Archive for January, 2009
Why investing in the stock market as an individual is akin to a being a lanky guy suddenly found playing football against an NFL team:
Watch a pro football game, and it’s obvious the guys on the field are far faster, stronger and more willing to bear and inflict pain than you are. Surely you would say, ‘I don’t want to play against those guys!’
Well, 90% of stock market volume is done by institutions [mutual funds, hedge funds, and program traders], and half of that is done by the world’s 50 largest investment firms, deeply committed, vastly well prepared — the smartest sons of bitches in the world working their tails off all day long. You know what? I don’t want to play against those guys either.
-Charles Ellis, Yale University Endowment
You’ve been warned.
While bringing in some firewood for my mother’s house, I tossed a piece from the woodpile a few feet so that it would bounce around and shake off the spiders and their nests. The biggest Wolf Spider I’ve ever seen (perhaps two inches in diameter) stood proud atop the wood block, as if it hadn’t been shaken at all. I wouldn’t get within three feet of the intimidating creature. Just then, one of my mother’s backyard chickens, curious, approached the wood block. I questioned whether I should scare the chicken away, lest it get bitten by the formidable little spider. Before I could act, the valiant chicken bobbed its head toward the spider, gobbling it up and swallowing it.
We now know who is more courageous.
Nadya Doud has had 14 children out of wedlock.
When you have six, why do you need more?
It should be illegal to have this many children. How is she going to provide for them and ensure they have a decent upbringing?
The departing frat-boy president, George W. Bush, did something odd in the last few days of his presidency.
He slapped a 300% import duty on Roquefort cheese.
His administration did it in retaliation for an EU ban on imports of US beef containing hormones.
The measure was completely legal under WTO rules.
Nick Negroponte, creator of the OLPC (One Laptop Per Child) project, is officially nuts. His new reference design for the second generation OLPC is a dual-screen laptop, with one screen being touch-sensitive and sporting haptic feedback.
Has he not witnessed the weak reception that the BlackBerry Storm received (the only device with a comparable haptic touch-screen keyboard)?
From a usability standpoint, the standard hardware keyboard is where it’s at. A touchscreen keyboard is slower, more expensive, and a pain to use, period.
The first generation OLPC failed because it took too long to become available, and because a slew of competition (from netbooks like the ASUS EEE PC) came out of the woodwork. The fact that competition sprung up is arguably a win for OLPC, whose goal was to get more computers in kids’ hands. Still, the fact that more people chose other netbooks instead of the OLPC shows how unnecessary the OLPC program is. Now that there are an adequate number of cheap netbooks on the market, shouldn’t OLPC just shut down, having already accomplished their goal?
Vladimir Putin and Wen Jiobao have blamed the worldwide economic recession on the United States. The financial crisis, said Mr. Wen, was “attributable to inappropriate macroeconomic policies of some economies and their unsustainable model of development characterized by prolonged low savings and high consumption; excessive expansion of financial institutions in blind pursuit of profit”.
At first glance, his statement seems to be relatively accurate, referencing the low savings rate and consumption powered by excessive borrowing that were characteristic of the United States from 2003-2006. However, the root causes of our economic are more complex than that, and, ironically, may have came from Mr. Wen’s home country and not irrational spenders in North America.
China has maintained a massive trade surplus, and America a massive trade deficit. Much of China’s income or surplus was invested in foreign currency reserves like the dollar, and specifically, Treasury bills. This had the dual purpose of paying interest on their cash haul, and, more importantly, weaking the yuan with respect to the dollar (by purchasing Treasury bills, demand is created for the Dollar, strengthening it, and selling yuan for dollars puts downward pressure on the yuan’s value). This cycle of using China’s trade surplus to buy Treasury bills ensured that the flow of Chinese goods came cheaply to American consumers. Also, it ensured that interest rates in the United States were artificially low, led down by low yields on Treasury paper.
