Some fascinating reads to start your Sunday Morning:

• Who Owns The World’s Financial Assets? And Why Are U.S. Households So Fascinated With Stocks? (Wall Street Rant)
• Chasing the Mirage of Hedge Fund Returns (Forbes)
George Soros: How to Save the Euro  (NY Review of Books)
• Why Tech Stocks Look Better—Even for the Risk Averse (WSJ)
• The one percent war (Reuters Magazine) see also NJ Gov Chris Christie to the 1%: Please Occupy New Jersey (WSJ)
• GDP growth still not enough to get back to full employment (Washington Post)
• Legal Foreclosure Issue two-fer:
…..-Arizona attorney general: Bank of America impeding investigation (Phoenix Biz Journal)
…..-Bill takes aim at Colorado foreclosures (Denver Post)
• The Office: Can It Be Fixed? (Grantland)
• How Siri is ruining your cellphone service (Washington Post)
• N.Y. Airports Account for Half of All Flight Delays (NYT)

What are you reading with Sunday morning coffee?

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U.S. Economy Picks Up Steam

Source: WSJ

Category: Financial Press

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

20 Responses to “10 Weekend Reads”

  1. BigSpooky says:

    I have a hard time getting behind the giant tech cash hordes as a big valuation driver. Ive not actually crunched the numbers but it seems like if there are two companies – one leveraged and one with a lot of cash the one with a lot of cash is probably better positioned to take advantage of new opportunities. But if virtually all the companies in the sector are cash-rich doesn’t the dynamic change? I see the potential for the big cash-rich balance sheets turning into a war of attrition with margin compression and progressively higher costs to acquire new business lines. Of course there has been ample time for this theory to play out and there is basically zero indication that its actually happening, but something just does not seem right to me. JNPR/CSCO might be an example of this, but I’m hard pressed to find others and dont understand why what looks like commodity semiconductors from the likes of LLTC and MXIM get 50%+ gross margins still.

    Also, its becoming common to make fun of worried investors who are only 50% invested or whatever (see previous posts on this blog), but what does that mean for a company with all this cash getting what, 14bp/yr (roughly AAPL’s return on its cash)? If companies are going to hold lots of cash, thats an asset like their IP or people or factory, and they must find better ways to create returns from it then simply letting it fester in treasuries. I think lots of people are expecting that when the ‘all clear’ bell is rung, there will be a big wave of acquisitions (of company A buying company B’s cash), but that does not sound like a good use of capital – or at least it sounds like what people dont think individual investors should be doing (ie they should be all-in already).

  2. mathman says:

    http://oddmanout215.wordpress.com/2012/01/28/the-job-creator-myth-debunked/

    “NYT reporters don’t seem to have access to the same facts as NYT columnist Paul Krugman, maybe because he doesn’t have an intranet connection to the newsroom. I’m kidding, but who knows? On Friday, Krugman lit into Indiana Gov. Mitch Daniels for misleadingly referring to Steve Jobs, the late CEO of Apple, as a job creator, even though Apple employs only 43,000 people in the U.S. while indirectly employing 700,000 people in other countries.

    Yes, the Times did report those figures in a piece last Sunday that helped explain why Apple does so much manufacturing in totalitarian China — the Chinese government subsidizes huge manufacturing centers with reliable supply chains and ultra-cheap labor — and so little in the U.S.

    However, a more thorough investigative piece would have put Chinese manufacturing efficiency in perspective by including the sometimes startling information in Krugman’s Friday column:

    …Germany remains a highly successful exporter even with workers who cost, on average, $44 an hour — much more than the average cost of American workers. And this success has a lot to do with the support its small and medium-sized companies — the famed Mittelstand — provide to each other via shared suppliers and the maintenance of a skilled work force.

    The point is that successful companies — or, at any rate, companies that make a large contribution to a nation’s economy — don’t exist in isolation. Prosperity depends on the synergy between companies, on the cluster, not the individual entrepreneur.

