tag:blogger.com,1999:blog-84290014652085768382024-02-08T04:18:59.475-08:00Intertemporal Smoothingbloggerhttp://www.blogger.com/profile/13408112510967957531noreply@blogger.comBlogger19125tag:blogger.com,1999:blog-8429001465208576838.post-49020620409341378452011-08-15T21:30:00.000-07:002011-08-15T21:30:46.939-07:00$2 Million stimulus dollars per job.Via <a href="http://lenpenzo.com/blog/id4454-black-coffee-uh-oh-i-think-something-got-lost-in-translation.html">Len Penzo</a> we learn of a Michigan factory that's received $300mm in subsidies and added 150 jobs. That's $2mm per job. A <a href="http://www.jsonline.com/blogs/business/127547468.html">news release</a> implies, but does not state, that this money is also paying for a second a plant, which will add another 300 jobs. It states that the first plant will fully employ 320, and makes further comments on increased staffing.<br />
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For the sake of argument, let's pretend that the multiplier doesn't exist and ignore other side effects (i.e. American competitiveness in high tech sectors). Mr. Penzo is correct that $2,000,000 per job is probably not the most efficient use of the Government's finite resources. What if the final result is $300mm for 620 permanent jobs (ignoring temporary work like construction and surveying). Now we are down to well under $500,000 per job, and it is much more ambiguous. If each job lasts 10 years and pays workers (with bens) an average of $80,000 a year, we are at $5mm in salaries. This looks like a good deal depending on your discount rate.<br />
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Now, I don't know if this piece of stimulus was a good deal or not. My assumptions are probably wide off the mark and we don't know if the extra 320 jobs would appear nor if they would have without the stimulus money. The general point is that when attacking spending per job created, it would be nice to have an idea of what the baseline for a good project is.bloggerhttp://www.blogger.com/profile/13408112510967957531noreply@blogger.com0tag:blogger.com,1999:blog-8429001465208576838.post-20519930814761758612011-08-10T21:31:00.000-07:002011-08-10T21:31:20.117-07:00S&P, 5 days laterWell, what have we seen? Previously I <a href="http://intertemporalsmoothing.blogspot.com/2011/08/bad-move-for-s.html">speculated</a> that bond rates wouldn't move. I have to admit to missing on this one. With the stock market tanking we've seen yield on the 30 year fall by an additional 28 bps, and it would seem that S&P's downgrade is meaningless. However, if we believe reports, they do seem to have some sway on <a href="http://www.latimes.com/business/la-fi-global-markets-20110811,0,2128189.story">France</a>.bloggerhttp://www.blogger.com/profile/13408112510967957531noreply@blogger.com0tag:blogger.com,1999:blog-8429001465208576838.post-42770055811676402262011-08-10T21:02:00.000-07:002011-08-10T21:02:26.833-07:00Everytime Obama speaks the market tanksThe title of this post refers to an oft repeated line among certain wall street types. I don't have readily available data to prove or disprove it, but I would bet quite a bit that it is false. Reason 1: What new information can the President possibly be introducing each and every time that it pushes the market down? Furthermore, who are the traders that are sophisticated enough to determine the impact of his statements, but unable to see that he's not actually able to accomplish anything due to gridlock?<br />
Reason 2: Let's say that the market goes down because he is actually able to unsettle it, or even because he unhappily reminds too many traders that he exists. If this phenomenon is true and so well known (go on, google it), why hasn't it been competed out?bloggerhttp://www.blogger.com/profile/13408112510967957531noreply@blogger.com0tag:blogger.com,1999:blog-8429001465208576838.post-50970213517330560322011-08-05T23:17:00.000-07:002011-08-05T23:19:40.408-07:00A bad move for S&P?So S&P's reputation been somewhat injured by the whole subprime thing--just a bit. Warren Buffet <a href="http://www.cnbc.com/id/37472016/CNBC_INTERVIEW_TRANSCRIPT_Warren_Buffett_on_Moody_s_Credit_Ratings_Agencies">doesn't use</a> ratings agencies in investment decisions (despite owning one), and I've heard at least one very well known mutual fund manger publicly speak very disparagingly of their work.<br />
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S&P threatening to downgrade the debt is virtually the same as a downgrade--the federal government's ability to pay its bills doesn't change because of S&P says it has, and the public threat clued us all in into their thinking. S&P has made good on their very public threat to downgrade the US credit rating. Well, in the week since the debt deal, which didn't meet S&P's very public demands, we've seen yields the 30 year's yield fall by 40bps. Chances are that we won't see much of a move post ratings downgrade. If S&P's most public credit rating is entirely ignored, is their whole business in danger of sliding into irrelevancy?<br />