The excess boom of debt fueled by low interest rates in the United States was partly to blame for irresponsible borrowing, which blew up in our face as banks failed when borrowers couldn’t pay back their loans.
China is just as much to blame for the financial crisis. Their economic policy of maintaining a weakened yuan by continually buying Treasury securities inflated the US economy with easy money.
I’m not trying to deflect blame from the American consumer to the Chinese government. What I’m trying to say is that in our dynamic and complex economy, we cannot rely on the primitive and simple cause-and-effect relationships that Wen and Putin have pointed to. The truth is that many factors are responsible for our current economic malaise, and even those factors were caused by phenomena years ago, and also share the blame.
It seems that every day that goes by, another large corporations or two announce that they’re laying off tens of thousands of workers. This process (cutting costs) is absolutely necessary to ensure that our businesses are viable and creditworthy. However, cutting workers isn’t the only option.
One avenue that has been largely ignored in this labor market is cutting salaries for a entire company’s workforce. Clearly, this would be negative for the workforce’s morale, but many employees would prefer a pay cut rather than risk being laid off. This is an option that MUST be put into practice in all cost-cutting efforts to stop the tsunami of layoffs.
Now, I’m not usually one for more government regulation, but I think the government should urge or potentially even require businesses to attempt to cut compensation before they reduce their headcount. Businesses should have an incentive (a tax incentive?) to do so.
Massive layoffs create a positive feedback loop that promotes recession. Layoffs need to be attacked immediately with a common sense solution. Unemployment is spiraling up and will soon be in double digits (it already is, depending on who you ask).
We can’t just spend our way to permanent jobs. We can surely create temporary ones with a massive infrastructure spend, but in the end, tax cuts have shown to create 3 times as much prosperity as government spending, so why attempt to spend public money it’s known that such an attempt is only a stopgap solution?
More of the same…
Barack Obama, who ran on a promise of post-partisanism and pragmatism, is already showing that those were just slick marketing slogans. Already, he’s decided that he will give few or no concessions to house and senate Republicans with regard to his bloated, trillion dollar-plus economic stimulus package. Just because you can act with disregard toward the minority party does NOT mean you should. Clearly, Republicans have some good ideas about reforming the stimulus package — they want to get the legislation right. GOP Whip Eric Cantor of Virginia argues that Obama’s stimulus bill does not focus enough on job creation, and he’s right.
The stimulus bill, as it’s presently written, is a flaming ball of pork. Politicos know that it will be easy to pass the legislation, considering the economic situation, and so they’re loading the bill with pork that they might not have been able to insert into bills of their own.
The other problem with the stimulus bill is that its effects will not be widely felt for years. Just 20 percent of the stimulus will actually be spent in the next 8 months, and over one-third of it ($291 billion) will kick in at least 21 months from now.
We need something timely, and waiting so long for the proposed stimulus to kick in will not work.
What should congressional Democrats do instead?
They should decide what the top three or five problems with the economy are (or will be) and write individual, comprehensive bills to cure those ills. A bill for small businesses, a bill for employment, tax cuts, the financial system, real estate, et cetera. They should work with their colleagues across the aisle to ensure that spending doesn’t get out of control, and that each provision really targets a problem and uses a method that has either worked in the past, or logically shows promise as a solution superior to past methods. In that way, each problem will be tackled individually, and the opportunity for injecting pork spending into the bills will be lessened, because the bills will be more focused in nature.
Rep. Paul Ryan (R-Wisc.) got curious about the costs of borrowing all those hundreds of billions in stimulus bucks. He had the Congressional Budget Office crunch the numbers:
The debt service alone from the stimulus will cost about $347 billion over the next 10 years.
That’s more than $3,000 per American household.
Another example of religion only serving to divide us:
Say goodbye to privacy (then again, this example comes courtesy of the nanny state, so we shouldn’t be so surprised).
Is the UK the next Iceland?
Best performers (down roughly half): Santander (Spain), JPMorgan (US), HSBC (UK/HK). Worst performers (down 90%+): Barclays, Citigroup, Royal Bank of Scotland.
