R. Morris Coats is a Professor of Economics at Nicholls State University in Thibodaux, Louisiana. He was educated at Louisiana State University and at Virginia Tech. He taught at Lynchburg College and at Marshall University before coming to Nicholls State where he teaches classes on environmental economics, health economics, public economics and managerial economics. He has authored or co-authored numerous articles in peer-reviewed journals, such as the Southern Economic Journal, Journal of Public Economics, Public Choice, Public Finance Quarterly, Legislative Studies Quarterly, National Tax Journal, the Journal of Marketing for Higher Education, and Applied Research in Economic Development. He has co-authored several papers on sustainable economic growth and common-property resources. In addition, he has performed various impact and forecasting studies for the South Louisiana Economic Council and various tax studies for local and state governments. He has also published papers on cigarette smuggling, bribery of politicians and wasteful spending on homeland security. He takes special pride in now having at least one economic advisor for both the presumptive Republican nominee and the presumptive Democratic nominee for President of the United States for 2008 cite his research.

Morris Coats--

In the approaching U.S. Presidential election, there will be discussions about who is better equipped to lead the country for the next four years. Discussions will get heated and opponents demonized. Other discussions will turn to the horse race. Who is ahead? What is the extent of the lead? How can winners be predicted beyond the daily fluctuating and often conflicting polls that are constantly being reported?

Certainly, polls are used to forecast election outcomes, and are crucial in the process. But to see where the smart money is in an election, just look where the smart money is.

In commodities markets, the futures markets provide a best guess as to where the price will be in the future. Speculators abound. And, as I recently discussed, foolish market participants lose money and exit the market while those who are better at predicting are able to increase their market presence.

The market price in speculative markets is also the one that is at the middle of the pack, the price with as many dollars bet above the going price as below, making it a strong predictor.

Speculative markets can be best thought of as betting markets, like sports betting markets. Here is where we see the smart money in the market, where the center of the money being wagered by those who are confident enough with their predictions that they each “put his money where his mouth is.”

This argument is nicely made in a recent Slate.com article, where the markets are explained. Take a look at Intrade.com and at the first election market, (a research and educational tool set by faculty members at the University of Iowa), but also look at each prospectus in the Iowa markets. Two types of markets to look at are the vote share markets, where the betting is on who will get what share of the vote, kind of like betting in sports markets with point spreads, and the “winner-take-all” markets which simply bet on the winner. The market prices for the vote share markets, then, are predictors at how the shares of the popular vote will turn out, while the price in the “winner-take-all” market is the market prediction of the probability of Obama or McCain winning the election.

At the close of the Iowa Electronic Market on August 20^th, the prices in the vote share market stood at $0.511 for Obama and $0.499 for McCain. The redemption prices at the end of the election will be for Obama will $1.00 times the two-party vote share that Obama receives, and similarly for McCain shares. So, if a speculator thinks that Obama will garner more than 51.1% of the popular vote (among the two top parties), that speculator will be driven to buy shares of Obama, while those who think Obama will get less of the vote will be driven to sell shares.

In the winner-take-all market, the close-of-midnight prices on August 20th were $0.596 for Obama shares and $0.396 for McCain. If a speculator thinks that Obama has better than a 59.6% chance of receiving the most popular votes, that speculator has an incentive to buy shares of Obama in the winner-take-all market. If a speculator thinks McCain has better than a 39.6% chance of getting the most votes, that speculator has an incentive to buy McCain shares, but will have an incentive to sell if the speculator thinks McCain’s chances are lower.

There is a concept in economics called the “efficient markets hypothesis,” which only means that market prices embody all available information. One type of information that is crucial in these markets is the information provided by polls. Speculators in these election betting markets also use every bit of information available not only about which candidates are favored by voters but also about how driven potential voters are to actually make it to the polls to cast their ballots.

So, if you want to find out how your candidate is doing, look beyond the polls and the pundits to the betting markets, particularly those at intrade.com and at biz.uiowa.edu/iem. While no forecast is perfect, these markets have already proven to be better than the polls and television’s talking heads.

Related:  Oil Speculators And Presidential Politics

                 To Drill Or Not To Drill

Matthew Lesko is a best-selling author, appears regularly on network television shows, and travels the country appearing on virtually every newscast in the top 100 markets. His stage antics, as well as his sound consumer advice has made him a favorite guest on Larry King Live, Good Morning America, The Oprah Winfrey Show, Jay Leno, Letterman, and The Today Show.

