Memorial Day Weekend/ Your Shopping Dos and Don’ts

Nilus Mattive

This post Memorial Day Weekend/ Your Shopping Dos and Don’ts appeared first on Daily Reckoning.

Memorial Day is one of the biggest three-day-sale weekends of the year, and retailers will be slashing prices on almost everything, from mattresses to appliances, outdoor gear and more.

But while Memorial Day sales cover almost all product categories, there are some deals that are better than others.

To make sure you get the best deals and skip the worst, I’ve compiled a list of what to buy and what not to buy this Memorial Day weekend.

What to Buy

Historically, Memorial Day is one of the best times of year to buy a new mattress, even eclipsing major shopping holidays like President’s Day and Fourth of July.

This year, Layla Sleep is offering $125 off their signature Layla mattress, plus you get two free pillows with purchase. Serta is offering up to $600 in savings on its iComfort mattress set and you can snag $50 off twin and twin XL mattresses and $100 off all full, queen, king, and California king at Purple mattresses.


Memorial Day sales rarely disappoint when it comes to deals on appliances — especially refrigerators.

Big players in this category include Best Buy and Lowes, which have offered in the past fridges and other major appliances up to 40% off.

This year, online retailer Made In is offering 15% off all individual items from May 24 to May 27.

Home Goods

Home goods deals are everywhere during Memorial Day weekend. Kohl’s and Macy’s have in the past hosted giant sitewide sales, while has taken 20% off area rugs, home decor, bedding and bath.

This year Birchlane is offering discounts up to 70% off in categories including outdoor furniture, rugs, sofas and sectionals, beds and headboards, dining tables, chairs, and lighting. and are also offering major deals starting May 20 through May 28.


Some of the best Memorial Day sales you’ll find are at home improvement stores, it’s a good time to stock up on tools right before summer and Father’s Day.

In the past, Home Depot has offered Memorial Day specials, including up to 50% off tools and hardware. This year Lowe’s has sales ranging anywhere from 10-25% off most tools.

Spring Apparel

With summer around the bend, stores are wanting to get rid of spring merchandise and make way for summer styles. Last year, high-end clothing retailer Lord & Taylor offered an extra 25%-60% off clearance styles. has sales of up to 40% off, and department stores like Macy’s, JCPenney and Dillard’s all join in on Memorial Day weekend with deep discounts of their own.

Some stores will even throw in a free gift with purchase to entice shoppers.


If you have big summer travel plans, Memorial Day weekend is one of the best times to book travel deals.

You’ll find better-than-average prices on flights, hotels, and more from sites like …read more

8 Ways to Save on This Summer’s Road Trip

Nilus Mattive

This post 8 Ways to Save on This Summer’s Road Trip appeared first on Daily Reckoning.

Summer is approaching. That means vacations for many families. AAA estimates that 100 million Americans are planning a getaway, more than half opting for a road trip.

But with gasoline prices inching higher, traveling could cost more than you may have expected. And for anyone on a tight budget, that could mean cutbacks on other parts of your trip.

As of mid-May, the national average price for a gallon of gasoline was $2.86… 3 cents higher than the same time last month.

Here in California we’ve been hit the hardest… passing a whopping $4. That’s up about 30 cents from a year ago.

For an estimate on how much gas will cost on your road trip, AAA has a handy calculator that’s based on where you’re traveling and the car you’re driving.

Now if you’re like me, you hate paying too much at the pump. So here are eight things you can do to make any upcoming road trip, and even your everyday commutes, a bit more affordable…

#1—Tap Your Smartphone

Use apps such as AAA’s Triptik or GasBuddy to find the lowest prices when you’re traveling. You can search by city, state, or brand. 

#2—Find a Fuel Rewards Program

Most gas stations offer a rewards program that can save you money…

For instance, BP’s Driver Rewards will knock off 10 cents per gallon (up to 20 gal.) for every $100 you spend on their fuel.

Shell has one, too. You can save 30 cents per gallon on your first five fill ups and 10 cents thereafter.

Exxon Mobil Rewards+ program gives you 3 points per gallon. For every 100 points accumulated, you get $1 off your fuel purchase. So 500 points = $5 in savings.

