Monday, October 31, 2011
Sunday, October 30, 2011
A Mockery of the "Barriers"
Let's debunk this income inequality garbage once and for all... Ask yourself, when you see/hear the stats suggesting that the top 20% of Americans are gaining, at the expense of everybody else, are you thinking that the top quintile, or 1% for that matter, is some elite fraternity that allows only a privileged few to join - that essentially sports the same members today as it did thirty years ago?
A Mockery of the "Barriers"
Let's debunk this income inequality garbage once and for all. Ask yourself, when you see/hear the stats suggesting that the top 20% of Americans are gaining, at the expense of everybody else, are you thinking that the top quintile, or 1% for that matter, is some elite fraternity that allows only a privileged few to join - that essentially sports the same members today as it did thirty years ago?
If you're thinking yes (in fact, if you're at all upset about the CBO's findings, you are indeed thinking yes), you couldn't be more wrong.
So let's disabuse you of that faulty notion. And I promise to move the content of this blog on to bigger and better things (maybe) going forward.
The fact of the matter is, in this great country, a great number of people move up and down the income ladder over time; per the following summarized results of a study (which covers only 7 years) from The Federal Reserve Bank of Minneapolis:
*Of the households occupying the bottom 20% in 2001, 44% broke into the higher ranks by 2007.
*61% of the 2nd quintile moved either above or below.
*58% of the 3rd quintile moved either above or below.
*55% of the 4th quintile moved either above or below.
*34% of the highest 20% moved into a lower quintile.
And take note, there's no blaming/crediting the "great recession", since the data was compiled pre-2008.
Nobody says it better than Thomas Sowell:
If you're thinking yes (in fact, if you're at all upset about the CBO's findings, you are indeed thinking yes), you couldn't be more wrong.
So let's disabuse you of that faulty notion. And I promise to move the content of this blog on to bigger and better things (maybe) going forward.
The fact of the matter is, in this great country, a great number of people move up and down the income ladder over time; per the following summarized results of a study (which covers only 7 years) from The Federal Reserve Bank of Minneapolis:
*Of the households occupying the bottom 20% in 2001, 44% broke into the higher ranks by 2007.
*61% of the 2nd quintile moved either above or below.
*58% of the 3rd quintile moved either above or below.
*55% of the 4th quintile moved either above or below.
*34% of the highest 20% moved into a lower quintile.
And take note, there's no blaming/crediting the "great recession", since the data was compiled pre-2008.
Nobody says it better than Thomas Sowell:
Only by focusing on the income brackets, instead of the actual people moving between those brackets, have the intelligentsia been able to verbally create a “problem” for which a “solution” is necessary. They have created a powerful vision of “classes” with “disparities” and “inequities” in income, caused by “barriers” created by “society.” But the routine rise of millions of people out of the lowest quintile over time makes a mockery of the “barriers” assumed by many, if not most, of the intelligentsia.
Whose Wealth??
Sixty-six percent of participants in a New York Times/CBS News Poll say the country's wealth should be more evenly divided...
I assume the question read something like;
"Do you believe the country's wealth should be more evenly divided? Yes or No"
I doubt it read;
"Do you believe another citizen's wealth should be coercively reduced and divided amongst those who didn't produce it? Yes or No"
Do you think of your home, your bank account, your investments as the "country's wealth" or your own?
This is America, right?
Honestly, I am anything but a conspiracy theorist, but clearly there's a class war effort afoot the likes of which we haven't seen in a very long time (if ever)... What troubles me is I'm hearing it from folks I would have never dreamed would buy this garbage...
I assume the question read something like;
"Do you believe the country's wealth should be more evenly divided? Yes or No"
I doubt it read;
"Do you believe another citizen's wealth should be coercively reduced and divided amongst those who didn't produce it? Yes or No"
Do you think of your home, your bank account, your investments as the "country's wealth" or your own?
This is America, right?
Honestly, I am anything but a conspiracy theorist, but clearly there's a class war effort afoot the likes of which we haven't seen in a very long time (if ever)... What troubles me is I'm hearing it from folks I would have never dreamed would buy this garbage...
