take following a diagnosis. Learn about the many technological advances that can help a loved one live a fulfilling life despite the challenges.

Many public places including hotels, churches, museums, auditoriums, theaters, etc. provide assistive technology for the hearing impaired. When it’s available, make sure a loved one uses it. And if not available, explain to the staff the importance of these devices. A little planning ahead can make for a fun trip on the town and eliminate a loved one’s feeling of being left out.

By learning the best ways to communicate, a caregiver can pass along these tips to other family members and friends. Simple strategies can increase communication, lessen stress and promote an enjoyable time for all involved.Communication is always a two-way street. Whether the loved one coping with the hearing loss or the caregiver learning how to navigate new waters, it takes both parties working together to have a successful outcome. It’s both persons’ responsibility to do their best in every situation and always show respect for the other’s challenges. 

The Better Hearing Institute says that one of the most loving things a caregiver can do is help their loved one come to terms with their diagnosis. This may be even harder than the actual purchase of hearing aids or assistive devices. Loss of hearing is a scary venture into uncharted waters for anyone with a recent diagnosis. A caregiver should be a constant support through the highs and lows of hearing loss. Once it’s properly treated, both sides will be glad they addressed the issue, together.


7/12: Unfortunately I have a cough

New research appears to reinforce “system integrity theory” — that people with high IQs live longer because they may be genetically blessed with an exceptional physiology, and this “optimal bodily functioning” leads to both a high IQ and resistance to disease.
Anjana Ahuja explains why this is so controversial. (FT)

Never heard this before- very interesting

7/12: I knew we were exporting a lot of oil but I did not think it would be this much. I wonder if the comment includes all the problems with horizontal drilling, contamination of ground water and those pesky earthquakes.

US pumps up
America will quadruple its crude oil exports to volumes greater than most Opec members
by 2020, according to PIRA Energy. As one expert put it: “This is very bad news for Opec.” (FT)

712:  Doomsday- the demise of humans due to climate change. I figure there might be ways for civilization to get to 2050. But then it's all bad from there. 

Arctic permafrost contains 1.8 trillion tons of carbon, more than twice as much as is currently suspended in the Earth’s atmosphere. When it thaws and is released, that carbon may evaporate as methane, which is 34 times as powerful a greenhouse-gas warming blanket as carbon dioxide when judged on the timescale of a century; when judged on the timescale of two decades, it is 86 times as powerful. In other words, we have, trapped in Arctic permafrost, twice as much carbon as is currently wrecking the atmosphere of the planet, all of it scheduled to be released at a date that keeps getting moved up, partially in the form of a gas that multiplies its warming power 86 times over.

At 11 or 12 degrees of warming, more than half the world’s population, as distributed today, would die of direct heat

Since 1980, the planet has experienced a 50-fold increase in the number of places experiencing dangerous or extreme heat; a bigger increase is to come. The five warmest summers in Europe since 1500 have all occurred since 2002

Climates differ and plants vary, but the basic rule for staple cereal crops grown at optimal temperature is that for every degree of warming, yields decline by 10 percent. Some estimates run as high as 15 or even 17 percent. Which means that if the planet is five degrees warmer at the end of the century, we may have as many as 50 percent more people to feed and 50 percent less grain to give them


There are now, trapped in Arctic ice, diseases that have not circulated in the air for millions of years — in some cases, since before humans were around to encounter them. Which means our immune systems would have no idea how to fight back when those prehistoric plagues emerge from the ice.

For every degree increase in temperature, the Malaria parasite reproduces ten times faster. Which is one reason that the World Bank estimates that

Carbon dioxide just crossed 400 parts per million, and high-end estimates extrapolating from current trends suggest it will hit 1,000 ppm by 2100. At that concentration, compared to the air we breathe now, human cognitive ability declines by 21 percent.

For every half-degree of warming, they say, societies will see between a 10 and 20 percent increase in the likelihood of armed conflict

Every degree Celsius of warming costs, on average, 1.2 percent of GDP (an enormous number, considering we count growth in the low single digits as “strong”). This is the sterling work in the field, and their median projection is for a 23 percent loss in per capita earning globally by the end of this century (resulting from changes in agriculture, crime, storms, energy, mortality, and labor).