The obvious downside to these programs is that you have to buy at participating stations, which can be a nuisance when on a road trip.

If that’s a concern, you might consider Pay with GasBuddy. It works as a debit card at most every station nationwide taking the purchase amount right out of your checking account.

The service has three membership levels. One is free; the other two have monthly fees. You’ll save 5 cents to 20 cents per gallon depending on which membership you join.

#3—Cash Is King

Some gas stations will charge you as much as 10 cents or so a gallon when you pay with a credit card. That’s to offset the processing fees that credit card companies charge them.

So if you’re willing to pay with cash, look for stations that’ll give you a discount. Paying with a debit card often earns similar savings. 

#4—Discounted Gas Cards and sell discounted gas gift cards that give you another way to save…

A recent listing was for a Sunoco card. Face value: …read more

5 Financial Rules of Thumb You Should Break

Nilus Mattive

This post 5 Financial Rules of Thumb You Should Break appeared first on Daily Reckoning.

One of my favorite Seinfeld episodes is when Kramer storms into Jerry’s apartment and starts complaining about another golfer who picked up his ball in the middle of the fairway to clean it.

Kramer goes on to say that he penalized his friend a stroke for breaking the rule.

Elaine then asks, “What is the big deal?” and Kramer replies, “Hey, a rule is a rule, and without rules there’s chaos.”

The same can be said for personal finance.

Without money rules, chaos can ensue. However, there are some rules of thumb I believe you should be breaking if you want to get ahead.

Some rules are outdated, and some simply don’t apply to everyone’s individual financial circumstances. So why bother follow a rule that makes no sense?

Here’s my list of 5 financial rules of thumb you should consider breaking:

1) Use Your Age to Determine Asset Allocation

During the 1980s and 1990s, it was standard to give the following asset allocation advice:

“Subtract your age from the number 100 and that is the percentage of your portfolio you should have invested in equities, with the remaining percentage in fixed income, adjusted each year as you age.”

Under this rule, at age 30, for instance, you should keep 70% of your portfolio in stocks and the rest in bonds and other relatively safer securities. At age 65, you invest 35% of your assets in stocks.

The idea behind the rule is to gradually reduce investment risk as you age. But that doesn’t always work. Americans are living longer and retiring later.

Your retirement savings strategy should be adjusted to meet a bigger nest egg. At the same time, the yield on a 10-year Treasury Bill is roughly 2.5%, down from a peak of nearly 16% in the 1980s.

And with the stock market soaring over the past decade, it might not have made a lot of sense to dump a large portion of money into fixed income when you could reap greater gains.

My advice, rebalance your portfolio each year, look at your target retirement age, what you plan on using your funds for in retirement and your risk tolerance. 

2) Pay Off Your Mortgage as Fast as Possible

For most, a mortgage is the largest debt they’ll ever owe. So from a risk tolerance point of view, it makes sense to want to pay down the debt as fast as possible.

Although this really only makes sense when interest rates are outpacing the stock market. If interest rates are double digits and investment returns average 7%, yes, it makes sense to pay down your mortgage faster.

But, the majority of homeowners today have a mortgage rate of less than 5%, and are seeing average annual returns above 7%. 

So it’s better to make your payments on time, take your mortgage …read more

Prepare for Trench Warfare

This post Prepare for Trench Warfare appeared first on Daily Reckoning.

What if China isn’t half so desperate for a deal as the president believes?

Are we in for an extended siege of economic trench warfare?

Today we explore possibilities… and their implications.

We first direct our gaze to Wall Street.

Investors came crouching from their shelters this morning… as if expecting an aftershock to the quake that drove them underground yesterday.

With Monday’s 617-point battering — piling atop last week’s losses — three months of stock market gains have vanished into the ether.

The S&P 500 endured its 15th-largest decline in history yesterday. It has shed $1.1 trillion since May 5 alone.

Markets Bounce Back

But the Earth held today. And investors cleared away some of yesterday’s wreckage.

The Dow Jones rebounded 207 points.

The S&P reclaimed 23 of the 70 points it lost yesterday. The Nasdaq gained 87.

Markets were encouraged by President Trump’s comments that he will strike a deal with China “when the time is right.”