Friday, October 28, 2011
Inequality? Well Duh!
Man I'd love to have Michael Jordan's jump shot, Bill Gates' or Steve Jobs' brains, Jay Leno's wit or Muhamad Ali's left hook... Oh well, I suppose all men just aren't equally endowed... But boy am I thankful my country's system rewards individuals for their unequaled talents...
Please take a listen to NYU Law Professor Richard Epstein...
Please take a listen to NYU Law Professor Richard Epstein...
The Voter's Ire
An excerpt from an email I received re; The Pie;
"I feel a connection to the 1%, and it has nothing to do with wealth.
"I feel a connection to the 1%, and it has nothing to do with wealth.
The Voter's Ire
An excerpt from an email I received re; The Pie;
"I feel a connection to the 1%, and it has nothing to do with wealth. As someone who deals with regulation/government on a daily basis, it is the ultimate frustration to do an excellent job at managing your business (within the rules) and at the end of the day be criticized, condemned, or at least not appreciated, for what has been accomplished for the good of the consumer and the economy."
This gentleman epitomizes the American employer...
Your Congressman, President, Candidate and Film Maker are drawing the voter's ire onto the many by pointing to the exceptions... Key incentive being votes...
"I feel a connection to the 1%, and it has nothing to do with wealth. As someone who deals with regulation/government on a daily basis, it is the ultimate frustration to do an excellent job at managing your business (within the rules) and at the end of the day be criticized, condemned, or at least not appreciated, for what has been accomplished for the good of the consumer and the economy."
This gentleman epitomizes the American employer...
Your Congressman, President, Candidate and Film Maker are drawing the voter's ire onto the many by pointing to the exceptions... Key incentive being votes...
Thursday, October 27, 2011
The Pie
"The top 1% has doubled its share of national income." So says (citing a Congressional Budget Office report) California congressman Brad Sherman. Our President, in virtually every speech, disses the "wealthy" (or, let's say, disses our system that he claims favors the "wealthy"). Even Presidential hopeful Mitt Romney finds political expediency, albeit treads lightly, in discounting the "wealthy" while promising a better world for the "middle class".
You'd think, per the rhetoric, that "national income" is some number that exists in and of itself. As if it's some already-baked pie to be sliced up and divvied amongst the masses.
Folks, don't let this malarky infect your thinking. There is no "national income", our nation doesn't produce income, we do. This notion that the upper 1% have somehow sliced a bigger space into the pie pan is utterly ludicrous. If indeed the CBO report is accurate (the vantage point, angle if you will, is critical [which we'll explore in a future post]); that, as a percentage of total income produced by the total population, the 1% own a greater percentage than in years past, it simply means that the 1% profitably produced more of whatever they produce at a price the world was willing to pay.
I.e., it simply means that the 1% made the pie larger. Go hard after the 1% and I assure you, we'll be eating less pie in the future.
You'd think, per the rhetoric, that "national income" is some number that exists in and of itself. As if it's some already-baked pie to be sliced up and divvied amongst the masses.
Folks, don't let this malarky infect your thinking. There is no "national income", our nation doesn't produce income, we do. This notion that the upper 1% have somehow sliced a bigger space into the pie pan is utterly ludicrous. If indeed the CBO report is accurate (the vantage point, angle if you will, is critical [which we'll explore in a future post]); that, as a percentage of total income produced by the total population, the 1% own a greater percentage than in years past, it simply means that the 1% profitably produced more of whatever they produce at a price the world was willing to pay.
I.e., it simply means that the 1% made the pie larger. Go hard after the 1% and I assure you, we'll be eating less pie in the future.
International Trade (Part 3) - The Effects of Tariffs
Protectionism is where politicians find bipartisan opportunity to exploit consumer thinking... The ideology, its been my experience, is rampant among conumers... This is where many of our clients (even some who'd profess a free-market bent) are at odds with my thinking... I hope our series on trade inspires a reassessment on their part...
Protectionism, as history has vividly shown, can be economically disastrous...