Every round-trip ticket on flights from New York to London costs the Arctic three more square meters of ice.

Carbon absorption can initiate a feedback loop in which underoxygenated waters breed different kinds of microbes that turn the water still more “anoxic,” first in deep ocean “dead zones,” then gradually up toward the surface. There, the small fish die out, unable to breathe, which means oxygen-eating bacteria thrive, and the feedback loop doubles back. This process, in which dead zones grow like cancers, choking off marine life and wiping out fisheries, is already quite advanced in parts of the Gulf of Mexico and just off Namibia, where hydrogen sulfide is bubbling out of the sea along a thousand-mile stretch of land known as the “Skeleton Coast.” The name originally referred to the detritus of the whaling industry, but today it’s more apt than ever. Hydrogen sulfide is so toxic that evolution has trained us to recognize the tiniest, safest traces of it, which is why our noses are so exquisitely skilled at registering flatulence. Hydrogen sulfide is also the thing that finally did us in that time 97 percent of all life on Earth died, once all the feedback loops had been triggered and the circulating jet streams of a warmed ocean ground to a halt — it’s the planet’s preferred gas for a natural holocaust.

In a six-degree-warmer world, the Earth’s ecosystem will boil with so many natural disasters that we will just start calling them “weather”: a constant swarm of out-of-control typhoons and tornadoes and floods and droughts, the planet assaulted regularly with climate events that not so long ago destroyed whole civilizations.

If the universe is so big, then why haven’t we encountered any other intelligent life in it? The answer, they suggested, is that the natural life span of a civilization may be only several thousand years, and the life span of an industrial civilization perhaps only several hundred. In a universe that is many billions of years old, with star systems separated as much by time as by space, civilizations might emerge and develop and burn themselves up simply too fast to ever find one another.

EFM- Those born in 2020 will have a life expectancy of 60- 70. Maybe even shorter. Their children's children will not live long unless they have a LOT of money to insulate themselves from the dire lives of those without.

Financial planners in the future will need to explore a dying world.

7/12: Retail Savings Guide for Baby Boomers



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7/12: Can you hear me now???

Research shows that low-income children hear 30 million fewer words than wealthier children by age three,

7/12: Caregiving and depression

More than one quarter of the adult population (26.6%) has provided care for a chronically ill, disabled or aged family member or friend during the past year.  Based on current data, that translates into more than 50 million people!  Sixty-one percent of “intense” caregivers (those providing at least 21 hours of care a week) have suffered from depression. Heavy-duty caregivers, especially spousal caregivers, do not get consistent help from other family members.  One study has shown that as many as three fourths of these caregivers are “going it alone.”   Is it any surprise that caregiver stress or burnout is becoming a critical issue?    

Dealing with stress is not a new concept.  None of us have immunity from the challenges of getting through life with the least amount of stress.  Some people drink, over eat, smoke, bite their nails, yell at the cat, or retreat inside themselves when the going gets too tough.  I’m sure you have your own ways of protecting yourself from the ravages of stress.  I have often thought my cat has the right idea when stress enters her life.  After one loud meow and an angry swish of her tail, she retreats to another room to take a nice long two-hour snooze.  Bamm!  The stress is gone.  Unfortunately, people do not have the same luxury.

Are you caught in the web of stress while being a caregiver?  In the book, Living with Stroke, there is an interesting section on stroke stress analysis.  People list nine sentences that sum up all the different ways that stress exhibits itself in families of stroke survivors.  Do any of these ring a bell with you?

If you are a caregiver, I’m sure you find yourself nodding your head at more than a few of these stress indicators.  I often say that caregiving is not something that people plan on or sign up for.  It is a situation that sort of plops itself in your lap, totally unexpected.  Caregivers are usually overwhelmed, untrained, and uneducated in the beginning.  With time comes a sense of control that can help you through.  Being out of control in any situation can knock a person off balance.  Don’t be too hard on yourself as you muddle through this.  You are a rookie now, but you are getting some heavy on-the-job training.

If you are a caregiver, I’m sure you find yourself nodding your head at more than a few of these stress indicators. I often say that caregiving is not something that people plan on or sign up for. It is a situation that sort of plops itself in your lap, totally unexpected. Caregivers are usually overwhelmed, untrained, and uneducated in the beginning. With time comes a sense of control that can help you through. Being out of control in any situation can knock a person off balance. Don’t be too hard on yourself as you muddle through this. You are a rookie now, but you are getting some heavy on-the-job training.