Matthew Lesko has published over 70 books showing everyday people how to get free services and products from the federal government. He has had two New York Times best-sellers and two national best sellers, Getting Yours and Information USA. In addition, Lesko has twice received the prestigious “Best Reference Book of the Year” award from the American Library Association and has written syndicated consumer columns for Good Housekeeping, The New York Times and The Chicago Tribune.

The first comprehensive head-to-head analysis of the leading Presidential candidates’ expressed plans for funding government programs that have helped millions of Americans get ahead has found major differences in how they would approach set-asides for grants, loans, free services and other federal opportunities. The exhaustive review, compiled by researchers at Information USA from public and published statements, shows Barack Obama would provide more than two times the support for such services than contender John McCain.

”The best place to look for the future in America is in the promises offered by elected officials running for office,” according to Information USA founder Matthew Lesko, the popular television icon in the question mark suit and author of more than 100 books on finding such services.

“America may be facing what will probably be the biggest turning point in recent history, and both candidates are pitching their view of how to help this country. The devil might be in the details, but so are the facts. What we’ve done here is look at each of their track records, their stated proposed policies and programs. You be the judge.”

Below is a website with a comparative listing culled from the both candidates' proposed new programs. The first group is a one line description of each new benefit program. And the second grouping is a more detailed description of each. The chart shows Obama has pledged his support for 212 of these vital programs and services, compared to137 that have been endorsed by McCain.

To view the complete detailed description of the Presidential Campaign New Programs go to: http://www.myamericanbenefitsplan.com/president.php

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R. Morris Coats is a Professor of Economics at Nicholls State University in Thibodaux, Louisiana. He was educated at Louisiana State University and at Virginia Tech. He taught at Lynchburg College and at Marshall University before coming to Nicholls State where he teaches classes on environmental economics, health economics, public economics and managerial economics. He has authored or co-authored numerous articles in peer-reviewed journals, such as the Southern Economic Journal, Journal of Public Economics, Public Choice, Public Finance Quarterly, Legislative Studies Quarterly, National Tax Journal, the Journal of Marketing for Higher Education, and Applied Research in Economic Development. He has co-authored several papers on sustainable economic growth and common-property resources. In addition, he has performed various impact and forecasting studies for the South Louisiana Economic Council and various tax studies for local and state governments. He has also published papers on cigarette smuggling, bribery of politicians and wasteful spending on homeland security. He takes special pride in now having at least one economic advisor for both the presumptive Republican nominee and the presumptive Democratic nominee for President of the United States for 2008 cite his research.

Morris Coats--

In this Washington Post article, there is a discussion about how Senator Obama plans to go after speculators, who he and his advisors see as destabilizing the price of oil.

The only problem with this is that speculators are NOT destabilizing oil prices, and in fact, any intrusion into the futures markets and those where these supposedly evil speculators lurk, will most assuredly destabilize oil prices. We have to be sure about what we do before rushing headlong to correct something that may not be broken. Public policy makers should follow the physician’s dictum, “Primum non nocere,” Latin for “first, do no harm,” instead of the politician’s dictum of “do anything, as long as it sounds good, no matter how much harm it might cause.”

First, recall our class discussion on the law of one price. If goods can be moved from one market to another rather costlessly, anytime goods are selling in two different markets at different prices, people will buy them up in the low-priced market and then resell them in the high-priced market. This is called “arbitrage”—buying in one market in order to resell in another. Arbitrage moves goods from lower valued uses to higher valued uses.

People who specialize in market speculation are risking their money on the movement of prices in the future. Essentially, speculators, then, bet on the direction of price movements. Speculators, then, are taking part in a special sort of arbitrage, moving goods from one time period to another. If speculators think that the prices will increase in the future, they buy up such goods now, driving prices up now, and then sell these goods in the future, adding to future supply and reducing prices in the future from what they would be otherwise. If they bet wrong, they lose--they end up buying when prices are higher and then selling the goods when the price has fallen, again adding to future supply--but buying at high prices and selling at low prices. So, when speculators err, they lose funds and are in less of a position to speculate further.

Those who tend to be good at predicting future prices, then, stay in the market and live to speculate another day. Poor prophets make losses when they buy high and sell low, and so, soon exit the market, as they run out of either their own funds or backers. Poor prophets of future prices do destabilize markets, but they lose money and soon exit the market. Good prophets make profits and stick around the market. Futures markets come to be dominated by good prophets. They buy up in periods of low prices, when goods would otherwise be put to low valued uses (since the market is relatively flooded) and move them to times when they are valued more.