Here's Part 3 (taking you back to Econ 101)...
http://www.youtube.com/watch?v=kra5njer6qw&feature=youtube_gdata_player
Protectionism, as history has vividly shown, can be economically disastrous...
Here's Part 3 (taking you back to Econ 101)...
http://www.youtube.com/watch?v=kra5njer6qw&feature=youtube_gdata_player
Wednesday, October 26, 2011
The Land of the Free to Work Your Ass Off!
The somewhat-articulate ball-capped "Wall Street Occupier" bemoaned being banned from the stock exchange... Flanked by a group of 99%ers, he chastises CNBC's correspondent for the network not inviting him into the studio (dress code), then offers up "the movement"'s message...
I bullet-point:
Bold means I absolutely sympathize, not bold means I don't... my retorts parenthesized.....
But first, allow me to interject: Generally I wouldn't give the likes of Michael Moore my (and now your) attention... However, the Wall Street Occupiers' message, bolstered by yesterday's CBO (Congressional Budget Office) report suggesting that the top 1% more than doubled their share of the national income over the last thirty years (I'll have plenty to say on this shortly), is just too aggravating (for me, for the most part) to ignore...
"
*We have an unjust and unfair economic system that benefits the wealthiest few at the expense of the many... (the wealthiest employ the many)
*Not a single arrest here, on this street, with these banks... (there was one taken away today)
*Where's the special prosecutor?(waste of time/taxpayer $)
*Don't the American people deserve some answers and some justice?
*Where did their money go? (check their credit card statements)
*Who stole this money? (how much did they save while working)
*Who misappropriated or played with it awrong?
*They (the Occupiers) want the wealthy to be taxed more... (and then what? redistribute?)
*They want Glass Steagle reinstated... (no more regs, please!)
*They want to get money out of politics...
*What bankers do good is buy politicians...
*The reason why this protest isn't centered in Washington is because those are just the employees of this street... (nonono... you'd have better luck going after the politicians for accepting the payoffs)
*This is the center, this is the core of the problem... (nonono... it's D.C.)
*They (politicians) don't listen to the people, they only listen to who's lining their pockets and those people happen to be right down this street... (they listen to the polls too)
*These are people who have a story to tell and I'm just one of those people... (you're a fat cat multi-millionaire)
*We need to build a much better country, a much more equitable and fair country... (nonono... we need a free country... fairness = someone else deciding what's fair for someone else)
*That's not an economy that's run by the people... (thank God it's not run by the occupiers)
*I do not own a single share of stock and I have never owned a single share of stock. (the Dow was at 2,169 the beginning of the year you made your first movie - that's an 8.04% annual rate of return - with several bear markets along the way... what a dumbasscus)
*I don't support this, this is a rigged casino, I don't know why anyone would put in their hard-earned money, especially after what happened in this last decade. (ditto last comment)...
*These guys on this street played with people's future, played with people's pensions.
*These derivatives and credit default swaps, no regulation from DC, and it's still going on... (CDSs are legitimate hedging vehicles.... just need to stop bailing out the abusers)
*Who's making this money? Who's divvying this pie up so that the 1% get the majority of it? (that's just an ignorant statement)...
*They want to know where their jobs went, they want to know where their future's going to be... (how did they become such victims... did it have anything to do with personal choice?)
"
Summary:
Michael Moore made his first movie, Roger and Me, in 1989...
He mentioned (referring to the occupiers) something about them "all having iPhones"...
Where would we be, as a country, if the 1% hadn't created their businesses and all those jobs in the process?
What country does enjoy income equality anyway? Go find one then tell me if you'd like to live there... And if you would, what are you waiting for?
Are we not each, as individuals, built uniquely... Would you personally be pulled higher or lower if by some magic we were all blessed with equal talents and motivation? Would the consumer be more or less motivated in such a world? Would Steve Jobs, Bill Gates, yourself, have achieved all they/you had in such a world? Is it even true that"we have an unjust and unfair economic system that benefits the wealthiest few at the expense of the many..."??