Here are some tips that I have found to be helpful in getting your life in balance again.

Caregiving is a huge responsibility. Keeping the caregiver healthy— physically, mentally, and emotionally — is vital. Try to find the right balance in your life that allows you to care for your loved one while caring for yourself.


7/11:
Ark. bill would force rape survivors to notify attacker before an abortion

You are kidding me. But their is some common sense-
Vatican Says No to Gluten-Free Communion Wafers

7/11:

  1. Ambiguous Correlation

Date:

2017-02

By:

Larry G. Epstein (Boston University) ; Yoram Halevy (University of British Columbia)

Many decisions are made in environments where outcomes are determined by the realization of multiple random events. A decision maker may be uncertain how these events are related. We identify and experimentally substantiate behavior that intuitively reflects a lack of confidence in their joint distribution. Our findings suggest a dimension of ambiguity which is different from that in the classical distinction between risk and "Knightian uncertainty."

URL:

http://d.repec.org/n?u=RePEc:bos:wpaper:wp2017-006&r=rmg


7/11"
One Woman’s Slide From Middle Class to Medicaid

Short article showing how good planning goes bad. As a separate issue is the real end of life of Alzheimers. You should be able determine how you want to die- because it can go very very wrong. 

7/11: Alzheimers and more
After a parent or loved one receives a diagnosis of Alzheimer’s disease or other dementias, cognitive decline is likely top of mind for caregivers and family members, but behavioral changes can also be challenging and distressing.1  Caregivers and family members may be familiar with common behavioral changes that occur in people living with Alzheimer’s such as depression;1 however, those living with Alzheimer’s can also have another neurologic condition associated with Alzheimer’s and other dementias, and it is important for caregivers to be familiar with the condition and recognize symptoms.

PseudoBulbar Affect, or PBA, is a distinct condition that can happen to people who have been diagnosed with Alzheimer’s and other dementias, multiple sclerosis (MS), Parkinson’s or amyotrophic lateral sclerosis (ALS), or who have suffered from a stroke or a traumatic brain injury. It results in sudden, frequent and uncontrollable episodes of crying and/or laughing that do not match how a person feels.2 It affects about two million people in the United States who suffer from common neurologic diseases or traumatic brain injury, and can affect men and women.3 Although PBA is not life threatening, it can be of concern to both patients and/or caregivers. According to a survey of 499 Alzheimer's/dementia patients (or their caregivers), 9.6% may have PBA. Based on this data, 500,000 people living with Alzheimer’s in the United States may also have PBA.4

These neurologic conditions or brain injury can affect the signals that tell a person’s body when or how much to cry or laugh. This can trigger episodes of crying and/or laughing that are sudden and exaggerated (more intense or lasting longer than expected) or mismatched (not fitting the situation).2 Alzheimer’s disease and other dementias can make PBA especially hard to identify, since sudden episodes of crying can be mistaken for depression or other personality changes associated with dementia and other neurologic comorbidities may also exist. Diagnosing PBA can also be difficult for two key reasons: the symptoms of PBA may look similar to and can overlap with other conditions such as depression, and patients and caregivers tend to use different language than physicians to describe PBA symptoms.

Patients can have both PBA and depression.

Differentiating PBA from depression can be challenging, as patients can have both PBA and depression.2 Patients and caregivers often self-diagnose PBA as depression. Experiencing PBA episodes can be distressing, causing patients to think of the episodes as a sign of depression. And caregivers often are not familiar with PBA so they associate the episodes with signs of depression as well.5 However, PBA and depression are two separate conditions, and both conditions are manageable and should be independently diagnosed.2  Patients, caregivers and physicians tend to describe PBA symptoms differently.

