The Big Picture - Macro Perspective on the Capital Markets, Economy, Technology, and Digital Media

Of each dollar the federal government spends, how much goes to defense? How much goes to Social Security? How much goes to interest on the debt? And how has this sort of thing changed over time?

The graphic below answers these questions. It shows the major components of federal spending 50 years ago, 25 years ago, and last year:

50 Years Of Government Spending, In 1 Graph

Source:
50 Years Of Government Spending, In 1 Graph
Lam Thuy Vo
NPR, May 14, 2012
://www.npr.org/blogs/money/2012/05/14/152671813/50-years-of-government-spending-in-1-graph” target

I’m going to take the charitable (though probably mistaken) view and say that Representative Daniel Webster was not deliberately trying to turn out the lights on Americans’ access to critical data when he proposed an amendment to defund the Census Bureau’s American Community Survey (ACS).

I tried (unsuccessfully) last year (here, here) to salvage the Statistical Abstract of the United States, a vital source of data since 1878. In fact, the book Fundamentals of Government Information – Mining, Finding, Evaluating and Using Government Resources says (emphasis mine):

The following chapters in Part 2 are arranged by broad topic area, starting with Statistical Information (Chapter 8), and the simple becomes multifaceted as we show the many ways in which government documents librarians utilize their most essential reference work, the Statistical Abstract of the United States.

So the “most essential reference work” utilized by government documents librarians is now gone, for a savings of about $2.9 million, not even a rounding error on a rounding error.

And the ACS is apparently next. As the NY Times points out, Representative Webster has a link on his page for those interested in “Census Data for the 8th District.” Where does the link go? To the ACS, of course. The same ACS that Representative Webster now wants to defund. Amazing.

The effort to kill the ACS is opposed by even the right-leaning Wall St. Journal, as well the New York Times and the Washington Post (see also here).

Here is a comment from the Census Director regarding the consequences of losing the ACS (though I confess he wasn’t quite as worked up about losing the Stat Ab). Finally, here is a series of videos about the importance of the ACS to various target audiences, among which I include myself.

The charitable view is that it’s all about cost savings. The not-so-charitable view is that it’s about death by a thousand cuts to the vital information that informs us as to where we’ve been, where we are, and helps us plan where we’re going and craft a better future for all Americans. “Operating in the Dark,” as the Times puts it. This must not stand.

@TBPInvictus

My afternoon reading:

• Post-Financial Crisis – How do the Major Economic Players Stack Up? (Northern Funds)
• Three reasons beating the market is so difficult (Dallas News)
• The Economic Case for Same-Sex Marriage  (Bloomberg)
• How Moore’s Law Affects Wall St. Trading (DealBook)
• Media Analysis: Murdoch has been humiliated but much worse is yet to come (London Evening Standard) see also Scandal and Scrutiny Hem In Murdoch’s Empire (NYT)
• 13 Disturbing Facts About McDonald’s (The Fiscal Times)
• Jon Favreau Talks ‘Iron Man 3,’ Praises Joss Whedon for Avengers (Hollywood Reporter)
• Homeland Security Concedes Airport Body Scanner ‘Vulnerabilities’ (Wired) see also Congress: The TSA Is Wasting Hundreds Of Millions In Taxpayer Dollars (Tech Dirt)
• All Presentation Software is Broken (Ilya Grigorik)
• Is the filibuster unconstitutional? (Washington Post)

What are you reading?

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Analytical Trend Troubles Scientists

Source: WSJ

Click to enlarged graphic:

Source: I.Imgur.com

Every year, American Express publishes an in depth “Survey of Affluence and Wealth in America.” The 2012 version is notable for the attitudinal differences between the top 1%, 10% and everyone else (aka the 90 or 99%).

