Political Calculations
Unexpectedly Intriguing!
July 23, 2014

What are the best and worst states for U.S. teens between the ages of 16 and 19 for finding jobs?

To find out, we turned to the U.S. Bureau of Labor Statistics, whose Geographic Profile of Employment and Unemployment provides the data by detailed age group on an annual basis for the years from 1999 through preliminary figures for 2013. We used that data to calculate the ratio of the number of employed U.S. teens from Age 16 through 19 with respect to their numbers in the U.S. population to create the following chart.

Ratio of Employed U.S. Teens (Age 16-19) to Population of U.S. Teens by State, 1999-2013

In the chart, we see that North Dakota is currently the leader among all states, surging considerably in 2013. We also see that the state has consistently ranked high by this measure from 1999 through the present. That's likewise true for the states that also ranked highly in 2013. The Top 5 states for teen jobs are:

  1. North Dakota
  2. Iowa
  3. Nebraska
  4. South Dakota
  5. Wyoming

Meanwhile, we observe that the worst place for jobs for U.S. teens is the District of Columbia, which currently and has chronically occupied the basement in the rankings by a wide margin during each year for which we have data.

But since this geographic region reserved to be the seat of the nation's capitol is not a state, the state that really ranks as being the worst state for job-seeking teens in 2013 is California. Here are the Bottom 5 states for teen jobs:

  1. New York
  2. West Virginia
  3. Mississippi
  4. Georgia
  5. California

In 2013, these five bottom-dwelling states were home to 23.6% of the entire population of 16-19 year olds in the United States.


July 22, 2014
Broken Hard Drive - Source: http://oversight.house.gov/release/15076/

What are the odds that IRS employees deliberately targeted President Barack Obama's political opposition and have attempted to cover it up?

On 31 May 2013, the U.S. Internal Revenue Service (IRS) told Congressional investigators that they had identified at least 88 IRS employees and supervisors who were involved in targeting groups opposed to various aspects of President Barack Obama's political agenda. At that time, the IRS ordered these employees to preserve all the "responsive documents" related to the scandal on their personal computers, which would apply to documents going back as far as 2010.

On 21 July 2014, in written testimony before the U.S. Congress, IRS Deputy Associate Chief Counsel Thomas Kane indicated that the hard drives of up to as many as 20 of these IRS employees had experienced crashes, making e-mails and other documents stored on them inaccessible in explaining why the agency would not deliver the information that it had been ordered to provide to Congressional investigators.

What are the odds of that happening?

Fortunately, we have an app for that! You just need to enter the relevant data, which we have below, or adjust it as you might like, and we'll figure out the odds of so many members of such a small group of IRS employees and supervisors going through the experience of their hard drive crashing so bad that no information related to potentially unlawful activities would ever be retrieved from them.

Binomial Probability Data
Input Data Values
Total Number of Opportunities [Must be 170 or lower to avoid maxing out the calculator!]
Number of Times the Outcome Goes a Particular Way
Percentage Odds of Outcome Occurring for Each Opportunity [%]

The Odds of That
Calculated Results Values
Percentage Odds of the Outcome Occurring the Entered Number of Times
Odds of the Event Occurring [1 in ...]

In the tool above, we're using the findings of a 2007 study found that the odds of a single hard drive independently failing in a given year is about 3%. If you want to be precise however, the average rate of replacement for a failed hard drive in a single year is 2.88%.

Our tool's results indicate the probability of the events in question occurring by purely random chance. If you want to find the odds that IRS employees deliberately targeted President Barack Obama's political opposition and have since attempted to cover up evidence of their unlawful conduct, just subtract the percentage odds above from 100% to find the odds of that....

Other Probability Tools on the Web

We've previously found two really cool tools for doing this kind of math elsewhere on the web:

Richard Lowry presents the detailed calculations and an online calculator for finding binomial probabilities that gets around our tool's limitation of 170 opportunities!

Texas A&M offers a Java application for doing this kind of math that includes graphical output, so you can see where various outcomes might fall on a normal bell curve distribution!

Update 3:35 PM EDT: One of our readers points us to the perfect country tune to describe the IRS' "problem" with hard drives:

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July 21, 2014

A new noise event rattled the markets on Thursday, 17 July 2014, when news broke that a Malaysian Airlines commercial jet had been shot down over eastern Ukraine, potentially by Russian-backed separatists. That act caused stock prices to drop below the level they would otherwise be, assuming that investors are now focused on 2015-Q2 (the quarter the Fed will likely hike interest rates from their current near-zero levels) in setting today's stock prices.

Our expectations/accelerations chart shows the negative impact upon stock prices with respect to the change in the growth rate of dividends expected in that future quarter.