Physicians tend to use more technical terms when talking about PBA, describing crying and/or laughing episodes as “disproportionate to the situation,” which may be difficult to understand. Patients typically use different terms, often emphasizing that episodes do not match their emotions or mood, or are overly emotional. While these words are likely to be understood by physicians, unfortunately patients are often too embarrassed to start the conversation with their doctors.5  “Caregivers note a change in behavior, such as an increase in laughing and/or crying, which may allow them to alert the doctor that there is a health concern that may need to be addressed,” says Jeffrey Cummings, MD, ScD, Director of the Cleveland Clinic Lou Ruvo Center for Brain Health in Las Vegas. “However, often they are not aware that these episodes are inconsistent with the patient’s mood.”

“Because caregivers of people diagnosed with Alzheimer’s and other dementias, MS, Parkinson’s or ALS, or people who have suffered from a stroke or a traumatic brain injury often become the eyes and ears of the patient, it is important they form a clinical alliance with the doctor if symptoms suggestive of PBA are present,” says Dr. Cummings. PBA can be managed if your doctor is aware that the symptoms exist and are bothersome to your loved one or yourself.

To prepare for a discussion with the doctor, you can take a short quiz at www.pbainfo.org on behalf of the person you care for. Your answers may help start a conversation with the doctor.


7/10: This is one reason why Japan can't get its act together.

Abe approval rating slides
A series of scandals and unpopular laws are thought to be responsible for a dramatic fall in the popularity of Japanese prime minister
Shinzo Abe. In a new poll, only 36 per cent of the Japanese public supported Mr Abe’s administration while 52 per cent opposed it — the worst figures since Mr Abe returned to office in 2012. The prime minister has announced a cabinet shake-up in an effort to regain public support

EFM- They can't get their act together. That said, our government seems equally bad. Trump's poll numbers are lower than Abe's.

7/10: And the G20 are not in our beds

World leaders agreed to move forward on climate change without the U.S., declaring the Paris accord “irreversible.” And European officials have stopped trying to paper over their differences with President Trump.

And an excellent comment from the Financial Times.

Donald Trump has reinforced the impression in recent days that the US is relinquishing its role as leader on the international stage. He gave his first major European speech in Poland, and held lengthy discussions with Russia's Vladimir Putin. He gave his place to his daughter Ivanka during the G20 heads of governments' meeting in Hamburg, and imposed an exception for his country in the closing declaration which has sparked some G20 critics to rename the forum the G19+1.
So are we in for a market drop per se. No. Comments like this (demogronomics) show some commerical optimism


·         "Overall, business is strong. We are seeing price increases for packaging and handling materials as well as some MRO supplies." (Plastics & Rubber Products)

·         "Overall, demand is up 5-7 percent and expected to continue through the end of the year, at least." (Transportation Equipment)

·         "Demand is picking up; meeting budget expectations." (Electrical Equipment, Appliances & Components)

·         "Business is still very robust. Have continued to hire to match increased demand." (Computer & Electronic Products)

·         "Business [is] steady; not great, but good and fairly solid." (Furniture & Related Products)

·         "Business globally continues to show improvement." (Chemical Products)

·         "Environmental regulations have strong effects on our business. We continue to watch for any changes as a result of the new administration." (Paper Products)

·         "Dry weather helping demand." (Nonmetallic Mineral Products)

·         "International business outside North America on the upswing." (Machinery)

·         "Metal pricing continues to drag down our profit margins, but we are very busy quoting new business, so our customers have a good outlook on the rest of the year." (Fabricated Metal Products)

·         "Business is strong both domestically and internationally. Supplier deliveries are quick domestically, international supply chain is slowing. We are in a hiring mode." (Food, Beverage & Tobacco Products)

However if we get an inverted yield curve we can kiss off the rest of this decade

7/10: More on Trump and the Paris accord

Donald Trump’s bad judgment on the Paris Accord Donald Trump’s decision to withdraw the US from the Paris climate agreement has caused much anger. This article raises important issues to discuss for students in ethics and sustainability courses. Is withdrawing from the accord better or worse for economic growth and jobs in the US? What does Trump’s decision do to the standing of the US in the world and to his leadership?

7/10: Changing durations



‘I live for the 12 centimeters of tongue in my mouth.’

Anonymous

7/9: A gun or a car or a pill

Opioid addictions kill nearly as many Americans as cars or guns each year

7/9"


7/9:
 

7/9:
I thought that only 2 interest rate increases would occur  this year. We shall see. Recognize that over the long haul- 5 to 19 years-Ecognoi

Fed split over when to start shrinking its balance sheet

Federal Reserve officials are deeply divided on the issue of when to start cutting the size of the central bank's bond portfolio, according to minutes from the Federal Open Market Committee's June meeting. Opinions ranged from "a couple of months" to waiting until December.


