My midweek reads to start the trading day (continues here):

• China’s Brewing Subprime Crisis (Bloomberg View) see also Chinese companies have racked up $14.2 trillion in debt—more than any other country on the planet (Quartz)
• Investment flows return to emerging markets (WSJ)
• Retirees Suffer as $300 Billion 401(k) Rollover Boom Enriches Brokers (Bloomberg) see also 401(k)s are a sham (Salon)
Chartfest: The Nation’s Economy, This Side of the Recession (NYT)

continues here

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.

20 Responses to “10 Wednesday AM Reads”

  1. chartist says:

    I’d like to add some of my own chartfest: Has anyone looked at that ascending triangle breakout on BP? That monthly chart is a thing of beauty and points to a target of $72.

  2. VennData says:

    So you’re going to buy into Alibaba?

    http://dealbook.nytimes.com/2014/06/18/citics-missing-alumina-prompts-concern-over-china-commodities-fraud/

    They’re willing to let slide an earnings drop to get their IPO out on 8/8.

    I’d pass, but hey, that’s just me.

  3. rd says:

    The constant whining about the problems with the retirement system is getting annoying. Instead of columns with whining, they should be outlining what they think are the solutions. Possibly an Australian mandatory contribution fund?

    There appears to be a perception that there was some long-term golden era for retirees. In reality, that was very short. Most people didn’t live long enough for retirement finances to be a major problem until life expectancy really started to climb with the enormous leaps in medical technology. Then there was a short golden economic era where many people actually were eligible for pensions and stayed long enough with one company to get a decent pension – that basically lasted for one generation.

    Now we are in what will likely be a long term “stable” environment with good longevity and self-funded retirements. We simply need to learn to deal with it. We have the twin towers of the private financial and healthcare sectors that are bound and determined to extract as much in fees as possible from a captive population. It is up to us to fight back.

    401ks have improved markedly over the past decade. There are still many problems but some of the new regulations are clearly having an impact despite the concerted effort of the financial sector to prevent them. It is not accidental that companies like Vanguard, T Rowe Price etc. are doing very well with growing assets. As more and more people figure out that the vast majority of the consumer-oriented financial sector are sociopathic snake oil salesmen but that there are simple low-cost solutions available that are easy to access, the better off we will all be. The same thing will happen with the health care sector as more and more data on costs becomes available so that the “invisible hand” can actually work. We can figure this out if we do as much research on retirement and health care as we do for buying flat screen TVs and cars.

    In my case, I have never been eligible for a defined benefit pension in over 30 years in the work place. 401ks, IRAs, and ESOPs are all tools I have made use of to slowly build a solid financial base. If the current 401k and IRA options were available 20-30 years ago, I would likely have significantly more money but the next generation has the opportunity to do that as they move forward. My kids are already socking away 10% plus in diversified tax-sheltered accounts with expenses less than 0.6%.

    The auto industry is a classic example of how things can improve. Deaths and injuries have plummeted as safety features were mandated by regulations, incentivized by insurance companies, and publicized in consumer publications. They are now major selling features for cars. The same as happening with fuel mileage. Graduated licensing by the stages with mandatory drivers ed and incentives for defensive driving classes provide training. A similar model can be used for retirement finances.

    • willid3 says:

      well most of the problem with retirement is that the vast majority of us dont make that much (usually around 30,000. a year. try saving for retirement on an income like that and you are likely to fail. and then of course the creator of the 401k has said that it wasnt designed to be the only source of retirement funding, it was suppose to be part of a it (along with pensions and SS).
      but many are leading us to the supposed golden land where its the only one.
      and its not a plan that will always succeed. as its depends as much as when you retire as much as how well you saved. or how much you earned

      • rd says:

        My kids that have been in the workforce for longer than a year have been making in the 30k-50k range and are saving 10%+. Its all about budgeting, especially at the beginning when saving should be the easiest and it has the longest time for growth. This should be taught in high school.

    • willid3 says:

      and while I am sure that the car business is a pretty good example of how it could work out. it did have to get pushed onto us, and the industry. and even then it has failures (that switch gate at GM. which seems to not just impact GM. but most of the other companies too as they all seem to be doing recalls for problems with the ignition switches). and i was rudely surprised when my daughter didnt have to take drivers ed to get a license. seems to be optional now days

      • rd says:

        It took some time to work out with an extended period of high rates of fatalities and injuries from the 1930s to the 1980s. However, today we are at the same fatality rate per hundred thousand of population (people, not drivers) as in 1920 when there were very few cars on the road.

        http://en.wikipedia.org/wiki/List_of_motor_vehicle_deaths_in_U.S._by_year

        Things like ignition switches are a big deal these days, because death and injury in a motor vehicle is becoming less common. That is similar to the current concern about cancer and other longevity diseases. People didn’t live long enough for those diseases to be a primary cause of death historically – they would have died of infection and other causes much earlier on.

        For retirement issues, we are now probably at the equivalent of the 60s and 70s for vehicle safety. The data is there saying that there are serious problems but we also know that there are solutions. However, the financial industry lobby generally still wants to maintain status quo. But the equivalent of seatbelts and 5-mile bumpers have been implemented and I expect that the safety bags and Electronic Stability Control types of things will be coming over the next decade or so. Seniors vote and once the baby boomers start to really see what is and is not working, they will be asking legislators to put changes in for their kids and grandkids.