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Not right away, not while companies are contractually obligated to please the ratings agencies, but it's very tough to see how S&P comes out ahead on this one.bloggerhttp://www.blogger.com/profile/13408112510967957531noreply@blogger.com0tag:blogger.com,1999:blog-8429001465208576838.post-57126160841145626622011-08-05T22:10:00.000-07:002011-08-05T22:10:57.958-07:00Payroll taxes (V1)Krugman <a href="http://krugman.blogs.nytimes.com/2011/08/05/anti-stimulus-politics/">comments</a> on the politics around the payroll tax, and reminds us that "<span class="Apple-style-span" style="color: #333333; font-family: georgia, 'times new roman', times, serif; font-size: 14px; line-height: 21px;">Milton Friedman’s permanent income hypothesis tells us that much of such cuts will be saved, not spent." </span>This makes the case for spending based stimulus much stronger. The long term unemployed are having <a href="http://www.nytimes.com/2011/07/26/business/help-wanted-ads-exclude-the-long-term-jobless.html">significant trouble</a> finding work. After some threshold they can reasonably assume their future employment income to be zero. However, once they are back in the work force, they have reentered the ranks of the employed and can reasonably expect continuous work until their retirement. The result is that their lifetime income has increased dramatically and they can be expected to spend a large portion of their wages. There is a little model below the fold.<br />
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Here's a tiny model: consider an economy with 100 people employed all making a mean of $100 a year and 10 people long term unemployed making zero. We further assume that recent hires have a 1/2rd chance of retaining employment indefinitely after their first year of employment, and a 1/2rd chance of returning to unemployment. All citizens are 30 and expect to continue working and living to 80. The government must choose between a one $200 payroll dollar tax cut (average of $2 per employed individual), and a policy of employing four individuals at $50 each. w.l.o.g, assume a discount rate of zero. Also assume that increased economic activity will turn into future jobs (contentious)?<br />
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</div><div>Under the tax cut policy, we will see increased economic activity of $200 (total tax cut)/50 (years), or $4 year, each year. By contrast, the four workers each have an lifetime income expectation of 1/2*50 (year 1) + 1/2*50^2 ($50 year for 50 years). Hence we see an first year increase in economic activity of 4 (workers) * 1/50 (years) 1/2 * 50*(50+1) = 2*51 = 102. For future years we see 2 (still employed workers) * 50 plus $2 from the $98 which was unspent in year 1. Clearly in this little world the direct hiring route generates more income in the first year, and it happens that the numbers I chose (not intentionally, I just wanted numbers that were easy to work with) created enough economic activity to sustain the 2 long term reemployed. BTW, please check my numbers, they were done on the fly.</div></div>bloggerhttp://www.blogger.com/profile/13408112510967957531noreply@blogger.com0tag:blogger.com,1999:blog-8429001465208576838.post-51491087844710931682011-08-04T20:06:00.000-07:002011-08-04T21:10:33.097-07:00Reasonably conservative ObamaDavid Frum <a href="http://www.frumforum.com/if-the-conservatives-were-right-about-the-economy">somewhat defends</a> Obama's record. This section struck me as particularly surprising:<div><br /><div style="text-align: center;"><span class="Apple-style-span" style="color: rgb(35, 35, 35); font-family: 'Times New Roman'; line-height: 18px; ">Obama’s only tax increases – those contained in the Affordable Care Act – do not go into effect until 2014. Personal income tax rates and corporate tax rates are no higher today than they have been for the past decade. The payroll tax has actually been cut by 2 points. Total federal tax collections have dropped by 4 points of GDP since</span><span class="Apple-style-span" style="color: rgb(35, 35, 35); line-height: 18px; font-family: 'Times New Roman'; "> 2007, from 18+% to 14+%, the lowest rate since the Truman administration</span></div></div><div style="text-align: center;"><span class="Apple-style-span" style="color: rgb(35, 35, 35); line-height: 18px; font-family: 'Times New Roman'; "><br /></span></div><div style="text-align: left;"><span class="Apple-style-span" style="color: rgb(35, 35, 35); line-height: 18px; font-family: 'Times New Roman'; "><br /></span></div><div style="text-align: left;">Assuming this is true, it seems fairly odd. Did the stimulus cut taxes by 4% of GDP? Well, no, the US GDP in 2010 was $14.66 trillion, and the <a href="http://www.recovery.gov/Transparency/fundingoverview/Pages/fundingbreakdown.aspx">total stimulus tax cut</a> was $288 million. This is about 1.9% of GDP, but that outlay was over the entire length of the stimulus to date so we can safely assume it was lower. It can't be the cut in the payroll tax, because that happened too late for it to impact 2010. Perhaps it was a running decline from 2007 to 2010?