7/7" Income disparity



7/7:
I agree

Some Fed Governors Disturbed: Stock Prices "Too High"

Several top central bankers are worried about rising risks in the U.S. stock market, according to minutes released Wednesday from June's Federal Open Market Committee meeting.


 EFM- But you must note that it still can continue. Think the 90s. Further, the market does NOT have to make sense. Hothe drop could be a death spiral.

7/7: Alzheimers plus

PseudoBulbar Affect, or PBA, is a distinct condition that can happen to people who have been diagnosed with Alzheimer’s and other dementias, multiple sclerosis (MS), Parkinson’s or amyotrophic lateral sclerosis (ALS), or who have suffered from a stroke or a traumatic brain injury. It results in sudden, frequent and uncontrollable episodes of crying and/or laughing that do not match how a person feels.2 It affects about two million people in the United States who suffer from common neurologic diseases or traumatic brain injury, and can affect men and women.3 Although PBA is not life threatening, it can be of concern to both patients and/or caregivers. According to a survey of 499 Alzheimer's/dementia patients (or their caregivers), 9.6% may have PBA. Based on this data, 500,000 people living with Alzheimer’s in the United States may also have PBA.4

These neurologic conditions or brain injury can affect the signals that tell a person’s body when or how much to cry or laugh. This can trigger episodes of crying and/or laughing that are sudden and exaggerated (more intense or lasting longer than expected) or mismatched (not fitting the situation).2 Alzheimer’s disease and other dementias can make PBA especially hard to identify, since sudden episodes of crying can be mistaken for depression or other personality changes associated with dementia and other neurologic comorbidities may also exist. Diagnosing PBA can also be difficult for two key reasons: the symptoms of PBA may look similar to and can overlap with other conditions such as depression, and patients and caregivers tend to use different language than physicians to describe PBA symptoms.

Patients can have both PBA and depression.

Differentiating PBA from depression can be challenging, as patients can have both PBA and depression.2 Patients and caregivers often self-diagnose PBA as depression. Experiencing PBA episodes can be distressing, causing patients to think of the episodes as a sign of depression. And caregivers often are not familiar with PBA so they associate the episodes with signs of depression as well.5 However, PBA and depression are two separate conditions, and both conditions are manageable and should be independently diagnosed.2  Patients, caregivers and physicians tend to describe PBA symptoms differently.

Physicians tend to use more technical terms when talking about PBA, describing crying and/or laughing episodes as “disproportionate to the situation,” which may be difficult to understand. Patients typically use different terms, often emphasizing that episodes do not match their emotions or mood, or are overly emotional. While these words are likely to be understood by physicians, unfortunately patients are often too embarrassed to start the conversation with their doctors.5  “Caregivers note a change in behavior, such as an increase in laughing and/or crying, which may allow them to alert the doctor that there is a health concern that may need to be addressed,” says Jeffrey Cummings, MD, ScD, Director of the Cleveland Clinic Lou Ruvo Center for Brain Health in Las Vegas. “However, often they are not aware that these episodes are inconsistent with the patient’s mood.”

“Because caregivers of people diagnosed with Alzheimer’s and other dementias, MS, Parkinson’s or ALS, or people who have suffered from a stroke or a traumatic brain injury often become the eyes and ears of the patient, it is important they form a clinical alliance with the doctor if symptoms suggestive of PBA are present,” says Dr. Cummings. PBA can be managed if your doctor is aware that the symptoms exist and are bothersome to your loved one or yourself.

To prepare for a discussion with the doctor, you can take a short quiz at www.pbainfo.org on behalf of the person you care for. Your answers may help start a conversation with the doctor.

7/7: And yet another retirement survey of retirees showing about zilch financial literacy

Only 38% of the participants were aware that the maximum sustainable withdrawal rate is 4% for a nest egg worth $100,000, while only 34% of the respondents knew the impact of negative return on assets is greater at retirement age than either before or after retirement.

