Tuesday Readings
By Barry Ritholtz - July 20th, 2010, 4:00PM
Whenever I travel, I always seem to find interesting stuff to read that I save for the plane. Here’s the current list of things to read later:
• The Men Who Ended Goldman’s War (NYT)
• China Passes U.S. as World’s Biggest Energy Consumer (WSJ)• Hulbert: Inflation down, deflation (Marketwatch)
• June Unemployment Rates, by State: Most Regions Show Improvement (Real Time Economics)
• Kass Takes on Nouriel Roubini (TheStreet.com)
• THE VOLCKER RULE (New Yorker)
• Hussman: Stocks are not cheap (Hussman Funds)
• Analysts Get SAD Too: The Effect of Seasonal Affective Disorder on Stock (InformaWorld)
• Interview with Mr. Jack Schwager, author of Market Wizards (CIO)
What are you reading ?
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July 20th, 2010 at 4:16 pm
Special Inspector General for TAPR (SIGTARP) report to congress — Especially Section I page 15
http://www.sigtarp.gov/reports/congress/2010/April2010_Quarterly_Report_to_Congress.pdf
Through March 31, 2010, SIGTARP has 84 ongoing
criminal and civil investigations. These investigations concern suspected TARP
fraud, accounting fraud, securities fraud, insider trading, bank fraud, mortgage
fraud, mortgage servicer misconduct, fraudulent advance-fee schemes, public
corruption, false statements, obstruction of justice, theft of trade secrets, money
laundering, and tax-related investigations.
MSM should include a list of Fraudsters in their broadcasts — would help to show the masses that the bad actors are being investigated and caught
July 20th, 2010 at 4:25 pm
Slate:
American Hypocrites: The only thing Americans hate more than big government is the absence of government protection.
http://www.slate.com/id/2260968/
July 20th, 2010 at 4:37 pm
Check out the new community bankers on the horizon? http://www.reuters.com/article/idUSTRE66J3X020100720
July 20th, 2010 at 4:48 pm
http://wallstcheatsheet.com/breaking-news/goldman-sachs-fumbles-can-competitors-recover-the-ball/?p=14654/
You’re in getting quite a bit of publicity out of Goldman BR.
July 20th, 2010 at 5:35 pm
for all you New Yorkers-
Soup for you! Seinfeld’s “Soup Nazi” reopens in NYC
July 20th, 2010 at 5:55 pm
Ben Stein: Still a Dumbass –
http://blogs.reuters.com/felix-salmon/2010/07/20/unemployment-chart-of-the-day/
July 20th, 2010 at 6:03 pm
Glenn Beck’s Golden Advertiser Under Investigation
http://abcnews.go.com/Blotter/glenn-beck-fox-hosts-golden-advertiser-goldline-investigation/story?id=11197000
Nice of Glenn, with the world coming to an end and gold being the only answer, to sell us some of his.
July 20th, 2010 at 6:11 pm
Re: China passing US as greatest energy consumer:
Gordon Ringoen has an interesting, if a bit overlong, piece on energy consumption as the principal driver of both productivity and wealth. Although it seems inspired by a green critique of industrialism, the analysis doesn’t seem terribly dogmatic to me.
http://www.prudentbear.com/index.php/featuredcommentaryview?art_id=10347
Parts 1 and 2 are extremely provocative. Part 3 gives the lie to alternative energy as an economic panacea. Part 4 is achingly stupid–don’t bother.
July 20th, 2010 at 6:47 pm
Can someone help me find a good video to show a high school class on what caused the financial crisis? Thanks
July 20th, 2010 at 6:57 pm
“…The United States government takes the latter argument one step farther, claiming that the internet itself is a vulnerable “natural asset” that could be seized or damaged by terrorists and must be protected, making the case for a massive $100 billion program of cyberwarfare. Senator Joseph Lieberman (D-CT) argues that “violent Islamist extremists” rely on the internet to communicate and recruit and he has introduced a bill in the Senate that will empower the president to “kill” the internet in case of a national emergency…”
http://uruknet.com/?p=m68096&hd=&size=1&l=e
“…The current wars in Afghanistan and Iraq are manifesting with an entirely new series of physical and mental illnesses and diseases. Some are being recognized, such as post traumatic stress disorder (PTSD), but many others are not. Hundreds of thousands of our veterans are living in destitution, are incarcerated, have attempted or committed suicide, and can no longer fit into a normal family life. And yet the government once again, as it did to previous Gulf War vets, turns its backs on them. This is an American tragedy, and that is where our story begins…”
http://globalresearch.ca/index.php?context=va&aid=20186
“…The 1983 payroll tax hike has generated approximately $2.5 trillion in surplus Social Security revenue which is supposed to be in the trust fund for use in paying for the retirement benefits of the baby boomers. But the trust fund is empty! It contains no real assets. As a result, the government will soon be unable to pay full benefits without a tax increase. Money can be spent or it can be saved. But you can’t do both. Absolutely none of the $2.5 trillion was saved or invested in anything.
