My morning reads:

• Bond Funds: A Bond Market Plunge That Baffles the Experts (NYT) see also What’s Eating Munis? (WSJ)
• NFP: An outcome desired only by assholes (TRB)
• Useless extraction (The Research Puzzle) see also Money for Nothing (and Fund Losses for Free) (aiCIO)
• It’s A “0.6%” World: Who Owns What Of The $223 Trillion In Global Wealth (Zero Hedge)
• The Million-Dollar Illusion: Why Many Retirees Could Outlive a $1 Million Nest Egg (NYT) see also 140% Increase in Food Stamp Use Since 1990 (Real Time Economics)
• Wrestling with Reform: Financial Scandals and the Legislation They Inspired (SecHistorical)
Shiller: Want to Fix Social Security? Use the Right Wrench (NYT)
• For Sussing Out Whether Debt Affects Future Growth, the Key is Carefully Taking into Account Past Growth (Supply Side Liberal)
• Did Hipster Tech Really Save the Obama Campaign? (Wired)
• Scalia Gives Obamacare a Big Boost (Bloomberg)

What’s for Brunch?


Dollar vs. Stock Correlation Hits Multi-Year Extreme
Source:  Bespoke

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.

15 Responses to “10 Sunday Reads”

  1. chartist says:

    They should remove the cap on wages subject to social security taxation. Since CEO pays continues to escalate while lower wage workers lose, it only seems fair.

    • Joe Friday says:

      Actually, we should remove the cap and apply FICA to ALL ‘income’, not just wages, and then the rate could be lowered way down as well.

      To be ungrammatical, that would be even more fair.

  2. farmera1 says:

    A Little Genetically Modified Wheat won’t hurt you, unfortunately most of the world doesn’t agree

    This stuff, genetically modified food, makes most of the world very nervous. That is why Monsanto never went ahead and developed (sold) this kind of wheat (although it has been used in soy beans for several years). This genetically modified wheat can be sprayed with herbicides (Round-up) , and the spray will kill everything except the genetically modified wheat. Most of the world won’t eat this kind of wheat. In this country no problem, we eat anything. Now some of the research wheat got loose and showed up in the current wheat grown by a US farmer. Many other countries reacted immediately and shut off imports from parts of the US. This is a big economic deal for farmers.

    Another great example of self regulation and companies shooting themselves (and farmers) in the foot. Obviously on some level the cat is out of the bag, but nobody knows the extent or exactly how it all happened.

    • mavery says:

      Crazy thing is that a lot of the food that we already eat – from common variety corn (never used to be so sweet) to turkeys (never used to be so meaty) – is already genetically modified by us. That said, all I ask of the food industry is to properly label my food with what’s been modified. This way we can at least know what we’re eating.

  3. ironman says:

    The Great Dividend Raid of 2012 – how the risk of having tax rates triple on dividends sparked off a raid on money set aside to pay future dividends and a major rally for stock prices.

  4. ilsm says:

    @Shiller (NYT),

    How come US spends 3 times the part of GDP (“cut” to $500B a year in 2010 dollars) for making ready for war as the EU zone?

    But never looks at moving some largesse from the war industries, to have a safety net?

  5. rd says:

    $1 million nest egg:

    It is good to see that people are finally figuring out that 2% long bong yields and 2% stock dividends may impact retirees. I couldn’t figure out why the warning sirens weren’t going off on the 4% rule several years ago.

    Bill Bengen came up with the 4% withdrawal rule in the 90s based on 30-yr rolling averages of 5-yr bond and large cap stock portfolios with various weightings. I was surprised nobody had thought to do that analysis before, which is another example of how the financial industry was focused on selling stuff, not helpign their customers with lifelong needs.

    However, Bengen was working with the historical data set which did not include extended durations of both stock dividends below 3% and bond yields below 3%. Even in the Great Depression, stock dividend yields were high so stocks provided significant income even if their price stayed below the peak.