He will have an opportunity at the G20 summit in late June. There he will meet China’s Xi Jinping, for whom his “respect and friendship is unlimited.”

But is China sweating dreadfully for a trade deal as Trump assumes?

China Braces for Escalation

China does — after all — ship some $500 billion of products to these shores each year.

It cannot afford to sit on them like a broody hen.

But you might have another guess, says the director of monetary policy at the People’s Bank of China:

As for the change in the domestic and external economic environment, China has sufficient leeway and a deep monetary policy toolkit, and so has full ability to deal with [economic] uncertainties.

But here we cite a government mouthpiece, a marionette in human form. You no more trust his word than you would trust a dog with your dinner.

Just so.

But affirms Brad Setser, senior fellow for international economics at the Council on Foreign Relations:

Trump’s escalation comes at an awkward time, but if push comes to shove, they’re quite capable of supporting growth through more investment and credit.

There may be justice here.

Twice as Much Stimulus as During the Financial Crisis

If you believe the Federal Reserve is a gargantuan spigot of credit, the People’s Bank of China brings it to shame.

ING estimates China has pledged 8 trillion yuan in economic support — twice as much “stimulus” as it offered during the global financial crisis.

And the Organization for Economic Cooperation and Development (OECD) estimates China’s fiscal stimulus this year equals 4.25% of GDP… up from 2.94% last year.

Meantime, Chinese domestic consumption has been on the increase.

Growth through increased consumption — say the economics wiseacres in practice among us — reduces dependence on exports.

Is most of this stimulus woefully wasteful? Does it finance vastly unproductive economic activity?

Yes and yes.

Is the way to wealth through consumption — rather than production?

No, it is not.

But if Chinese authorities believe they can offset lost exports by bellowing credit and vomiting money… they may choose to dig in for the long haul.

“A nation is never …read more


This post Retaliation! appeared first on Daily Reckoning.

“The next few weeks could be rocky.”

Bank of America’s fortune cookie writers may have undersold their case…

The trade war famously reopened Friday. The United States imposed 25% tariffs on $200 billion of Chinese products.

Come this morning, China announced retaliatory tariffs on $60 billion of United States products.

They enter effect June 1 — unless a negotiated truce first washes them out.

CNBC lists the butcher’s bill:

Beijing will increase tariffs on more than 5,000 products to as high as 25%. Duties on some other goods will increase to 20%. Those rates will rise from either 10% or 5% previously. 

American agricultural products were not excepted. Soybean and cotton prices went plummeting today… in consequence.

Additional retaliation, suggest some Chinese sources, may await.

Trade war, like any other war, is harder to stop than to start.

China Maximizes the Market Impact

Was it coincidence that this morning’s blast arrived in time for opening whistle on Wall Street?

Samantha Azzarello, global market strategist at JPMorgan:

China retaliating as fast as they did was a clear signal they’re not going to be pushed around… It was interesting it wasn’t done on the weekend. It was done just in time Monday morning for markets to open.

On cue the floodgates swung open at 9:30… and a red deluge came washing down the canyons.

The Dow Jones was instantly 400 points under… then 500… 600… and 700 by early afternoon.

By midafternoon the worst of the hemorrhaging was plugged.

The Dow Jones ended the day down 617 points.

But for the first occasion since February, it has slipped beneath its 200-day moving average — which has the chart watchers shaken and rattled.

The S&P lost another 70 points today.

But percentage wise, the trade-sensitive Nasdaq withstood the worst slating of the three — down 270 points on the day — or 3.41%.

“Very bad for China, very good for USA!”

President Trump laughed off all concerns this morning… and insisted China is brunting the true impact.

Their [sic…] is no reason for the U.S. Consumer to pay the Tariffs, which take effect on China today… Also, the Tariffs can be completely avoided if you by from a non-Tariffed Country, or you buy the product inside the USA (the best idea). That’s Zero Tariffs. 

Here he digs his thumbs into China’s eyes, and gives them a good hard twist:

Many Tariffed companies will be leaving China for Vietnam and other such countries in Asia. That’s why China wants to make a deal so badly! There will be nobody left in China to do business with. Very bad for China, very good for USA!

The American Consumer: Hidden Casualty

But the president’s top economics man — Larry Kudlow — conceded this weekend that American consumers will in fact pay much of the freight.

