My afternoon train reads:

Yeah! U.S., States Plan to File Civil Charges Against S&P (WSJ)
• Dow 14,000: Are Stocks Expensive Now? (The Fiscal Times) see also Is this a good time to buy stocks? (Econbrowser)
• ETFs turn 20, remain misunderstood (MarketWatch)
Today’s WTF headline: SEC panel seeks stock exchange only for the rich (MarketWatch)
•  TODAYS WTF HEADLINE:  SEC panel seeks stock exchange only for the rich (MarketWatch)
• The Horrific Accident That Created the Regulatory State (Echoes)
• Everybody’s working for the…health care benefits (WONKBLOG)
Calculated Risk: Blogger keeps finger on pulse of housing market (Los Angeles Times)
• Eric Schmidt Unloads on China in New Book (Corporate Intelligence)
• Harold Ramis Gets the Last Laugh (Brett Martin)

What are you reading?


Week 4: S&P 500 4Q earnings – another beat in the making

Source: Merrill Lynch

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.

22 Responses to “10 Monday PM Reads”

  1. cdub says:

    Did you see the S&P defense strategy? We have the right to spread bad advice:

    DAVID FABER ‏@DavidFaberCNBC

    S&P will argue its free speech rights as defense against DOJ suit. Floyd Abrams, noted first amendment expert, is their lawyer.

  2. rd says:

    The financial sector realizes that they have stripped the flesh off of the small investors around the country with high fees as well as rigging the game so that the wealth is now transferred to the top 1%. also, their profits have been coming from exorbitant fees and expenses but now the evil government is unnecessarily requiring that fees and expenses need to be declared in one of their biggest money-makers, 401k plans, so the jig is almost up.

    However, their annual bonuses still need to be paid so it is time to move on to where the money has been transferred to. By setting up “special” stock exchanges for only wealthy “sophisticated” clients, they can hopefully recreate the high fee opaque system that has been a magic money maker for Wall Street over the past decade or two. If you can keep telling these “sophisticated” people that these opporutnities are so good that the average man on the street can’t even hear about them, the “sophisticated” people will be flocking to hand over their money. Madoff is probably very proud of the finacial sector now.


    BR: Most of the financial sector doesn’t give a rat’s ass about the small investor. That’s not where the money is . . .

  3. rd says:

    I think a lot of potential retirees between 55 and 65 are working for the health care benefits before they are eligible for Medicare. Fewer and fewer employers are providing healthcare benefits to retirees. COBRA is often limited to a couple of years, after which you are on your own in a very unfriendly private individual insurance pool.

    Also, even employers that were offering them generally drop them if they declare bankruptcy which has happened to a lot of large companies over the past decade, so even a 62 year old collecting a pension may not have access to health care coverage.

    Often part-time workers can participate in an employer’s health insurance program by paying for it – this can be a major money saver because they get into group insurance rates which can be a fraction of the individual rates. The group rates can be half or less of the individual rates so the magnitude of the savings can be on the same order as the part-time pay itself.

    It will be interesting to see how ACA impacts this whole dynamic over the next few years.

  4. eliz says:

    Speaking of the housing market (in ref to Calculated Risk entry): I think David Stockman nails what’s going on in his Yahoo! Tech Ticker appearance today.

    See this link .

  5. eliz says:

    Healthcare (in ref to Everybody’s working for… entry) costs and delivery have got to change. I don’t hear one person in Congress promoting anything radical – and the change needs to be radical.

    First off, let’s start with requiring every health provider to publish online, in a standardized format, a list of prices for every procedure. Surely these are already coded into their billing systems — they just need to report them, sortable by CPT code as well as Procedure Name. If they have a negotiated price for a particular carrier, those variations need to be listed as well: Carrier (or “None”), Procedure Name, CPT code, Price. Any other variations – must list them. This would be a huge first step in adding competition to the market. Surely, both sides of the aisle could agree on this. ** Exemptions could exist for tiny practices, with a dollar revenue threshhold (or something similar) and concierge practices.

  6. catman says:

    God I hate Bachmann Turner Overdrive – but I scooted out the door the first day my health care was assured.

  7. S&P is one..

    though, what about MCO (Moody’s)?

    or, do they catch a (further delayed) Pass as, yet, another ‘Welfare’ Pay-Off to ol’ Uncle Warren?

  8. Bridget says:

    Oh goodie. Everybody can now quit working for their heathcare benefits and get subsidies from those who are working in order to pay for the outrageous amount of Obamacare premiums. On account of Obamacare has done NOTHING to address the major problem with our healthcare system, which is cost.

  9. gd says:

    Health insurance driving retirement decisions? They need to get out more. Everybody in the real-life working world and above the age of 30 has been making decisions about their lives driven by health insurance concerns for a decade or two. The single most effective thing anybody could do to promote entrepreneurs, small businesses, and overall economic growth in the USA is to remove the burden of supplying health insurance from employers.

