My longer form weekend material, expertly curated for your reading pleasure:

• The best investment advice you’ll never get (Modern Luxury)
Shameful: How the Pentagon’s payroll quagmire traps soldiers (Reuters)
• The Water-Park Scandal and Two Americas in the Raw: Are We a Nation of Line-Cutters, or Are We the Line? (Esquire)
• Risk Parity edition (Abnormal Returns)
• In America’s Pastime, Baseball Players Pass A Lot of Time (WSJ) but see In Defense of Baseball’s Lazy Pace (WSJ)
The Road To Resilience: How Unscientific Innovation Saved Marlin Steel (Fast Company)
• How the media outrageously blew the IRS scandal: A full accounting (Salon)
Disruptions: How Driverless Cars Could Reshape Cities (Bits) see also The wastefulness of automation (Pieria)
• Internet trolls: What to do about the scourge of the Web? (CNN)
• How wonder works (Aeon)

Whats up this weekend?


Bruising Quarter for Bond Fund Managers
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.

18 Responses to “10 Weekend Reads”

  1. RW says:

    When government debt becomes politically toxic even though it is absolutely essential to maintaining a country, doubly so during economic contraction (when the usual suspects make it even more politically toxic), then what’s a poor technocrat to do …and how is that to be dealt with later, eh? The paper referenced in the article lays out facts and asks the question but ….

    How do you restructure a contingent liability?

    …European countries especially have turned to sovereign guarantees as a way of masking the true size of their national debt. Many of these guarantees, once upon a time, would have simply been sovereign loans: the nation would have borrowed the money, and then lent it on, at a modest profit, to the borrower. But European countries want to do everything in their power not to borrow money right now. So instead of lending and borrowing, they simply guarantee a borrower’s debt instead. That brings down the price of debt for the borrower, but it doesn’t show up in any national debt-to-GDP statistics. …

    …contingent liabilities are going to have to be addressed somehow, in future restructurings, but no one knows how. If you thought that sovereign debt restructuring has been difficult until now, you ain’t seen nothing yet.

  2. dyspeptic says:

    Leave it to CNN to tackle the great issues of 2006

  3. willid3 says:

    how come is it we are ok with large farm spending bills?
    when the numbers of farmers is down to about 1 -2 % of the population (just a side note, in the Roman empire that was a lot closer to 98%, or go back a century in the US and it would be closer to 50% here in the US). wonder how it now works outs, during the depression farmers were still a large percentage of the population, wonder how that impacts the US when we have the new small depression in a few years.

    wonder how well it will pass when it goes to the senate since it has now lost the other half of the coalition that helped get it passed.

  4. Petey Wheatstraw says:

    “Shameful: How the Pentagon’s payroll quagmire traps soldiers”

    Dig down deep enough in this bankrupting, incompetent, pile of shit, and what do you find?

    Dick Cheney (with his half-absorbed, homunculus twin, Donald Rumsfeld).

  5. RW says:

    The bond market may have overreacted recently but it wasn’t stupid: This was not the first time the Fed signaled a willingness to tighten, something it had not only done before but done with follow-through.

    the Federal Reserve Prospectively Tightened Massively in Late Spring 2013

    “Once is happenstance. Twice is coincidence. Three times, it’s enemy action.” -Auric Goldfinger

  6. VennData says:

    Metta World Peace Says NBA not an Option Next Season

    ​He’s going to Syria, then Egypt, then Sheremetyevo, After that he’s flying to Pyongyang with Rodman, RIchardson and Rubio. And finally to the Congressional fiscal 2014 Budget Reconciliation.

    ​Metta in 2016​

  7. Francois says:

    “How the media outrageously blew the IRS scandal”

    I’ll be very blunt here: name me one “scandal” that, over the last 2 decades, the media didn’t outrageously blew when the originator of the “scandal” was the Republican Noise Machine?

    I am sooo waiting for a refutation.