Companies that accept imports actually pay the tariffs at water’s edge.

These costs they pass along to the consumer further down the line.

Thus tariffs represent a tax increase upon Joseph and Jane Average American… who must stretch deeper into their pockets to purchase the same …read more

7 Ways THIS Is Not What It Used to Be

Nilus Mattive

This post 7 Ways THIS Is Not What It Used to Be appeared first on Daily Reckoning.

The days of the 40-year career with the same company are gone. The gold watch is gone. And in most cases, the company pension is gone too, or it’s been replaced by a self-managed IRA or 401(k) plan.

The first thing you need to know about retirement today is it’s entirely your responsibility.

Here are seven ways retirement has changed in the last 25 years and what you can do about it.

1. Inheritance

If you were banking on an inheritance from mom and dad to fund your retirement, think again.

According to an HSBC Bank survey of 16,000 people in 15 countries (1,000 from the U.S.), 23% of pre-retirees would like to spend their last dollar with their last breath, and let the kids figure it out on their own. Only 9% of the pre-retirees found it important to leave a legacy for their kids.

In the U.S., about one in 10 retirees support a child over the age of 16 and almost 60% of working-age Americans expect to leave something to heirs.

The days of a hefty inheritance will soon be forgotten, so instead I suggest you start saving more now.

2. Mortgage Payoff

Should you pay off the mortgage? For most people, it generally makes sense after taxes to keep the mortgage, but 25 years ago most people would rather not have to make that payment every month.

Given how low interest rates are today, many retirees are choosing to keep the mortgage, or obtain one if they are buying a retirement home. A recent study by Merrill Lynch and Age Wave, a research firm, found that 64% of retirees expect to move at least once and 37% have already done so.

What’s more, 27% are seriously thinking about it. And not all of this is downsizing, 30% of those who have already moved upsized to a larger home primarily to make room for visitors and family.

3. Retirement Age

It used to be that 65 was the age you retired. This was the norm for a long time. Then a handful of baby boomers made retiring at 55 cool but this was still considered early retirement.

A recent survey by the Employee Benefit Research Institute, found that 50% of retirees quit working earlier than they expected. Health issues were the culprit in 60% of those situations, while 27% cited changes at the company, and surprisingly, 22% stopped to care for a family member.

In addition, a New York Life survey found that 51% of retirees wished they had stopped working sooner so they could have enjoyed retirement while they were younger and healthier. On average, they wanted to retire four years earlier than they did.

There’s no set or recommended retirement age anymore. Retirement comes to each person at different times in life. For some people, retirement is …read more

“Mandate of Heaven” in Jeopardy

This post “Mandate of Heaven” in Jeopardy appeared first on Daily Reckoning.

U.S. policy through the Bush and Obama administrations was to soft-pedal questionable Chinese trade practices, pirating technology and theft of intellectual property in return for cheap manufactured goods and China’s willingness to finance trillions of dollars of U.S. government debt.

Now Trump has changed the rules of the game. He’s said lost jobs in the U.S. are not worth the cheap goods and cheap financing. He bet that China had no alternative but to keep producing those goods and keep buying our debt, even if the U.S. imposes tariffs to help create manufacturing jobs here.

President Trump and President Xi had been on a collision course involving issues of trade, tariffs, and currency manipulation, which are coming to a head.

It’s important to understand that China’s economy is not just about providing jobs, goods and services. It is about regime survival for a Chinese Communist Party that faces an existential crisis if it fails to deliver. It is an illegitimate regime that will remain in power only so long as it provides jobs and a rising living standard for the Chinese people. The overriding imperative of the Chinese leadership is to avoid societal unrest.

Once the Chinese job machine stalls out, popular unrest could emerge on a scale much greater than the 1989 Tiananmen Square protests. This is an existential threat to Communist power.

If China encounters a financial crisis, Xi could quickly lose what the Chinese call, “The Mandate of Heaven.” That’s a term that describes the intangible goodwill and popular support needed by emperors to rule China for the past 3,000 years.

If The Mandate of Heaven is lost, a ruler can fall quickly.

