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Does This Make Any Sense?

From The Australian : There's a price to pay for illiquidity

Which brings us to Peter Swan's paper on the equity premium. He describes his explanation of the equity premium as very simple. Read more »

Auto Lease Tidbit

As I've noted in the comments to this post, auto lease agreements are not required to disclose the interest rate used to determine the charge for the use of money over time.

However, it can be relatively easily calculated from only three numbers on the lease agreement.

In the section of the agreement that determines your monthly payment find the Rent Charge. Back up slightly and find the Adjusted Capitalized Cost and the Residual Value.

1. Divide the Rent Charge by the sum of the Adjusted Capitalized Cost and the Residual Value.

2. To get the interest rate, multiply the above by a number that depends on the length of the lease.

For a two year lease, multiply by 100.

For a three year lease, multiply by 66.67.

For a four year lease, multiply by 50.

For a five year lease, multiply by 40.

For a six year lease, multiply by 33.33.

In general, multiply by 200 and then divide by the number of years.

For a real world example : Read more »

What Toyota is in Shortest Supply?

Like most people, I would have thought that it was the Prius Hybrid.

But no, yesterday a mustard-colored envelope from my local Toyota dealer came in the mail.

Quoting the enclosed letter :

"Ira Toyota is in desperate need to acquire several pre-owned 2004 Toyota RAV4s in order to fulfill special used vehicle requests. Our records indicate you own one of these vehicles and our new car managers have been authorized to buy back your current vehicle." Read more »

Stocks vs Bonds, Equity Premium

Imagine a new mandatory government savings plan as follows :

For every social security number ending in the same digit as the current calendar year, the government contributes $2000 to a restricted private savings account for that individual. In every year after the first, the $2000 contribution is adjusted higher to match the total return of the accounts established in the first year of the ten year cycle. Each ten year cycle reverts to a starting point of $2000, adjusted only for inflation. Read more »

Has the Earth Begun to Enter a Time Warp?

I know this sounds unlikely, but the evidence seems to mounting. Unrelated rates of time flow seem to have intermittently sped up in the last week or two.

1. The Bloomberg TV channel cycles through a large number of displays of many financial data values in a square gray box on the right center of the screen. In just the last few days it has started to sometimes update each screen every second, too fast to read all but the simplest screens. Read more »

A Gasoline Selling Problem

You are the owner of Joe's Desert Service, the only gas station for 150 miles in any direction in the Southwest US.

Under normal conditions, you charge $2.50 per gallon of regular.

Your full service attendent is an illegal alien who works 40 hours a week for the minimum wage. Your payroll and income tax arrangements are known only to the two of you.

You mutually agree to change from a wage payment to a commission payment of 4 cents per gallon pumped.

1. If the total take home pay falls by 10%, what is the new price per gallon charged for regular from the list below? Read more »


From Regret the Error via Dead Parrot Society -

"...'Sheep might be dumb... but they're not stupid' (News, 6 March) said that studies in Oxford showed that a Caledonian heifer called Betty had managed to bend a piece of wire to construct a hook and retrieve food from a jar. Betty is, in fact, a New Caledonian crow, a creature perhaps better adapted to bending wire than a cow." Read more »

M3, A Picture the Fed doesn\'t Want You to See Anymore

FWIW, scroll 7/8ths of the way down. Read the rest if interested.

The Fed has announced that it will discontinue reporting of the form of the money supply known as M3. See this.

Price Controls, the Lessons of History Unlearned

Thomas DiLorenzo on the history of price controls.

The last time that a Congress actually learned from experience.-- Read more »

FAIRTAX, An Internal Economic Error

The FAIRTAX is a proposal to replace virtually all Federal taxes with a single retail sales tax on new goods, attempting to eliminate all multiple taxation and the costs of compliance, among other things.

For background, see and the book.

I am not interested here with the pluses or minuses of the overall plan, but merely with refuting one of the primary claims. Read more »

Science, Sort Of

From Political Calculations

While the earth seems to be knowingly keeping its distance from the sun, it is really only centrificating.

Water freezes at 32 degrees and boils at 212 degrees. There are 180 degrees between freezing and boiling because there are 180 degrees between north and south.

Some people can tell what time it is by looking at the sun. But I have never been able to make out the numbers.

Rain is saved up in cloud banks. Read more »

Intrinsic Bad Behavior

From Hypothetical Bias --

Dan Ariely, the center's visiting scholar and an MIT professor, is examining why people might pay prices greater than the intrinsic value of a good or service, which could have implications for policies that rely on market forces to deliver equitable results.

GM, Signs and Portents

GM suspends 401(k) match for salaried employees

DETROIT, Dec 15 (Reuters) - General Motors Corp. (GM.N: Quote, Profile, Research) is suspending contributions to its 401(k) retirement savings plan for salaried workers, a spokesman said on Thursday... Read more »