That is how the largest theft in the history of the world was carried out. 300M people worked and saved their whole lives to set aside $2.5Tn into a retirement system that, if it were paying a fair compounding rate of 5% interest over 40 years of labor (assuming an even $62Bn a year was contributed), would be worth $8.4Tn today – enough money to give 100M workers $84,000 each in cash! The looting of FICA hid the massive deficits of the last 30 years in the Unified Budget. Presidents and Congresses were able to reduce taxes on the wealthiest Americans without complaint from the deficit hawks, because they benefited. The money went directly from the pockets of average Americans into the pockets of the rich…”
http://www.philstockworld.com/2010/07/17/its-the-end-of-the-world-as-we-know-it/
July 20th, 2010 at 7:08 pm
Todd Harrison: It’s Time to ‘Short’ American Icons
http://finance.yahoo.com/tech-ticker/todd-harrison-it%27s-time-to-%27short%27-american-icons-522746.html?tickers=nke,gs,skf,xlf,mco,brk-b&sec=topStories&pos=9&asset=&ccode=
July 20th, 2010 at 7:22 pm
@Mark E. Hoffer: Thanks for the social security “trust fund” link – I seem to recall something from my american history classes about a revolution being fought over taxation without representation. Social Security and Federal Reserve “inflation targeting” are both forms of this, are they not?
@”Hussman: Stocks are not cheap” – If the MSFM pumpers are successful in conflating “Apple earnings” with “the broader economy” as I expect them to be, look for stocks to get quite a bit not-cheaper over the next few days.
July 20th, 2010 at 7:35 pm
Mark: This is about as good an explanation of what happened as any:
http://2.bp.blogspot.com/_H2DePAZe2gA/TER_1jnFFVI/AAAAAAAAN0Q/2aQevfr-ur0/s1600/themaestro.jpg
July 20th, 2010 at 7:44 pm
We’ll be seeing a lot more of this. Maybe even from our voters:
Hungary’s IMF revolt augurs ill for Greece
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7899304/Hungarys-IMF-revolt-augurs-ill-for-Greece.html
Once the ordinary people figure out (or are told by demagogues) that the real reason for the EU and IMF loans is so that can scrimp for five to ten years to pay off a bunch of foreign bankers who wear thousand dollar suits, I don’t think they’ll go for it.
I’m surprised that no one is pointing out an analogous thing in the US: huge tax cuts for the rich earlier in the decade create a mult-trillion dollar deficit. The crisis hits and the government runs up even bigger deficits bailing out the financial class that has already benefited from the tax cuts. Suddenly, these same people “discover” the deficit and the need for austerity, preferrably by cutting social security because we don’t want no socialism here.
July 20th, 2010 at 7:46 pm
ewmayer: I was pretty shocked to see that Apple beat earnings forecasts. I’m sure don’t remember that ever happening before :)
How can the same turkeys who consistently overestimate S&P earnings always manage to underestimate earnings for the darlings of the market?
July 20th, 2010 at 8:37 pm
Mike in H-Town,
if AAPL keeps pulling gags like: “Its reputation has already been tarnished by iPhone 4 antenna problems, but now Apple faces a new PR nightmare as iPhone 3G owners say their handsets are barely usable after Apple pushed out a software update.
The iOS 4.0 update was recently delivered to iPhone 3G users when they connected the device to their computers. Many users have said their phones now regularly lock up and take an eternity to perform basic tasks such as web browsing.
Anthony Agius, founder of the popular Australian MacTalk community website, described the update as a “disaster” for iPhone 3G owners…”
http://www.smh.com.au/digital-life/iphone/iphone-3g-crippled-by-software-update-20100720-10ijp.html
‘beating Estimates’ may, just, get more difficult..