Hmm.... Today = iPhones/Androids (etc), 6th graders with laptops, flat screen TVs (with 99 thousand channels that I betchya 99% of the 99% own), affordable air travel - you can imagine all the other stuff I could add when comparing to 1989...
Yes I know; 9% unemployment, record foreclosures, etc... And yes I feel for those folks... My only hope is that they remember where they live; the land of the free to work your ass off... Picketing Wall Street ain't going to land them a job or start them a business...
Moore rails against what he doesn't understand... How could any American in his right mind protest capitalism? Capitalism is synonymous with capital, growth, opportunity, entrepreneurship, freedom, hard work, ingenuity, invention, prosperity, productivity...
Notice the areas I bolded above, there he's talking cronyism - and I couldn't agree more... Moore might actually inspire the hearts of true capitalists if he understood his own undertaking, if he chose his words more carefully... But, that said, he has made $millions, he has definitely capitalized on America (big time!)...
This nation was built by people exploiting capitalism... Tour Ellis Island when you have a chance... Unrelenting individuals, heroes, risked life and limb to come to the country where they'd be granted the opportunity, the freedom, to work their asses off - and keep the fruits of their labor!!!!
Tuesday, October 25, 2011
International Trade (Part 2) - Comparative Advantage (video)
Looks like U.S. consumers may take it in the chin, once again, through protectionism... In this instance we'd be slapping tariffs on solar panels coming from China... This news inspired me to illustrate [for you] David Ricardo's theory of comparative advantage...
http://www.youtube.com/watch?v=u76IgGY0Jsw&feature=youtube_gdata_player
http://www.youtube.com/watch?v=u76IgGY0Jsw&feature=youtube_gdata_player
Thursday, October 20, 2011
Destined to Lose
Some years ago, when banks were banks, I knew a young man who was offered a partnership in a residential painting business. His employer saw great promise in his savvy apprentice (or was desperate for cash)... The deal made so much sense (to said apprentice) that he figured any bank would jump at the opportunity; a mere $15,000 would do the trick...
Alas, the bank said "nope"...
"Screw them!", cried the young artist, "they don't know squat! I'll take it to someone who knows business, someone who knows a real opportunity when they see it - I'll take it to my parents!"
And, alas, he indeed 'took it to his parents'....
Now think Solyndra... If it takes paternal Washington (where politicians spend other peoples' money on other people) to fund a company (i.e., if said company can't raise capital in the private sector), there's a very VERY good chance that said company ain't going to make it...
- or -
When government picks winners and losers, their winners (and the taxpayer) are, all-too-often, destined to lose...
Alas, the bank said "nope"...
"Screw them!", cried the young artist, "they don't know squat! I'll take it to someone who knows business, someone who knows a real opportunity when they see it - I'll take it to my parents!"
And, alas, he indeed 'took it to his parents'....
Now think Solyndra... If it takes paternal Washington (where politicians spend other peoples' money on other people) to fund a company (i.e., if said company can't raise capital in the private sector), there's a very VERY good chance that said company ain't going to make it...
- or -
When government picks winners and losers, their winners (and the taxpayer) are, all-too-often, destined to lose...
Wednesday, October 19, 2011
Nirvana is Not for This World
Take a close look at what's going on in Athens this morning... You can't help but sympathize... I mean they're fighting on behalf of their country's Constitution; which guarantees jobs for life for all state employees... I kid you not...
Now take a look at what's going on in NYC this morning... You can't help but sympathize... I mean they're fighting for the rights the Greeks "enjoy"... I kid you not...
Angling politicians are lining up with sympathy for the Wall Street Occupation Movement... They feel their pain, they understand their frustration... It's just not fair that some should suffer while others enjoy up-town lives... We need more fairness in this country... We need to distribute that up-town wealth... We need to ensure prosperity for everyone... You know, like Greece...
Sad thing is, as the Greeks have come to learn, as Milton Friedman points out below, nirvana is not for this world...
http://www.youtube.com/watch?v=QeqPibwK_u4&feature=youtube_gdata_player
Now take a look at what's going on in NYC this morning... You can't help but sympathize... I mean they're fighting for the rights the Greeks "enjoy"... I kid you not...
