Saturday, April 18, 2009

SAR #9108/Weekender

Human advances have mostly resulted from desperate acts of trial and error.

Wish I'd said: The Obama administration’s plan to fix the U.S. banking system is destined to fail...“All the ingredients they have so far are weak, and there are several missing ingredients,” Stiglitz said in an interview. The people who designed the plans are “either in the pocket of the banks or they’re incompetent.”

Now They Tell Me: Billionaire Jim Rogers "Diversification is something that stock brokers came up with to protect themselves, so they wouldn't get sued. Henry Ford never diversified, Bill Gates didn't diversify. The way to get rich is to put your eggs in one basket, but watch that basket very carefully. And make sure you have the right basket. You can go broke diversifying. Ask anyone who's diversified in the last three years. They've lost money."

Diagnosis: California's real problem is that it is the largest economy in the world that cannot print its own money. Yet.

Myth: Is there any truth behind the claim that 'higher income individuals' create jobs, invest in new business and innovate? As far as I can tell, they take the money and run. New businesses, new jobs, and innovation mostly seem to happen in small run-down buildings and garages, especially garages.

Discuss: "This Market Is Ridiculous" Essays, please; compare and contrast with other markets, 2500 words. Usual prize.

Now You See Them... Among the brand names that will probably soon go away - besides Chrysler - are Crocs, Borders and The Hartford Steam Boiler Inspection and Insurance Company.

Words, Words: Citigroup surprised everyone and managed to report a profit, even though it ended up with a negative EPS. And the market applauded. Think what would have happened if Citi had actually made a profit.

Question & Followups: Did the twenty-year expansion of the US financial system accomplish anything productive? How much of Wall Street's supposed productivity was an illusion? Did these folks add any value at all?

Paradigm: Fiat, like the US Governement and everyone else involved, wants to solve the auto crisis by squeezing the workers. If they can lower the average cost per worker to say $3.82 and hour, who is going to have enough money to buy one of the cars? Is the solution to our massive household debt the further pauperization of the worker? Apparently, even Best Buy refuses to learn from Circuit City. Best Buy is cutting knowledgeable senior sales associates' pay by 25 to 50%. Smart.

Junkyard Dogs: About 1 out of 3 foreclosed homes has been damaged to the point it no longer qualifies for a mortgage. Maybe that's what some 600,000 foreclosed houses are not on the market.

Scare Tactics: Whenever you see an article that says, "The future cost of Social Security and Medicare is $47 gadzillion dollars... " Stop. The cost of taking care of old folks is going to go up a bit. We'll pay it. Relax.

Smoke, Mirrors: Citigroup discovered that the more unlikely you are to make a profit, the less your bonds are worth. If you ruin your credit sufficiently, you can book the loss as a gain and claim a profit. Don't ask me, it's America.

Porn O'Graph: Job losses on parade.


Anonymous said...

RE: This Market Is Ridiculous

It's an April bounce. There is an old Wall Street saying,
"Sell in May and go away.". That will apply this year too.


larryang said...

Link is wrong for the "Myth" item.

CKMichaelson said...

larryang - Nope, just the very thing. The misleading thing on this one is the suggestion we'd havae to pony up the gadzillions all at once and it's more than the US is worth. How's that really any different in scale than pretending we're going to pay off the national debt all at once one day next week? Of course there's no trust fund, Social Security has always been and will always be a pay as you go plan. Need more money? We'll do what Uncle Sam has always done, borrow some and/or print some.
Don't scare the horses.

Steve said...

CK - larryang is correct - a simple editorial correction needed.

Your '' Social Security link, which is correct for your "Scare Tactics" entry, is incorrectly also used for your "Myth" entry, which link should be to some article about sources of business innovation, and whether it is "high-earners" that cause it (but that link is to the same BusinessInsider post about SS).

CKMichaelson said...

Steve- That's what I get for reacting twice to the same item. But it IS the same item. The BusinessInsider link includes a 3 paragraph quote from Knoledge@Wharton that includes the quote about the idle rich being the font of all jobs ("higher income individuals [are] the ones who create jobs and invest and innovate"), which claim I don't see a lot of evidence for and which I suspect started out as simply a pandering excuse to cut the taxes on the rich.

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