    But the current Republican worldview has no room for such considerations. From the G.O.P.’s perspective, it’s all about the heroic entrepreneur, the John Galt, I mean Steve Jobs-type “job creator” who showers benefits on the rest of us and who must, of course, be rewarded with tax rates lower than those paid by many middle-class workers…

    I think Krugman’s larger, implicit point is that American corporations do what they do — off-shore millions of jobs while being treated to gigantic tax breaks — only because our corrupt political system allows them to do so. We could be Germany, a democracy with strong unions, good wages and universal health care, if we had laws and lawmakers that reined in the Ayn Rand-worshiping skunks who sell out American workers but are portrayed as heroes by the American media. “

  3. mathman says:

    and this from Harpers via cryptogon:

    http://cryptogon.com/?p=27275

    Killing the Competition: How the New Monopolies Are Destroying Open Markets

    (from same)
    “Over the past four years of financial collapse, many of us have come to view markets as a fantastical scam: a giant mechanism geared to transfer our hard-earned dollars into the hands of a few select bankers. And when it comes to the Wall Street markets we rely on to trade our equities and debt and commodities, this sentiment is not all wrong.”

  4. mathman says:

    okay, i’ll stop now (so the moderators aren’t overworked):

    http://guymcpherson.com/2012/01/comedian-louis-ck-comments-on-civilization/

  5. Petey Wheatstraw says:

    mathman:

    Good observations. I think we have been hoisted on our own petard: Exceptionalism borne of inflated ego, borne of the Great American myth (John Wayne as a universal American hero, despite his despicable and selfish behavior when we were truly at war, is a prime example), has rendered the vast majority of the American middle class blind to our own true status in the economic universe.

    Regardless of how well the German working class does in comparison to its American counterpart, they are obviously wrong, because they are German, not American (everybody already knows that John Wayne took care of the Germans and the other Axis Powers in many of his movies — a FACT that cannot be argued against, as we have all seen it with our own eyes).

    The dawning realization among the riff raff (the upper middle class on down), of our true position(s) in the New World Economic System will be the tipping point between support of the status quo and the potentially nightmarish transition to what comes next.

  6. uzer says:

    http://www.huffingtonpost.com/peter-s-goodman/world-economic-forum-global-financial-crisis-davos_b_1239074.html

    “We do not know how deep this hole will be when the whole thing implodes on us,” [Hong Kong leader Donald Tsang] said. “Nobody is immune.”

    Just don’t call the “thing” a ponzi scam, right BR?

    ~~~

    BR: YOU can call it whatever like: Its a viral contagion, the Magna Carta, a viola concerto, Mitochondria DNA, a ponzi scheme!

    I prefer to be both precise and accurate — so that limits me when I endeavor to describe various events and or occurrences; I cannot for example select random names for items.

    But for those who care not for precision or accuracy, its a tree frog! 42! the letter C! a black hole! A cherry coke!

  7. TapeReader says:

    Here’s some thoughts on the next stage of algorithmic data processing with insights as to why the current model of processing massive amounts of data with limited access to advanced algos is a dying model.

    http://sceeto.com/blog/dont-want-to-cook-get-your-dinner-delivered-if-you-dont-want-to-develop-algos-get-your-output-delivered/

    Hope that you find it as interesting as I do.

  8. SOP says:

    Re. the WSJ = “U.S. Economy Picks Up Steam” graphic

    That graphic may be the single most Bearish thing I’ve seen this year (century ?).

    I love the imaginary (delusional ?) exponential curve fit… with the actual data fading the Adult-Sized Child’s fantasy trend.

  9. MayorQuimby says:

    Re: stocks

    The ‘intrinsic’ value of a given share of a company is irrelevant. Nowadays – the stock ITSELF is irellevant.

    ALL that matters is where leverage will be going….iow…the stock is really just an illusory placeholder designed to draw “liquidity”.

    Of course, this will all end in tears but everyone thinks THEY will be smart enough to jump ship first.

  10. AHodge says:

    Romneys 13.9 pct tax rate
    I’m guessing that on us taxable only
    excludes. Offshore cayman islands. Family trusts. Did he drop the swiss because it looks bad
    Don’t care who wins but confess for politics as blood sport I like to watch
    The Ds should break out those old ronald reagan campaign clips
    .regularly Attacking those wealthy who were not paying their fair share of taxes
    He also on record saying hefavored roosevelt new deal he just wanted to roll back great society

  11. Petey Wheatstraw says:

    MayorQuimby:

    The smart money is already off that ship. The smartest money never boarded.

