Friday, May 28, 2010

What is Leverage?

Leverage.

We all have heard about it. But what is it?

To some, it's owning a significant amount of information that the other negotiating party involved doesn't have.

To others, it's a more financial based system where individuals and/or companies find borrowed funds for investment purposes.

A simple example of financial leverage:

Monday, May 24, 2010

Friday, May 21, 2010

Gambling with Other People's Money: How Perverted Incentives Created the Financial Crisis

Russ Roberts host of EconTalk, discusses his paper, "Gambling with Other People's Money: How Perverted Incentives Created the Financial Crisis." Roberts reflects on the past eighteen months of podcasts on the crisis, and then turns to his own take, a narrative that emphasizes the role of government rescues of creditors and the incentives this created for imprudent lending. He also discusses U.S. housing policy, particularly the Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac and how the government's implicit guarantee of lenders to the GSE's interacted with housing policy to increase housing prices. This in turn, Roberts argues, helped create the subprime market, created mainly by private investors. The episode closes with some of Roberts's doubts about his narrative.

You can find the podcast here.

Saturday, May 15, 2010

Chicago has a Problem and the Solution is to gouge its Citizens

Recently (in the past three days), two of my friends were the victims of questionable ticketing practices by the Chicago Police Department and Chicago Parking Authority.

It is no secret that Chicago is facing a MASSIVE deficit ($525 million dollars) and must find new and creative ways to fill that deficit.

Apparently this means squeezing every last dime out of its citizens.

The Sun-Times wrote a good article about the declining revenues of parking tickets which can be found here.

Even our Aldermen speaking up about this issue...

"Aldermen said their constituents are fighting mad when it comes to parking and tickets. "I agree we are in a bad revenue situation," said Ald. Tom Allen, (38th Ward). "But I'm tired of us beating the daylights out of John Q. Citizen to get 50 bucks out of him because he overstayed his parking."

...

"At every community meeting, people are questioning us about the fact that we are attempting to collect more revenue from the tickets," said Ald. Freddrenna Lyle, (6th Ward)."


It is NOT the fault of the citizens of Chicago (or Illinois for that matter) for a deficit of epic proportions.

But unfortunately, it looks like we have to pay for it.


Additional Reading:
1.) Some 2009 stats on parking tickets
2.) Parking Tickets Up, Revenue Down
3.) The Expired Meter<--a parking ticket blog
4.) Traffic cameras billed as answer to Chicago's budget deficit