Strange effects from cellphone cameras (not photoshopped):
Los sensores CMOS baratos, como el del iPhone, no exponen el escena de una vez, sino que la escanean de izquierda a derecha. Si fotografías algo que se mueve muy rápido (como las hélices de un avión) puede resultar en imágenes extrañas en las que cada columna del sensor representa un momento en el tiempo distinto a los demás.
(Cheap CMOS censors like those found in the iPhone don’t take a single exposure, and instead scan a scene from left to right. If you photograph something moving quickly (like an airplane’s propeller) it could result in a strange image, in which each column of the CMOS censor displays a capture moments apart from its neighbors).
The internet has changed the way we consume news. Nicholas Sarkozy wants to go against progress and bail out French newspaper publishers. It’s true that there is inherent value in having a strong, independent press, but there is no evidence that suggests that we’re losing that robust impartiality. In fact, only the method of news consumption is changing. Minus two points for Sarkozy.
The Chinese translation of the speech, credited to the Web site of the official China Daily newspaper, was missing the word “communism” in the first sentence. The paragraph with the sentence on dissent had been removed entirely.
It’s time to get rid of farm subsidies in the US and Europe:
The US ought to allow online poker. California is going to this year, and will reap a massive tax windfall. Other states will follow suit.
When Russian sociologist Yevgeny Gontmakher, writing in the newspaper Vedomosti, outlined a “Novocherkassk 2009″ scenario (a reference to the 1962 strike at the Novocherkassk Electric Locomotive Factory) in which massive job layoffs, precipitated by falling oil prices, would cause social unrest, both the paper and author were sternly warned that they could be prosecuted for “inciting extremism.” He should, though, be congratulated for his prescience. A month later, the Kremlin instituted massive tariffs on imported automobiles in an effort to “protect” the Russian automobile industry. Imports fell dramatically, jobs in the port of Vladivostok dried up, workers protested, and Putin sent in the truncheon-wielding Chekists to throw the protesters in police vans. It was an underreported story in the United States (though the New York Times did a good piece on the Vladivostok uprising, few others noticed), probably because such anti-democratic actions by the Putin regime seem to us so banal at this point.
In other underreported Russia news, being a journalist for the independent daily Novaya Gazeta is still one of the most dangerous jobs in the country. Der Spiegel has a decent piece on the recent murder of Anastasia Baburova, an investigative journalist at Novaya Gazeta who was shot in Moscow by a masked gunman using a silenced pistol. Her companion, human rights lawyer Stanislav Markelov, who served as counsel for the murdered Novaya Gazeta journalist Anna Politskaya, was also gunned down.
It was an execution in broad daylight, in the middle of Moscow’s “Golden Mile,” a neighborhood of high-priced mansions and old townhouses not far from the Kremlin. Once again Izvestiya, a pro-government daily, was quick to assign blame for the killings to the West.
Markelov had worked closely with the Russian human rights organization Memorial, whose offices were recently raided by government forces. They confiscated hard drives full of material related to Stalin’s various purges.
Originally appeared in Reason: The Further Unraveling of Democratic Russia, by Michael C. Moynihan.
By Greg Palast
John Thain is the guy that looks like a Clark Kent doll you saw grinning from page one of your paper Friday morning. Thain was just fired by Bank of America because the square-jawed executive demanded a $30 million bonus after losing $5 billion in just three months at the bank’s Merrill Lynch unit. In addition, Thain spent over a million dollars redecorating his office while, at the same time, the U.S. Treasury was bailing out his company with billions in aid. Thain’s office re-do included the installation of a $35,000 toilet bowl.
Thain was robbed. He shouldn’t have been fired; he should have gotten a $60 million bonus — and Obama should immediately hire him as Secretary of the Treasury in place of that tax-dodging lightweight that’s been nominated, Timothy Geithner.
Here’s the facts, ma’am.