Angling politicians are lining up with sympathy for the Wall Street Occupation Movement... They feel their pain, they understand their frustration... It's just not fair that some should suffer while others enjoy up-town lives... We need more fairness in this country... We need to distribute that up-town wealth... We need to ensure prosperity for everyone... You know, like Greece...
Sad thing is, as the Greeks have come to learn, as Milton Friedman points out below, nirvana is not for this world...
http://www.youtube.com/watch?v=QeqPibwK_u4&feature=youtube_gdata_player
Monday, October 17, 2011
But You Promised!
"This is not the future I was promised!" reads the 3'x3' cardboard square held by a raging 20-something Wall Street demonstrator... I suspect she suspected life would be easier...
Now who would be these promisers,her parents? You think her parents promised her something other than what she's getting? That life would be that proverbial bowl of cherries? Or did she somehow interpret political-speak to suggest that she'd be better off today? Was she promised a free lunch?
So what's her story? Is she the worldly college student with a change-the-world attitude? Is she the laid-off factory worker on her 98th week of unemployment? Is she the trust-fund baby who'll never need to work? Did she get fired from Starbucks for dipping into the till? Is she the stay-at-home mom? Does she have bills to pay? Bills she wants us (taxpayers) to pay? Hmm??
What indeed would inspire her to leave her post in life to rebel without a [clearly defined] cause... By leaving work, by (assuming she lost her job) pushing her unemployment aid to the limit, by leaving her bills unpaid, is she saying she wants what the big banks got? A bailout? Is she thus a bit of a hypocrite?
Just saying......
Now who would be these promisers,her parents? You think her parents promised her something other than what she's getting? That life would be that proverbial bowl of cherries? Or did she somehow interpret political-speak to suggest that she'd be better off today? Was she promised a free lunch?
So what's her story? Is she the worldly college student with a change-the-world attitude? Is she the laid-off factory worker on her 98th week of unemployment? Is she the trust-fund baby who'll never need to work? Did she get fired from Starbucks for dipping into the till? Is she the stay-at-home mom? Does she have bills to pay? Bills she wants us (taxpayers) to pay? Hmm??
What indeed would inspire her to leave her post in life to rebel without a [clearly defined] cause... By leaving work, by (assuming she lost her job) pushing her unemployment aid to the limit, by leaving her bills unpaid, is she saying she wants what the big banks got? A bailout? Is she thus a bit of a hypocrite?
Just saying......
The Right Side of Big Government
According to the Federal Election Commission, President Obama has, thus far, raised as much 2012 campaign money as all the Republican candidates combined...
Now how in today's world
Now how in today's world
The Right Side of Big Government
According to the Federal Election Commission, President Obama has, thus far, raised as much 2012 campaign money as all the Republican candidates combined...
Now how in today's world (9.1% unemployment, $5.5 trillion new debt in 3 years, barely-moving GDP, huge budget deficit, low approval rating, etc.) can that be?
Well I'm afraid it makes perfect sense... You see the larger the government (grown beyond my wildest expectations), the more the influence it has over the economy - over business in general... And therefore the larger the motivation for cronies-to-be to lobby, to influence policy, to buy favor...
I.e., if you're on the right side of big government, big government is precisely what you're after...
Now how in today's world (9.1% unemployment, $5.5 trillion new debt in 3 years, barely-moving GDP, huge budget deficit, low approval rating, etc.) can that be?
Well I'm afraid it makes perfect sense... You see the larger the government (grown beyond my wildest expectations), the more the influence it has over the economy - over business in general... And therefore the larger the motivation for cronies-to-be to lobby, to influence policy, to buy favor...
I.e., if you're on the right side of big government, big government is precisely what you're after...
Saturday, October 15, 2011
UNFAIR TRADE ALERT!!!!
Quick somebody call Washington!! I just heard that Costco has marked down patio sets by 50% this weekend... This is going to kill patio set sales at every other major outlet in the U.S.!