China has serious structural economic problems and its internal contradictions are catching up with it. Economies can grow through consumption, investment, government spending and net exports. The “Chinese miracle” has been mostly a matter of investment and net exports, with minimal spending by consumers.

The investment component was thinly disguised government spending — many of the companies conducting investment in large infrastructure projects were backed directly or indirectly by the government through the banks.

This investment was debt-financed. China is so heavily indebted that it is now at the point where more debt does not produce growth. Adding additional debt today slows the economy and calls into question China’s ability to service its existing debt.

China is now confronting an insolvent banking system, a real estate bubble, and a $1 trillion wealth management product Ponzi scheme that is starting to fall apart.

Up to half of China’s investment is a complete waste. It does produce jobs and utilize inputs like cement, steel, copper and glass. But the finished product, whether a city, train station or sports arena, is often a white elephant that will remain unused.

Chinese growth has been reported in recent years as 6.5–10% but is actually closer to 5% or lower once an adjustment is made for the waste. The Chinese landscape is littered with “ghost cities” that …read more

3 Things Everyone Should Do Before They Die

Nilus Mattive

This post 3 Things Everyone Should Do Before They Die appeared first on Daily Reckoning.

The average life expectancy for those born in 2018 in the United States is 76 for males and 81 for females.

Compare these figures to almost 80 years ago, where males born in 1940 lived until age 61 and females age 65, and there’s no question we are living longer.

But eventually we’re all going to die. And as morbid as that sounds, there are some important things you need to consider before your time is up.

I recently read some good advice regarding estate planning I thought I’d pass on. An estate planning lawyer said something interesting to one of her clients that caught my attention:

“People who aren’t rich might need estate planning more than rich people because they might not be able to afford to pay probate fees in the case of an untimely death.”

If you die without a will, the US court system determines who gets your assets. If you’re single and childless, that could mean your estate goes to your parents or your siblings.

If you’re married, your assets may all go to your spouse. Or be split between your spouse and children of another marriage. If you’re an unmarried couple, your estate goes to your biological family, not your partner. And, all for a price…

Without a will or a living trust, your beneficiaries can pay anywhere from 3% – 10% of the assets in fees in probate. They could be waiting up to a year or longer for all assets to be properly distributed.

An easy way to reduce these fees is simply by creating a revocable living trust.

On average, the costs to settle a trust are between 1% – 3% of assets. Another benefit to a revocable trust is it adds a layer of privacy. So you don’t have to worry about your kids fighting over who got what.

Once you’ve covered the basics of estate planning, like writing a clear will, setting up a revocable living trust, and assigning your Powers of Attorney, you should consider these next three points that were brought to my attention.

1. You Need to Forecast Your Death

There’s no easy way to say it.

Time is passing every second of every day, which means your biological clock is winding down as you read this.

In order to best plan your finances and be able to enjoy the most of your money, you should have a rough idea of when you might die.

How can you predict this?

The Social Security Administration published Actuarial Notes with tables that predict when someone will die based on the year they were born. You can find the latest table here. Use this as a guide to predict when you might die.


2. You Need to Forecast Your Wealth and Estate Taxes

Time is your most valuable asset …read more

Could Your Age Cost You Your Job?

Nilus Mattive

This post Could Your Age Cost You Your Job? appeared first on Daily Reckoning.

If you’re over 50, chances are the decision to retire won’t be yours.

A new data analysis by ProPublica and the Urban Institute found that more than half (56%) of U.S. workers over 50 have been fired, forced to retire early, or pushed out of their jobs before they were ready to retire.

What’s more, one third of these pushed-out workers go on to be fired from two or more jobs before leaving the workforce. And, only 1 in 10 of them ever reaches their previous salary level again.

If you’re under the impression age discrimination is on the decline, think again. Over the last two decades, age discrimination has only been getting worse, not better.

In 1998, the percentage of older workers who had been pushed out of their jobs was less than a third, compared with 56% in 2016. And, the percentage of older adults who suffered major financial losses from being pushed out of a job tripled, from 10% to nearly 30% over the same time period.

Coasting into retirement is no longer an option if you’re over 50. Not only is it a career mistake but also a retirement planning mistake.

Something you need to watch out for are the sneaky ways employers will try to push you out the door.

