My train reading for this afternoon

• Stocks Are Cheap vs Bonds? Logic Says Otherwise (Smart Money)
Baum: Geithner Takes Lead in BLS ‘Much Ado About Nothing’ (Bloomberg)
• Real Tax Rates of the Rich (Wealth Report)
• Anat Admati: More Bank Equity Is Needed (Institutional Investor) see also BofA Faces Bad Home-Equity Loans: (Bloomberg)
• Louisiana sues banks for RICO, Wire Fraud Racketeering due to MERS (mattweidnerlaw)
Duncan: Capitalism is dead, credit new king (Marketwatch)
• Pulitzer winner on Taxes: But Nobody Pays That (NYT)
• MBS Discovery Battles Heating Up, Impacting Litigation Timelines and Leverage (Subprime Shakeout) see also Why Entrepreneurs Should NOT Buy Homes (Tech Crunch)
• It’s Time to Upgrade Your Biological Software (Think Big)
LOL Chris Christie Denies Falling Asleep at Springsteen Show (Bloomberg)

What are you reading?


Google Opens Up About Its Network  

Source: Bits

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.

19 Responses to “10 Thursday PM Reads”

  1. AHodge says:

    SEC decides to single out Egan Jones?

    i think possible we would be better off with NO SEC than the one we have now
    so thats my smaller govt proposal, at the least its a complete do over so dump this one and all the staff first
    they are going after the biggest of the rating agencies
    that ISNT a totally corrupt, likely lawbreaking, stooge??

  2. DrungoHazewood says:


    The big 3 have 3,000 credit analysts and EJ has 5! Look at the results. EJ has shown that you can do better work with a LOT less people and the effect of the massive conflict of interest in the big rating agencies. Hitler and Stalin showed that any threat, no matter how tiny, must be squashed. As usual, protecting those that have done, and will do the most damage.

  3. willid3 says:

    financial education a panacea ?
    My feeling was that such attempts would never work. The investment returns of people with defined-contribution pensions are woefully low — much lower than the returns seen by the managers of defined-benefit schemes. And the difference, to a first approximation, is rents being extracted by the financial-services industry. That’s the industry which does all of the educating: so it’s unrealistic to assume that it’s going to educate people and thereby reduce its own income.

    Besides, as Appadurai says, the US population has never been more educated about matters financial than it is now. We can try to improve the level of education even further. But a little financial education can be a dangerous thing, if it instils overconfidence. And what’s more, there’s zero empirical evidence that educated investors have higher realized returns. Besides, you can’t hope to effectively educate everybody.

    Much better, I think, to allow people to invest alongside the defined-benefit scheme of their employer, and accept the returns of that scheme. Most employers still have some kind of legacy defined-benefit scheme, and those schemes, as a rule, tend to be invested pretty sensibly. Those pension funds should accept defined-contribution money alongside their defined-benefit money: it would beef up their AUM and thereby their negotiating power, while at the same time delivering higher returns to the company’s employees.

    Some employees, of course, will think that they are very clever and will be able to get large returns for themselves. But most of us aren’t that hubristic, and consider asset-allocation decisions and the like to be something of a chore. Give us the opportunity to outsource those decisions to somebody acting on our behalf, and we’ll jump at it. We might not get the same implied returns as the lucky people on defined-benefit plans. But at least we’ll have our money professionally managed, at little or no cost.


  4. willid3 says:

    Summers and Rubin. deregulation INC. dont even see a problem today with that.
    Flicking through the new book by David Rothkopf this afternoon, I found this:

    It’s not entirely clear when exactly this interview took place, although it seems it was before the Obama administration set the ball rolling on what eventually became Dodd-Frank in June 2009.

    By this point, of course, Summers was a millionaire many times over thanks to his work for financial services firms, and it’s telling that he seems much more worried about the prospect of too much regulation than he is remorseful about the fact that deregulation of the financial-services industry went way too far.

    Later on in the book, Rothkopf finds exactly the same attitude coming from another financial-services multimillionaire, Bob Rubin:

    Again, the timing of this is not clear, but the remorselessness is entirely in keeping with Rubin’s few previous public statements on the matter. It’s worth remembering that virtually the entire Obama economic team was connected to Rubin in one way or another, and that Rubin is generally understood to have been the gray eminence who basically architected Obama’s economic policy in the fraught weeks between the 2008 election and the 2009 inauguration.