  8. Rationality says:

    The Water-Park Scandal and Two Americas in the Raw: Are We a Nation of Line-Cutters, or Are We the Line? : Funny, I was at Whitewater in the past two weeks myself and initially had the same thoughts about cutting line (as I used the higher-level fast pass). On one side I think maybe it’s not quite right, but the on the other I look at the bigger picture and realize I drive a nicer car and live in a nicer home than the majority as well. Is that right, or should I succumb to the norm and strive just to be the same as everyone else? Maybe go out, and instead of paying for a fast pass, I elect to waste a couple hundred on a stupid tattoo? Or maybe go to the all I can eat buffet a few times a month? Maybe buy a few more six packs of natty light? I don’t have to look at my kid in the long line and tell them: “sorry darling, I couldn’t afford the fast pass cuz I spent 100 bucks last night on a bottle of Patron” (so all my friends would think I waz cool). Nonetheless, the bigger picture argument of the article isn’t missed. I agree that buying influence in Washington to get pork into a bill, or tailor fit regulations in banking is a major issue…. but can you really tie a fast pass at Whitewater to paying to become an ambassador to a country? Or contributing to a campaign so that you get to help write a bill regulating your industry? Seems pretty far fetched. My thoughts would be that at Whitewater, it’s your election to not waste here, so you can spend there. In Washington, my opinion is, it is much more sinister than that. Of course, the validity of anyone talking Democrat and Republican is immediately suspect, as this writer did. Give me a break if you really think the same BS buying of Senators/Congressmen/favor of Regulations/Bills doesn’t occur on both sides.

  9. RW says:

    This is amusing in a depressing kind of way.

    Fish in a Barrel, Rick Santelli Edition

    … back in 2009-2010, as the Fed greatly expanded its balance sheet, there was a real debate over consequences — with each side making falsifiable predictions. One side said that the Fed’s moves would be hugely inflationary; the other said that expanding the monetary base in a depressed economy that was, furthermore, in a liquidity trap wouldn’t be inflationary at all. Years have now passed, and reality has closely tracked the liquidity-trap view. Argument settled, right?


    For the most part, the inflationistas have quietly dropped the whole inflation thing, never admitting that they made a wrong prediction, and gone on to demanding the same thing as before — but with a new rationale, financial stability. A few have supplemented this strategy by spouting what appears to be gibberish.

    But some have moved even further, vehemently denying that they ever said anything about inflation, that it was always about something else. A prime case in point is CNBC’s Rick Santelli, who flatly declared, “I never said it was about inflation.”

    Of course, Business Insider went back to the tape, and found Santelli back when not only declaring “of course I’m talking about inflation”, but going the full Weimar.

    …I guess what gets me about all of this isn’t just the bad economics, it’s the stunning lack of menschlichkeit.

    What gets me is not just how a falsified prediction causes less honest debaters to move the goalposts — in public figures this isn’t just cognitive bias, it is a contempt for audience that could eventually become costly, at least one would hope — but how falsification appears to be irrelevant to policy determination: mostly what we seem to get is a doubling down of failed policy with different reasons attached while technocrats struggle to keep everything afloat via increasingly arcane stratagems because the normal strategies are forbidden.

  10. Jojo says:

    Four Years Into the Recovery and We’re Just a Fifth of the Way Out of the Hole Left by the Great Recession
    By Heidi Shierholz | July 5, 2013

    The June 2013 employment report, released this morning by the Bureau of Labor Statistics, marked four years since the official start of the recovery in June 2009 with stronger job growth than we have been seeing. The economy added 195,000 jobs in June and an upward revision to prior months’ data brought the average monthly job growth of the last three months to 196,000.

    The average growth rate for the previous 12 months was 169,000, so the current rate is an improvement. However, the current pace of job growth is still slower than what’s needed for the economy to return to full employment any time soon. At this pace, it will be more than five years until we get back to the prerecession unemployment rate.

    The numbers show that we have made surprisingly little progress over the last four years undoing the damage caused by the Great Recession. One of the best measures for assessing that progress is the employment-to-population ratio (EPOP), which is simply the share of the working-age population with a job. The EPOP is currently 58.7 percent, up one-tenth of a percentage point from May but still 4.6 percentage points below the EPOP of 63.3 percent in early 2007. Some of the lack of progress in the EPOP can be explained by demographic trends such as retiring baby boomers and increasing college enrollment of young people. To get a cleaner read of trends in job opportunities we look at the EPOP after removing young people and people near or above retirement age. As the figure below shows, the employment-to-population ratio of “prime-age” workers–workers age 25-54–dropped from over 80 percent in early 2007 to 74.8 percent at the end of 2009, and has since increased to 75.9 percent. In other words, we are four years into the recovery, and we have climbed only about one-fifth of the way out of the hole left by the Great Recession.