Thain was CEO of Merrill Lynch, the big brokerage firm. On a good day, Merrill is worth zero. A week before it was about to go out of business, Thain sold this busted bag of financial feces to Bank of America for $50 BILLION.
I’d say that’s worth a bonus.
But it gets better. When the bag broke and another $5 billion in losses were discovered at Merrill, Thain went to the U.S. Treasury and got ANOTHER $20 BILLION to cover Bank of America’s bad financial bet — from us, the taxpayers.
Now that certainly deserves a bonus. And let’s face it, a butthole that big needs a $35,000 toilet.
Instead, the guy that paid the $50 billion, Bank of America Chairman Kenneth Lewis, is keeping his job. Lewis is the same guy that just spent billions more on buying Countrywide Financial, the sub-prime mortgage loan sharks that have brought America to its knees and put Bank of America into effective bankruptcy. (Note to Mr. Lewis: the only thing worse than getting cancer is PAYING for it.)
But dumber than Lewis is the loser who OK’d paying Bank of America for its losses on Merrill, who traded a pile of turds for a stack of gold — our gold from the U.S. Treasury. That was Tim Geithner, Obama’s pick for Treasury Secretary, who’s now answering questions at Senate confirmation hearings about his funky tax filings.
Tiny Tim was head of the New York Federal Reserve Bank during the Bush regime. Along with Bush’s Secretary of the Treasury, Geithner came up with that $700 billion bail-out that loaded banks with loot on their way to insolvency. Bank of America got $25 billion of it to spend on Thain’s company Merrill. That was before the extra $20 billion was weedled by Thain.
So why, President Obama, have you given us Tiny Tim to save our sorry nation’s economic behind? What’s with that?
In another life I was an economist. Really. So here’s the economic facts of life: Our valiant young president is going to have to borrow a trillion dollars to bring our economy back from the grave. He’s got to borrow it, no choice about that. But who in their right minds will lend it to us? I can tell you the number one job of a new Treasury Secretary will be to con Saudi sheiks and Chinese apparatchiks into lending us another trillion (they’ve already lent $2 trillion).
Who in the world can talk them into it?
The answer came to me after I went this afternoon to see my proctologist, a brilliant doctor with one eye and really long fingers. (OK, I made that up.) The good doctor told me that hoary old joke about the heart and brain and rectum getting into a fight about which one was more important. When the higher organs made fun of the butt-end, the rectum went on strike. After a month, the brain and heart couldn’t take it any more — the whole body was about to explode. So they told the rectum, ‘You win.’ And the rectum said, Now you know why an asshole’s always in charge.
There’s our answer. Instead of an easily duped, incompetent weasel like Geithner for Secretary of the Treasury, what we really need is a lying bucket of evil snot, a flaming red take-no-prisoners asshole. A guy like Thain that can sell a piece of crap like Merrill for billions — twice — is just what we need to shake down the sheiks. “America for Sale! Cheap!”
And Thain comes with his own gold-plated toilet.
Greg Palast is the co-author of Steal Back Your Vote, a comic book co-authored with Robert F. Kennedy Jr. Watch Palast’s investigative reports on BBC Television’s Newsnight and in Rolling Stone Magazine. For more info go to GregPalast.com.
Chrysler has struck a deal with Fiat, in which it will give Fiat a 35% equity stake for….wait for it…$0!
This is a great deal for Chrysler.
First, Chrysler is worth less than zero. They burn cash like it’s their job. Therefore, giving away equity for free is perfectly acceptable, providing they receive something else of value in exchange.
Fiat is bringing its fuel-efficient small-car platforms to the table, and is going to allow Chrysler to build them in the U.S. In addition, Chrysler will benefit from technology sharing.
The other potential benefit for Chrysler is $3 billion from the U.S. taxpayers. Chrysler is selling this deal as the only way to save itself, and is asking the government for the cash as a condition to making the deal go through.
In an environment in which the government is inclined to agree to just about any action that might save industry or banks, Chrysler is likely to get their wish.
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