7/7: Alzheimers and making the home safe

As a caregiver faced with caring for a person with Alzheimer’s, we are concerned for our loved one’s safety above all else. The following tips will help you outfit your home or your loved one’s home for better safety.

While a safe home environment is essential, it should also support the needs of the individual by promoting independence, positive social interaction and meaningful activities. Here are some additional ways to create a safe atmosphere, without making the home too restrictive for the person with Alzheimer's:

7/6: Tail risk- Kitces has an article,

Does Monte Carlo Analysis Actually Overstate Tail Risk In Retirement Projections?

My point? Who cares! One removes the risk of loss in future projections simply because one can, and one does. If you purposely miss the periods of large losses, then the losses  such as 2000 (49%) and 2008 (57%) do  not impact a monte carlo and one can live in retirement without such tail risks/financial calamity. So one has smoothed out returns by limiting the big losses that almost all advisors suggest/infer you must accept. Your return will be greater and smoother for your 30- 40 years of retirement.

7/6:

Fed ready to start unwinding QE within months

 

US Federal Reserve policymakers are ready to start the unwinding of quantitative easing within months, preparing for the landmark step in spite of a spate of weak inflation readings.

Minutes of their June rate-setting meeting on Wednesday showed a number of officials warning that allowing unemployment to fall too low could lead to the US economy overheating or the emergence of financial stability risks, as they also advocated a series of further rate increases.

The record of the meeting on June 13-14 reveals the Fed in a hawkish mood and it comes as central bankers across a number of rich nations hint at withdrawing some of the crisis-era monetary stimulus.


7/6:


7/6:

“A First Look at Alternative Investments and Public Pensions”

by Jean-Pierre Aubry, Anqi Chen, and Alicia H. Munnell

 

The brief’s key findings are:

  • Public pension plans have boosted their holdings in alternative assets, defined as private equity, hedge funds, real estate, and commodities.
  • This shift reflects a search for higher returns, a hedge for other investment risks, and diversification.
  • The question is how the shift has affected returns and volatility over two periods: 2005-2015 and 2010-2015.
  • In terms of returns, a 10-percent increase in the average allocation to alternatives was associated with a reduction of 30-45 basis points, primarily due to hedge funds.
  • In terms of volatility, alternatives did not have a statistically significant effect.  Hedge funds reduced volatility, but real estate and commodities increased it.
  • This analysis is only a first look at this area; further research is clearly warranted.

 

This brief is available here.



7/6:

Social Security Reform Should Consider Life Expectancy Gap:

Researchers have confirmed that life expectancy at older ages has been rising fastest for the highest socioeconomic groups, according to a paper published by the National Bureau of Economic Research. They found that for those born in 1960, there is a $130,000 gap in benefits between the highest and lowest socioeconomic groups. Read more »


EFM- then why not adjust for race. Asians last longer than whites which are longer than blacks which is longer for Hispanics. Married men last longer than single- the list is huge. But once a particular group is benefited- or losses-  will cause (I believe) riots.

The current SS may not be perfect  but it is better than slicing and dicing benefits.

7/6: Past practices in the  office were not necessarily perfect, but most recognized certain boundaries  should not be crossed. Not so now.

Why We Need to Kick Incivility Out of the Office


The problem is that the bulk of workers are equally uncivil during other hours as well. Just look at how Trump acts.

7/6" It's true

studies demonstrate that grunting allows players to hit the ball significantly harder, without increasing their heart rate or oxygen consumption.

I'm grunting right now


7/6:The fragility of the global recovery

The FT’s Martin Wolf argues that the world economy is recovering from the effects of the financial crisis but is not yet out of danger. (FT)



7/5: Indiana Trump and the Korean missile
Indiana Trump and the Felonious Russians
Indiana Trump and the illiterate Twitter

Which one will win out??
Which will win a war

Let's watch CNN to find out.

Putin may take Trump hunting.............

Actually, Korea has got us in a bad way. WE cannot afford a war but sanctions have not hindered the North




7/5:  I agree

Why Some Men Don’t Work: Video Games Have Gotten Really Good

By QUOCTRUNG BUI
Young men are working less. Some economists think it’s because they’re home playing video games.