Donna Ballman, a Florida employment lawyer and author of the book, Stand Up For Yourself Without Getting Fired: Resolve Workplace Crises Before You Quit, Get Axed or Sue the Bastards, wrote down 11 stealth ways companies try to eliminate older workers.

Here the most common ploys, according Ballman:

1. Job Elimination

One of the most common excuses used to get rid of older employees is “job elimination.” However, that may just be an excuse for what is really age discrimination.

If the company is not really eliminating the job, just changing the title and putting someone younger in your former position, you may have an age discrimination claim.

2. Layoff

The company is supposed to attach to a layoff notice a list of other employees included and excluded from the layoff, along with their ages. Employers can be sneaky about the way they put together these reports.

Some will show only select departments or specific job titles, which don’t give the whole picture. More often, they’ll include a few under-40 employees to make the bloodletting look less like age discrimination.

If you are selected for layoff and younger, less-qualified employees at your level are not, you might have an age discrimination claim. If you’re part of a one-person or small “layoff” and you can show that younger people are not being included, you may also be able to prove age discrimination.

3. Suddenly Stupid

If, after years of great performance reviews, you’re getting reprimanded for things everyone does, or being nitpicked for things the company didn’t care about before, it’s possible the …read more

6 Easy Ways to Control Spending

Nilus Mattive

This post 6 Easy Ways to Control Spending appeared first on Daily Reckoning.

One of the downsides to saving large sums of cash is it starts to burn a hole in your pocket.

When I was a kid, my grandparents would occasionally give me a $10 bill after I’d go visit for a week. I had zero tolerance for saving back then, so I would spend it on candy and comic books almost immediately.

Since then, I’ve built up a pretty good tolerance against spending cash. I’ve seen too many financial struggles and missed opportunities to not have a decent stockpile of cash in my bank account.

As of late though, my tolerance against spending is being tested. With a looming bear market, hoarding cash doesn’t feel like a bad investment.

The problem is this extra money starts tempting you. And, the last thing you want to do is waste your hard saved cash on something frivolous.

So, what should you do?

Here are 6 “easy” tips to help you control spending. I say easy because none of these require any extra discipline or extravagant measures. All you’ll need is a calculator, a pen and pad of paper.

The fastest way to boost your savings is by not spending what you have. If you want to accumulate more money, you need to learn some tricks to keep your spending urge at a minimum. Here are some tips I like:

Tip 1: Calculate How Much in Gross Income Is Needed to Buy

How much does it cost to buy a $90,000 Porsche 911 Carrera? It takes about $136,000 in gross income at a 30% effective tax rate. At a 25% effective tax rate, it requires $2,700 in gross income to purchase the newest $1,799 Macbook Pro.

Whatever you’re thinking about buying, multiply it by 1.5x to find out how much it really costs before tax. Suddenly, what you want to buy doesn’t seem as affordable.

Tip 2: Calculate How Many Hours of Work It Takes to Buy

If you work a salaried job, then you likely don’t pay much attention to your hourly rate.

However, understanding how much labor is required to afford something is sometimes the best strategy to give yourself some pause.

For example, to buy a $9,000 second-hand Rolex Submariner will take about 450 hours driving for Uber at $20/hour after operating costs. If you drive for 40 hours per week, that’s almost 11.5 weeks worth of work to purchase one watch.

Tip 3: Save 50% of Your After Tax Income Every Year

This might sound challenging, but I promise it’s not. As long as you’re maxing out your 401k and saving a certain percentage of your after tax income before you spend, you can afford to do whatever you want with your money after that.

But one idea I like is to max out your 401k and then save 100% of every other paycheck. Since …read more

Big Banks or Congress, Who Do You Trust More?

This post Big Banks or Congress, Who Do You Trust More? appeared first on Daily Reckoning.

I know it seems like I’m picking on Senator Elizabeth Warren lately, but that’s not my intention.

Rest assured, I dislike the vast majority of politicians just as much.

It just so happens that, in a runup to the 2020 election, it seems like Warren is trying to make big headline splashes by taking on populist whipping boys like the student loan crisis and, more generally, big banks.

Meanwhile, I want to inject reason back into the equation every time I see something that might produce a good feeling among a certain part of the population, but doesn’t pass muster when examined more closely.