~~
ewmayer,
yes, “taxation without representation” has been responsible for a number of disturbances, over the Arc, even, at least, one, here, on these Shores..
Interestingly, if We take a view of *History: “”No taxation without representation” was a slogan in the period 1763-1775 that summarized a primary grievance of the American colonists in the Thirteen colonies. The colonists complained that taxes were imposed by Parliament without the consent of the colonists, which violated the traditional rights of Englishmen dating back centuries. The point was that the colonies had no representation in Parliament; the British responded that they were “virtually” represented. The Americans said these “virtual representatives” knew nothing about America.
The Americans strenuously rejected the Stamp Act of 1765 (which was repealed), and in 1773 violently rejected the tax on tea imports at the Boston Tea Party. Britain retaliated against Boston in a chain of episodes that led to armed rebellion in 1775 and the American Revolution. The colonists formed militias and seized control of each colony, ousting the royal governors. The complaint was never officially over the amount of taxation (which was low), but always on the decision-making process by which taxes were decided in London, without representation for the colonists in British Parliament.
Some radical Patriots tarred and feathered tax collectors and customs officers, making those positions dangerous, especially in New England…”
http://www.conservapedia.com/No_taxation_without_representation
We’d note that those(these) “Train of Abuses” was withstood for ~12 Years, before animosities, more, fully flowered..
And, Today, We can see: “…This issue of Backwoods Home Magazine contains two articles that I think are related to this great robbery of America’s younger generation: One is The Appleseed Project on page 8, and the other is The Tea Party Movement on page 74. Both movements are heavily peopled by young patriotic adults longing for smaller and more responsible government. They are part of what I believe to be a burgeoning revolution among young people in America.
While The Appleseed Project seeks to make riflemen out of Americans in the tradition of the country’s War of Independence that started in 1776, the Tea Party Movement is composed of patriots who seek to take back the Government at the ballot box…”
http://www.backwoodshome.com/articles2/duffy123.html
as, potentially, the first(?) stirrings of “Round Two”..
~~
though, specifically, to your Q: of f______ course, those two, discrete, Acts, are quantifiable indiscretions against the Citizenry that was not asked for, nor, did they give, their Consent.
July 20th, 2010 at 8:45 pm
history of debt. from the depression no less
Hoovers debt to GDP was much higher that FDR. odd yes? as Hoover didn’t spend much at all.
GDP just collapsed
http://krugman.blogs.nytimes.com/2010/07/20/depression-debt/
http://krugman.blogs.nytimes.com/2010/07/20/more-depression-debt/
July 20th, 2010 at 8:52 pm
decoding the FED and the shadow banks
http://www.nakedcapitalism.com/2010/07/ny-feds-picture-of-shadow-banking.html
July 20th, 2010 at 8:59 pm
some things just for BR
http://www.egmcartech.com/2010/07/19/gm-offering-incentives-on-the-2009-2010-chevrolet-corvette-zr1/
http://www.egmcartech.com/2010/07/20/ferrari-world-abu-dhabi-unveils-list-of-rides-and-attractions/
http://www.egmcartech.com/2010/07/20/woodhouse-dodge-dealer-to-produce-20-limited-edition-viper-srt10-acr-roadster/
http://www.egmcartech.com/2010/07/20/report-lotus-to-show-new-supercar-in-paris-that-will-replace-esprit/
July 20th, 2010 at 9:01 pm
clawbacks?
http://www.businessinsider.com/now-that-the-judge-allowed-the-sec-to-clawback-this-ceos-bonus-feinberg-can-take-more-2010-7
July 20th, 2010 at 9:27 pm
Interesting discussions from the world’s best named think tank — the Centre for the Study of Capital Market Dysfunctionality:
The Future of Finance: The LSE Report
http://www.futureoffinance.org.uk/
July 20th, 2010 at 9:43 pm
The end of the Welfare-Warfare State is approaching.
http://theburningplatform.com/blog/2010/07/19/welfare-warfare-featured-article/
July 20th, 2010 at 9:46 pm
Wait until Joe & Jane Citizen find out there health care premium will likely end up mostly worthless health-wise and is just a corporate tax:
https://www.nytimes.com/2010/07/18/health/policy/18health.html?_r=1&hpw
I guess that is why most of Obamacare does not kick in until after the election.