</div><div style="text-align: left;"><br /></div><div style="text-align: left;">Well, I found tax numbers <a href="http://www.whitehouse.gov/omb/budget/Historicals">here </a>and GDP numbers <a href="http://www.bea.gov/national/index.htm">here</a> (which reports GDP lower than the CIA number above). This shows GDP falling from 17.7% in 08 to 14.8% in 2010. Of the 2.9% reduction, about 0.8% is a fall in corporate tax collection. This leaves us with a real puzzle, because we know, or think we know, that the recession has had a disproportionate impact on those at lower economics rungs, and the WSJ editorial page loves to tell us that the rich pay all the income taxes.</div><div style="text-align: left;"><br /></div><div style="text-align: left;">I don't have a solution to this puzzle yet.</div>bloggerhttp://www.blogger.com/profile/13408112510967957531noreply@blogger.com0tag:blogger.com,1999:blog-8429001465208576838.post-40082738679236902982011-08-03T20:25:00.000-07:002011-08-03T20:45:28.461-07:00Ineffective policy recommendations.I heard an <a href="http://marketplace.publicradio.org/display/web/2011/08/03/pm-cut-taxes-for-young-professionals-commentary/">important story</a> on <a href="http://marketplace.publicradio.org/">Market Place</a> today. The story highlighted the long lasting negative impact that a slow start to one's career can have. Recent grads--and by recent we mean 2008 onwards--are having trouble entering the workforce, and hence we've handicapped a generation. Ok, this story is pretty well known, but it's good to hear it publicized. <div><br /></div><div>What blew me away was the solution: "<span class="Apple-style-span" style="font-family: Georgia, Times, serif; font-size: 14px; line-height: 21px; ">We could, for example, exempt workers under 25 from paying their share of the Social Security payroll tax." </span></div><div><br /></div><div>Something tells me that he doesn't fully understand incentives. When unemployment for a group is nearly double the national average, you can safely infer that the problem is not a lazy workforce. Cutting taxes on workers might increase the supply of workers, but it will do nothing to increase demand for them. Oh, and to get back to intertemporal smoothing, a member of the workforce may reasonably see the recent behavior by the government as a willingness to reneg on social security, and may further interpret specific cuts in their payroll tax as a chance to exclude them from future benefits. This reduces their incentive to rack up working years (even at a low wage), and may actually have the exact opposite impact of what he intends. </div><div><br /></div><div>Cutting the employer portion of the payroll tax may be a different story, but the reality is that the marginal cost of a recent grad is already pretty low. Making additional employees profitable would do a lot more.</div>bloggerhttp://www.blogger.com/profile/13408112510967957531noreply@blogger.com0tag:blogger.com,1999:blog-8429001465208576838.post-49923820682447820172011-08-02T21:49:00.000-07:002011-08-05T23:27:37.894-07:00Limits of the debt/GDP ratioQuick primer on debt, Greece is at 155% debt/GDP, and the USA is somewhere around 100%, and the US is running 10% annual deficit. (These are crude estimates based on order of magnitude.) We differ from Greece in a number of ways: 1) we don't face high interest rates, 2) we can print our own money, and 3) tax evasion isn't nearly as common.<br />
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</div><div>Generally speaking, these differences imply that we aren't in any major danger of "becoming like Greece," but I think what's happening to Italy should be a warning for us. Yes, they are part of the Euro, and can't try to monetize their debt, but they are a big important part of the Euro. While I previously would have thought that our debt limit was well above what got Greece into trouble, seeing Italy have trouble at 119% (end of 2010) implies that action should be taken sooner rather than later. Yes, we could face unlimited borrowing constraints, as Japan seems to, or we could slip into dangerous waters. The reason I think we should act now, is the same principle as acting on global warming: reduce the likelihood of a possible catastrophic event.</div><div><br />