Change in Growth Rates of Expected Future Trailing Year Dividends per Share with Daily and 20-Day Moving Average of S&P 500 Stock Prices, as of 2014-07-18

While stock prices rallied strongly back on Friday, 18 July 2014, in reality, the negative noise generated by the missile attack on Malaysian Airlines Flight MH17 event is still present in the market and is keeping stock prices from rising as high as their fundamental relationship with their expected future dividends indicates that they would otherwise be.

That is evident from the relative position of the trajectory of stock prices with respect to the trajectory they would be taking if not for the negative impact of the terrorist act.

Alternative Futures for S&P 500, 30 June 2014 - 30 September 2014 (Without Echo Effect), Snapshot on 18 July 2014

What this chart indicates is that the perception of investors of the event's potential negative impact on their expectations for the future did not worsen from the previous day, as the gap that opened up in response to the event did not widen. By that same token, the outlook of investors did not meaningfully improve either, as the gap between projected trajectory and actual trajectory did not close on 18 July 2014.

As of the close of market trading on Friday, 18 July 2014, investors were in a holding pattern as more information about the attack becomes known and its potential impact upon their expectations of the future can be assessed. Depending upon what they learned over the weekend, there is a potential for a significant difference between the value the market closed at and the value at which it will open later this morning (21 July 2014) to develop.

And you'll know what they thought of what they learned over the weekend by whether the gap between our forecast and actual stock prices widens or narrows.

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July 18, 2014
Cultural Landscape

If you are a leader, the example you set means everything.

Because it is the people in charge who have the responsibility for setting the priorities for those who work for them and also for shaping the environment in which they will do so. It is the people in positions of leadership who, by their policies and example, provide both the official and unspoken guidance that the people who work for them will follow in determining how they will act. Even when the boss is away - the cultural landscape they establish remains in effect.

In business, it's called "corporate culture". And it plays a massive role in how successful an organization can be. Especially during times of adversity, when challenges can become overwhelming in the absence of a solid organizational culture that can deal with them in a coherent, competent fashion.

As a case study of how important that aspect of leadership is and how much it is missed when it is lacking, let's consider a day in 2014 when the news of the death of 295 people aboard a Malaysian Airlines 777 commercial airliner became known around 11:30 AM EDT and how U.S. President Barack Obama handled it.

Here, we observe a large degree of disengagement on the part of President Obama that day, particularly after the news of the tragedy had become widespread. The White House press pool traveling with President Obama on that fateful day offered the following tidbit nearly an hour and a half after the news first broke:

At approximately 12:50 pm, the motorcade stopped at the Charcoal Pit, a popular, established restaurant just north of Wilmington, Del. Known for its burgers and sundaes. Obama shook hands and mingled with many of the diners, stopping at one point to pick up seven-month old Jaidyn Oates, and pose for a photo.

He invoked Vice Presiident [sic] Biden’s name a few names, noting to some diners, “Me and Joe, we share shakes all the time,” and to others, “Biden told me the burgers are pretty good.”

Just before hugging another young girl, whose mother lifted her across the booth to hug the president, Obama asked, “Do you give good hugs?”

At 1:01 pm Obama declared, “I’m starving!” He sat down to eat with Tanei Benjamin, who wrote the president a year ago. The president ordered a 4-ounce “Pit special,” which is burger with fries. He asked for it to be done medium well, and to have lettuce and tomato. He also asked for a water with lemon.

About an hour after lunch, President Obama finally noted the tragedy, inserting the following comments in a planned speech:

President Barack Obama offered his first public comments on Thursday about the Malaysia Airlines plane that crashed over Ukraine, saying his first priority is to find out whether there were any Americans on board the flight.

“Obviously, the world is watching reports of a downed passenger jet near the Ukraine border,” Obama said in brief comments before a planned speech in Delaware. “And it looks like it may be a terrible tragedy.”

Right now, we’re working to determine whether there were American citizens on board. That is our first priority. And I directed my national security team to stay in close contact with the Ukrainian government,” Obama said. “The United States will offer any assistance we can to help determine what happened and why. And as a country, our thoughts and prayers are with all the families of the passengers, wherever they call home.”

For the sake of context, here's the video of President Obama's remarks so you can appreciate how disengaged President Obama's first comments on the tragic events of 17 July 2014 really were, as the President gave them before going on to say that "it is great to be in the state that gave us Joe Biden":

Meanwhile, it was confirmed very early after the incident occurred that the lives of Americans had been claimed in the crash. In fact, the first reports of that fact were breaking at the same time President Obama was stopping for lunch, even though it would be some time for the exact number and their names were known.