    In this context, it’s something of a miracle that we got any substantive new regulation in Dodd-Frank at all: we should be thankful for small mercies, I suppose. But I never cease to wonder at how difficult it is for these men to admit that they ever went too far, that they were ever wrong about anything. Making mistakes is only natural. But refusing to learn from your mistakes is downright pathological.

    and the conservatives don’t see that so much of what Obama has done is not different?
    guess they just hate they aren’t totally in charge like they were in 2001-2006.

  5. willid3 says:

    shareholders speak out on Citi executive pay? will it really matter? and what does it mean if the ‘owners’ of the company company are ignored?

  6. Arequipa01 says:

    Gotta wear shades-

    “Reducing employees by more than three quarters in three years is a bold and difficult task. What will it leave behind? Who, under this plan, will still be a US IBM employee in 2015? Top management will remain, the sales organization will endure, as will employees working on US government contracts that require workers to be US citizens. Everyone else will be gone. Everyone.”

  7. Arequipa01 says:

    Too many people in this country expect improvement. Will not happen. The sociopaths are in charge:

    Criminality is the order of the day:

    “Similarly, I had a colleague tell me today that I shouldn’t use the “c” word, meaning corruption, since it would alienate potential allies. The logic is similar to arguments against being shrill. He claimed that even if a lot of people in positions of authority engage in corrupt looking behavior, that doesn’t mean they understand it to be corrupt, so calling the corrupt will merely get them worked up to no useful end. They could well think they are doing the right thing and just be victims of cognitive capture.”

  8. DrungoHazewood says:


    EJ is tiny with only 5 analysts. The big 3 have 3,000. EJ, threatens and obviously corrupt business model. They could become a big embarrassment.

  9. catman says:

    Sadly, I just read Levon Helm passed away. He lived with a monkey and Chinese acrobat. She called him Tex and made him wear a cowboy hat. Antic genius with a killer backbeat.

  10. SOP says:

    The World is Finite, Isn’t It?

    Yesterday I gave a presentation to a group of distinguished business leaders.

    In my presentation, I tried to show that the global rate of production of petroleum … is at an all-time high or a “peak” that at a greatly expanded scale looks like a “plateau.”

    I used my published, peer-reviewed extensions of King Hubbert’s approach to support my arguments.


    I definitely encroached on the deeply held, personal beliefs of some of the members of my audience, and they became rather upset with me. But their arguments are at the center of the national myth in the U.S., which means that I am in a small and unpopular minority.

    So how does one begin convincing so many people in the U.S. that the Earth is spherical and finite, her crust is very thin, and her fossil fuel resources cannot be produced forever at arbitrarily high rates?

    Quoting my friend, Dr. Albert A. Bartlett, Professor Emeritus of Physics at the University of Colorado, such convincing is an uphill battle because:

    These people believe that perpetual growth is desirable, consequently it must be possible, and so it can’t possibly be a problem. At the same time there are still a few remaining “spherical earth” people who go around talking about “limits” and in particular about the limits that are implied by the term “carrying capacity.” But limits are awkward, because limits conflict with the concept of perpetual growth, so there is a growing move to do away with the concept of limits.

  11. woodhenge says:

    Don’t think it will help Romney to remind voters of Bush: Romney Visits Factory Closed Under Bush, Blames Obama

  12. mathman says:


    “Farage had some very interesting comments regarding the Italians moving large quantities of gold to Switzerland, but when KWN asked about the chaos in Europe, Farage stated, “Well, so far, from all of the European officials and from the new IMF branch office in Washington, we’ve had unanimity that there was no prospect, at any stage, of the euro being under threat.”

    Nigel Farage continues:

    “Suddenly, a big shot from the IMF says, ‘There is a problem here, and there may be a breakup of the eurozone. It could come sooner than you think.’ I see that as a bit of a crack in the dam. They’ve always used the argument that the euro was inevitable and it was here to stay, and an individual from the IMF has just completely blown that out of the water.