</div><div>If the model was clearer, and we knew that a fiat currency would absolutely prevent problems, then let the debt grow until the economy recovers during Bachman's second term. However, absent that certainty we should proceed with caution.</div>bloggerhttp://www.blogger.com/profile/13408112510967957531noreply@blogger.com0tag:blogger.com,1999:blog-8429001465208576838.post-1788651640576720912011-08-01T20:54:00.000-07:002011-08-01T21:02:54.445-07:00A bright spotI can't say I'm a fan of the deal, but <a href="http://www.latimes.com/news/nationworld/nation/la-na-debt-giffords-20110802,0,4910712.story">this</a> was a wonderful example of both sides coming together. Unfortunately, I think for our nation to properly heal, we need a recovered economy. Obviously, reducing GDP via cuts to the federal budget is going to move us backwards, but it's looking like hope is <a href="http://www.angrybearblog.com/2011/08/global-pmis-and-fed-policy-theyre.html">retreating.</a>bloggerhttp://www.blogger.com/profile/13408112510967957531noreply@blogger.com0tag:blogger.com,1999:blog-8429001465208576838.post-89266696475177727102011-07-30T23:50:00.000-07:002011-07-31T00:13:08.204-07:00billion not trillion dollar coins pleaseA method for the Treasury to <a href="http://thinkprogress.org/yglesias/2011/07/28/282471/the-platinum-coin-option/">print money</a> has been making the rounds. Let's posit that depositing newly minted large denomination coins will directly result in inflation. To the extent that this avoids default, it's a great idea, but it should be conducted based on daily revenue short falls rather than a "trillion dollar coin." By making it clear that the money supply will be expanded as needed, future <a href="http://www.theatlantic.com/business/archive/2011/07/aim-for-higher-inflation/241733/">inflation expectations will be raised</a>. With higher inflation expectations, businesses will start spending some of the crazy-high <a href="http://www.theatlantic.com/business/archive/2011/07/the-us-now-has-less-cash-than-apple/242729/">cash reserves</a> they are sitting on, and unemployment may finally start to fall. Note that it doesn't matter if coin minting scheme actually causes inflation; it only matters that enough executives think it will.<div><br /></div><div>While we are on the topic of inflation, the obvious added benefit is that it will reduce the deficit in real terms.</div>bloggerhttp://www.blogger.com/profile/13408112510967957531noreply@blogger.com0tag:blogger.com,1999:blog-8429001465208576838.post-23502587209199225062011-07-27T22:11:00.000-07:002011-07-27T22:37:16.358-07:00Debt Ceiling LeverageTwo ideas have recently surfaced which both involve the federal reserve. In one, the Fed <a href="http://www.google.com/url?sa=t&source=web&cd=1&ved=0CBUQFjAA&url=http%3A%2F%2Fwww.isn.ethz.ch%2Fisn%2FCurrent-Affairs%2FISN-Insights%2FDetail%3Flng%3Den%26id%3D130800%26contextid734%3D130800%26contextid735%3D130795%26tabid%3D130795%26dynrel%3D4888caa0-b3db-1461-98b9-e20e7b9c13d4%2C0c54e3b3-1e9c-be1e-2c24-a6a8c7060233%2Ccab359a3-9328-19cc-a1d2-8023e646b22c&ei=bfAwTs6PEIGTtwefyKzrDA&usg=AFQjCNE-dM47BMShb-GvH06KHvQt5XR-7g">destroys</a> the treasuries they own. The result is immediate space under the debt ceiling. In a slightly modified version of this, the Fed will just destroy t-bills which will at least allow the treasury to continue issuing cash management bills and the like.<div><br /></div><div>In the <a href="http://www.cnbc.com/id/43899646">second idea</a>, the Fed simply allows the US Government to overdraw its account, and continues crediting payments. Clearly this is just printing money. Assuming that these options are legally possible, Obama should at least be making unassuring noises about them. </div><div><br /></div><div>Here's why: libertarians and tea party types have deep fears of inflation and are more or less <a href="http://blogs.forbes.com/timothylee/2011/07/21/why-are-libertarians-inflation-hawks/">unanimous</a> in their view that <a href="http://en.wikipedia.org/wiki/Milton_Friedman">"</a><span class="Apple-style-span" style="font-family: arial, sans-serif; line-height: 16px; font-size: small; "><a href="http://en.wikipedia.org/wiki/Milton_Friedman">'<wbr><em style="font-weight: bold; font-style: normal; ">inflation</em> is <em style="font-weight: bold; font-style: normal; ">always and everywhere</em> a monetary phenomenon."