The Financial Riddler 11-12-23
It's ok to get all these wrong. No one will know.
What share of downtown San Francisco office space is vacant?
a. 5 percent
b. 17 percent
c. 34 percent
d. 52 percent
e. 69 percent
And the answer is …
The answer is 34 percent. Nationwide, the commercial office vacancy rate is 18 percent — close to a record high. A healthy vacancy rate is about 8 percent. Small banks hold about one third of all commercial real estate mortgages. And commercial real estate loans represent a third of all assets of small banks. This helps explains why bank stocks, particularly regional bank stocks, are down relative to the rest of the stock market. My concern is that we’re going to experience another S&L crisis, with small and medium sized banks will dying gradually on the vine. Some 1,500 S&Ls failed in that episode, which lasted nine years.
Unfortunately, there is no reason to expect companies to rent expensive office space to house workers they can meet via Zoom. My own company is 30 years old. We’ve been virtual from the beginning. When we hire someone new, it usually takes two years before I meet them in person.
How many Social Security beneficiaries are receiving a clawback letter from Social Security each year that demands they repay amounts that can range in the tens to hundreds of thousands of dollars? The clawbacks, featured recently on 60 Minutes (see the second episode), are demands for what Social Security alleges, but doesn’t explain, let alone prove, are mistaken overpayments. Hence, to rephrase the question, how many people does Social Security claim it mistakenly overpays in a typical year?
a. 5,000
b. 50,000
c. 100,000
d. 500,000
e. 1,000,000
And the answer is …
The answer is one million. To protect yourself against the System’s terrible clawbacks as well as ten truly horrific scams, please grab a copy of my new book (self published with Amazon) coauthored with Terry Savage. It’s entitled Social Security Horror Stories — Protect Yourself from the System and Avoid Clawbacks. Actually, please buy three extra copies to mail your members of Congress. The price is $14.99. It will turn your stomach. If you help fill up Congress with copies of the book, they will finally get the message and fix these outrages overnight.
Is air traffic back to pre-Covid levels?
a. Yes
b. No
And the answer is …
The answer is yes. As measured by capacity — available seats times miles flown, it’s just recovered. But industry profits are down 40 percent. This spells near-term American airline failures adding to the over 400 hundred recorded since 1914, when the first airline — St. Petersburg — Tampa Airboat Line — began operation. Time to use your points?
How much lower are weekly median real wages today than when COVID struck in the second quarter of 2020? Yes, I’ve asked this question before, but I continue to find the answer startling. It shows the economy hasn’t fully recovered from COVID.
a. 3 percent
b. 5 percent
c. 7 percent
d. 9 percent
e. 11 percent
And the answer is …
The answer is 7 percent. But that’s misleading as Jason Furman of Harvard’s Kennedy School explained to me. Real median wages rose dramatically when COVID struck as employers laid off their lower-compensated workers. Today, real median wages are somewhat higher than in Q4 2019. (In the previous version of this question of the riddler, I stupidly didn’t focus on the compositional run up of median real weekly earnings in early 2020.)
Of 167 countries surveyed by the Economist Intelligence Unit, how many are ranked as full democracies?
a. 121
b. 88
c. 51
d. 24
e. 11
And the answer is …
The answer is 24, which comprise only 8 percent of the sample’s total population. On the other hand, another 48, with 37 percent of the total population, are categorized as flawed democracies. The analysis classifies 57 countries, with 37 percent of sample population, as authoritarian.
With how many of the following Social Security scams, discussed in Social Security Horror Stories, are you familiar? The only correct answer is all. If not, please read these chapters in the book. They may make or save you a ton of money. Also, learn why the Foundational Scam is the one scam that rules them all.
Has Social Security’s software been hacked twice in the past two years?
a. Yes
b. No
c. Maybe
And the answer is …
My answer is maybe. Please read this column and this one. How can Social Security send out completely crazy benefit statements and have its website produce dramatically lower benefit estimates than it had a few days before — and continue doing so for over a month — without someone external getting into its code? To be clear, there is no reason for anyone to update the System’s benefit-estimating software. If there was no hack, how did these mistakes occur? If there was, how do we know the hack was limited to the system’s benefit estimates as opposed to workers’ earnings records? This represents more evidence of an agency that’s out of control and is in desperate need of far stricter Congressional oversight.
Please protect your earnings record by a) checking it has correct past covered earnings values, b) checking each new year’s covered earnings are correctly recorded, and c) keeping a physical copy of your latest earnings history. I have no confidence that Social Security is keeping physical copies of each month’s covered earnings information of 135 million American workers. That would require printing out and storing a mountain of paper each month.