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The Final Countdown

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This is a critical week in the Presidential election. No, that’s not because of the Vice Presidential debate, which will start right after this is posted. You can decide for your self just how important it is and then revise your estimate downward a week later. Don’t worry, we live in a time of negative interest rates so there is indeed a lower standard of importance than whatever you are thinking.

No, this is the week for the final jobs report. Not the last one before the election – that comes out the Friday before. That will be too close to the election to really sink in, so this is the last one that we can be sure will count. Will it be good and favor Obama III: The coming of Hillary? Or will it be a disaster and herald the arrival of, well, a much worse disaster named Trump?

Bet on a solid 180k gain that will seem decent enough to be called a win. But you never know with these reports. Here’s why.

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Confidence is Back!

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Barataria has asked the question several times before – given that things are a lot better than they have been in a long time, why are people so down on the economy?

After posing a few potential reasons, we may have the answer – it was largely an artifact of the presidential campaign. That would make the most sense given that the Conference Board index of Consumer Confidence has hit 104.1, the highest it has been since 2007. Combining that with a strong net approval rating for President Obama, which has been tracking around +8 (52 approve, 44 disapprove) and we have the net positive we should expect.

Will this transfer over to Sec. Clinton in time for the election? Given her performance at the first debate, the answer is that it should.  It’s all coming just in time.

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Simply Too Big

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Perhaps you believe, as many people do, that the largest banks in the nation such as JP Morgan and Goldman Sachs should be broken up. They are simply “Too big to fail” and the cost of a bailout by taxpayers to avoid a systemic failure is too great. Who should break them up? The federal government, by legislation? The Federal Reserve, by regulation?

How about the free market – because they are not as profitable?

For all the shouting and consternation about big banks, one simple fact has gone overlooked. With their tremendous size and ability to “make the market”, as shown by the “London Whale” incident, they do not actually rule the world. They are about as profitable, and usually less so, than smaller banks. The reasons are not obvious but they are demonstrated. And those who should be doing the shouting are not the “99%” but the shareholders.

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Education at the Speed of Profit

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ITT Technical Institute was hardly a fly-by-night operation. After 50 years in business as a for-profit technical school it was forced to close down after losing its accreditation and, shortly afterwards, eligibility for federal student loans. It’s merely the latest blow to the for-profit education market after the closing of Corinthian Colleges in 2015 and the dramatic paring back of the previously aggressive University of Phoenix.

Is there a future in for-profit education? Does the free market work, or should education be entirely run by and for the public?

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Labor Unions are Inevitable

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Labor Day is brought to you by those who brought you the weekend – Organized Labor.

When I worked in Germany for a short time in the 1990s, labor relations often came up. Some of my colleagues were envious of the US system while most hated it. All of them, however, had a term for what they understood our core principle to be – “Hire and Fire”. The idea of an “at will” employee with no job security in law and no loyalty by tradition was alien to Germans.

Compared to the nations in the developed world which we compete with, our position is unusual. It’s a bias at the foundation of our system – a natural outcome of the demand for a flexible workforce. This is also likely to change as more and more skill is needed to do the jobs of tomorrow.

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