  4. willid3 says:

    on that roll over scam, wonder how long it is before that stops because the court of public opinion no longer trusts those who sell them? or trusts their 401k (if they have one) to be of any use to them when they retire?
    we are back to having to live on credit because we can’t afford to live otherwise?
    isnt this what got us into trouble to begin with?

    http://www.marketwatch.com/story/americans-are-getting-into-debt-just-to-get-by-2014-06-18

    might have missed this
    but it seems that if you track inflation and company profits you notice that the match. so now we know where inflation has come from. but if wages were to go up? it would be the beginning us super inflation and lead us to Zimbabwe

    http://www.marketwatch.com/story/has-your-pay-gone-up-theres-no-reason-it-shouldnt-2014-06-13

    http://www.marketwatch.com/story/has-your-pay-gone-up-theres-no-reason-it-shouldnt-2014-06-13

  5. willid3 says:

    latest fad word disruptive the new think out side the box ?

    http://nymag.com/daily/intelligencer/2014/06/lets-all-stop-saying-disrupt.html
    and of course all disruptive change is good. just like all that financial change was good right?

    We know that not all disruptive change is good, of course. (As Lepore points out, “When the financial-services industry disruptively innovated, it led to a global financial crisis.”)

    • rd says:

      I believe Iraq is currently undergoing disruptive change. Based on current management magazine writings, that means they should come out of this stronger and more vibrant.

  6. VennData says:

    SEC budget means they can only fo after one in twenty Insider traders. Democrats want to fund the SEC.

    http://dealbook.nytimes.com/2014/06/16/study-asserts-startling-numbers-of-insider-trading-rogue

    So GOPers, If you ‘small gov’t at any price’ types want the other 5% to go free, that’s not too bright. You want all the petty crimes to not be prosequeted? You might want to read up on how incentives work.

    You country-club Republicans are getting ripped off by this. Does that make you happy?

    • willid3 says:

      well they should know better…

      because

      freedom!!

      besides its really only the .001% that count any way

  7. Jojo says:

    Sweet vindication… :-)
    =========
    Glenn Beck admits: Liberals got Iraq right
    By KENDALL BREITMAN | 6/18/14 6:57 AM EDT
    Glenn Beck is admitting he was wrong and liberals were right for opposing the invasion of Iraq.

    “[Liberals] said we couldn’t force freedom on people,” Beck said at the start of his Tuesday radio show. “Let me lead with my mistakes. You were right. Liberals, you were right, we shouldn’t have.”

    Beck’s comments came as he discussed the increasingly partisan divide in politics, saying, “We were a mess in 2008. … It hasn’t gotten any better.” The radio personality explained his feelings that in the past five years the country has been “ripped apart.” To fix this divide, Beck called on the American people have to come together on some issues, such as the VA scandal and Iraq.

    “From the beginning, most people on the left were against going to Iraq,” Beck said. “I wasn’t.”

    http://politi.co/1pfjnjM

  8. Jojo says:

    Chinese city holds dog-meat festival early to avoid animal-rights protests
    Yulin residents bring forward annual summer solstice festival as objections increase and Chinese lose taste for dog meat

    theguardian.com, Wednesday 18 June 2014 05.09 EDT

    Residents in a southern Chinese city that has come under fire for an annual summer solstice festival in which thousands of dogs are slaughtered for food have held their feasts early to avoid attention.

    Some residents of Yulin started gathering last weekend and eating dog meat and lychees to celebrate the longest day of the year, before Saturday’s actual solstice, state media reported. The residents wanted to avoid protests by animal-rights activists.

    In recent years, the festival has been targeted by activists who have drummed up public awareness of the event with posts on social media and online petitions, and descended on the city to protest outside slaughterhouses or markets where the dogs are sold.

    http://www.theguardian.com/world/2014/jun/18/chinese-dog-meat-festival-held-early-animal-rights-protests

  9. VennData says:

    GOP Senator from Tennessee proposes gas tax hike, along with Democrat.

    http://thehill.com/homenews/senate/209769-murphy-and-corker-propose-raising-164-billion-through-higher-gas-tax

    I told you so Tea Party. The GOP establishment wants to raise taxes, gas taxes. Why are you still voting for those Obamacrats in RHINO clothes?! Where is the outrage?

    • VennData says:

      What if they doubled the carbon tax propose to twenty five cents a gallon, and paid for it by implementing Romney’s proposal to cut dividend taxes for amounts below $100K to zero? This would:

      1) Raise carbon taxes
      2) Force fuel efficiency
      3) Open up more space, cost-wise, with renewals
      4) Raise investment levels
      5) Give Incentives to saving and investment for individuals
      6) Raise Middles class standards of living
      7) Raise demand.

    • rd says:

      The un-indexed highway gas tax is exposing the whole “states rights” issue. Basically, the current structuring of the federal funding of highway improvements means that the conditions of roads and bridges in a state is really up to that state. If they want to have decent road infrastructure to be competitive, then they have to pay for it through state-level taxes now. Somehow, I don’t think the local citizenry in the low tax states have been told this yet…..