• July 12, 2017

    Measuring uncertainty about economic policy

    Here is a shout out to Steven J. Davis from my alma mater — the University of Chicago– for his work creating the Economic Policy Uncertainty Index. While the VIX index measures volatility in the markets, the Economic Policy Uncertainty Index provides clues about how politics might be shaping the economy. Professor Davis developed the index with Scott Baker from the Kellogg School of Management at Northwestern University and Nicholas Bloom at Stanford University. The three saw a need for this kind of measure after the recent financial crisis. The index is used as the basis for research by economists and finance experts looking for connections between political economic uncertainty and different parts of the economy. You can listen to an NPR Marketplace story about the index here: http://<iframe src=”https://www.marketplace.org/2017/07/12/economy/government-policy-uncertainty-and-economy/popout” frameborder=”0″ width=”100%” height=”240px”></iframe>

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  • July 11, 2017

    Chinese officials caught fudging numbers to meet targets

    Chinese authorities recently reported that two government officials for two northern provinces had falsified financial performance data in order to meet targets. “Good times or bad, China always seems to post numbers that meet the targets set by central planners,” Arthur Dong, a professor of international relations at Columbia University specializing in Chinese economic affairs told Pacific Standard Magazine. According to Kevin Tsui, an economics professor at Clemson University specializing in the Chinese economy, “local government has incentives to manipulate their financial data because local leaders’ promotion opportunities are related to these statistics.” “Producing the numbers that Beijing likes will always lead to promotions and career advancement within the party apparatus,” Dong says. “There is a ‘get what you pay for’ element to the incentive system that encourages provincial leaders to game the numbers.” But some see this report in a positive light. William Hurst, a political science professor at Northwestern University, says “I actually look at the fact that the central authorities are trying to crack down on this as a positive sign that China’s leaders want a little bit more transparency and more accurate reporting in the economy … This can help preserve some trust among investors—foreign and domestic—and temper panics that can occur in times of crisis.” https://psmag.com/economics/china-has-been-cooking-the-books

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  • July 10, 2017

    Insurance bad faith award upheld by federal appellate court

    It is not surprising when an insurer refuses to pay a covered claim. It is surprising when an insurer gets hit with a court order to pay millions for bad faith denial of a customer’s claim. And it is even more surprising when a federal appellate court upholds that order, as the 11th Circuit Court of Appeals did on July 7, 2017.   http://media.ca11.uscourts.gov/opinions/unpub/files/201614225.pdf The case arises out of a 2005 automobile accident that occurred when a Nationwide insured driver ran a red light, killing a young mother who was driving the car he hit. After the accident, Nationwide’s insured pleaded guilty to vehicular homicide. Nationwide had the opportunity to settle the wrongful death and estate claims of the mother’s surviving family members for the $100,000 policy limits and certain releases. Nationwide would only agree to settle if the family agree to indemnify Nationwide for any other claims or payments sought under the Nationwide policy. The family refused and filed a wrongful death case in Georgia state court against the insured driver. A jury awarded the family $5.83 million in wrongful death damages. After the verdict, the insured driver assigned to the family his right to bring a claim against Nationwide for bad faith failure to settle. The family filed suit against Nationwide in Georgia federal court. The parties agreed that a jury would determine liability, leaving the determination of damages to the judge. Nationwide argued that it was unfairly “set up” for bad faith and that that there is no tort of bad faith denial of insurance claim. The jury found Nationwide liable for negligent or bad faith failure to settle the claims made by the family against Nationwide’s insured. The district judge then ordered Nationwide to pay the family $5,730,000 in damages, plus interest of, at that time, $2,405,873. Nationwide appealed and lost. Nationwide has litigated this case for 12 years. Isn’t it about time to pay Nationwide? The case is Jesus Camacho, et al. v. Nationwide Mutual Insurance Co., Case No. 16-14225.

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  • July 8, 2017

    Courts open for business claims but closed to more and more individual claims

    Big business can get into court — individuals are forced into arbitration The public courts were available to Beef Products Inc (BPI) to sue ABC News for defamation — even the court in a tiny South Dakota town. Reports are that the South Dakota county where the case was filed spent $45,000 preparing a courtroom for the so-called “lean finely textured beef” defamation trial. That’s nice. It is not so nice that the legal system is not as accessible to an individual with a beef against a big business. Individuals with disputes against businesses are increasingly forced into arbitration — which means disputes will be decided behind closed doors usually by someone with connections to the business. No federal or state court judge, no jury of one’s peers, no appellate review, no public access for media and court watchers. Think this does not matter to you? Check your brokerage statement. Brokers require that you “agree” to mandatory arbitration if you want to open an IRA or other brokerage account. Check your internet and phone bills. Internet and telecommunication service providers require that you “agree” to mandatory arbitration if you want those services. Check your credit cards. Credit card companies require that you “agree” to mandatory arbitration if you want to use a credit card. If businesses can bring their disputes in the public court system, shouldn’t individuals be able to do the same? http://www.hollywoodreporter.com/thr-esq/abc-pink-slime-trial-opens-scathing-attacks-media-bias-corporate-secrecy-1010391   http://www.businessinsider.com/pink-slime-case-settlement-2017-6

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