    So it has been clear since the Fed orchestrated a massive lowering of bond yields while the stock market has had very low dividend yields for over a decade, that the current conditions are well outside the data set used to calculate the 4% rule. However, I have seen the 4% rule over the past decade go from a well-intended and well-reasoned rule based on empirical evidence to an incontrovertible “fact” that is probably wrong at this time. My guess is that most financial planners don’t even know the origins of the 4% rule and how it was developed just a short while ago.

  6. rd says:

    I like the Arlington vs. FCC ruling.

    I deal with federal and state regulations a lot. One of the big problems is that Congress writes huge complex laws that require tons of detailed regulations. I also occasionally deal with Canadian laws, regulations, and guidelines. They tend to be much shorter, more focused, and are more end-point focused than the US ones.

    Canadian “You will accomplish this end point by this date – tell us how you plan to do it”
    US “In order to safeguard whatever, you will do the following unless it is a Tuesday in Alabama, in which case you must follow Rule 133(c)i but not in the years 2014 and 2017.”

    Somehow we need to get Conbress to write more principle-based and end-point focused laws that don’t require multiple reams of paper to print out and that require far less detailed regulation. This ruling makes it clear that if there are problems with the regulations, then it is probably Congress’s fault for writing a poorly-defined law and Congress should fix it.

  7. RW says:

    Mass Surveillance in America: A Timeline of Loosening Laws and Practices (ht TPM)

    Nothing new certainly but the scope and depth seems to really be ratcheting up faster and faster post 9/11. Some of that is probably due to technical capacity — “we are able to do it” becomes “we will do it” with precious little thought about whether “doing it” is a good or wise thing to do — but it seems clear we’re confronting a state of affairs in which surveillance is a permanent feature so, eo ipso, how democracy works in such a state (assuming it can) becomes a very pressing issue.

  8. S Brennan says:

    While I do agree with Shillers point; “the point of G.D.P. indexing is to align the interests of the retired with society as a whole… It shouldn’t be otherwise.” I don’t agree with his use of overt distortions to make it;

    Social Security’s designers DID see the “shifting demographics”, it was widely discussed and FDR had a particular interest in it, he actually forced the bill to be re-written on precisely that point.

    The public widely SUPPORTS the removal of caps on the payroll tax…it is after all the most regressive of all taxes.

    Obama’s message is anything but the “spirit of compromise”, it is a “complex” benefit cut that over 3/4ths of Americans OF BOTH PARTIES oppose.

    The purpose of Social Security is clear; “Social Security is a social insurance designed to protect citizens when they encounter social situations that make it difficult for them to provide for themselves. These protections include unemployment, old age and disability.” NOT family assistance, in fact, it is insurance for when a family is not present to help.

  9. > but it seems clear we’re confronting a state of affairs in which surveillance is a permanent feature so, eo ipso, how democracy works in such a state (assuming it can) becomes a very pressing issue.

    Which is why there needs to be transparency in these programs and clear safeguards against abuses . . . it is far too easy to say that this is just the way things are today and slowly let mechanisms be put in place that, if not now, later, become entrenched . . . and abusive.

  10. Joe Friday says:


    Meredth Whitney, of ‘state munis are gonna crash and we’re all gonna die’ fame, is back with a new book. In an appearance on Bartiromo’s “On The Money”, she now tells Maria of the wonders of the Texas Miracle: Low taxes, low wages, no pesky unions, very little regulations, is resulting in low unemployment.

    Except it’s not.

    Krugman has already covered this unmiraculous nonsense:

    A Short Course in Miracles

    Wages, Jobs, Texas, and the World

    More About the Texas Unmiracle

  11. Takeyourfinger says:

    High prices are driving more motorists to rent tires,0,1748795.story

  12. Willy2 says:

    “A Bond Market Plunge That Baffles the Experts”.

    Baffles ??? Anyone who took a close look knew bond(s) (funds) were overvalued.