David Fuller and Eoin Treacy's Comment of the Day
Category - General

    Your Parents' Financial Advice Is (Kind Of) Wrong

    This article by Julia Carpenter for the Wall Street Journal may be of interest to subscribers. Here is a section:

    The typical U.S. home now sells for more than four times the median U.S. income, according to the Joint Center for Housing Studies at Harvard University. Between 1980 and 1999, home prices were closer to three times household income.

    • Given the savings rates of the millennial generation born between 1981 and 1996, rental-listing company Apartment List estimates that two-thirds of millennial renters would require at least two decades to save enough for a 20% down payment on a median-priced condo in their market. Just 11% would be able to amass a 20% down payment within the next five years.

    • The upshot: Millennial households had an average net worth of about $92,000 in 2016, nearly 40% less than Gen X households (people born between 1965 and 1980) had in 2001, adjusted for inflation, and about 20% less than baby boomer households (born from 1946 to 1964) had in 1989, according to data from the Federal Reserve.

    So it’s time to kill the idea that student-loan debt is always “good debt,” to admit that buying a house isn’t always the right move, and to refashion these old expectations. It’s time for a new playbook.

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    EU's Juncker Thinks Brexit Deal Can Be Reached by Oct. 31

    This note by Nathan Crooks for Bloomberg may be of interest to subscribers. Here is a section:

    European Commission President Jean-Claude Juncker thinks a Brexit deal can be reached by Oct. 31, Sky News reported, citing an interview to be broadcast on Sunday.

    Juncker warned that a no-deal Brexit would be “catastrophic” for Britain and the EU

    “I’m doing everything to have a deal, because I don’t like the idea no deal,” he said, declining to specify if the chance of reaching a deal was above or below 50%

    “If the objectives are met, all of them, then we don’t need the backstop”

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    Bank of Japan Hints at Possible Action in October

    This article by Megumi Fujikawa for the Wall Street Journal may be of interest to subscribers. Here is a section: 

    “If I am asked if I feel more favorably about additional easing compared with the previous meeting [in July], my answer is yes,” Mr. Kuroda said at a news conference. “There is no sign of recovery in overseas economies.”

    He added, “Even if we consider additional easing, I don’t think it’s necessary to change the current framework” of monetary policy, which includes setting a target yield for 10-year government bonds—currently zero—and buying riskier assets such as stocks.

    Inflation has been running below 1% recently, short of the BOJ’s 2% target. The BOJ said in its policy statement that it needs to pay closer attention to “the possibility that momentum toward achieving the price stability target will be lost.”

    “It is sort of a notice that the bank is going to take additional easing action,” said Hiroshi Ugai, an economist at JPMorgan in Tokyo and a former BOJ official.

    Mr. Ugai said the BOJ would likely move next month, but might hold off if markets are calm or if it is having trouble assessing the impact of an Oct. 1 increase in the national sales tax to 10% from 8%.

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    Examining Inequality: How Geography And Gender Stack The Deck For (Or Against) You

    This report from the Bill & Melinda Gates Foundation may be of interest to subscribers. Here is a section on India:

    There is yet another way that policies designed around the JAM trinity are empowering the poor—by making government more accountable. For example, with the new cooking gas subsidy, government officials in 640 Indian districts receive daily progress reports on PAHAL, including enrollment, cash transfer, and error rates, so they can identify and address problems as soon as they arise.

    Various states are also experimenting with ways to proactively solicit citizens’ input whenever they interact with government. In one state, for example, beneficiaries receive an automated call soliciting feedback on the quality of the service: Was the customer treated courteously? Did she receive the benefits she expected? Did she receive them without having to pay a bribe? Negative responses roll over into a human system to generate formal complaints.

    On its own, the JAM trinity doesn’t do much. It needs to be paired with smart, pro-poor policies and services built around digital technology. Even then, digitally powered policies and services by themselves won’t end poverty and gender inequality. They need to be accompanied by analog reforms like changing discriminatory laws and policies. When all these pieces come together, though, the status quo can change fast.

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