“The Obama White House is infested still with the same Clintonite neoliberals that landed the economy in crises. Unless the above policy measures are adopted, the world can face another crisis of even greater damage within a decade. The business cycle has not ended. In fact, it has been made more deadly by hubris policy. ”
http://henryckliu.com/page234.html
“Entrepreneurs: From the Near Eastern Takeoff to the Roman Collapse”
http://michael-hudson.com/2010/07/entrepreneurs-from-the-near-eastern-takeoff-to-the-roman-collapse/
“Paul Saffo: “Profiles of the Future” at Foresight 2010 Conference”
http://www.vimeo.com/9508049
And Newt Gingrich gets the accolades he deserves.
July 20th, 2010 at 9:50 pm
@willid3 – Clawbacks
YES — would be great to see a wave of clawbacks for unjust enrichment be it accounting restatements, fraud or even fines from non-compliance, omissions and misrepresentations.
If this sets a precedent there is obviously a huge pool of folks to go after, but a couple that come to mind
FNM – accounting scandal and restatement
FRE – excessive bonus for failed business
GS – 550M settlement — should be clawed back from the Execs, Senior management, not from the equity of the company (shareholders).
Companies that received TARP funds — bonuses in the years leading up to the crisis should be thoroughly reviewed for clawbacks.
July 20th, 2010 at 10:44 pm
How much longer until we are read stories by a “Bard”? (sci-fi Asimov reference “Someday”)
http://www.nytimes.com/2010/07/20/technology/20kindle.html?_r=1
Does this really surprise anyone?
http://www.washingtonpost.com/wp-dyn/content/article/2010/07/19/AR2010071905256.html
July 20th, 2010 at 10:47 pm
Looks like the Coast Guard investigation of the BP disaster is hitting some nerves. Four witnesses from Transoceanic cancelled their scheduled hearings before the CG panel. Two said they had to further review docs. Another claimed that there was a conflict of interest between some lawyers.
http://blogs.chron.com/newswatchenergy/archives/2010/07/transocean_witn_1.html
As some wag put it: “They need more time to get their lies straight.”
July 20th, 2010 at 11:15 pm
Here’s a Scoop: SUB-PRIME DEBT BOMB 2.0!!!!
A guy in my class was just telling me that his buddy got a job working for an online college provider.
They’re hiring sales guys to come in and cold call unemployed people and encourage them to get an online degree to help them gain employment. Apparently a part of the sale is “you can borrow money if you can’t afford school through the Federal Government!” I guess they get their cold call lists from people that are applying for jobs online and fill out information requests under the impression it is to get info on a job or to gain job skills.
So I looked up the website of the company and then I went to the school’s website they drive students to.
$372 per credit and 120 credits later you have a bachelor’s in accounting for a grand total of ~ $43,000
Now, I’ll admit I am headed to my 3L law year and think institutional education is a huge waste of money for most people. I’m not a huge fan of the herd mentality for everyone to go get a degree when they should have gone to trade school.
But I can’t help but think this “online college paid for with borrowed funds” idea is getting seriously abused.
Anyone else here about this or think we might have our first “at-bat” for the Consumer Financial Protection Bureau?
Or am I wrong and this is just a great way for unemployed folks to gain some employment skills?
July 21st, 2010 at 1:00 am
mbelardes: hate to tell you that my daughter graduated a few years ago from law school with $100,000+ debt and is now working as a paralegal. A law professor admitted during an ethics CLE, law schools have become major profit centers for colleges: you can fill a classroom with law 50-100 law students when you couldn’t get away with that for undergrads. Law schools have become completely bloated beauracracies scamming young people. My law school education at the same school my daughter attended cost less then $10k twenty eight years ago. That’s some inflation rate.
As to your post, I think you’re correct. From what I see, I think you’re correct in that it’s a new way scamming the unemployed. I get lots of ads from places like Monster encouraging me to go back to school and assuring me that I won’t have any trouble paying for it. Of course this is nothing new. A former client made lots of money running a beauty college which was mainly financed by federal grants to the students. Now, you just have a bigger pool of students with access to a lot more credit.
The tragedy of all this is that student loans are one of the few debts not dischargeable in bankruptcy.
