Scamz

http://www.washingtonpost.com/news/wonkblog/wp/2015/10/19/how-your-junk-mail-shows-if-youre-rich-or-poor/

It seems this is an example of the government protecting people. It is a case in which, if left to the devices of the free market, there are people that will take advantage of others, in this case in “broad daylight” so to speak. The government has since changed the rules on this activity…so I wonder where the predatory behavior has migrated to? And what if this means that credit card companies become incredibly less profitable? Is this a social ill? It will surely be measured that way in a political debate that ignores the whybehind the loss of profitability
 
Something I think that I find hard to wrap my head around is what exactly the state should do in markets? Referee. That’s an old answer. It’s not cheap to a) collect data, b) have the knowledge to spot these and frame them as crimes, c) have the proper policy response to correct the problem, and d) be able to sell that response to the dipshits that get elected and vote on these things.
Finally, I also don’t know where I stand on the morality of it. These are adults who agree to be taken advantage of, in a sense, and the defining feature of those who avoid the trap seems to be an education. Buyer beware is one response, but it’s not reasonable to expect consumers to be experts on subjects outside of their productive scope. This paper makes the argument that people are acting irrationally, and therefore don’t understand the contract…and what if we made people take comprehension tests in addition to signing contracts? Haha, there goes your housing market!
Haha, perhaps universities should be using these types of studies to sell over-priced education, rather than false promises of employment. Fear is a better motivator than greed, after all. So if you tell people that your best defense against predatory corporate interests is to be smart enough to avoid their traps, what would enrollment cost-benefit analysis look like? But…alas, the people without an education offend easily, and would resent the marketing.
I think the further irony…if you’re reading these articles, you probably aren’t targeted…knowledge is power.

Gas Prices in Calgary

I had the usual office chat about gas prices going up and oil prices going down. I wanted to make sense of it, and so I looked it up. Since I did that work, here you go, take a look.

First, there is a Financial Post article tries to explain how oil prices are linked to gasoline. I just used the formula they have at the end to see if our prices added up (see below).

This is a handy website that forecast prices at the pump, and gives some current conditions to explain price movements (e.g. right now high prices are attributed to U.S. refineries facing outages).

Bummer, it’s going up.

On my quick addition (see below table), it looks like we’re being hosed by .22 cents on either the retail margin or at the refineries or both. Now, they sell off stock at whatever price they paid for it at the time…so today’s RBOB isn’t the actual feeder price of gasoline today. I’m not really satisfied by that explanation, so I think we are being hosed.

Here is a chart showing WTI and Calgary Gas prices

Looks like Van and Toronto have prices coming down until the most recent tick, and actually Calgary prices are higher than Toronto prices at the moment…The other thing to note is that WTI and Calgary gasoline prices sorta move together, but there is a seasonal element in the gasoline prices. I wanted to download the data, but they wanted money…so I couldn’t do the adjustment. But looking at it, it looks to be seasonally driven to some degree.

Anyway, enjoy.


RBOB

Market Price RBOB  $        1.72
Convert From Gallons in Litres  $         0.45
Exchange Rate CAD/USA  $         1.31
in CAD/L  $         0.59
Assumption Canadian Refiners add  $         0.05
Federal tax on gasoline  $         0.10
Was .09, thanks NDP. Provincial Fuel Tax  $         0.13
Assumption Retail Margin  $         0.08
Double Tax! GST  $         0.05
Gas Prices that would make sense Total  $         1.00

Proselytizing cold-ass reason.

Key quote :

As indebted as she is, she can’t bear to part with the home that means so much to her elderly mother. She would do anything to keep the place her father built when her parents got married.

