FX business now shares equities’ harsh economics ( Admin posted on October 22nd, 2014 )

By Dominic Elliott

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Currency trading is taking over from equities as the challenged business in investment banking. Resurgent volatility in foreign exchange markets during September and October is unlikely to offer more than a temporary respite for the business.

Margins in FX have been declining steadily this decade amid the rise of electronic trading. At the same time, a regulatory clampdown has forced banks to switch away from a so-called principal model, acting as a currency wholesaler, to a less lucrative agency model, matching buyers and sellers. An agency-brokered $1 million spot...

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Parents helping more first-time home buyers ( Admin posted on October 22nd, 2014 )

These days, first-time home buyers struggling to come up with that down payment are more likely to do something a little more than scrimp and save.

According to the National Association of Realtors, 27 percent of first-time buyers used a cash gift, usually from mom and dad or another relative, to make their down payment in 2013. Thats the highest its been since the group started tracking that data in 2009, and up from 24 percent in 2012.

Its hard to know whether people are more comfortable telling their real estate agents that theyre getting a gift or if its truly more common, said Bill Boswell, an agent with Coldwell Banker of Wyckoff/ Franklin Lakes.

But Boswell...

Lycoming College students inducted into economics honor society ( Admin posted on October 22nd, 2014 )

WILLIAMSPORT, Pa. – The Lycoming College chapter of Omicron Delta Epsilon, the honor society for economics students, inducted 15 students during a ceremony on Oct. 2.

Among those inducted were Trang M. Tran, a junior economics major from Vietnam; Phuong Nguyen, a junior business administration and economics major from Vietnam; Trang H. Tran, a junior business administration and economics major from Vietnam; My Nguyen, a junior business administration major from Vietnam; Kali Moeller, a senior international studies and German major from Fredricksburg, Va.; Colton Dershem, a senior business administration major from Lock Haven, Pa.; JohnPaul Keith, a senior economics major from...

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NZ mortgage rates: How we compare with rest of the world ( Admin posted on October 21st, 2014 )

Raewyn Cox, Federation of Family Budgeting chief executive, was shocked to find our rates were towards the OECD top.

Many people were struggling with mortgages, partly due to high prices but also because of poor planning. They had not factored life changes – like a double-income reducing to single-income – into repayments, she said.

Overcommitment is a big issue. We dont see a lot of mortgagee sales because people have become a lot more aware in the last few years.

High prices and high interest rates sentenced a rising number of New Zealanders to be lifetime tenants.

A lot of people have given up hope and are stuck in expensive rental situations, heading...

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Monetary policy ( Admin posted on October 21st, 2014 )

IT IS Economics 101. If central bankers want to spur economic activity, they cut interest rates. If they want to dampen it, they raise them. The assumption is that, as it becomes cheaper or more expensive for businesses and households to borrow, they will adjust their spending accordingly. But for businesses in America, at least, a new study* suggests that the accepted wisdom on monetary policy is broadly (but not entirely) wrong.

Using data stretching back to 1952, the paper concludes that market interest rates, which central banks aim to influence when they set their policy rates, play some role in how much firms invest, but not much. Other factors–most notably how profitable...

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Behavioral Economics ( Admin posted on October 21st, 2014 )

Business leaders often struggle to understand why their employees and customers behave the way they do. More often than not, the answer simply comes down to human nature, but this is still news to many people. Over the years, classic economic theory has assumed that individuals make decisions based solely on rational thinking. In fact, some have suggested that economic decision making is up to 70% emotional and 30% rational.

Our work with clients is guided by an emerging discipline known as behavioral economics. Led by the thinking of such notable scientists as Nobel laureate Daniel Kahneman and Angus Deaton, this new discipline considers the intersection of human nature and economics.

But...

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More Than Economics: How to Measure Inequality ( Admin posted on October 21st, 2014 )

We can all understand the concept of inequality, but how do you measure it? 

All measurement starts with a definition. In the case of inequality, youre essentially asking how one group is doing relative to another. Of course, how one is doing can mean any number of things. For example, you can measure income, health, lifespan, or any number of political and social factors. 

Taken together, these different approaches can give you a broad picture of how things are going in a particular country. 

The Gini coefficient 
The Gini coefficient is, according to the World Bank, the most widely used of the inequality measures. It measures the distribution of income in a population...

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What Economics Can Teach Us About Ebola ( Admin posted on October 21st, 2014 )

There are two fundamentally different ways of thinking about complex social systems: the economic approach and the engineering approach. The thinking about Ebola at the Centers for Disease Control reflects the engineering approach. The behavior of everyone else reflects the economic approach.

Social engineers see society as disorganized, unplanned and inefficient. The solution? Let experts takeover. Social engineers inevitably believe that a plan can work even though everyone who is expected to carry it out has a self-interest in defeating it. Implicitly they assume that incentives don’t matter. Or if they do matter, they don’t matter very much.

Economics is the science...

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Jeffrey Sundberg ’82 presents Economics Department Lamson Lecture, Focused … ( Admin posted on October 20th, 2014 )

Jeffrey Sundberg 82 will present the Carleton College Economics Department Lamson Lecture on Tuesday, Oct. 21 from 4 to 5:15 pm in the Gould Library Athenaeum. Sundberg, the James S. Kemper Foundation Professor of Liberal Arts and Business at Lake Forest College in Illinois, will speak about An Economic and Environmental Analysis of Conservation Easements. This event is free and open to the public.

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Advice For A Career In Economics ( Admin posted on October 20th, 2014 )

This week I was on a panel for an audience of undergraduate and graduate econ students discussing advice for a career in economics. Since I think a lot of readers of econ blogs are students that are in similar positions, I thought it might be useful to put some of those thoughts here. These are only my perceptions, so I think it might be useful for other bloggers with careers in and around economics to weigh in a well. There are three big themes: programming, communicating, and conscientiousness.

First some background so you know where I’m coming from. I am not a professor and have never been more than a TA or tutor. I’ve worked in the private sector for my relatively short...

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