</a> </span>They also tend to be terrified of inflation and view it as far more troublesome than, say, a ruined economy. Making their biggest economic fear (well, after being told what ketchup brand to buy) a little closer to reality might just make them slightly more flexible. Nah. For good measure, maybe Obama should hint at having to sell off the gold reserves (this assumes that they can understand the impact of drastically increased supply on a market). </div>bloggerhttp://www.blogger.com/profile/13408112510967957531noreply@blogger.com0tag:blogger.com,1999:blog-8429001465208576838.post-29268532884390327162011-07-23T07:00:00.000-07:002011-07-23T07:22:44.643-07:00The Death of BordersMuch is being written about the death of Borders, and ebooks are often mentioned as the cultprit. While ebooks (and mp3 downloads) may have been what nudged them over the edge, they weren't the main instigator. Borders had a failed international expansion and took on huge debts. Barnes and Noble, which has survived (so far) stayed relatively debt free and always seemed to do a better job of managing their inventory. It also sounds like Border's in store inventory was mandated by company management and infrequently allowed store and regional managers to adjust for local taste.<br /><br />Anyway, the upshot is that a flawed, but pleasant institution is gone. One more item, in a <i>You've got Mail</i> vein, in my experience bad independent book stores have suffered far more than good ones. Stores with poor selection, hours, or located in unwalkable neighborhoods have died. Other notable victims were those shops with holier than thow staff. On the other hand, stores such as The Elliot Bay Book Company and the Toadstool are still going strong.bloggerhttp://www.blogger.com/profile/13408112510967957531noreply@blogger.com0tag:blogger.com,1999:blog-8429001465208576838.post-28540940865211541052009-08-25T20:30:00.000-07:002009-08-25T21:47:58.875-07:00On CarsSo, Bryan Caplan <a href="http://econlog.econlib.org/archives/2009/08/touristic_bias.html">thinks</a> human happiness peaks when eating at Chili's after buying a tv at Best Buy. (Speaking of chains, WFMI keeps going up despite the boycott. I've been wanting to reduce my Beta as an SPX over 1000 has me very nervous. Time to get short Whole Foods?) Ryan Avent, ever the voice of reason, <a href="http://www.ryanavent.com/blog/?p=2214">points out</a> that preferences vary.<br /><br />The pro-American sprawl crowd seem to have more of an ideological objection to Europe than the "actually, the European lifestyle is somewhat appealing" crowd. That is, they seem to think that touristy Europe is an illusion: most Europeans don't live there you know, (presumably Europeans taking a holiday in America visit Church Falls rather than D.C.) Furthermore, the real Europe is a horrible disutopia caused by an oversized government. I'm not sure if it's because they feel threatened by it, or if they truely love mowing their lawns.bloggerhttp://www.blogger.com/profile/13408112510967957531noreply@blogger.com0tag:blogger.com,1999:blog-8429001465208576838.post-69606034280126195812009-02-12T08:10:00.001-08:002009-02-12T08:21:59.300-08:00Democratic StupidityRemember when the media treated <a href="http://en.wikipedia.org/wiki/Nuclear_option">the nuclear option</a> as if it was a perfectly normal thing for the then Republican congress to consider? Remember how democrats agreed they could keep the filibuster option, as long as they only used it when Republican said it was ok? I'm glad they could see so far into the <a href="http://www.washingtontimes.com/news/2005/apr/15/20050415-105858-6978r/">future.</a><br /><br />Aren't they glad they preserved that right? Aren't we glad that an extremist, minority party of now-discredited ideology can do so much damange to the stimulus bill?<br /><br />While I'm at it, I'm glad that the $15,000 credit for home purcahses is dead. Talk about a dead weight loss.bloggerhttp://www.blogger.com/profile/13408112510967957531noreply@blogger.com0tag:blogger.com,1999:blog-8429001465208576838.post-34534187167324756022008-09-04T08:11:00.000-07:002008-09-04T08:49:08.344-07:00PalinI watched part of her speech this morning. Hopefully I'll watch the rest tonight, which I've heard was very good. However, I'm utterly sick and tired of this Republican class warfare crap. The bit I saw was painful. To paraphrase: "I'm from a small town and if you're not from a small town you aren't a real American, and hockey moms who can't move beyond their high school years are better people than the rest of you." blah.bloggerhttp://www.blogger.com/profile/13408112510967957531noreply@blogger.com0tag:blogger.com,1999:blog-8429001465208576838.post-17582327630699699162008-08-29T10:16:00.000-07:002008-08-29T11:59:26.741-07:00Buy Nothing MonthSo, we are 11 days into "buy nothing month," by which we mean "buy very little for 43 days." The general concept is that our current assets were steadily trending downwards. Much of this can be attributed to extra-ordinary items (e.g. weddings on the other coast, short vacation with friends, etc). However, we had enough successive months of this that the "extra spending" had become the norm--no matter how we tried to explain it away. The hope is that "buy nothing month" will 1) restore our immediate cash balance to where we want it, and 2) put us back in a more frugal mindset. So far, the results are positive, and progress has been made towards the first goal. Whether or not a small dose of frugality lowers our average consumption in distant months remains to be seen.