Dr. Riedy's Random Thoughts

On September 26 the Federal Reserve raised a "key interest rate", continuing a string of eight rate increases since 2015.  Media coverage indicated some consumer and business loans use this "key" rate as a benchmark and might also lead to increases in other interest rates. On the premise most adults have only a vague idea of what's happening other than  interest rates are rising, and the Fed has something to do with it, let me try to explain what's going on. And why I wrote in the headline The Federal Reserve is Becoming Relevant Again. I'll use two  or three more blog postings to put the Fed's actions into context. From the mid-point of the housing and mortgage market collapse in about 2008 until 2015, short-term interest rates--including this "key" rate supposedly "raised" this week by the Fed--fell dramatically and stayed at zero or near zero until 2015.  During that period, from a monetary policy point of view the Fed became...

America is blessed with organizations and individuals involved in “causes” that appeal to donors who have the option of supporting those causes, or not.   Philanthropy is a major industry. Donors are exceedingly generous to thousands of “causes” both domestically and internationally.   In-kind and cash donations are voluntary. Donors and philanthropists decide where to direct their gifts. In contrast, City, County, State and Federal governments impose substantial non-voluntary financial burdens on taxpayers: Fees, sales and income taxes, gas taxes, taxes to pay off special purpose bonds whose interest and principal payments are spread over many years. Also, the Federal government   has supported social programs (whose advocates are effective in gaining government support) for years, sometimes for decades, by increasing Federal borrowing.   Which means current taxes also cover the costs of past government-funded social programs, not just current ones. The mi...

As I was reading yet another article proposing additional taxpayer funding of affordable housing, it got me to thinking about why it is that this cause gets such great exposure and has such tremendous momentum as a funding engine.   In contrast, t he next thought that came to mind was why there is so little public discourse about America's middle class other than as a funding mechanism for causes other than preservation of the middle class. As a trained economist I also thought about the critically important role America's middle class has played historically as a major source of socio-political and economic stability in this country.   Those roles for the middle class are under attack, in my view.  In terms of anyone supporting and defending the middle class  I was reminded of lines from the Broadway play, 1776: “Is anybody there?   Does anybody care? My last stint of 14 years working in Washington, D.C. involved 11 years during which I was chief execut...

Though not a stock analyst, when I read about the expansion running out of steam I suppose I should get nervous, but I don't--watchful and wary, maybe, but not nervous. As a retiree my investments are our primary nest egg so if they diminish in value it will hurt.  The question then would become, how long before those values recover? The three major indicators I consider in assessing future prospects are interest rates, the impact of tax cuts, and the effects of foreign trade and tariff policies of the U.S. government. 1. Stock markets hate uncertainty, especially about over-arching factors such as interest rates.  In that vein the Federal Reserve has made clear it intends to continue measured increases in the short term (Fed funds) rate. Their goal is to keep inflation in check as expansion occurs.  No uncertainty here. 2. Tax cuts are stimulating spending and sustaining consumer and business confidence, all of which tend to extend economic expansions.  We've pu...

OASIS is a non-profit organization dedicated to creating opportunities for rewarding and successful aging for individuals 50 and older.  I have become involved with this wonderful group since I retired and had lunch today with the CEO of the San Diego chapter, Simona Valanciute, and the VP of External Relations, Jolyn Parker.  They want to reduce costs and increase the organization's user-friendly programming for seniors by consolidating its north county programming.  At present, programs are held in dozens of small locations, from libraries to community centers, where rents are either free or extremely low cost. They believe creating a key OASIS location in the north county coastal region would be extremely beneficial to the audiences they serve. OASIS needs to find approximately 7,000 square feet of vacant space, at a discounted rent, with plentiful parking to accommodate the hundreds of individuals who currently participate in their north county activities on a daily...

Most of my blog posts will be more generalized than applying primarily to San Diego, so I apologize for being parochial in this one.  Of course, short-sighted public policies and policy-making processes certainly are not limited to the City of San Diego so in that sense these thoughts are also relevant to other regions of the country. In the November 2018 elections San Diego's voters are being asked to choose between two competing ballot initiatives for the redevelopment of land tied into the former Qualcomm football stadium site in Mission Valley.  Although each proposal adds a variety of sweeteners, at their core one is to make the land available for the future expansion of San Diego State University.  The competing initiative is to build a new soccer stadium, plus the sweeteners. Another major initiative facing voters for an up-or-down vote is expansion of the downtown waterfront Convention Center, financed by an expansion of the Transient Occupancy Tax (TOT).  ...

Dear Readers: So that I do not plague you sending multiple invitations to follow my posts, whether or not you become a follower would you please send me a brief email at mriedy@sandiego.edu informing me that you are already on the list of those to whom I have sent invitations.  Also, if you have topics you would like to see addressed, please feel free to add a note about those topic(s) and if I can address them intelligently I will.  Thanks.  I look forward to hearing from you.  Mark