July 21st, 2010 at 1:22 am
@ mike: Correct. Colleges have become untouchable bloated bureaucracies.
One I am familiar with has lower level union staff on partial furlough every month. But they can always hire another administrative EVP of BS. They can pay the outgoing football coach/ athletic director millions even though he had no contract with the university. They can have a “Taj Mahal” classroom building exclusively for athletes, but they furlough lower level employees. But “We love our thugs”. Athlete criminality.
And yes, part of the American mythology is you need a college degree, as opposed to, for example, a tech school degree. Ask Germany about that.
And yes, these students undertaking this readily available debt (Read CRA-like) frequently have almost no chance of ever being able to repay their loans. It’s a really, really ugly guilt trip that they will never be able to escape.
July 21st, 2010 at 1:24 am
One last thing before bed. Haven’t seen it cited here, but it looks like the credit agencies may be out of business because FINREG makes them liable for their incompetence.
http://ftalphaville.ft.com/blog/2010/07/19/290701/fitch-to-debt-issuers-dont-cite-us-thank-you-very-much/
I would think they would be one of the least sympathetic defendants one could have at trial.
July 21st, 2010 at 1:28 am
Anytime there is large $$ dedicated to a program with admirable goals it brings out the fraudsters – which is why the oversight and regulation is needed. Knowing that we have a world full of greed, corruption and unethical people that somehow believe or rationalize that it is right to line their pockets and bank accounts at the expense of the folks that play by rules and just want to do the right thing, then we need to ensure appropriate oversight and exercise strong law enforcement. Unfortunately by the time CFPB gets spun up the money will have been sucked out.
Not that adding more government agencies and people is the desired approach, however we know from experience that if there is not a counterbalance to regulate business and enforce the rule of law then bad things continue to happen. “if we do not learn from history, we are doomed to repeat it” …
July 21st, 2010 at 4:35 am
In addition to what @Mike in Nola references above:
http://online.wsj.com/article/SB10001424052748704723604575379650414337676.html#articleTabs%3Darticle
@alfred e: You’re spot-on about the mythology. It is just that – a myth feeding the higher education scam, loading kids up with monstrous debt while taking useless degrees, before they’ve even started their adult working lives.
An example of another path: There will be about 500K welding jobs opening up in the next 10 years, according to estimates by the American Welding Society. A big reason why has been this obsession with getting four year degrees and sitting in a cube, playing a walk-on role in a Dilbert cartoon.
These jobs can pay really well – an experienced guy can pull down upwards of $60K straight time, before we talk about rig rental income and OT. Most of these jobs can’t be outsourced or automated. The pipelines, bridges and buildings have to be built here, in place – not in India or China and then shipped over here.
The problem from the perspective of the NY Times readership is that a) people in these jobs will get dirty (horrors!), b) they’re gonna sweat or freeze (or both at the same time) when they’re doing pipeline work and c) a degree from an Ivy League school won’t mean shit to whether their welds pass x-ray inspections or not.
July 21st, 2010 at 5:22 am
In “The Technocracy Boom” David Brooks think’s Bush was a technocrat.
OK, so stop laughing…
http://www.nytimes.com/2010/07/20/opinion/20brooks.html?_r=1&src=me&ref=general
Anywa,y Bush’s SEC allowing banks to lever up causing the financial crisis, their post-invasion war plans, their Prescription Drug benefit’s no negotiation clause, structural trillion dollar debt etc… etc… all show a tendency to undermine the government, not scientifically strength it, change it, end it.
We haven’t even lived on a full annual budget of the technocrats who replaced Bush. The technocrats haven’t been around since 2000 as Brooks claims. It’s more GOP media machine spin.
Brooks needs to stop reading so much ancient Greek and instead read about technocrats, technology, and management so he can comment intelligently on the subject.
July 21st, 2010 at 8:08 am
Jack Schwager’s books have been extremely useful to me. Time for another one.
July 21st, 2010 at 1:29 pm
Nice article in the WSJ about the new liability of the rating agencies.
“Bond sale? Don’t Quote Us, Request Credit Firms”
Sorry no link. Posting from iPhone.
July 21st, 2010 at 2:01 pm
i almost finished reading Market Wizards by Jack Schwager’s … it is a ton of fun to read… should be a must read for any aspiring trader…