Friday Reads
By Barry Ritholtz - June 18th, 2010, 2:32PM
Some items of interest:
• 4.6% Increase in Private Hours Worked Are Positive for the Economy (Economix)
• The Growing Push to Impose a Transaction Tax (Dealbook)
• Fed’s No. 2 Man Says Rules ‘Didn’t Keep Up (WSJ)
• Kass: The Decline and Fall of P/E Multiples (TheStreet.com)
• Fed Emerging Intact From Challenge to Its Power (WSJ) See also House-Senate Panel Broadens Audits of Fed (NYT)
• Why It’s Different This Time for Housing (Barron’s)
• Is this Random or significant? Stock Market vs Unemployment Claims (Smart Money)
• The Ten Most Disturbing Scientific Discoveries (Smithsonian)
• A Core Set of Global Environmental Indicators (Simple Complexity)
• 19 reasons why God torched Jesus (Mark Morford)
What fascinating things are you reading . . . ?
Tweet
Facebook
Reddit
Digg this!
June 18th, 2010 at 2:41 pm
Citigroup Looking Past Volcker May Seek $3 Billion for Funds
Citigroup Inc. plans to raise more than $3 billion for its private-equity and hedge funds, even as U.S. lawmakers consider banning banks from owning and investing in so-called alternative funds, people with direct knowledge of the plan said.
Citi Capital Advisors, which oversees about $14 billion, may seek $1.5 billion for private equity this year and $750 million for hedge funds, said the people, who declined to be identified because the plans aren’t public. An additional $1 billion is targeted next year for hedge funds, the people said.
“Citi must be comfortable enough that whatever happens, even in the extreme version, they’ll be able to move ahead with these businesses,” said Steven Kaplan, a professor at the University of Chicago Booth School of Business who studies the private-equity industry. “I don’t think any of these bills envisioned not being able to manage someone else’s money. It’s the bank capital that’s still an open question.”
June 18th, 2010 at 2:58 pm
Now Stocks Are 48% Overvalued, Says Smithers
Henry Blodget | Jun. 17, 2010, 11:20 AM
We’ve been pointing out for a while that, based on a cyclically adjusted PE ratio, the stock market is significantly overvalued–say, 20% or so.
To arrive at this view, we use a “fair value” estimate for the S&P 500 of about 900, which is close to the one used by fund manager Jeremy Grantham, fund manager John Hussman, and others. This compares to the S&P’s current level of about 1100.
But now Andrew Smithers, an excellent economist based in London, is telling us that we’re way too optimistic, that fair value for the S&P 500 is actually in the 700-750 range. Smithers, therefore, thinks the stock market is about 50% overvalued.
…
http://www.businessinsider.com/now-stocks-are-48-overvalued-says-smithers-2010-6
June 18th, 2010 at 3:04 pm
Bank reform loopholes are roadmap to trouble
For clues to next financial crisis, watch what’s left out of new rules
If you want to figure out where the next big financial crisis is coming, watch the proceedings in Washington over the next two weeks. Whatever pieces of the proposed financial reform legislation get watered down or eliminated during current negotiations will create the holes that future bad actors slip through.
No investor should be naïve enough to assume that legislation, no matter how comprehensive, will make problems disappear. But the singular hope for investors should be that legislation protects against known and foreseeable threats, and deters the bad guys from making their play.
Looking at both the House and Senate versions of financial reform, it’s clear that the politicians actually recognize some of the biggest problems, but it’s equally clear that they’re not willing to take the hard steps needed to go all the way to eradicating trouble.
June 18th, 2010 at 3:05 pm
Resolution of Banking Crises:
The Good, the Bad, and the Ugly
Luc Laeven and Fabian Valencia
http://www.imf.org/external/pubs/ft/wp/2010/wp10146.pdf
This paper presents a new database of systemic banking crises for the period 1970-2009.
While there are many commonalities between recent and past crises, both in terms of
underlying causes and policy responses, there are some important differences in terms of the
scale and scope of interventions. Direct fiscal costs to support the financial sector were
smaller this time as a consequence of swift policy action and significant indirect support from
expansionary monetary and fiscal policy, the widespread use of guarantees on liabilities, and
direct purchases of assets. While these policies have reduced the real impact of the current
crisis, they have increased the burden of public debt and the size of government contingent
liabilities, raising concerns about fiscal sustainability in some countries.
June 18th, 2010 at 3:32 pm
Tony may get his life back:
http://seminal.firedoglake.com/diary/55543
June 18th, 2010 at 3:45 pm
something to consider-
End The Drug War
talk about a waste of resources- in fact the USG should embrace drugs- and start providing free “happy pills” (substance D anyone?) to all those who have become disillisioned-
that way we can walk around believing “American Exceptionalism” means something- mindless and happy while we slowly sink into impoverishment-
and keep in mind- that police love laws- any laws- the more reason to break heads and demonstrate their “authority”- consider the following-
Radley Balko of Reason magazine says more than a hundred police SWAT raids are conducted every day. Does the use of illicit drugs really justify the militarization of the police, the violent disregard for our civil liberties, and the overpopulation of our prisons? It seems hard to believe.
June 18th, 2010 at 4:24 pm
June 18, 2010
Gallup’s Job Creation Index Hits 20-Month High
Employees report 32% of companies are hiring, while 19% are letting people go
http://www.gallup.com/poll/140798/Gallup-Job-Creation-Index-Hits-Month-High.aspx
June 18th, 2010 at 4:52 pm
West Poised for Worst Grasshopper Outbreak in 30 Years
and check out who wrote the story:
Brett Israel
8O
http://news.yahoo.com/s/livescience/20100531/sc_livescience/westpoisedforworstgrasshopperoutbreakin30years
It seems the judgments haven’t stopped. They will only get worse before they get better if you have fallen under judgment America.