We need to slap a cease-and-desist on Costco immediately! We're talking unfair trade; consumers will no doubt use their savings to buy even more stuff they need from Costco (unless someone else can more affordably offer them that even-more-stuff-they-need), and if we allow Costco to keep it up, it's going to buy even more property and expand (even more) its stores all over the country... Costco's trying to take over the nation!!
Ridiculous, right? Say right...
So........ China so desperately wants its enterprises to invest in the United States that it subsidizes their exports. I.e., spends its taxpayers' money buying down (through subsidies and (allegedly) "devaluing" its currency) the price of goods (making them very affordable to you and me) so its businesses can accumulate massive quantities of dollars with which to buy U.S. stuff, services and assets.
And BTW - - now think for a minute - - Chinese businesses buying assets from U.S. businesses gives China no power over our military, and places no Chinese politician in the U.S. Congress. I.e., China will garner no more power over the U.S. than Japan had back when a Japanese company bought Pebble Beach from a U.S. Company...
Make no mistake my friends.... We're being baited-and-switched into taking our aim off of the real issues facing this country; issues so clearly spelled out in this two minute video...
We need to slap a cease-and-desist on Costco immediately! We're talking unfair trade; consumers will no doubt use their savings to buy even more stuff they need from Costco (unless someone else can more affordably offer them that even-more-stuff-they-need), and if we allow Costco to keep it up, it's going to buy even more property and expand (even more) its stores all over the country... Costco's trying to take over the nation!!
Ridiculous, right? Say right...
So........ China so desperately wants its enterprises to invest in the United States that it subsidizes their exports. I.e., spends its taxpayers' money buying down (through subsidies and (allegedly) "devaluing" its currency) the price of goods (making them very affordable to you and me) so its businesses can accumulate massive quantities of dollars with which to buy U.S. stuff, services and assets.
And BTW - - now think for a minute - - Chinese businesses buying assets from U.S. businesses gives China no power over our military, and places no Chinese politician in the U.S. Congress. I.e., China will garner no more power over the U.S. than Japan had back when a Japanese company bought Pebble Beach from a U.S. Company...
Make no mistake my friends.... We're being baited-and-switched into taking our aim off of the real issues facing this country; issues so clearly spelled out in this two minute video...
Friday, October 14, 2011
Economic Freedom in America Today (video)
Watch this video, and, if you relate, please forward it on...
While the recent trend, in terms of the growth of government, is troubling, the good news is we're talking about it (observation is step one), and you're sharing this with everyone you know... They won't all sympathize, but just maybe you'll get them thinking... Feel free to comment, pro or con, below...
http://youtu.be/F4fWQnguR1E
While the recent trend, in terms of the growth of government, is troubling, the good news is we're talking about it (observation is step one), and you're sharing this with everyone you know... They won't all sympathize, but just maybe you'll get them thinking... Feel free to comment, pro or con, below...
http://youtu.be/F4fWQnguR1E
Thursday, October 13, 2011
Not Anyone%
I was just thinking about the "Wall Street Occupiers"... I guess I haven't listened close enough or Googled sufficiently to get what their aim is... At this point I'm guessing there are no clear demands, just complaints... In one flash across the telly I saw decently dressed demonstrators holding signs saying "we're the 99%"... I'll take that to suggest they're opposing the "1%"... And that the "1%" are really rich folk... I'll then assume that their message is that the "99%" is at the mercy of, or somehow exploited by the "1%"...
You know........... I struggle with that........
Pardon my passion (and mild profanity) but it'll be a cold friggin day in Hell before this American will find himself admitting that anyone%, in this great country, will ever make a victim out of him...
It's that .00018% (the House and Senate) that I worry about!!
You know........... I struggle with that........
Pardon my passion (and mild profanity) but it'll be a cold friggin day in Hell before this American will find himself admitting that anyone%, in this great country, will ever make a victim out of him...
It's that .00018% (the House and Senate) that I worry about!!