7/3: Long and detailed. Have a drink and then try it

"The Value-Extracting CEO: How Executive Stock-Based Pay Undermines Investment in Productive Capabilities" Free Download
Institute for New Economic Thinking Working Paper Series No. 54

WILLIAM LAZONICK, The Academic-Industry Research Network
Email: william.lazonick@theairnet.org

The business corporation is the central economic institution in a modern economy. A company’s senior executives, with the advice and support of the board of directors, are responsible for the allocation of corporate resources to investments in productive capabilities. Senior executives also advise the board on the extent to which, given the need to invest in productive capabilities, the company can afford to make cash distributions to shareholders. Motivating corporate resource-allocation decisions are the modes of remuneration that incentivize and reward the top executives of these companies. A sound analysis of the operation and performance of a modern economy requires an understanding of not only how much these executives are paid but also the ways in which the prevailing system of executive pay influences their decisions to allocate corporate resources. In the United States since the last half of the 1980s the overriding goal of U.S. corporations has been to “maximize shareholder value,” with corporate performance measured by a company’s “total shareholder return”: percentage stock-price appreciation plus dividend yield. Also since the 1980s, the most important components of the total compensation of senior executives have been modes of stock-based pay in the forms of stock options and stock awards. This stock-based pay is structured to incentivize executives to make corporate allocation decisions that will boost the stock prices of the companies that employ them and reward them for achieving that objective. There are three drivers of stock prices: innovation, speculation, and manipulation. The first critical question that this paper addresses is which of these drivers, individually or in combination, contribute to a company’s stock-price performance. Then we can ask the second critical question: Does executive compensation reflect the success of the company in value creation, or the power of senior executives to engage in value extraction? The “value- extracting CEO” hypothesis posits that, in the United States, a significant portion of senior executive compensation rewards them for making decisions that foment speculation and manipulate stock prices, and thereby extract value for their own personal gain. In section four of the paper, I invoke the theory of innovative enterprise to support this hypothesis and debunk the dominant ideology that companies should be run to “maximize shareholder value.” Finally, I elaborate the policy implications for controlling the power of the value-extracting CEO, including a) banning stock buybacks, b) requiring executive compensation that rewards innovation rather than speculation and manipulation, and c) placing stakeholders representing households as taxpayers, workers, and consumers on boards of directors of publicly listed companies, along with shareholders who represent households as savers. An intellectual precondition for these reforms is the rejection of the ideology that companies should be run to maximize shareholder value, which means replacing agency theory with innovation theory as a mode of analyzing how the operation of an economy, supported by the strategies and structures of the business enterprises within it, can attain the objectives of stable and equitable economic growth.

7/3: "The Functions of the Stock Market and the Fallacies of Shareholder Value" Free Download
Institute for New Economic Thinking Working Paper Series No. 58

WILLIAM LAZONICK, The Academic-Industry Research Network
Email: william.lazonick@theairnet.org

Conventional wisdom has it that the primary function of the stock market is to raise cash for companies for the purpose of investing in productive capabilities. The conventional wisdom is wrong. Academic research on sources of corporate finance shows that, compared with other sources of funds, stock markets in advanced countries have been insignificant suppliers of capital for corporations. The purpose of this essay is to build a rigorous and relevant conception of the evolving role of the stock market in the U.S. corporate economy. In fact, the functions of the stock market go well beyond “cash” to include four other functions, which can be summarized as “control,” “creation,” “combination,” and “compensation.” In this paper, I argue, based on historical evidence, that in the growth of the U.S. economy the key function of the stock market was control. Specifically, the stock market enabled the separation of managerial control over the allocation of corporate resources from the ownership of the company’s shares. Yet, assuming that the key function of the stock market is cash, economists known as agency theorists see this separation of control from ownership as the “original sin” of American capitalism, and argue that the evils of managerial control can be overcome by compelling corporate managers as “agents” to maximize the value of corporate shareholders as “principals.”

What is missing from the agency-theory argument is a theory of the value-creating firm, or what I call a “theory of innovative enterprise.” The value-creation process requires three social conditions of innovative enterprise: strategic control, organizational integration, and financial commitment. The functions of the stock market may support the types of strategic control, organizational integration, and financial commitment that can result in the generation of high-quality products at low unit costs—the economic definition of innovative enterprise. It is possible, however, that the functions of the stock market may undermine the types of strategic control, organizational integration, and financial commitment that the innovation process requires.