But wait! Weren't there responsible people back at the White House to whom the President might have delegated the task of keeping up on tragic events as they occur? While President Obama's initial reaction was oddly disconnected, surely there were others that President Obama had placed into positions of authority who were on top of what the the President truly needed them to be doing.

Well, judge for yourself - our site saw the following site traffic at 9:08 AM PDT, or rather, 12:08 PM EDT, shortly after more extended news reports of the downing of the Malaysian 777 were hitting the airwaves:

Political Calculations - Executive Office of the President - Site Traffic on 17 July 2014

Amazing the priorities that some have when commercial jetliners are shot down from the sky.

That odd level of extreme disengagement was also observed at other government agencies, including the State Department:

President Barack Obama is setting a very bad example of leadership. And it's showing all across the executive branch of the U.S. federal government.

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July 17, 2014

Who are the major holders of debt issued by the U.S. federal government going into the summer of 2014?

The answer is presented graphically below:

Summer 2014: To Whom Does the U.S. Government Owe Money?

On the whole, there haven't been many changes since our previous edition. We see that the debt reported to be held by Belgium is still considerably inflated over historic levels, as this nation's banks would appear to have acted on behalf of Russian interests seeking to place their U.S. government-issued debt holdings in non-Russian financial institutions ahead of and in the months following Russia's actions to seize control of Crimea from Ukraine.

Tapering the Federal Reserve's Quantitative Easing Program

Our special area of focus on this update of our irregular series on the ownership of the U.S. national debt looks at the role of the Federal Reserve's Quantitative Easing (QE) programs as the central bank of the U.S. has gone from holding a low of $478.7 billion in U.S. government-issued debt securities on 18 June 2008 up to an astounding $2,414.8 billion on 28 May 2014. As of that date, the Federal Reserve held a a combination of $2,370.7 billion in U.S. Treasury securities and $44.1 billion in debt securities issued by other federal government agencies.

The Federal Reserves holdings of these securities now accounts for 13.8% of all the total public debt outstanding for the U.S. federal government, which totals $17.490 trillion as of 31 May 2014. On 1 January 2014, the U.S. national debt stood at $17.352 trillion, of which the Federal Reserve held some $2.266 trillion, or 13.06%.

The Federal Reserve also holds some $1,648 billion in mortgage-backed securities, which are primarily issued by government-backed entities, including the Government National Mortgage Association (Ginnie Mae), which is owned by the U.S. federal government, and the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), which are nominally private institutions, but which have been operating under government conservatorship since 2008. Although these government-backed entities issue mortgage-backed securities, their role is to collect and bundle the mortgages of U.S. homeowners and firms for the money they've borrowed into pools, which are then securitized and traded on the open market - it is not money borrowed by the U.S. Treasury or federal government agencies.

The Federal Reserve began its most recent round of QE government-issued debt buying in the fourth quarter of 2012, which it began doing to keep the U.S. economy from falling into a full-fledged recession at the time. Beginning in January 2014, the Federal Reserve has been steadily reducing the amounts its QE purchases every six weeks, as it believes the risk of falling into recession has diminished.

Even though the Federal Reserve has been reducing its purchases of U.S. government-issued debt securities since the beginning of 2014, as of 28 May 2014, it has boosted its net holdings of the federal government's liabilities by $148.8 billion. Meanwhile, the U.S. federal government borrowed an additional $138.1 billion from 1 January 2014 through 28 May 2014.

Or rather, the Federal Reserve has acquired 107.7% of the net new debt that has been issued by the U.S. Treasury and other federal government agencies during the first five months of 2014.

That's possible because of two factors. First, with the bills for U.S. federal income taxes coming due on 15 April 2014, the federal government experiences a surge of tax revenue during this part of the year, which can be enough to allow it to run a short-term surplus, reducing its need to borrow money during this period of time.

Second, the Federal Reserve is displacing other entities that lend money to the U.S. government, who are seeing their share of debt issued by the U.S. government fall as the debt they hold matures. That allows the U.S. Treasury to roll over a portion of the existing national debt and borrow more money, in this case, from the Fed, which doesn't show up as a net increase in the overall size of the national debt.

And that is how the U.S. Federal Reserve can lend more money to the U.S. federal government than the U.S. government appears to have borrowed, even as the Fed is reducing the amount it lends to the government!

Data Sources

Federal Reserve Statistical Release. H.4.1. Factors Affecting Reserve Balances. Release Date: 5 July 2013. [Online Document]. Accessed 16 July 2014.

U.S. Treasury. Major Foreign Holders of Treasury Securities. Accessed 16 July 2014.

U.S. Treasury. Monthly Treasury Statement of Receipts and Outlays of the United States Government for Fiscal Year 2013 Through May 31, 2014. [PDF Document].


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