Don't Worry My Child, I'll Buy You A New One
"The greed of the banks is the reason for the crisis today... And that the govt refunded all of the banks' losses, with no penalties to stockholders or bondholders, from taxpayer money... and the government has given over $400 billion of free money to the banks... I've also said very clearly that the only way that we can pull ourselves out of this mess is to combine fiscal with monetary policy"... Says unlikely Wall Street Occupier Asher Edelman to a reporter Tuesday morning...
Don't Worry My Child, I'll Buy You A New One
"The greed of the banks is the reason for the crisis today. And that the government refunded all of the banks' losses, with no penalties to stockholders or bondholders, from taxpayer money. and the government has given over $400 billion of free money to the banks. I've also said very clearly that the only way that we can pull ourselves out of this mess is to combine fiscal with monetary policy."
Says unlikely Wall Street Occupier Asher Edelman to a reporter Tuesday morning. Mr. Edelman, a well-known ex-corporate raider who, in 1988 taught a course titled Corporate Raiding the Art of War at Columbia University, a very bright chap indeed, clearly has strong feelings about his old stomping grounds.
As I essayed in Brains to Burn, brightness of mind does not necessarily correlate with good judgment. In fact, in my arrogant opinion, uncommon intellect rarely meets with common commonsense (of course, being no possessor of "uncommon intellect", this could be a simple case of brain-envy).
For starters, I don't suppose the stock and bondholders of Lehman Bros. (lost all their money, forever) or Bank of America (would, if they sell today, lose most of their money) agree with Mr. Edelman's charge that they've escaped penalty-free. But that's the lesser issue. The greater being, as always, government.
I do agree that investors (and CEOs!!) absolutely should lose when they make poor choices, be it banks or buyers of Greek debt. The problem, as I (and others) see it, is too much—make that way too much—no, make that WAY WAY TOO MUCH government intervention.
Ask yourself, would the financial industry of the 2000s have been more or less prudent if
Penn Central Railroad (1970)
Lockheed (1971)
Franklin Nat'l Bank (1974)
New York City (1975)
Chrysler (1980)
Continental Illinois Bank (1984)
Savings and Loans (1989)
Long Term Capital Management (1998)
Airline Industry (2001)
hadn't been bailed out?
In October 2008, Alan Greenspan confessed to Congress that he had found a troubling "flaw in his [free market] ideology" (fanning the flames for the Keynesians [govt intervention advocates]). Thus questioning the ability of markets to regulate themselves.
Oh but Alan, you own a glaring contradiction. While you championed free markets, you had not the tolerance, nor nearly the courage, to allow the inevitable cyclicality of economies, and of human nature, to produce the necessary pain/losses that inspire the kind of prudence that may have mitigated the recent Great Recession. I.e., you totally bailed out Wall Street when you orchestrated the bailout of Long Term Capital Management.
And, alas, your successor, per
Bear Stearns (2008)
Freddie Mac (2008)
Fannie Mae (2008)
AIG (2008)
Auto Industry (2008)
TARP (2008)
has, he believes, no choice but to pick up where you left off.
It's like saying to your child "my child, don't worry about driving smartly, cause if you crash the car I'll just buy you a new one. Like I did for your brothers and sisters."
Wednesday, October 12, 2011
Tuesday, October 11, 2011
Investing Basics - The P/E and Today's Market (video)
http://www.youtube.com/watch?v=afZjIriTvJk&feature=youtube_gdata_player
Monday, October 10, 2011
Investing Basics Video - Portfolio Rebalancing
Click lower right corner arrows for full screen...
http://youtu.be/HCCO3SOwHv8
http://youtu.be/HCCO3SOwHv8
A Convenient Distraction
In a free market world, producers pursue their separate interests within a competitive marketplace... The consumer will do business where she finds the quality and price she demands... Producers therefore compete, on that basis, to meet her needs...
In today's world, producers pursue their separate interests within an evermore regulated marketplace... The policymaker will do business (regulations) where he finds political support at a price (favor) he can hide inside the regs... Producers therefore compete, on that basis, to meet the politician's needs...