7/3:

"Willingness-to-Pay and Willingness-to-Accept Are Probably Less Correlated Than You Think" Free Download
CESifo Working Paper Series No. 6492

JONATHAN CHAPMAN, New York University (NYU) - New York University Abu Dhabi
Email: jchapman@nyu.edu
PIETRO ORTOLEVA,
Columbia University, Department of Economics
Email: pietro.ortoleva@columbia.edu
ERIK SNOWBERG,
California Institute of Technology - Division of the Humanities and Social Sciences, National Bureau of Economic Research (NBER)
Email: snowberg@caltech.edu
COLIN CAMERER,
California Institute of Technology - Division of the Humanities and Social Sciences
Email: camerer@hss.caltech.edu
MARK DEAN,
Brown University - Department of Economics, New York University (NYU) - Department of Economics
Email: mrd254@nyu.edu

Willingness to pay (WTP) and willingness to accept (WTA) a monetary amount for a lottery should be closely related. In data from an incentivized survey of a representative sample of 3,000 U.S. adults, we find that WTA and WTP for a lottery are, at best, weakly correlated. Across all respondents, the correlation is slightly negative. For the subgroups that we examine, the correlation is almost always small, typically statistically insignificant, and often negative. The exception is respondents who score highly on a within-study IQ test, where the correlation is around 0.2. A meta-study of similar lab experiments with university students also shows a correlation of around 0.15-0.2. While poorly related to each other, our measures of WTA and WTP are strongly related to different measures of risk aversion, and relatively stable across time. These various patterns allow us to show that this lack of relationship between WTA and WTP is compatible with existing theories, such as Prospect Theory and Stochastic Reference Dependence, only under very specific, and unlikely, correlational structures between parameters. We suggest a simpler formalization.


7/3:

"The Shock of Falling Among Older Americans" Fee Download
NBER Working Paper No. w23517

INAS RASHAD KELLY, CUNY Queens College
Email: inas.kelly@qc.cuny.edu

Direct medical costs associated with falls have been shown to be $34 billion in 2013, an underestimate since full costs are not factored in. Using the 1998-2012 waves of the Health and Retirement Study and several econometric methods to address the endogeneity of falls, this study seeks to answer the question of how much worse physical and mental health outcomes are for individuals who fall compared to their steadier counterparts. Results across various specifications suggest that falling leads to lower activities of daily living, more depression, and more psychological problems. It leads to greater probabilities of being in poor health, having heart problems, and having a stroke. These results survive several robustness checks.




7/2:
  1. Grade Expectations: Rationality and Overconfidence

Date:

2017-06-23

By:

Jan R. Magnus (Vrije Universiteit Amsterdam and Tinbergen Institute, The Netherlands) ; Anatoly A. Peresetsky (National Research University Higher School of Economics, Moscow, Russia)

Overconfidence seems to be an essential aspect of human nature, and one way to study overconfidence is to consider students' forecasts of their exam grades. Part of a student's grade expectation is based on the student's previous academic achievements; what remains can be interpreted as (over)confidence. In this paper we study overconfidence using a sample of about five hundred second-year undergraduate students enrolled in a statistics course in Moscow. The course contains three exams and each student produces a forecast for each of the three exams. Students' expectations are not rational and most of students are overconfident, which is in agreement with what most people find. Less obvious findings are that overconfidence is helpful: given the same academic achievement students with larger confidence get higher exam grades. Female students are less overconfident than male students, their forecasts are more rational, and they are also faster learners in the sense that they adjust their expectations more rapidly.

Keywords:

Rational expectations; Classroom experiment; Overconfidence; Gender difference; Persistence

URL:

http://d.repec.org/n?u=RePEc:tin:wpaper:20170054&r=cbe



7/2:


7/1:

IMF lowers forecast for US economic growth

The International Monetary Fund has cut its forecast for US economic expansion this year to 2.1%, down from its 2.3% projection in April. Minimal productivity growth and an aging population make it unlikely that President Donald Trump will reach his target of 3% annual growth,


EMF- we will not see 3% for a l   o   n   g time. Probably will not happen under Trump. Absolutely not 4%.