The author reveals the bias right there. It’s so emotional, heartbreaking, but it’s also so irrational. If you want to see entitlement, there you go, it’s not the prima donna, it’s messier than that. I know full well that most people would respond to this statement with a sense that there is something wrong with a system that “puts” people like Juanita into this horrible situation. But lets not forget, she is sitting on an asset that she refuses to sell, she has some financial means, but chooses not to utilize them. Maybe out of desperation, but people act like they have no choices. Which is certainly not true here.
People in Canada really do believe they have a ‘right’ to own a home, which, while they do have that freedom, it is not the same kind of capital-R Right that guarantees her personal safety, or ability to speak her mind.
I hate that this is happening. It is a tragedy. It is tragic that there are people so financially illiterate they use the services of the jewellery guy. And I  also hate the way that people will paint this guy as a sleaze-ball…I mean, he sorta is, but he is also 100% not wrong. He forces nobody, he doesn’t feel bad, doesn’t care, and it isn’t his place to care. People make choices, emotional choices, that get them into these financial straits. The Huff post author would like to frame it as No choice at all. But there is a clear choice, sell or don’t. There isn’t any victimization in this loan market. Not the way this story reads. But it feels like it. Right there in the prose.
Hey, remember Shylock? Merchant of Venice? People that charge interest are not morally fallible because they charge interest, sorry. They provide all of the information about what will happen if payments are not made. Whose job is it to make sure someone understands the risk they are taking or not? Grey area. Who is able to judge if someone understands? Not easy. How much would that cost? A lot. Buyer beware, no? Consumers have agency, and we really should keep it that way. 
All this to gloss over that the author identifies some troubling incentives in the loan market. There is a problem that occurs if everyone is out for themselves here.

Although alternative lenders are not insured by the CMHC, mortgages in Canada are considered “full recourse” loans, which means the borrower is responsible for repaying a loan even in the case of foreclosure, unlike in the United States.

That means lenders can take legal action to recover the money owed. It is also why many alternative lenders are often not the primary lender but will help finance second, third or even fourth mortgages. They are willing to provide loans to borrowers with just five per cent equity in their homes.

Unlike banks and credit unions, which rely on deposits from other customers for capital, shadow lenders finance loans with money from groups of investors. Some experts worry that such lenders, who earn their money in fees from investors but take on little risk themselves, could be more inclined to dole out bad loans that are likely to default. A growing contingent of market watchers is calling for better monitoring and regulation of shadow banking activities.

So the market maybe doesn’t have a good price mechanism on risk or ‘risk premium’, there is potential market failure there. Which is a public goods problem, and the government is probably the correct body to address that. No doubt. Good to report on that. But again, the author’s bias would likely be that the people that go for these loans are not responsible for the repercussions. Because this is a victim piece. “Full recourse” is scarty, it means that rich people can sue and bleed poor people. Power imbalance. Truth be told, the rich people can do that because the poor people agree to it, they agree to it so they can keep their stuff. When they agree to a loan, they transfer the Right to own their stuff to someone else…so it’s a case of ignorance. If they want to keep their house, no matter what, they shouldn’t leverage it.
For some reason, we have this narrative in the west, or whatever universe we wish to define, in which the ignorant are innocent because of their ignorance. Ignorance is tragic, and in some way excusable, because: “how to not be ignorant?”. But we shy away from assigning ignorance the blame it rightly holds. I can attempt to theorize why, but I assume it has to do with fear. We fear our own ignorance, and so we are careful to avoid addressing it in others as a mutual way of saving face. The reason we have to save face is that we are petty and judgemental to one another in the first place. Which is partly because we are so egotistical, narcissistic, and obsessed with advancing our own rank in society ( ironically we do this also by amassing wealth in material objects). So ignorance lives and thrives. So we have tragedy. So some wish to protect the ignorant from their own ignorance, disincentivising self education, perpetuating tragedy. It’s the tragedy of good intentions, or maybe it’s the tragedy of narcissism, or cowardice, or all of the above. Let’s not make this simple. Remember Shylock? These problems’ve been around a while. 
The Juanita story is there to say what? “Hey, it’s not fair that some people get to own homes and some people don’t.”
 