<br /><br />Originally we planned on making September buy nothing month, but we decided that things were sufficiently out of hand that we needed to start early. We've decided to allow ourselves a small entertainment budget, but placed rules around it. For example, trips to restaurants are limited and mostly reserved for social occasions. We've agreed to no new clothing or homegoods purchases. The other big change is cash: points be damned; many things we would normally buy with plastic and pay for 20-40 days later are now being purchased with actual cash. This helps in two ways: it limits spending and it will spread the benefits into October.bloggerhttp://www.blogger.com/profile/13408112510967957531noreply@blogger.com0tag:blogger.com,1999:blog-8429001465208576838.post-55217972347255384872008-08-26T14:51:00.000-07:002008-08-26T17:22:59.728-07:00First Post on the ArsenalArsenal play FC Twente in the champions league tomorrow night. If Arsenal manage to score one, then Twente will need four to advance. Hence, the outcome is fairly certain. Now then, one wonders what team Arsene will select. If he plays Cesc he is gambling with his health, but he is also providing some match fitness for the team's most important player. More than that, he is pressing for an outcome. Fiscally, playing in the CL is very very important. So, while the result of this qualifier may be far more certain than an individual PL match, it is also far more valuable. On the other hand, losing Cesc for an extended run may put the team in danger of missing next year's CL. So, in effect, the choice to play Cesc is a function of how he values this year's CL revenue vs next year's.<br /><br />There are other choices to make as well: assuming that Djourou is still third choice, should he get a start ahead of Gallas (who has played all three games and has been subpar) or Toure (not fully match fit)? Cleary Djourou could use the experience. Should RVP or Adebayor be rested?<br /><br />Personally, I'd have Cesc, Gallas, and Ade on the bench. By doing this you rest your players and increase the quality of your bench. Improving the bench controls costs in the future.bloggerhttp://www.blogger.com/profile/13408112510967957531noreply@blogger.com0tag:blogger.com,1999:blog-8429001465208576838.post-6699083473500176922008-08-26T13:41:00.000-07:002008-08-26T14:51:44.754-07:00An introductionThis blog is meant to be my thoughts on personal finance, sport, random ruminations and visceral reactions. The name refers to the general concept of spreading consumption evenly across life, but there is a slightly more specific motivation. A few years ago, I was enjoying a bitter--even though it wasn't nearly as bitter as a good American beer--in Waxy's Little Sister debating some ridiculous thing or another. The beer was being bought on credit, and the evening's entertainment (the long running play "The Women in Black") was on credit. My lodgings were being paid for with credit, and even the rather expensive purpose of my trip (a short course) was also on credit. What's more, the form of credit is a familiar one--visa rather than student loans, and I had NO intention of paying it back in the near term (beyond maintenance payments). At said time I was a student, and I was accruing the credit card debt, which we frequently hear about as being the scourge of America's newly educated. <br /><br />Anyway, a few years later I've graduated and am gainfully employed. I still haven't paid off that debt, but it doesn't exactly hang over my head. To lay it out again, that particular evening I ran up debt to pay for beer. America's newpaper columnists will tell me that I was being irresponsible (maybe) and careless with money (nah), but I'm quite convinced it was the right thing to do. I borrowed against my future to pay for the present. The net result was a good play, and some persistent friendships which I value more than, say, 100 quid at 3% interest. So this raises questions. Was I too sure of future earnings? Should current earnings be used for consumption or savings? If they are spent on savings, which kind: debt reduction, short term savings, IRA, etc? Those are some of the things I want to explore.<br /><br />Well, that is that lot.bloggerhttp://www.blogger.com/profile/13408112510967957531noreply@blogger.com0tag:blogger.com,1999:blog-8429001465208576838.post-66414448785218500362008-08-20T13:39:00.000-07:002008-08-20T13:40:26.193-07:00FirstThis is the first post on intermporal smoothing, but it is a bad one. More fun to come.bloggerhttp://www.blogger.com/profile/13408112510967957531noreply@blogger.com0