  10. Bridget,

    interesting point, esp. when understood through the “Cost/Volume” -Prism..

    We forget that ‘BigGov’ is ‘BigBusiness’ ‘ Best Friend…

    here’s one take on it..

  11. mad97123 says:

    John Hussman takes himself to the woodshed.

    “.. here’s a guy who had compiled a great record by early-2009 (anticipating a market loss which incidentally erased every bit of return achieved by the S&P 500 in excess of Treasury bills, all the way back to June 1995), and yet, seemingly unable to invest his way out of a paper bag during the recent bull market advance.”

    Fun summary at the end of the piece.

    “I’ll end with a review of how we can expect market psychology to evolve over the completion of the present market cycle. It’s the same sequence that I suggested in April 2000:

    “This is my retirement money. I can’t afford to be out of the market anymore!”

    “I don’t care about the price, just Get Me In!!”

    “It’s a healthy correction”

    “See, it’s already coming back, better buy more before the new highs”

    “Alright, a retest. Add to the position – buy the dip”

    “What a great move! Am I a genius or what?”

    “Uh oh, another selloff. Well, we’re probably close to a bottom”

    “New low? What’s going on?!!”

    “Alright, it’s too late to sell here, I’ll get out on the next rally”

    “Hey!! It’s coming back. Glad that’s over!”

    “Another new low. But how much lower can it go?”

    “No, really, how much lower can it go?”

    “Good Grief! How much lower can it go?!?”

    “There’s no way I’ll ever make this back!”

    “This is my retirement money. I can’t afford to be in the market anymore!”

    “I don’t care about the price, just Get Me Out!!””

  12. willid3 says:

    hm…well until we get rid of the fee for service health care system, cost isn’t going to change, it will continue rising. cause thats part of the problem, the other part is monopolies in insurance and providers. if you can’t solve for both, you are wasting your time and effort. and trying to do that cross state boundary thing for insurance is a sure loser. try getting help from the insurance board in a different state. you wont get any they dont care if you dont live in their state (they barely care if you do, so being out of state puts even farther down that list of priorities). and tort reform doesnt work, some of the states with (red one Texas, blue one California) still have high health care costs. and trying to be an informed customers without becoming a doctor, is hopeless, can you compare procedure or drugs for any particular health condition> think not..unless you are already a doctor

    and that auto bailout? actually save money

    When a private-sector company shuts down, it lays off its workers, shutters its plants, and walks away. The private costs largely disappear. But that is when public expenses arise. Unemployed workers stop paying taxes and start receiving unemployment insurance and welfare payments. Their private health insurance gets replaced by Medicaid or Medicare. Their pension costs transfer to the government’s Pension Benefit Guaranty Corporation. Previously paid corporate and property taxes become lost government income.

    But the impacts don’t stop there. Shutdowns affect firms that did business with the bankrupt company. Whether they supplied goods, provided services, or were landlords, their revenue falls. Since unemployed workers spend less, companies that sold them goods suffer as well. Tax revenue drops as a consequence.

    Given the extended web of negative effects a collapse in the vehicle sector would have created, it is no wonder the bailout was estimated to have prevented a loss of about one million jobs. The bailout saved all levels of government a massive amount of expenses the layoffs would have created.
    Consider what an additional one million people receiving unemployment insurance payments would have meant. At an average of about $16,000 per year, roughly $16 billion a year – for up to 99 weeks – would have been paid out. Total cost: at least $25 billion.

    The federal taxes lost from those workers, assuming an average income of $35,000, would be roughly $8 billion a year, every year. Add in a few billion dollars for health care and pension costs and the federal government alone would have had to pay out an extra $25 billion to $30 billion a year. State and local government tax losses and welfare cost increases are not even in that total.

    so maybe on balance the bailouts for companies that employ lots of workers (more than wall street does). and buys lots of materials, services and parts, have a lot bigger impact than a company that doesn’t. and employs less any way

  13. swag says:

    Kai is all the rage this afternoon:

    Hitchhiker uses hatchet to save woman from bear hug attack, gives best NSFW interview ever


    BR: Awesome!

  14. Lyle says:

    Actually the proposal re the small cap companies is consistent with the way the SEC has worked for years. The only extension is creating an exchange. Accredited investors have always had access to items that the general investing public can’t access, but this in general allows them to be more easily fleeced. The concept dates from 1933. The theory is of course at that level one is supposed to know what one is doing, but of course the recent crisis demonstrates that even financial advisers did not know very much about things (the cdo’s et al. were available to the accredited investor). All this proposal does is to formalize the mechanism, that was partly set up last year. and provide a way for those investors to get in and out. So its not really anything new, check out accredited investor in Wikipedia for more details on the history of the concept.

