Daniel Gross

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Daniel Gross joined Yahoo! Finance in the fall of 2010 as columnist, economics editor, and a co-host of The Daily Ticker. The best-selling author of six books, including Forbes Greatest Business Stories and Dumb Money: How Our Greatest Financial Minds Bankrupted the Nation, Gross has been covering politics, business, and economics for two decades. The longtime “Moneybox” columnist for Slate, he was a staff writer and columnist for Newsweek and a contributor to the “Economic View” column in the New York Times.

Blog Posts by Daniel Gross

  • The decline of financial failure

    As has frequently been the case in recent years, Friday was the night the lights went out for a bank in Georgia. This time it was Montgomery Bank and Trust, a two-branch bank with $174 million in assets. The bank failed and was taken over by America Bank.

    Friday, July 6, was the first Friday in three weeks that a bank failed. The time off from chronicling the woes of the banking industry has given us a chance to step back and look at some trends in financial failure. For some time, it has been clear that, while pain persists in the credit markets — especially when it comes to housing — the rampant financial failure that crippled the system and the economy in 2008 and 2009 has been ebbing. As a general rule, people are doing a much better job keeping up on their financial obligations than they were a few years ago. Bankruptcy filings are down. In the first quarter of 2012, there were 332,973 filings in federal bankruptcy courts, a 12 percent decline from the 366,178 filings in the first

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  • Enough with all that interesting stuff going on overseas. For too long, the Europeans have been able to grab our attention with their soccer and tennis tournaments, quaint bicycle races, and truly unquaint financial crises. With the latest summit seeming to have resolved, for now, Spain and Italy's sovereign debt crisis, and with Independence Day approaching, it's time for Americans to shift the focus back to what really matters — the short-term fate of the U.S. economy.

    As Henry Blodget and I discuss in the accompanying video, the news flow continues to be whipsawed by the cross-currents of a continuing expansion, which has now entered its 37 month, that remains unsatisfying for the legions of unemployed. With the forces that propelled the U.S. out of recession three years ago — global growth, business investment and manufacturing — ebbing, future growth hinges on whether the services sector and consumer demand can take the helm. And that's an open question.

    There's no question that

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  • Why New York City is becoming the not-so-Big Apple of world finance

    The financial headlines are delivering a persistent message. New York, and all those who live and work in the self-proclaimed financial capital of the world, is showing rising signs of financial irrelevance.

    Sure, the New York-based stock and bond markets have been gyrating with their usual velocity, processing news, fear and greed. But increasingly, it seems that the real action is happening elsewhere, and that New York is now the tail being wagged by a distant dog.

    In the accompanying video, I discuss this phenomenon with my Daily Ticker colleague, Henry Blodget, joining via Skype. (Note: New York has lost its magnetic pull to such a degree that Blodget, usually a regular at our midtown Manhattan studio, connected from an undisclosed offshore location.)

    Consider the evidence:

    On a daily basis, American investors are obsessing over the latest details from Europe. Will the European Central Bank come to the rescue of Spanish banks? Will Italy manage to avoid the fate of its fellow Club

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  • Apple and wages: Why more companies must raise pay

    It's been reported that some employees at Apple retail stores have received a raise of up to 25 percent. The news was noteworthy for three reasons: because it was Apple, because of the size of the increase, and because it's been so rare for large numbers of service workers to get such a significant bump.

    In the accompanying interview, my Daily Ticker colleagues talk with Apple retail Specialist Cory Moll. Last week his hourly pay jumped $2.82 per hour to $17.31.

    One of the remarkable features of this expansion, which turned three years old this month, according to the National Bureau of Economic Research, has been the zero-sum game between companies and their workers. Corporations have rebounded extraordinarily well from the great recession of 2008-2009. Corporate profits have risen from $1.3 trillion in 2009 to $1.942 trillion in 2011, and in the first quarter of 2012 were running at an annual rate of nearly $2 trillion. Corporate cash holdings are high. Thanks to a host of factors —

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  • Sunday's election in Greece was supposed to deliver a catharsis . Either the markets would rally in relief of pro-bailout parties won. Or they'd collapse in fear if an anti-bailout party won. But the reaction thus far has been a shrug. Why?

    The big fear is that the Greeks would upset and fail to live up to commitments. That's still an open question, although the (muddled) election results seem to have forestalled an eminent exit. But there's a larger fear. What about countries that have steadfastly labored to meet their commitments to bondholders and other creditors, stuck to the austerity programs — and yet the market still treats them like junk?

    Take Ireland. The island nation's desire to seek a bailout had nothing to do with runaway public-sector spending. Rather, it had everything to do with its private-sector banks running amok. Ireland's banks lent way too much indiscriminately, and borrowed from bond investors around the world. Come the housing bust, rather than let bank

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  • In the euro crisis, Greece is a sideshow to Spain and Italy

    Greece is becoming like one of those celebrities who has to do or say ever more outrageous things to continue to stake a claim on public attention. (Ahem, Mr. Trump.) Having sought two bailouts and convinced many bondholders to take a 75 percent haircut on the value of their holdings, Greece has lately resorted to more extreme measures. Like electing several members of the neo-fascist party Golden Dawn to Parliament, as it did last month. Or perhaps by electing a party to run the government that has threatened to default on its debt entirely, as it may do on Sunday.

    But as is the case with celebrities making outrageous statements, Greece's ability to shock the world is declining. And in fact, given the activity elsewhere in the euro zone, the action in Greece is becoming something of a sideshow.