It’s not fair. Or, perhaps, it is exactly the most fair it is possible to be, because to do anything else would be to say that Juanita is entitled to somebody else’s property. Or at least to say Juanita is entitled to someone else’s precious effort and time and focus…scarce resources. And in a free society, you can’t really force anyone to give up scarce resources just because someone needs them. Yet someone should, right? So the government should fix it. But that’s taxation, and quite literally means someone is giving up their property for Juanita, so she can keep hers. In truth, she could sell her house, rent, and have money to help her in that situation…but the author doesn’t criticize her for being irrationally attached to some romanticised asset.
Her dad built it, I get it, it really would be a shame to have to give it up, but it’s still just a possession, a material possession. And what matters more in all of this is that she is making this sacrifice for her mother, to ease the burden of illness on her family. She is taking a shitty loan to manage her finances. 
 
What message is the author really getting at? That she should keep her home, and that the system is wrong if it ‘puts’ people in these desperate situation. And on that note, I think I agree. Aren’t we supposed to have universal health care in Canada? Isn’t Juanita’s story better to point out the inadequacies of that system? After all, as a country, we did decide that health is a capital R: Right. I totally find her story sympathetic.
And at the same time, if it isn’t the healthcare system that failed her, is she really blameless? Sometimes medicine is hard to swallow. She should sell her house. That is the rational way forward from a financial perspective given the information the reporter provided.
 
There is a reason people hate the Huffington post, but actually, it’s great. They report on things that everyone is else neglecting. You just have to see that they miss the point, they are lazy thinkers. They know something is wrong, they just don’t know what.

EconTalk podcast got me on a rant.

There is the most recent Econtalk podcast on the development goals:

Eric Hanushek is the guest. I don’t know who he is…probably an economist.
Thy get into education as a causal link in income. This is what they talk about at one point:
A korean immigrant raised in the korean education system does better ( has higher average income) than a korean immigrant raised in the american education system. Say both individuals enter the job market in america at the same time at the same age, the korean immigrant in the US education system simply immigrated at a younger age, to take part in the american education system. The Korean national test scores (whatever the test is) are higher in terms of mathematical ability (or whatever) than the American national test scores.
Data comes from the US census and the test score database, etc… the data is very noisy, but the finding holds for other countries with immigration to the US, not just Korea. Even English speaking countries. This is not a panel/longitudinal dataset…doesn’t sound like it.
I’m sceptical…I don’t think they control for the kind of people that are able to immigrate as adults vs. the types of people that are brought in as children….that is, the US would only take the high achievers. Which would skew the result, but they didn’t really address this in the talk. Selection could explain the finding.
Regardless…it does show that higher education correlates with higher incomes. Which is an old, redundant finding.
On a tangent here is my rant:
The US (Canada is the same) have got so caught up in trying to make childhood ‘special’ that they are too afraid / too sentimental to tell kids to sit down and concentrate. The belief here seems to be that ‘experiential learning’ where kids ‘get their hands dirty’ is a proper substitute to learning times tables…sometimes rote memorization of rules is the only way to get some tools, it’s boring (if bad teachers), its hard (ditto), and it is not natural–as in not the first or primary processing path–for the human brain (brain is a computer).
But that seems somehow…too rigid and old school, people want math to be intuitive (wishful thinking)…it is not (at least to the beginner). Especially not probability or calculus. The reasoning takes a lot of relearning how to think, and it takes a lot of concentration.
Anyway. I hate the education system. I feel gypped. Two/three years out of a graduate degree, and I don’t know how to do anything, because all I learned is how to learn stuff that will be on a test. None of the material was mastered, because that isn’t the goal of the system…the goal of the system is sorting workplace candidates…and to waste money…and to inflate egos. Now I have to sit down and try to reteach myself the stuff I should already know, which takes a lot of my time. Harumph. It’s especially hard when your ego is so inflated.