One of the best known stories of speculators is the story of Joseph and Pharaoh. This Joseph is the one from Broadway musical “Joseph and the Technicolor Dreamcoat,” that starred Donny Osmond. This is, of course, based on the story from the Old Testament, where Joseph, a son favored by his father, was the victim of sibling jealousy. As the story goes, his brothers threw him down a well and stained Joseph’s prized “coat of many colors” with pig’s blood in order to deceive their father about Joseph’s fate. Slave traders rescued Joseph from the well and sold him as a slave. He came into the Pharaoh’s employ, became an advisor to the Pharaoh, and ultimately Pharoah’s second in command.

You should recall from this story that Pharaoh began having troubling dreams about seven fat calves followed by seven frail calves and seven full ears of corn (what Europeans called grain and later called maize when they ventured into the New World) followed by seven dried out ears of corn. Pharaoh didn’t understand the meaning of his dream, but Joseph easily figured that it meant that there would be seven years of bountiful harvests followed by seven years of famine, and he shared the meaning with the Pharaoh. Joseph, being a good economist as well as a good prophet, advised the Pharaoh to speculate in the market for grain, buying it up during the years of bounty and storing it during the years of famine, when prices would be much higher. Not only did Joseph and Pharaoh make great sums of profits (from Joseph being a superior prophet), but they also saved lives of people and livestock far and wide. In fact, Joseph’s father, on hearing that Pharaoh had grain to sell, sent his sons to buy grain, where, of course, they found their brother.

Speculators, when they are good prophets, move resources from where they are plentiful to where they are dear. In addition, they stabilize prices, by adding to demand when prices are low, increasing prices, and by adding to supply when prices are high, bringing prices down. Good prophets do good things and make good profits. False prophets do bad things and they make losses for themselves and destabilize prices for others.

We should note that all oil producers are speculators by necessity. Oil producers can extract oil more rapidly or less rapidly. The more they extract from an oil well or from an oil formation now, the less will be available from that formation in the future. If oil producers think that prices will be higher in the future, their opportunity cost of extracting it today is higher and they will extract less oil today. The lower they expect oil prices to be in the future, the lower the cost of extracting that oil today. One result of this logic is that by opening up the Atlantic Coast, the Pacific Coast, the Florida Coast and ANWR to drilling and exploration, the lower prices will be in the future, reducing opportunity costs of extracting oil now and reducing prices immediately upon even hints of discoveries. Another result of this logic is an understanding of why oil companies are not extracting everything that they can now, and why they are preserving oil for the future, unlike what many in Congress want oil companies to do with those oil formations.

The question for Obama’s advisors is “if they are such good prophets and know more about what will happen with the prices of oil than current oil speculators, why is that they are not heavily investing in the futures market for oil, betting that prices will come down and “trading short” (look here in Wikipedia for a good explanation for trading “short”)? Who are the false prophets?

We have to look beyond today’s oil prices, today’s oil demand and today’s oil extraction costs. We need to think about future conditions of the world, especially future conditions in oil producing regions such as the Middle East and especially the Persian Gulf. What are the concerns there?

Well, one concern is our own presence in Afghanistan and Iraq. Is that stabilizing or destabilizing the region? In other words, what effect does our presence there have wars have on the region and on oil prices? What should cause everyone “pause” (the French word for “stop”) is the last remaining part of the Axis of Evil (because North Korea is being so good these days–sure), Iran, and its threats of nuclear devastation of Israel. The greater the threat of confrontation between Israel and Iran, the greater the chance of disruption of oil through the Persian Gulf, the higher the future price of oil and the higher the opportunity cost of extracting oil today.

The high price today guides us learn to conserve oil, guides us to explore more for oil, and guides us to look more for alternative energy sources. In addition, it preserves oil in the ground from being used today to drive one SUV so that it can be used in the future to drive fifteen Mini Coopers the same distance. In other words there really is something worse than high oil prices, and that is prices held artificially low, allowing frivolous current use of oil and then, running out in the future. High prices of depletable resources keep us from running out before we develop more sustainable alternatives.