    No improvement in the number of involuntary part-time workers in a year and a half

  11. Jojo says:

    Too cool. Say goodbye to human soccer players. We don’t need no stinkin’ hu-mans any more!
    RoboCup 2013 Standard Platform FINAL: GERMANY / GERMA

  12. ami_in_deutschland says:

    So many of the articles I’ve read about the impact of driverless cars (including the one above) fail to mention perhaps the greatest ramification of their coming introduction: the sudden switch on a massive scale from car ownership as the typical basis for vehicular usage to one based primarily upon fee-based mobility services. For the vast majority of people, when a car or other appropriate vehicle can be summoned within only a few minutes, there simply won’t be an adequate reason to actually own an automobile anymore.

    The more I’ve given thought to the financial aspects of driverless cars, the more I’ve become convinced that the transition to them will also take place at a surprisingly rapid rate. Assuming they will successfully reduce the risk of accidents to near zero (certainly still needs to be proven, but so far it looks likely), the actuarial equations will gradually result in an increase in the cost of insuring oneself as a driver, and this in an acceleratingly compounded way in direct correspondence to the shifting ratio of driverless to standard cars. I think the vast majority of people will suddenly discover that sitting behind the wheel of a car is a luxury they won’t be able to afford.

    • Jojo says:

      Then there are the unintended consequences (or benefits).

      - Will car theft evaporate with driverless cars? Will the car say I am not going to drive you anywhere unless you have a matching iris scan?

      - Will car insurance rates decline to zero if there are no thefts and no accidents? What will this do to the revenue model in the insurance industry? How about your local insurance office? Will this cause a decline from the common one, two or more agent offices within a couple blocks of each other?

      There is much discussion of the impact of driverless cars on the web. Do a search.

  13. 873450 says:

    Amar G. Bose, Acoustic Engineer and Inventor, Dies at 83

    “Amar G. Bose, the visionary engineer, inventor and billionaire entrepreneur whose namesake company, the Bose Corporation, became synonymous with high-quality audio systems and speakers for home users, auditoriums and automobiles … focused relentlessly on acoustic engineering innovation. His speakers, though expensive, earned a reputation for bringing concert-hall-quality audio into the home … by refusing to offer stock to the public, Dr. Bose was able to pursue risky long-term research, such as noise-canceling headphones and an innovative suspension system for cars, without the pressures of quarterly earnings announcements. In a 2004 interview … he said: “I would have been fired a hundred times at a company run by M.B.A.’s. But I never went into business to make money. I went into business so that I could do interesting things that hadn’t been done before.”

    “Dr. Bose’s devotion to research was matched by his passion for teaching. Having earned his bachelor’s, master’s and doctorate degrees in electrical engineering at the Massachusetts Institute of Technology in the 1950s, Dr. Bose … joined the M.I.T. faculty in 1956. He taught there for more than 45 years, and in 2011, donated a majority of his company’s shares to the school. The gift provides M.I.T. with annual cash dividends. M.I.T. cannot sell the shares and does not participate in the company’s management … His popular course on acoustics was as much about life as about electronics, said Alan V. Oppenheim, an M.I.T. engineering professor and a longtime colleague. “He talked not only about acoustics but about philosophy, personal behavior, what is important in life. He was somebody with extraordinary standards,” Professor Oppenheim said.”

  14. Willy2 says:

    Has the Obama administration ordered a media campaign to get the US military (financially) more under control ? Not that don’t like that, but when even the Washington Post starts reporting on this kind of issues then there’s a major change coming.

    And the (financial) figures have turned their back on the US. Today the US financial situation is much worse than under the Bush administration (i.e. a much larger budget deficit in combination with a much smaller Current Account Deficit).

  15. Willy2 says:

    Even the “financial maestro” Gundlach has suffered losses. That’s what you get when interest rates rise. What do you mean “financial maestro” ?

  16. patslatt says:

    Modern Luxury

    Investment managers claimed in the past-truthfully I believe-that managed portfolios easily outperformed the stock markets of emerging markets before subtraction of management fees. That’s because those stock markets have been inefficient for lack of quality investment research and management.

    This supports Sharpe’s belief that ownership of index funds may be getting so large as to reduce the efficiency of the US stock market. Investment managers could use that viewpoint to justify their attempt to beat the market,though not to justify their exorbitant fees.

    • No, you have it pretty much all wrong

      Most managed (read active) portfolios underperform their passive (read index) portfolio competitors. Typically, 60-80% of managers miss their benchmarks. Look at the data for the past 1 5 10 and 20 years.

      As to Bill Sharpe, the last I read he was criticizing the high fees of active managers.