Good snowy New York morning. My commute is a mess, trains are running way ate. Here is what I’m reading while the Long Island Railroad figures out that it snows in the winter:

• Sundown at the Permabear Alamo (Reformed Broker) see also PermaBear to English Translation Guide (TBP)

• Technological Miracles Will Keep Generating Profits and Jobs (Crossing Wall Street)

• Bond Vigilantes Christmas Quiz 2014 (Bond Vigilantes) see also Unperturbed by Government Shutdown, China Buys More Treasury Debt (WSJ)

 

Continues here

Category: Markets

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.

16 Responses to “10 AM Tuesday Reads”

  1. rd says:

    More proof that the Global War on Terror is getting in the way of just about everything and simply needs to go away:

    http://investigations.nbcnews.com/_news/2013/12/15/21911592-climate-change-experts-fraud-was-crime-of-massive-proportion-say-feds?lite&preview=true

    • ilsm says:

      rd,

      In pentagon environment, this guy is a duffer!

      Unlike the pentagon, EPA has passed their GPRA financial audit, image what is going on in the pentagon………..

      At pentagon this kind of fraud is done at stand up meetings, intent on keeping everyone at high speed, not thinking what they are doing, devising ways to spend money, violating the Bill of Rights and making everyone think they are securing the country.

      • rd says:

        As far as I can tell, those pesky troops constantly needing supplies and equipment that are actually of use (as well as claiming to requiire medical and mental health care after serving in war zones) are simply getting the way of the real purpose of the Pentagon which is to funnel public money to military contractors in important Representatives’ districts.

        However, I thought it was really cool that this guy could be Walter Mitty for years simply by bluffing. It takes Madoff-level balls to pull it off for this long. I wonder if they will be roomies?

  2. RW says:

    One of several pet peeves: The (apparent) unwillingness of even the more credible news orgs to appropriately inform their readers. Felt the same when Republican Senators dislike of the House budget deal was discussed on NPR and everyone seemed to take the explanation that their disapproval was due to “lack of spending real cuts and entitlement reform” seriously.*

    When Does the NYT Plan to Start Putting Budget Numbers in Context?

    It’s not likely many readers would have understood that the budget deal implies the continuation and extension of large cuts in domestic discretionary spending relative to its historic path. At the prompting of its public editor, Margaret Sullivan, the NYT committed itself to expressing numbers in a way that is meaningful to its readers. It’s difficult to see any evidence of progress toward this end in this piece on the budget.

    *As noted in the quote above, the budget deal has more spending cuts over time (just does so less ‘blindly’ than the sequester) and has nothing to do with entitlement spending because, among other things, the separate Social Security and Medicare have nothing to do with the federal operating budget (you could look it up).

  3. rd says:

    Interesting article here about the wealthy using zeroed-out trusts to avoid paying capital gains taxes and estate taxes:

    http://www.bloomberg.com/news/2013-12-17/accidental-tax-break-saves-wealthiest-americans-100-billion.html

    Sheldon Adelson asks “How many times do you have to pay taxes on money?”

    A simple answer to this is that transferring an asset at a stepped-up basis without paying a capital gains tax on the step-up means that the capital gains tax was never paid and will never be paid. The money that was used to buy the original asset may have had taxes paid on it, but it is customary (except in his rarified world or on sale of many peoples primary homes) to pay a capital gain tax on the increased value when the asset is sold. Capital gains are already preferentially taxed, both by deferring the payment of tax until a sale is realized and at a preferential rate compared to ordinary income.

    I believe that people who make money should be able to enjoy it at non-punitive rates. However, it is very bad policy to then allow them to transfer that money tax-free to future generations that did not earn it. A tax rate similar to the ordinary income tax rate at the time of transfer would be equitable compared to how the rest of society is taxed.

    A parallel example for normal working stiffs is tax-deferred savings vehicles where the trade-off between being able to accumulate assets without paying interim taxes on capital gains, dividends, and interest paid during the accumulation years is that the money is taxed as ordinary income when it comes out of the tax. There is also a penalty tax if it is used early for a purpose other than intended for retirement etc. The only exception to this process is Roth IRAs and 401ks where future taxes are not taxed but there are strict limits on how much can be managed this way.

    Why should the wealthy have trusts that can simply bypass this taxation process entirely for almost unlimited amounts of money? There are distinct social benefits to having limited amounts of tax-free money for working people so that they will not be poor during retirement. However, there are very few social benefits that arise from creating a hereditary aristocracy based on untaxed transfer of wealth between generations – this is a very un-American concept.

  4. willid3 says:

    are buybacks actually driving the stock market?

    http://www.washingtonpost.com/business/economy/companies-turning-again-to-stock-buybacks-to-reward-shareholders/2013/12/15/58a2e99c-4aef-11e3-9890-a1e0997fb0c0_story.html

    since companies are having trouble increasing revenue (sales. for some reason consumers really aren’t buying like they used too) and since they have no reason to invest more in the business (since they do have much increased sales or see much incentive to do so) they have resorted to by backs to increase stock prices.

  5. Jojo says:

    Technological Miracles Will Keep Generating Profits and Jobs

    “Here’s a safe prediction: We don’t know what the world will look like in 50 years, but the most important innovations are probably taking shape now, in the form of the 50th or 100th failure in some university or corporate laboratory, or in some tinkerer’s garage. Creativity did not die with Steve Jobs. What we once considered wildly innovative – like phones with cameras or a talking GPS in your car – are considered normal now. What’s next? Bitcoins you can trust? 3-D imaging for something more beautiful than guns (violins, perhaps), delivered in 30 minutes by an Amazon drone? Or how about a hyper-loop bullet car taking you 300 miles in 30 minutes? Or a trip to space, orbiting the earth or shooting off to the moon?

