Don’t Quit Your Day Job – Personal Finance, Economics and Investing

There’s been a lot of talk about the Troubled Asset Relief Program (TARP for short) as of late. The TARP, as you may know, authorizes the Department of the Treasury to purchase (or repurchase!) up to $700 billion of so-called “Troubled Assets” in order to shore up bank and bank-like company (somehow including the auto industry) finances. The Treasury has kept the TARP in the news by deciding it is time to sell its stake in Citibank.

Articles and carnivals for the week!

In Economics, there is a concept of ‘leading’ and ‘lagging’ indicators. ‘Leading’ indicators predict economic activity in the future- they are statistics which give a decent idea how things will be soon. ‘Lagging’ indicators are the opposite; they signal performance in the recent past. Is it possible that there is a leading indicator of the economy that we all experience? According to an article in the Wall Street Journal, our spam email messages have become more bullish over the past few months.

Substitution and Income Effect: These two terms are very familiar to anybody who has taken an intermediate course in macroeconomics. With the recent articles regarding volunteerism and labor statistics, I thought that it was very timely to write on these two very important concepts.

Let’s start with a thought experiment: if you were to receive a 10% increase in your hourly wage, would you increase, decrease, or maintain your hours worked? Believe it or not, any answer is correct, despite many assumptions regarding the positive slope of labor supply curves. The reason that any answer is correct lies in an understanding of substitution and income effects.

You knew it was only a matter of time – once it was revealed that Treasury Secretary Timothy Geithner blamed his personal tax problems on a misuse of the tax software TurboTax – that someone would try to blame their own tax problems on the software in Tax Court. Well, your wishes came true, and the first tax case was decided on the 19th concerning the “Geithner Defense”!

Carnivals and Links for the Week!

A recent article on CNN Money highlighted what I like to refer to as truly alternative investments. The article, entitled “Investments You Can Live With” covered four categories of ‘investments’ which one can use or display (or drink!) in their home. Wine, photographs, antique furniture, and paintings are all mentioned as possible additions to your investment portfolio.

The “VAT”, the so-called value-added tax, has received some attention here before at Don’t Quit Your Day Job. Unfortunately for everyone, it probably will receive a bunch more in the future. Fresh off Paul Volker’s comments to the New York Historical Society putting the VAT in play, the United States could be getting a VAT of its own. As pointed out in this very good article at Super-Economy, the US is the only county in the OECD that doesn’t have a Value-Added Tax.

Recently we’ve been giving you lots of information on that most popular of topics- the income tax! We here at DQYDJ see no need to tone down our articles on taxes at this point… something about this date (maybe it has something to do with the April 15 tax deadline?) makes tax articles popular. Anyway, thanks to the Tax Foundation, we have an interesting measurement of tax – the number of days you have to work to be free and clear of the burden of tax, otherwise known as Tax Freedom Day!

From the always-interesting website Political Calculations comes this gem of an article… The Calvalcade of Risk 102. Let me explain… Ironman hosted the carnival, but also embedded into it a useful calculator for determining whether or not an individual should drop health insurance as a result of the new health care law. The somewhat predictable result? If you’re younger and generally healthy, you could be better off dropping health insurance. Check it out yourself!