Some see Obama as soft on the Middle Eastern terrorists and soft on the Iranians, especially when he suggests that he would sit down and talk with the President of Iran. If the likelihood of Obama becoming the next President of the United States is seen as encouraging the Iranians to take action against Israel, then it could even be possible that Obama’s very success could be destabilizing the price of oil. Of course, that is remote, but it is more likely than speculators being wrong about the chance of disastrous Middle Eastern conflict.

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Jaci Rae is known as The Queen of More Green. She is the author of several books including this week's Bestseller at  Amazon 5 Meals For $5. Other books she's written: Shop For a Day With Jaci Rae, How To Get Almost Anything For Free, and Winning Points With The Woman in Your Life One Touchdown at a Time. Jaci Rae, who was raised in poverty and knows the value of a dollar, can show you that it doesn't have to be a struggle. Recently Jaci Rae went on a shopping spree and filled an entire truck, inside and out for under $400. Jaci is currently working on a Ph.D.

Jaci Rae--

I know you want to save money, but there are those constant budget busters that steal your money and leave you constantly crying for cash.

Here are a few simple ideas to help you save money and leave behind budget busters.

Think about switching deodorants. Believe it or not, the less costly no-name brand deodorants are often just as effective as your name brand type.

I am a picky eater, but I also realize that there are some combinations of food in which I will never taste the difference. If you give me a tomato sauce made with my favorite, more expensive tomato and then one with a less expensive mealy tomato, I will probably taste the difference.

However, if you are mixing yogurt in your favorite smoothies or butter that is on sale versus your less expensive brand into a cooked item, you most likely will never taste the difference.

The same goes for pasta and many other food items that you eat. If you aren't going to taste the difference, but only know the difference in your head, why not switch?

Buy stamps at Costco or Sam’s Club. Believe it or not, they can give you a better deal than the Post Office.

Why pay more for “printer” paper for school, when regular, inexpensive by comparision, white copy paper works just as well. For great bargains I suggest  Realiable. Their phone number is: 800-735-4000.

One last easy tip. While it may seem very obvious because the high cost of gas has become prohibitive, it still behooves you for me to say it, ditch the high grade and get into low grade gas. Always consult with a mechanic who is not biased to your vehicle's manufacturer before you do this, but I have always run my vehicles, even when they said “high octane only” gas on low grade gas. I have never had a problem and in fact, most mechanics who do my tune-ups think the car is brand new.

If you change your oil every three thousand to six thousand miles and get regular tune-ups, you will be okay. My mom agrees and she’s been driving my entire life!

There are many more strategies to use, but this will get you started!

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Stanley A. Tomkiel, III, Esq. is a practicing attorney and a partner in the New York law firm of Tomkiel & Tomkiel. Mr. Tomkiel was formerly employed by the Social Security Administration as a claims representative in several field offices in the Northeast. He first published the Social Security Benefits Handbook in 1985 and has revised it many times since then to provide the latest information for readers. The Fifth Edition was published in 2007. An online edition ia available at http://www.socialsecuritybenefitshandbook.com/. Mr. Tomkiel has been practicing personal injury law since 1979. He handles complex serious injury cases. Mr. Tomkiel has achieved the highest rating -AV- by Martindale Hubbell, which indicates very high to preeminent legal ability and very high ethical standards as established by confidential opinions from members of the Bar. He lectures at continuing legal education seminars, and is a member of numerous professional associations.

Stanley Tomkiel--

Question:  My ex-husband, Earl G. M., age 76, received approx $2,000 a month after Medicare..........and, I, Evelyn C. M. am receiving $600 a month. I am 73 years old and the $600 is my only income. Would it be possible for me to receive more from Social Security? --Evelyn


Answer:  Well Evelyn, it depends on just what kind of benefits you are receiving. You don't give enough information. Are you receiving the $600 on your own earnings record or as a wife/ex-wife? If you are receiving as a wife or ex-wife, are you also collecting on your own account? (Probably)  If the $600 benefit is based on your ex-husband's account - a divorced wife's benefit - then that would most likely be all you can collect for social security benefits.

But if you are collecting only on your own account, you may be eligible for some extra money on your ex's account too. It depends on both your and his primary insurance amounts (PIA). This is the amount before any age reduction. A wife's benefit (and an ex-wife's) is determined by subtracting the wife's own primary insurance amount from one-half of the primary insurance amount of the husband. So if your ex-husband's PIA is $2,000, one-half is $1,000. If your PIA is $600, you can collect the additional $400 difference as an ex-wife. But, you must have been married at least 10 years.

