Universal Life Insurance Scams and Complications

You don’t think about insurance until you need it. When you decide it’s time to protect loved ones you face another problem: what to choose from among the gluttony of options? So you get a call amidst your decision from someone hawking universal life insurance. Should you buy in? All prudent financial advisers unanimously say no. Here’s why.

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Economists View: FOREX Explained – ‘What is Forex?’

FOREX is short for “foreign exchange”. When we discuss the FOREX market we are usually referring to the purchase or sale of a currency against sale or purchase of another currency. The largest and most active market in the world is in fact the foreign exchange market. Since the market remains open for 24hrs (never closes, one market closes while the other opens,) it also features some of the biggest daily money moves.

Any type of financial instrument that is used to make payments between countries is considered foreign exchange. The list of instruments includes electronic transactions, paper currency, checks, and signed, written orders called bills of exchange. Large-scale currency trading, with minimums of $1 million, is also considered foreign exchange and can be handled as spot price transactions, forward contract transactions, or swap contracts.

You will find countless online FOREX tools that try to capture the demand for ‘quick and easy money’. Online FOREX traders are essentially consumers with money to spare who wish the seek the thrill of foreign exchange markets over their usual day trading.

When one speaks of a forex profit or loss, he is talking about the increased or decreased value of an investment caused solely by appreciation or depreciation of competing currency.

Incentives and Profit for Insurance & Drug Companies

Pharmaceutical companies are routinely called out for supposedly holding on to suspected cures because there’s no money to be made. Sometimes drugs are available but because the condition is comparatively rare is costs thousands of dollars for one treatment you’ll need the rest of your life.

How do they get away with it and why does it happen?

From a drug company’s perspective the issue of what to product and research is far more complex than arbitrarily holding back cures. For example, the research required to come up with an approved drug can run into the hundreds of millions. There’s also no guarantee the drugs will in fact be effective, sometimes R&D produces a dud, so that’s millions lost.

It’s no surprise that when a drug is approved drug company’s will want to have a lot of sick people for a long time buying the drug. So this isn’t necessarily a case of having no incentive to produce drugs for problems, but a need driven by the market to find drug treatments that will in turn product a profit.


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National Income Accounting Explained

Including Intro to Balance of Payments

Here is a brief tutorial to aid newbie economists understand the constructs behind national income accounting and balance of payments (the two are related). To do so we’ll introduce the two measures of national income which most of you are familiar with: GDP (gross domestic product) and GNP (gross national product).

Gross Domestic Product (GDP): the total value of all FINAL goods and services produced in an economy (country) domestically in a given time period.

Gross National Product (GNP): the total value of all FINAL goods and services (G&S) produced by a countries factors of production (including labour) in a given time period.

Here is a calculation to help.


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Top Five Analyses to Evaluate Cash Flow

Five Cash Flow Analysis Tools

This post continues a discussion about cash flow, net present value, interest rates and NPV, and IRR, which you can read by clicking on the specific links. This post deals with the topic of using these tools for conduction cash flow analysis.

The methods of evaluating the opportunity of an investment project are the NPV method and the IRR method. If the NPV of the project is greater than zero or the IRR is greater than some minimum predetermined rate, the project is profitable, thus it should be undertaken.

However, a strong piece of information to consider is the firms cash flows over time. This way we will have a more detailed image of the project and see not only if the project is profitable, but also when it becomes profitable, how much of the initial cost is recovered every year, etc.

The first step in this analysis is to calculate the cash flows and discounted cash flows (with the previous years’ cash flows (up to and including the current year) and will show how much money is still invested or tied in the project at this time. appropriate signs) generated by the project. Based on them we can calculate the following:


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Canadian dollar hits 11 year low with no end in sight

The Loonie hit on 11 year low closing the day at 1.3785 / 1USD. Last time the dollar was this low was May 2004.

Apart from immediate consumer impact felt in the purchase of consumer goods and vacations, the depreciating currency is indicative of deeper problems for the Canadian economy. Canada is predominantly a commodity based economy which means when major commodities are slipping so too will the Canadian economy. With oil hovering around $35 a barrel, investment in these particular industries has been muted.

A short term exogenous factor affecting the currency was the recent Federal Reserve (US) interest rate announcement raising the benchmark interest rate to half a percent. On leave for an exchange market when benchmark interest rate increase, the currency is comparatively more attractive and therefore I appreciates vis-à-vis other worldwide currencies. As the American currency appreciated the Canadian currency depreciated.


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Federal Reserve Increases Overnight Rate to .5%

The federal reserve today increased the overnight lending rate by a quarter percentage to 1/2 a percent. This is the first increase in nearly a decade dating back to 2006. Increasing the benchmark rate is an indicator that the American economy is starting to not only improve but is becoming resilient as well.

The increase means major lenders now borrow at a higher rate. Eventually there will be a trickle-down effect that will impact the consumer as well.

The increase coincides with the Fed’s goal of maintaining a 2% inflation target.


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The Economics of Property Law – Coase Law

Here is an article that deals with Coase laws and the economics of property law.

The lack of defined property rights leads to the abuse of certain activities as a result of a differing perceptions regarding how choices affect marginal private benefits and social costs. How does this impact society and what does this say about how private enterprises make choices? let’s use the example of pollution and the effects on property owners.

A particular firm that is polluting the air will continue to do so because to the firm, the private cost of polluting is zero, and the social costs need not be considered. The external costs imposed on society (the social cost of the pollution) will not be factored into cost analysis of the firm.


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Canada Elects New Liberal Majority Government – Markets Respond

On October 19th, 2015, Canadians went to the polls in a national election and ousted the longtime Conservative government for the more left leaning Liberal party. There have been some concerns, particularly in oil-rich Alberta, that a change in government would spell further decline in the energy sector. Prior to the change in government the Canadian economy sank into a recession and stock markets have been volatile largely based on reduction of world energy demand (and the Canadian economy largely being reliant on the commodity sector.)

Stock markets hate uncertainty and uncertainty creates price volatility. Therefore the fact that Canada has a new majority government is positive for the stock market. Any changes that the new government wants to implement will take time.


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Corporate Whining Cartoon from 2009

labor_history

1842 Businessman: If workers can legally STRIKE, no business will be able to survive!
1887 Businessman: Give BLACKS an entire DOLLAR for a day’s labor? Might as well burn my business to the ground!
1912 Businessman: Worker deaths are TRAGIC, but ANTI-SWEATSHOP laws would be the DEATH of industry in America!
1915 Businessman: When workers can’t be FIRED for joining a UNION, how can ANYONE stay in business?
1924 Businessman: Banning CHILD LABOR would DESTROY the economy! Right, little Timmy?
Small urchan boy, missing a front tooth and two fingers, standing next to 1924 businssman: That’s right!
1938 Businessman: We can’t have a FORTY HOUR WORK WEEK, because if we DO there’ll be no employers LEFT to hire anyone!
1964 Businessman: EQUAL PAY for women AND negroes? Business can’t stay afloat if federal regulations STRANGLE us!
1970 Businessman: HEALTH and SAFETY laws are a formula for MASSIVE PERMANENT UNEMPLOYMENT!
NOW Businesswoman: If the new labor rights law PASSES, then business is doomed! DOOOOOOOOMED!

I believe this is the source: http://leftycartoons.com/2009/09/04/a-brief-history-of-corporate-whining/

Intro to economics and personal finance.