I’m just sayin’
June 18th, 2010 at 5:23 pm
14 Facts About The Federal Deficit That Will Blow Your Mind
http://tinyurl.com/ydo8qcn
June 18th, 2010 at 5:47 pm
Banks look for loophole in fin reg to co-invest in private equity and hedge funds. Read Ft article below:
http://www.ft.com/cms/s/0/7662a9e2-7a5d-11df-9cd7-00144feabdc0.html
The best reasons banks can give to allow co-investment in private equity and hedge funds is that they need to show they have “Skin in the Game”. Total BS! Isn’t “Skin in the Game” the reason that Goldman Sachs gave for Abacus and other fraudulent mortgage marketing pieces. First you need skin in the game, then you short the heck out of it!!!!
June 18th, 2010 at 7:20 pm
by Tom Burghardt
“As “gee-whiz” high-tech wonders seamlessly morph into “your papers, please!,” more often than not in “new normal” America science and technological innovation are little more than deranged handmaids serving corporate crime and political power.
In the interest of “keeping us safe,” the Department of Homeland Security (DHS) unveiled a spiffy new surveillance cam “that puts others to shame,” CNET breezily reported last week.
The Imaging System for Immersive Surveillance (ISIS) is a hemispherical group of cameras roughly the size of a basketball that, if one believes giddy accolades by enthusiasts touting the system, will lovingly wrap us in a “high-res video quilt,” a DHS press release gushes.
The ultra-wide camera undergoing field-tests since December at Boston’s Logan International Airport, streams distortion free, real-time stitched video and has a resolution capacity of approximately 100 megapixels which our guardians say is “as detailed as 50 full-HDTV movies playing at once, with optical detail to spare. You can zoom in close…and closer…without losing clarity.”
But with an abundance of acronyms, and a decided lack of imagination from a gaggle of secret state agencies, one shouldn’t confuse Homeland Security’s ISIS with one incubating beneath the dark wings of the Pentagon’s “blue sky” office, the Defense Advanced Research Projects Agency (DARPA)….”
http://globalresearch.ca/index.php?context=va&aid=19785
168. Track n’ Trace has been the Bull Market of the 21stC. … make book on it.
~~
by Ellen Brown
“Last week, England’s new government said it would abandon the previous government’s stimulus program and introduce the austerity measures required to pay down its estimated $1 trillion in debts. That means cutting public spending, laying off workers, reducing consumption, and increasing unemployment and bankruptcies. It also means shrinking the money supply, since virtually all “money” today originates as loans or debt. Reducing the outstanding debt will reduce the amount of money available to pay workers and buy goods, precipitating depression and further economic pain.
The financial sector has sometimes been accused of shrinking the money supply intentionally, in order to increase the demand for its own products. Bankers are in the debt business, and if governments are allowed to create enough money to keep themselves and their constituents out of debt, lenders will be out of business. The central banks charged with maintaining the banking business therefore insist on a “stable currency” at all costs, even if it means slashing services, laying off workers, and soaring debt and interest burdens. For the financial business to continue to boom, governments must not be allowed to create money themselves, either by printing it outright or by borrowing it into existence from their own government-owned banks.
Today this financial goal has largely been achieved. In most countries, 95% or more of the money supply is created by banks as loans (or “credit”). The small portion issued by the government is usually created just to replace lost or worn out bills or coins, not to fund new government programs. Early in the twentieth century, about 30% of the British currency was issued by the government as pounds sterling or coins, versus only about 3% today. In the U.S., only coins are now issued by the government. Dollar bills (Federal Reserve Notes) are issued by the Federal Reserve, which is privately owned by a consortium of banks.
Banks advance the principal but not the interest necessary to pay off their loans; and since bank loans are now virtually the only source of new money in the economy, the interest can only come from additional debt. For the banks, that means business continues to boom; while for the rest of the economy, it means cutbacks, belt-tightening and austerity. …”
http://globalresearch.ca/index.php?context=va&aid=19786
http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=Ellen+Brown+Web+of+Debt+Central+Banking+Fraud
other than those ‘happy thoughts’, actually, weather-wise, it was a beautiful day~
June 18th, 2010 at 11:31 pm
It’s interesting how the unemployment numbers are not getting as much press as before. All we here now are the summer of recovery and how hiring is going up. In talking to the average man on the street (neighbors, etc) it seems everyone knows someone who is unemployed. Since Congress failed to pass he unemployment extension bill because they want to keep the deficit down it appears that 1.2 million people will fall off the unemployment rolls in the next week. Therefor they won’t be counted as unemployed! Where do these phantom unemployed people go?
It may be the summer of recovery or the summer of hell… all depends on which side of the fence your on. With job or without… Links for those who like to read the details…
http://cnmnewsnetwork.com/121807/unemployment-extension-2010-update-another-unemployment-bill-fails/
http://www.associatedcontent.com/article/5502010/republicans_stop_2010_unemployment.html?cat=62
June 18th, 2010 at 11:57 pm
OK It’s not exactly fascinating, but what does this say about misallocation of capital?
http://www.news.com.au/entertainment/celebrity/nicole-richie-300000-richer-for-cutting-midcity-ribbon/story-e6frfmqi-1225881590066
June 19th, 2010 at 9:22 am
Except for his accent Tony Hatward did a very good Sgt Schultz impression “I know nothing..”
Anadarko and BPs other drill partners are distancing themselves from BP, this is going to be like Bhopal on steroids.
June 20th, 2010 at 9:44 am
Jack Stack’s blog on Open Book Management
in the New York Times
http://boss.blogs.nytimes.com/author/jack-stack/