I hope this helps you. If you think you may be eligible, you should apply without any further delay. You could lose some benefits because in your case an application cannot be retroactive for any more than 6 months, so get going! If you can't get to the SS office right away, send a letter telling them you want to claim ex-wife's benefits. This will protect your filing date.

One other avenue you may explore if you have limited assets and little income, is Supplemental Security Income payments, which are also handled by SSA. These are designed for people over 65 (as well as for the blind and disabled) in financial need. Eligibility depends on your assets (not counting your home), your income and your living arrangements. If your only income is the $600 you should question SS about your eligibility. Some states add a supplement to these federal payments. And if you are eligible for SSI you may also receive Medicaid, which pays for some things not covered by Medicare.

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Rosie Rains is the Founder and CEO of Capital Financial Advisors, Inc. a boutique mortgage firm and author of the book The Little Black Book of Wealth Building Mortgage Secrets. After 15 years of working almost exclusively with Estate Planning Attorneys, CPA’s and the clients of Certified Financial Planners, Rosie developed a deep understanding of the role a mortgage plays in the wealth building process and its significant impact on finances. She has coached hundreds of individuals through the mortgage and wealth building process to achieve their goals.
Rosie has been a guest on CNBC’s The Big Idea with Donny Deutsch. She can also be seen on Good Morning Arizona (KTVK Channel 3). She has authored several mortgage columns for the Del Mar Times and has been interviewed by Money Magazine as well as having been a guest on The Financial Advisors with Aubrey Morrow, KOGO radio in San Diego.

Rosie Rains--

Are you trying to get a home loan and completely frustrated at the process?
Mix three cups of mystery with a half a pound of madness and you might find
yourself in the perfect loan. Many of you out there are probably wondering why you
have a loan on your home, still have equity, good credit and money in the bank yet
are having difficulty getting a loan. The new lower rates are great but why can’t you
get it?

Well I am here to tell you. The days of getting a mortgage have completely changed
in the last year to the point that not only do you have to be golden you actually have
to lay the egg. The fact is if your loan is over conforming limits of $417,000 or
jumbo conforming limits (which vary depending on the County and State) you are in
for a rude awakening. State and federal regulators have taken up residence within
our lending institutions nationwide making a full time job of the mortgage business.
One might think the regulators job is to help consumer’s secure reasonable
financing and fix whatever problem they may have but it’s just not that simple, the
fact remains it’s gotten much harder. An actual census was taken which indicated
that 40% of all borrowers who took out a loan from 2005 to 2007 will not be able to
qualify for a loan today. This is a staggering statistic.

The days of 100% financing and even 10% down are few and far between and the
days of credit scores at 680 are swiftly sinking into the sunset. Here are some of the
new rules that might help you prepare yourself for the new landscape of home
loans.

A minimum credit score of 720 is now required on most loans, full documentation

which means W‐2’s, tax returns and bank statements are required on all loans. You

must be employed for no less than two years with the same employer. There is a
new hard and steady rule which will sting the conservative consumer the most. You
must have a minimum for 4 active trade lines.

Let’s talk about what a trade line is in the eyes of a lender.
Credit cards like Visa, Master Card, American Express, Discover or store cards such
as Macy’s, Kohl’s, Home Depot, Best Buy, etc. are all considered trade lines. But
don’t confuse this with your ATM card that has a Visa logo on it. That’s not a credit
card or a trade line. Car loans, a home loan, an equity line, a car or equipment lease
are all considered trade lines.

So what can you do?
Now here is where it gets tricky. For those of you out there that are fiscally
responsible and don’t like to use your cards we applaud you whole‐heartedly. In a
realistic financial world you would be rewarded for your nature. But in the new
landscape you must actually be using those cards. Now we aren’t saying to go out
there and take a $10,000 vacation because you will most definitely be penalized for
that too. You must now tow the line and use them prudently! Use your cards a little.
For instance, if you normally pay cash for groceries charge them once in a while but
put the money aside to pay it in full, we don’t want you running up unnecessary
debt. If you normally pay cash for lunch, charge it once in a while, pay for that tank
of gas here and there. Be sure to rotate them so at least four cards get used and stay
active. Never access more than 40% of your available credit. So if your credit line is
$1,000 you never want to go over a $400.00 balance. You also need to be careful to
pay the bill on time. Most credit cards companies have taken away the grace period
and are looking to charge late fees whenever possible and never, ever be late. That
is a true killer!

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Kathleen A.