  12. nebyarg says:

    Barry, you asked what we are reading. I am re-reading Democracy and Debt by Michael Hudson:

    In Judah, the prophet Isaiah (5:8-9) decried foreclosing creditors who “add house to house and join field to field till no space is left and you live alone in the land.”

    Among Rome’s leading historians, Livy, Plutarch and Diodorus blamed the fall of the Republic on creditor intransigence in waging the century-long Social War marked by political murder from 133 to 29 BC. Populist leaders sought to gain a following by advocating debt cancellations (e.g., the Catiline conspiracy in 63-62 BC). They were killed. By the second century AD about a quarter of the population was reduced to bondage. By the fifth century Rome’s economy collapsed, stripped of money. Subsistence life reverted to the countryside as a Dark Age descended.

    http://michael-hudson.com/2011/12/democracy-and-debt/

    Barry, I have a very high regard for what you do for all of us and really appreciate your work. The comments speaks well for the intelligence of your readers.

    I’ve been reading lots of bloggers who are from different ends of the economic spectrum; those who want to drop out and form a different system and those who are don’t want to play this game and are creating new ways.

    Buckminster Fuller said, “You never change the existing reality by fighting against it. Instead,
    create a new model that makes the old one obsolete.”

  13. doug says:

    Not sure how to put a url in here but this link should be interesting you BR, as a apple fan boy and author. It seems they have learned from MS on how to take over….

    http://www.zdnet.com:80/blog/bott/how-apple-is-sabotaging-an-open-standard-for-digital-books/4378?tag=nl.e539

    Thanks for all you do.

  14. MayorQuimby says:

    “The smart money is already off that ship.”

    Maybe. Maybe not. As long as there is a bid…

    “The smartest money never boarded.”

    Agreed.

  15. theexpertisin says:

    Mathman and, to a lesser standard Petey Wheatstraw (above) present Germany as a case in point as to how a mature nation can prosper in tough economic times. I agree with the thrust of their thoughts on this matter.

    Unfortunately the U.S. spends national treasure on wars, poorly coordinated welfare schemes and the perpetuation of too many low quality public education systems of dubious structure, Germany focuses on high quality stratified (vocational/college) education working hand in hand with corporations, strictly regulated and monitored public assistance, border controls and maintaining a gentlemen’a agreement with unions to put the interests of the State first – as it will benefit all, more or less.

    The assimilation of the worker’s paradise formerly known as The Democratic Republic of Germany was historic and successful. Teaching pseudo-workers that they had to show up and actually do somethig productive to earn a wage after three generations of socialism was a daunting challenge. The U.S appears to be going in the opposite direction on this matter.

    We have much to learn from post-WW2 Germany, which ironically owes it’s existence to the U.S.

  16. Robert M says:

    The one percent war is illuminating. It always reminds me of when football and basketball players go on strike; everyone’s total greed always let the billionaires win.

  17. Molesworth says:

    Nebyarg,
    You might find Wealth and Democracy a good read.
    Boiled down, first a country becomes wealthy making things, then come the bankers and financialisation, workers making things become too expensive, the manufacturers move production to another less expensive country, leaving just the bankers, financing the products now made overseas, and the poor. Lather, rinse, repeat.
    He cites Hapsburg Spain, the 18th century Dutch & 19th century Britain as his examples.
    Not an easy read, but instructive.
    The consistency of history provides a good reason to use policy incentives to create jobs making things in the USA again.
    The book is old (2002) and it appears you can get a hard cover copy for $4. Well worth that price I assure you.
    Your comment prompted me to put it into back into my reading pile for a re-read.
    http://www.amazon.com/Wealth-Democracy-Political-History-American/dp/0767905334/ref=cm_cr_pr_product_top

  18. arogersb says:

    John Reed on Big Banks’ Power and Influence
    Former CEO of Citigroup, currently the Chairman of the Massachusetts Institute of Technology’s Office of Corporation.
    http://vimeo.com/35736113

  19. Joe Friday says:

    Great.

    The threats by the West against Iran have now resulted in them counter-threatening to outright stop selling crude oil to some countries.

    Who needs to get into a confrontation over closing the Straight of Hormuz when you can just close a few valves and double or perhaps triple the price of gas to American consumers ?

    Bishop to King 7. Check.

    Prepare to get reamed.