A few quick bullet points:

• Incomes up 6% for top 1% in 2011. Slightly lower among everyone else;
• Investing dollars down from 71% to 39% of portfolio;
• In ‘2007 savings was only 12% among the top 1%, now at 34%;
• Even after recession ended, savings has stayed high, unlike 1981 recession when consumers spent aggressively. (back then, passive income tax rates dropped from 70% to 20%);
• Almost $6 trillion in personal savings account by year’s end. Another $3-4 trillion in cash among business. Getting 0.3% interest and not complaining

Here is how this looks graphically:

Click to enlarge:

~~~

 
No judgement here — I simply find the differences between the top 1% and the rest of the country intriguing.

 
Previously:
Invest in stocks? FORGET ABOUT IT (May 8, 2012)

Source:
American Express Publishing and Harrison Group
The 2012 Survey of Affluence and Wealth in America
Press Webinar, May 9, 2012

My early morning reads:

• Small Cities Are Becoming A New Engine Of Economic Growth (New Geography) see also Rust Belt chic: Declining Midwest cities make a comeback (Salon)
• Make Banking Boring (NYT)
• Share buybacks: the other way company managers rob you (Money Week)
• Attention Frustrated Chartists: It ain’t HFT – it’s the Macro! (Mercenary Trader)
• Who will tame the giant vampire squid? (New Economics) see also Who Are the One Percent? (Barron’s)
• Checkbox Syndrome: Why We Spend Money on Things We Don’t Need (and How to Avoid It) (Life Hacker)
• Apple squared, (four)squared (Gigaom)
• Facebook’s worst idea yet: Paid post promotion (ZDNet)
• How a Radical Greek Rescue Plan Fell Short (WSJ)
• Visiting NYC? Where to Eat in New York, The Best Restaurants And More (Serious Eats

What are you reading?

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J.P. Morgan’s Loss: Lessons From a Fiasco

Source: WSJ

“Right now, gold is less than an ideal investment.”

Gold prices are now down slightly year-to-date, 13% below its 2012 highs of near $1,800, and 18.7% below its all time high of $1920.

I spoke with Paul LaMonica of CNN/Money about having Gold exposure, and more importantly, how investors should think about Gold:

“Ritholtz, who said his firm does have a position in gold, said that having some gold investments makes sense. Gold should rise when the U.S. dollar is weakening and inflation is a worry.But he added that the biggest problem with the metal is that it’s not as easy to objectively value it like a stock or bond. Still, he said some investors treat gold like a “cult” and refuse to believe that the prices can ever go down.

“Gold doesn’t have any earnings. It doesn’t pay you interest. It’s a shiny yellow metal. Its value only comes from its relative rarity. It should trade on supply and demand,” he said.

Gold is a commodity first and foremost, not a currency. Commodity prices, even for something like gold that doesn’t have as much commercial use as other metals, tend to closely track consumer demand. So it should be no surprise that gold prices are now tumbling.”

The other factor to note: Inflation is rather modest versus the 2003-07 period, primarily due to unemployment and capacity under-utilization. The case for gold gets stronger in a money printing environment when the economy gets better, and inflation picks up.

Last July, I noted “Gold was a trade, not a religion” at a conference. There were scattered boos and catcalls.

Source:
‘Au’-sterity for gold as prices plunge
Paul R. La Monica
CNN/Money May 14, 2012
http://money.cnn.com/2012/05/14/markets/thebuzz/

Mother’s Day at JPMorgan by Peter Steiner

Hat tip Josh

My afternoon reading:

• Frank Partnoy: Rebuild the pillars of 1930s Wall Street (FT.com)
• Berkshire 2012: The Times They Are A-Changing and Other Observations (Jeff Matthews Is Not Making This Up)
• Spark in Sales of Cars and Trucks Drives U.S. Economy (Bloomberg)
• CFA Conference: James Montier (Above Market) see also Flaws of Finance (The Research Puzzle)
• Why Is Barron’s More Bullish Online Than in Print? (Picks & Pans Breakdown) (Wall Street)
• Teri Buhl: SEC Tells JP Morgan Enforcement Action Coming over Bear’s Mortgage Backed Securities Violations (Wall Street Unplugged)
• How the Blind Are Reinventing the iPhone (The Atlantic) see also My First Week with the iPhone (Behind The Curtain)
• Small Cities Are Becoming A New Engine Of Economic Growth (New Geography)
• What Were The Most Radical Social Experiment in Modern History? (The Atlantic)
• Was Paul’s Boutique Illegal? (The Slate)

What are you reading?

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Floating Facebook

Source: The Economist

Awesome set of data from Bloomberg:

Click to enlarge:

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Source: Bloomberg