  15. drewburn says:


    I think you deserve a little “gloat” time on S&P. Given McGraw Hill treated you so shabily with “Bailout Nation.” Take an “I told you saw bow.”

    It boils my blood. I’m a very sophisticated individual investor. These people almost destroyed this nation. Not just S&P, but the banks, obviously. And almost no one has been called to answer, to serve their time. Disgraceful. Even some of the new “masters” should be held as they’ve covered up old crimes. My God, what have we become.

    You nailed it with Bailout Nation; I’m a proud paid owner of the hardcover. Things just go on so long, the pendulum sweeps, the momentum continues…………..until. So many obvious crimes. Oh, God, I’m getting poetic, I do that….. Sorry.

    Thanks Barry. Keep up the good work.

  16. VennData says:

    Goldman Sachs hired to improve Russia’s image for $500,000

    That’s right, Jeffry Dahmer is not available.

    If the squid doesn’t work out they can hire Wayne LaPierre and the NRA Gun lobbyists.

  17. Joe Friday says:

    Fran Tarkenton rides his stupidity horse to Phil Mickelson’s rescue, while flogging all the standard RightWing myths:

    * “Should a private citizen, no matter how successful, really owe the government more than half of what he or she makes?” (Nobody does)

    * “More taxes lead to less government revenue because overtaxed businesses and higher income individuals depart for more business-friendly states (Debunked gibberish)

    * “…the cost of the corporate income tax – now the highest in the developed world” (More than 2/3rds of corporations pay ZERO taxes, the rest pay less than 5%)

    * “Our nation must lower tax rates to be more competitive and to incentivize businesses to invest and job creators to grow their businesses. Pro-growth policies will lead to more businesses and more jobs; these jobs will create more taxpayers and government revenue.” (Taxes are the lowest in more than six decades and cutting tax rates is definitively not pro-growth, it reduces revenue not increases it)

    How does a person allow themselves to become this ignorant ?

  18. GoBigRed says:

    I am reading Bet the Farm; How Food Stopped Being Food by Fredercik Kaufman.

  19. beaufou says:

    I’m not gonna rag on baby boomers but they could have thought about healthcare costs a while ago.
    Obviously they were too busy deregulating a system that wasn’t giving enough back out of the pockets of real work. Credit and 401ks were going to keep you warm at night, paying interests on the promise of a future wage and letting dividends win the day, wages? who needed wages and unions and all those worky/socialist things?
    oh well…don’t let those healthcare costs hit you in the butt on your delayed way out, you may after all still suck the life out of the young workforce for a while, don’t forget to work for a few bucks less, that really helps the economy too.

    Still though, we have to remove the “care” from healthcare, caring isn’t having a cost 70% higher than other economies with similar incomes or having a cumulative real per capita spending of 4.9 times as much as GDP since 1960, caring isn’t spending 5 percentage point of GDP higher than the next punter in the OECD. Someone needs to tell doctors finance is the money thing, or supposed to be, you don’t even need insurance for malpractice, you’ll get a bonus for it.

    No matter how many committees you round up in DC the problem will still be capping the cost of meds, 50 high-selling pharmaceuticals cost 60 percent more in the United States than in Europe, hospital interventions (including the normal delivery of a baby, a Caesarean section, a hip or knee replacement, etc.) cost 60 percent more in the United States than in a selection of other countries. Someone somewhere is making a lot of dough out of this and it isn’t the patients…
    Obama did the healthcare thing but didn’t address the main problem, cost of meds, thanks to those ever so proud Republicans who would rather enrich their buddies while whining about deficits.

  20. farmera1 says:

    So the real ways out of an excessive debt bind are: 1) Depression 2) INflation. Thought that for a long time and just hope Bernanke and the boys are smarter than I am. The inflation door “can” lead to all kind of bad things. If it truly gets out of hand, governments fall.

  21. rd says:


    Historically small investors had a reasonable amount of wealth and the financial sector used their 2% expense ratio mutual funds with 5% loads along with expensive brokerage accounts to extract a tidy percentage of that. However, as wealth shifted to the top few percent while low expense investing options proliferated over the past 30 years, the small investor has ceased to be a source of income and therefore interest to Wall Street.

    I first really noticed the trend in the late 90s and early 2000s when many mutual fund managers quit and started hedge funds to cater to the top few percent and pension funds. I wondered at the time just how many successful Soros’s there could be out there given the laws of averages and big numbers. However, you have to generate profits to make lots of money which the hedge funds, especially the major bank run ones, have been struggling to do. So now, Wall Street is looking at the top 1% and essentially going back to the good old days of pink sheet pricing for opaque investments for them. I assume they plan on treating these investors the same way that they treated the MBS customers. I wonder how often they will structure these investments so that a John Paulson can be shorting them in a back room.