    We have no idea what tomorrow will bring, but somebody, somewhere, is inventing tomorrow today.”
    ———–
    And here’s another safe prediction – Technology advancement [nearly?] always destroys more jobs than are created. This is the point that most everyone, including this Gary Alexander fellow, chooses to ignore.

    A steady or increasing birthrate will birth ever more people but with every technology advancement taking away jobs, net net, the unemployment rate is sure to grow with each passing year.

    • NoKidding says:

      I think you’re leaving some factors out.

      Population estimate foy year 0 : 200 million
      Population estimate foy year 2103 :7 Billion

      Assuming full employment in the Roman empire, less than three percent of us should have a job.

      An alternative theory is that as the value of doing what was once thought productive activity approaches zero, the value of doing what was once thought unproductive rises from zero.

      Examples: What was hourly Beijing weather worth to a Roman? The value of the Fruit Ninja franchise to industrial Britain? Butler statues for holding up single wine bottles for Marie Antoinette? Frozen pizzas on the Oregon trail? Right this second I’m wearing a bandaid on my thumb with a purple cartoon teddy bear print – it was somebody’s job to design this. WTF is a bitcoin worth beyond intellectual property and confidence? A bitcoin had zero value for 6000+ years of humanity.

      There is a market reselling high level online computer characters. A fraction of the population is earning money playing games and selling the results.

  6. willid3 says:

    seems we leaned to not use credit cards as much

    http://www.ibtimes.com/credit-card-users-are-paying-down-balances-lot-faster-they-used-1511748

    but seems like the amount of reduction just rolled into student loans?

  7. rd says:

    Diversification is very important, bith biologically and financially. Here is an example of the results of poor bio-diversity where a single species (Cavendish banana) has been adopted world-wide as the universal banana:

    http://blogs.marketwatch.com/thetell/2013/12/17/banana-fungus-spreads-threatening-breakfast-minions-and-more/

    I have been addressing increasing bio-diversity and reducing invasive speces on some projects recently. It is amazing how big of an issue it has become, although it is only really popping up on the radar screen now as a policy matter. We are now seeing some real activity on the regulatroy front with outright bans on nursery stock etc. However, it will be a while before the real routes of entry, mainly in shipping ballast water and commercial shipping (pallets, packaging etc.) are addressed as this would involve real costs to the private sector (privatization of profits and socialization of costs again).

  8. ch says:

    RE: Unperturbed by Government Shutdown, China Buys More Treasury Debt (WSJ)

    Article celebrates the fact that China bought $10.7B more in US Treasuries in October, nearly all short term (< 1 year debt.) What type of long term debt was China buying? The zero coupon, infinite duration kind: $5.2B of gold in October.

    So if China didn't want the US' long term debt, who bought it? The Fed, who bought $45B in October, dwarfing China's total UST buying.

    The largest foreign creditor of the US prefers gold to the long term debt of the US, leaving the Fed to buy the biggest chunk of long term debt from Treasury…I'm left wondering why there's a debate about whether there are any bubbles out there or not…

  9. intlacct says:

    re: ‘sundown on the permabears’: Confucious say “When you lose say little; when you win say less.” Put another way, grasshopper: you are becoming a contrary indicator.

    What do I suggest reading instead?

    http://www.baruch.cuny.edu/president/messages/December_13_2013.htm

    Prudent speculators would do much better to read the Philosopher King of Accounting’s entire ouvre (my personal favorite was ‘Dirty Pooling’ – how long did it take to change the practices decried therein? just 34 years.):

    Briloff, A. J. 1958. Price level changes and financial statements: A critical reappraisal. The Accounting Review (July): 380-388. (JSTOR link).

    Briloff, A. J. 1961. Price level changes and financial statements at the threshold of the new frontier. The Accounting Review (October): 603-607. (JSTOR link).

    Briloff, A. J. 1964. Needed: A revolution in the determination and application of accounting principles. The Accounting Review (January): 12-15. (JSTOR link).

    Briloff, A. J. 1966. Old myths and new realities in accountancy. The Accounting Review (July): 484-495. (JSTOR link). (Discussion of three accounting myths related to: 1. The Gap in GAAP, 2. The communication Gap regarding the auditor’s responsibility, and 3. The communication Gap related to management services and auditor independence).

    Briloff, A. J. 1967. Dirty pooling. The Accounting Review (July): 489-496. (JSTOR link).

    Briloff, A. J. 1967. The Effectiveness of Accounting Communication. Frederick A. Praeger, Inc. Review by T. J. Burns. (JSTOR link).

    Briloff, A. J. 1972. Unaccountable Accounting. HarperCollins. Review by H. E. Milller. (JSTOR link). See also Benston, G. J. 1974. Unaccountable accounting. Journal of Accounting Research (Autumn): 348-354. (JSTOR link).

    Briloff, A. J. 1974. Prescription for change. Management Accounting (July): 63-65, 71.

    Briloff, A. J. 1976. More Debits Than Credits: The Burnt Investor’s Guide to Financial Statements. HarperCollins.

    Briloff, A. J. 1981. The Truth About Corporate Accounting. HarperCollins.

    Briloff, A. J. 1995. Review of Strengthening the professionalism of the independent auditor, report to the public oversight board of the SEC practice section. Accounting Horizons (September): 125-130.

    Briloff, A. J. 1996. America Online/ On a roll: A case study in investigative accounting. Behavioral Research In Accounting (8 Supplement): 1-11.

    Briloff, A. J. 2002. Beyond the Brilovian critique: A Brilovian rejoinder. Accounting and the Public Interest (2): 94-96.

    IntlAcct