I have an Equation

30 12 2009

For my bankruptcy project I intend to study the relationship of Oregon and/or nationwide bankruptcy filings against a series of factors.  I became curious of this subject in my bankruptcy work.

This is a continuation of an earlier post on an economic project I am working on.

The main variable being The number of Bankruptcy filings in a region every month for a series of years. The realtion of this value will be tested relatively to the following variables (each according to monthly numbers).

  • The Federal Funds rate, the interest rates that which banks offer each other loans.
  • Regional unemployment statistics.
  • Home prices (ie median value, assessed value or market prices).

Those three are the primary values I expect to have significant relationships to bankruptcy filings.  There is however an additional “wild card” variable:  Divorce data.  I will include divorce filings by state to include them in the equation.

Hopefully when the data is compiled we can see if there is a meaningful correlation between bankruptcy and divorce filings.  Expect more to come on this subject.  There is quite a bit of data to mine.





American Debt Levels

24 12 2009

NYT Interactive Feature on American Debt

The NYT has a great piece on American debt levels.    This picture should be a flashing red warning light to anybody.  Debt can be a useful tool in buying a home, or car.  However there is clearly not enough saving by Americans.  When credit is in high demand or short supply, interest rates go up.  So when individuals, business, and governments all seek credit, it drives up interest rates.  However one might note that US real interest rates are extremely low.  The world economy is an open system and when other nations save it allows the United States to keep interest rates low by borrowing internationally.

This chart puts the increasing US Debt levels into perspective.  The chart shows the falling US historic capital formation.  Investment is extremely  cyclical.  Companies typically don’t make huge investments when cash and credit are in short supply.  Greg Mankiw also has a great article on economic investment.

The WJS has a great piece I quoted below on this subject.  Mr Varian is the chief economist at Google as well.  His article scores the need for private investment.

“Unfortunately, savings are currently not getting translated into investment for three reasons. First, one of the largest categories of physical capital is real estate, and we have already overinvested in that area. Second, businesses are reluctant to invest in new plant and equipment due to the weakening economy. Third, the sorry condition of bank balance sheets has made them reluctant to lend. The net result is that money is piling up in ultrasafe assets like Treasury bills, without being invested in ways that would build a more productive economy.”

Clearly there is a need for more long term investment in the US economy.  This is where the government needs to promote infrastructure spending by businesses and states.  Encouraging them to do that is the tricky part.

Creditor-Debtor tip #2:

Learn your states debt statutes.  What does that mean to you? If you don’t not make payment on an old unsecured debt for X years, the debt is often NOT COLLECTABLE.  Of course this does not apply to many forms of debt like Student loans and mortgages.  Each states has its own set of rules for how long creditors can collect old debts.  So each payment you make can establish the debt as valid for another X number of years.  As always make sure you consult with a lawyer regarding legal matters.





More Bankruptcy Data

22 12 2009

I started compiling data from the usual government sources.  The BLS and the Census.   These variables should be useful in comparing bankruptcy data with individual and statewide  unemployment levels.  Empirically one would assume that states or time periods with increased unemployment levels would have more bankruptcy filings.

My initial equation would then be B/K (Chapter 7 and Chapter 13) = C + X + Y +Z + Unemployment (growth or real levels).  C being a constant value determined by the Regression program, X, Y, and Z are to be determined variables.

http://www.census.gov/govs/statetax/

http://data.bls.gov/PDQ/servlet/SurveyOutputServlet

My knowledge of creditor-debtor matters should be shared, so below is  a tip on privacy.

Creditor-Debtor Tip #1:

Go to http://www.whitepages.com/ and search for yourself.  Did you find your home address?  If you don’t like any address you see (ie for privacy concerns), then click the green tab next to the name titled “edit details”.  You can also replace them with more appropriate info like a business address, social media profile, email or twitter account.  Remember that your creditors, vampires, creepers and the less nefarious direct mailers will look at free online directories first when they want to track you down.  Bear in mind that if a creditor cant serve you and they have your email, then they may try to get the Court to allow service of summons by email.





Bankruptcy Research Project

21 12 2009

I am currently working on a bankruptcy economics project. Hopefully I will be able to combine my academic background with my current work specialization. I already complied an amazing amount of nationwide bankruptcy data. Now I just have to find some other fun variables to run against the bankruptcy information.

The links to my initial sources are below. The open source application gretl will be great for my regression and analysis of the date. To the non-economic viewers, a regression analysis is using data to create a function that shows correlation between variables. Please note that last sentence is an extremely simplified explanation, for more data please see http://elsa.berkeley.edu/sst/regression.html. Essentially a dependent variable is tested using a computer program (that preforms the OLS regression) against several sets of data. The end benefit of this project would be possible forecasting for future bankruptcy numbers.

http://www.bankruptcy-statistics.com/

http://bdp.law.harvard.edu/index.cfm

http://lopucki.law.ucla.edu/index.htm

http://www.learneconometrics.com/gretl.html

Any ideas for resources, data or interesting testing variables is appreciated.





Reduce Taxes By Owning Property?

21 12 2009

Many people erroneously view owning property as an increase to their tax burden. The constitutional amendment Measure 50 approved by Oregon voters in 1997 ties property taxes to assessed value as opposed to market value. This causes property taxes to only increase three percent per-year, which means that your assessed value is still most likely below the market price.

Even despite property tax increases, there are still many tax advantages to owning a home. For example a homeowner with a 30-year fixed rate mortgage of $200,000 could expect to pay about $10,000 in interest, with an additional $2,400 in property taxes. By itemizing these payments on a Schedule A, they can reduce their taxable income by $12,400. The homeowner’s gain is even higher if appreciation on the property is added.

In the Housing and Economic Recovery Act, a first-time homebuyer is currently entitled to a $8,000 tax credit. This credit will reduce taxes or even provide a refund unless the home ceases to be the homeowner’s principal residence within three years from the date of purchase. In addition, a long-time homeowner may now qualify for a $6,500 credit if a replacement home is purchased after November 6th, 2009. This creates a credit for divorced individuals buying new homes.

If you are planning to buy a home in the near future, be sure to calculate the amounts of appreciation and tax savings. Just remember that these examples are intended to provide a general idea of how home ownership might be applied to taxes and income. You should always consult with a tax advisor for information relating to your specific circumstances.

Special thanks to Lori Manley (LoriM@Cascaderm.com) at Cascade Mortgage for additional tips.





Welcome to Enriconomics

20 12 2009

I decided to create Enriconomics (fka ericonomics) to post articles, research, links and analysis on economic and business topics.

Before I start busting out my posts, I figured I’d throw out what blogs and sites I typically read.

http://rodrik.typepad.com/
The finest developmental economics expert around. Other economists should take note.

http://ideas.blogs.nytimes.com/
Some of the most interesting essays and ideas on the web presented to you.

http://www.ritholtz.com/blog/
More finance related, but great unbiased analysis of finance stuff.

http://economix.blogs.nytimes.com/
Mostly links to other analysis but usually good stuff.

Green View
The Economist green view is great environmental focused econ blog.

538

http://www.marginalrevolution.com

http://www.calculatedriskblog.com/

http://economistsview.typepad.com/

http://freakonomics.blogs.nytimes.com/





Hello world!

19 12 2009

Transferring from my Blogger account.  This user interface is much better.

More content coming very soon!








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