    (The breakup could be disorderly) because there have been no contingency plans. This is what makes me so angry. I’ve been saying to Barroso and that little Van Rumpuy character, ‘Come on, let’s have a Plan B.’ Let’s actually get ourselves ready in case it goes the other way.’ The point the IMF official made is that there have been no contingency plans whatsoever….

    “Therefore, what is likely, is that at some point, the markets will just overwhelm and engulf the whole thing and short-term, that will lead to chaos. The whole central banking, International Monetary Fund banking system, I mean it just begins to look more and more like the biggest Ponzi scheme we’ve ever seen on earth.

    There are going to be some serious banking collapses and the impact of that on some sovereign states, will be serious. I’m afraid we’ve gotten to a point where we really can’t stop this now. We’re beginning to reach a stage where however much false money you create, the problem becomes bigger than the people trying to solve it. We are very close to that point.” (there’s more)

  13. rktbrkr says:

    Farage also had this to say about the Italian movement of gold: “It was interesting to see massive bullion movements last month, out of Italian banks and into Swiss banks. So, people who have purchased gold for protection and have kept the gold in Italian bank vaults, now their trust in Italian banks is so bad they have physically moved the bullion to Switzerland.

    Unemployment in many of the PIIGS is in double digits, Spain is near 25% and double that among youth. Real estate prices in Spain and Ireland are plummeting at double digit rates and the previous Irish gov has put every citizen on the hook for about $600K per capita bank bailout costs, an impossible debt burden. Aside from the high unemployment what young Irish person is willing to spend the rest of their working life paying off foreign bankers for a commitment made by a political hack. The Kenny gov will be replaced by a much more radical gov that will take radical approach to this impossible debt, Ireland has been turned into a nationwide workhouse.

  14. Low Budget Dave says:

    Every day, I am amazed all over again at the cynical garbage published as “news” by the WSJ. Those poor billionaires are having to pay nearly 25% of their income in taxes? Horrors.

    Maybe we can take up a collection to help them buy some more Congressmen.

  15. gman says:

    The WSJ article by Robert Frank on wealth and taxes is typical for both of them. Claim the tax code is extremely progressive and then only show the data in the most progressive light(income tax only).

    The tax code is extremely progressive for people earning wages up to about 1 million/yr (where his chart convienently stops) and then begins decrease above the 2mill/yr level where people start to earn mostly cap gains(all left out of the chart).

  16. rd says:

    Robert Frank continues the matra of talking about the federal income tax as if it is the only one that matters.

    By the time you put payroll taxes (including employer share), sales taxes, property taxes, health care insurance (handled as a tax in many countries), etc. into the mix, the difference in total tax rates flattens dramatically and the wealthy with capital gains and dividends are really making out like bandits since their additional taxes are limited to sales taxes on what they buy and property taxes on their houses.

    This is very important since the mushrooming federal budget is driven a lot by “entitlements” like Social Security and Medicare which are currently paid for by payroll taxes. Once you make over $100k in salary/wages per individual, the tax burden that covers those items drops dramatically. The working poor who theoretically are paying no taxes based on the bleating from many conservatives are probably paying well over 30% of their gross income in taxes by the time you add in payroll taxes, sales taxes, health care insurance, etc. (including employer contributions to payroll taxes and health care which could otherwise show up as additional wages).

    The national argument about who is paying their fair share of taxes is very distorted by the singular focus on income tax.

  17. RW says:

    To expand on SOP’s point, even assuming consistent technological progress, economic growth on a finite planet is going to prove a problem even if we assume adequate resources.

    Exponential Economist Meets Finite Physicist
    A Socratic dialogue in which it is shown that continued economic growth at 20th Century rates is physically impossible; i.e., the laws of thermodynamics dictate that growth at a nominal rate of 2.3% will produce enough waste heat from human activity to raise the worlds oceans to the boiling point within a few centuries at most (ht Noahpinion.

    I may re-post this for this evening’s reading so more people see it and have an opportunity to consider and possibly critique. The argument does make some assumptions, naturally, but the assumptions aren’t very extensive IMO and the math appears to work regardless.