That’s a long-winded way of saying: I want to call Warren when she spouts off B.S.

Or comes up with a plan that simply doesn’t make sense.

And I will do the same as other politicians – on both sides of the aisle – going forward.

Take Warren’s latest spat with Chase Bank on Twitter.

The Backstory

Through its Twitter account, Chase Bank wanted to inspire people to be more mindful of their personal spending.

So it posted a hypothetical conversation between a bank account and its owner.

The gist was that there are plenty of ways to save more money – including bringing your lunches to work, cutting out expensive coffee trips, and walking rather than taking a car service. 

Here’s the full post…

Now, there are a lot of things we can hate about Chase and its big banking rep. A lot of things.

But was that post really one of them?

I won’t keep you in suspense: No.

Yet Warren took aim anyway…

Chase’s suggestions are hardly novel.

But there is absolutely no equivalency between a post trying to motivate people to think about their personal spending and Warren’s accusations.

For starters, it’s a false dilemma – even if Warren is correct, it doesn’t negate having a personal budget or considering where you’re spending money.

Ask Yourself This…

What was the personal savings rate before the financial crisis?

I’ll answer – it was typically around 5% from January 2000 through January 2010 but dipped as low as 2.2% in 2005.

In other words, it isn’t like your typical bank account was getting stuffed with cash before the financial collapse.

What about Warren’s other accusations?

Well, yes, Chase was involved in the subprime mortgage crisis and the near-collapse of our financial system.

So were several government agencies,  the Federal Reserve, and a number of policies that aggressively encouraged homeownership even for groups that couldn’t really afford it.

In fact, Fannie Mae and Freddie Mac – two government-sponsored enterprises – were the largest components of the total federal bailout… needing $191,484,000,000 in taxpayer money. That’s 7.6 times as much as Chase needed.

And what about the $25-billion bailout given to Chase itself?

It has already repaid the entire amount …read more

The Trade War Is Back

The Gap Trade - Chart

This post The Trade War Is Back appeared first on Daily Reckoning.

President Trump shocked markets yesterday when he announced that a new, heavy round of tariffs on Chinese goods will take effect this Friday. Complacent markets had assumed that a trade deal would get done, that it was just a matter of sorting out the details. Now that is far from certain. Failing a last minute deal, which is certainly possible, the trade war is back. And it could get worse.

What most surprised me about the new trade war was not that it started, but that the mainstream financial media denied it was happening for so long. The media have consistently denied the impact of this trade war. Early headlines said that Trump was bluffing and would not follow through on the tariffs. He did. Later headlines said that China was just trying to save face and would not retaliate. They did.

Today the story line has been that the trade war will not have a large impact on macroeconomic growth. It will. The mainstream media have been wrong in their analysis at every stage of this trade war. And it did not see this latest salvo coming.

The bottom line is that the trade war is here, it’s highly impactful and it could get worse. The sooner investors and policymakers internalize that reality, the better off they’ll be.

For years I’ve been warning my readers that a global trade war was likely in the wake of the currency wars. This forecast seemed like a stretch to many. But it wasn’t.

I said it would simply be a replay of the sequence that prevailed from 1921–39 as the original currency war started by Weimar Germany morphed into trade wars started by the United States and finally shooting wars started by Japan in Asia and Germany in Europe.

The existing currency war started in 2010 with Obama’s National Export Initiative, which led directly to the cheapest dollar in history by August 2011. The currency war evolved into a trade war by January 2018, when Trump announced tariffs on solar panels and appliances mostly from China. Unfortunately, a shooting war cannot be ruled out given rising geopolitical tensions.

The reasons the currency war and trade war today are repeating the 1921–39 sequence are not hard to discern. Countries resort to currency wars when they face a global situation of too much debt and not enough growth.

Currency wars are a way to steal growth from trading partners by reducing the cost of exports. The problem is that this tactic does not work because trade partners retaliate by reducing the value of their own currencies. This competitive devaluation goes back and forth for years.

Everyone is worse off and no one wins.

Once leaders realize the currency wars are not working, they pivot to trade wars. The dynamic is the same. One country imposes tariffs on imports from another country. The idea is to reduce imports and the trade deficit, which improves growth. But the end result is …read more