    Consider. Holders of Greek bonds have already accepted a three-quarters reduction in the value of their holdings; that means there is only 25 percent to go. A conscious decision by Greece to

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  • The Honest Truth About Cheating, Lying, and Dishonesty

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    If you're watching this right now, you're probably a liar — about something. It doesn't make you bad. It just makes you human. That's what Dan Ariely, behavioral economist at Duke University and author of the best-seller Predictably Irrational, argues in his new book The (Honest) Truth About Dishonesty: How We Lie to Everyone—Especially Ourselves.

    In his book, Ariely describes a series of experiments and studies that undermine a core belief among economists and law enforcement about crime, bad behavior, and cheating. The system tends to believe that people make rational cost-benefit analyses about what they'll gain from outside-the-lines behavior and the potential consequences. And so it follows that the way to forestall bad behavior is to put tough punishments in place. Ariely says that's the wrong way to think about it. "Our behavior is driven by two opposing motivations. On the one hand, we want to view ourselves as honest, honorable people.  On the other hand, we want to benefit from cheating and get as much money as possible." Human behavior is the balance between those two forces.

    While there is a very small population of sociopaths that cheats all the time, most people tend to cheat just a little bit. At the core of his book lies a study that he repeated in different iterations with college students. They were asked to solve simple math problems, but given a short amount of time to do them. They were told they'd get a certain amount of money for each correct answer. Some students were asked to put the tests in a paper shredder after they finished and then report the number of problems they completed correctly. When Ariely looked into the shredder bin (he lied about actually shredding the paper), he found that students routinely over-reported the number of answers they solved correctly. "If you look across all our experiments, about 30,000 people, a handful cheated in a big way, and 18,000 cheated" in much smaller ways.

    The (Honest) Truth About Dishonesty contains plenty of other great insights. People are much less squeamish about cheating when they can distance themselves from what seems to be immoral behavior. People are much more likely to take a can of coke out of a common refrigerator than they are to take a dollar bill off a plate. Golfers are much less likely to say it's ok to physically move a ball four inches with their hands than they are likely to say it's ok to nudge it with their club — even though both actions are violations of rules.

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  • Monday brought news of three transactions in the broad fields of content, communications, and technology -- each worth about $1 billion. Cerberus bought a majority stake in AT&T's Yellow Pages business, Microsoft bought a bunch of patents from AOL, and Facebook purchased Instagram. Since we live in Dickensian times, it's only proper to note that these deals represent the ghosts of social media past, present, and future. The transactions, the players behind them, the prices paid, and the valuations attached to them, shed light on the dynamism of the U.S. economy in general, and, in particular, in its media and communications industries.

    The Ghost of Social Media Past. In the Cerberus-AT&T deal, a bunch of 50- and 60-year old guys bought a century-old, cash-flow producing business from a 135-year-old social media pioneer.

    After the telegraph, the telephone was perhaps the original social network. Its rapid spread allowed anybody to communicate with anybody else. The early phone

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  • Obama AMT-Buffett Rule Combination Pits Well-Off Against Ultra-Rich

    We've heard a lot of talk about the one percent and the 99 percent. With the release of his proposed budget for fiscal 2013, President Obama has opened a new front in the class war. He's pitting yuppies against the overclass, the struggling well-off against the very rich.

    This declaration of class warfare can be found on page 39 of the section on cutting waste and reducing the deficit. President Obama's deficit-cutting proposals rest in part on making life more expensive for the very rich. He wants to let the Bush-era marginal tax cuts for those making $250,000 or more (about 3 percent of American households) expire, and limit the amount of deductions they can take. He proposes to end the loophole through which "carried interest" —the money private equity magnates are paid for managing other people's money — is taxed at a low, long-term capital gains rate. And he's proposing to codify what's come to be known as the Buffett Rule, the notion that "those making over X million $ should pay

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  • The Strange Controversy Over Chrysler’s Ad

    There were plenty of objectionable ads during the Super Bowl — the absurdly sexist GoDaddy.com spots, Adriana Lima's come-hither pitch for Teleflora, Coca-Cola's lame polar bears. So it's surprising that the biggest controversy has been generated by Clint Eastwood's spot for Chrysler. The ad, "It's Half-Time in America," told a story of how a country and a city that have both suffered adversity and some tough knocks can nonetheless return to prominence and usefulness through hard work and ingenuity. Of course, the ad was a metaphor for Chrysler, which filed for bankruptcy in 2009, received a government bailout and has been revived under the ownership of Fiat.

    Some Republican operatives cried foul. Karl Rove complained that "The President of the United States' political minions are, in essence, using our tax dollars to buy corporate advertising and the best wishes of the management, which has benefited by getting a bunch of our money that they'll never pay back."

    Huh?

    Let's review the

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  • Facebook’s rise from start-up to establishment

    Facebook's prospectus, released today, offers readers a voyeuristic look at the company's operations, its profits and the riches it will shower on fortunate investors and insiders.

    Reading between the lines of the prospectus also reveals a case study of how, in an age of income inequality and embedded privilege, an outsider can very quickly become part of the establishment.

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    It shows how a good idea can attract not just capital and customers, but people and other institutions. Facebook has definitively arrived.

    It starts literally at the top of the prospectus -- with the lead underwriter. Facebook chose Morgan Stanley, the last remaining white-shoe firm, which traces its lineage to J.P. Morgan.

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    From the moment

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