From last Thursday's NY Times; Wall Street is United in its Disdain for Dodd Frank, but Split on Details:
As federal officials flesh out some 300 new regulations, top companies and trade groups are squabbling over the fine print, each cheerleading for policies that suit their own businesses.
Some level of discord is expected. The Dodd-Frank law, which spans some 2,300 pages, is as huge and disparate as the industry it polices.
But a few industry debates have grown hostile. Firms are taking aim at competitors, and regulators are stuck in the awkward position of picking winners and losers
In today's world, producers pursue their separate interests within an evermore regulated marketplace... The policymaker will do business (regulations) where he finds political support at a price (favor) he can hide inside the regs... Producers therefore compete, on that basis, to meet the politician's needs...
From last Thursday's NY Times; Wall Street is United in its Disdain for Dodd Frank, but Split on Details:
As federal officials flesh out some 300 new regulations, top companies and trade groups are squabbling over the fine print, each cheerleading for policies that suit their own businesses.
Some level of discord is expected. The Dodd-Frank law, which spans some 2,300 pages, is as huge and disparate as the industry it polices.
But a few industry debates have grown hostile. Firms are taking aim at competitors, and regulators are stuck in the awkward position of picking winners and losers
Saturday, October 8, 2011
Go Go Godzilla
Read at your own risk... This is just me venting... If you're in no mood for a lengthy diatribe, scroll down to Here's the bottom line folks...
Mit Romney, guessing political-wind direction, announces he'll go after China the minute he's confirmed... Chuck Schumer no longer tests the breeze, he learned a long time ago that the blame-China-game works in his district... What's strange is that President Obama, who, on behalf of the United Steel Workers Union happily tariffed China-made tires back in '09, isn't signing onto this China currency malarky just yet... Hmm?? I'm thinking he's feeling a different breeze, that maybe folks are beginning to see the political fakery and inherent [economic] danger in the old foreign-trade bait-and-switch maneuver...
"So what now?" asks the politician... "At 9.1% unemployment, at low single-digit GDP, where can we get more bang for our campaign buck?"
Last week the President urged the NEW Consumer Finance Protection Bureau to stop Bank of America from charging a $5 monthly fee for customer use of its debit cards: “You can stop it because if you say to the banks, ‘You don’t have some inherent right just to–you know, get a certain amount of profit. If your customers–are being mistreated. That you have to treat them fairly and transparently.”
Wow!! An American President just said “You don’t have some inherent right to get a certain amount of profit”… As opposed to, “you have every right to whatever profit you can muster, and the consumer has every right to take his business wherever he chooses”…. I think we call that FREEDOM!!!!
And I know, from personal observation, that even self-proclaimed fiscal conservatives are up in arms over B of A’s attempt to recoup the $2 billion/year it’s losing to the Durbin Amendment (reducing the “swipe fee” charged to retailers) – which is your classic case of government picking winners; i.e., retailers over banks… i.e., retailers over consumers…
Here’s Republican Buddy Roemer: “Wall Street grew to be a source of capital for growing companies. It has become something else: A facilitator for greed and for the selling of American jobs. Enough already.” “It is Main Street that is being foreclosed on; and it is Main Street that is suffering while the greed of Wall Street continues to hurt our middle-class.”
Someone help me out here: What precisely is the agenda of the Occupy Wall Streeters? What are their demands? Why are they there? I mean the big banks paid it (the bailout $) all back with interest. If they want the individual bailed out, shouldn’t they follow the bailout money back to Washington; i.e., “you got the money back, now give us some”…
Mit Romney, guessing political-wind direction, announces he'll go after China the minute he's confirmed... Chuck Schumer no longer tests the breeze, he learned a long time ago that the blame-China-game works in his district... What's strange is that President Obama, who, on behalf of the United Steel Workers Union happily tariffed China-made tires back in '09, isn't signing onto this China currency malarky just yet... Hmm?? I'm thinking he's feeling a different breeze, that maybe folks are beginning to see the political fakery and inherent [economic] danger in the old foreign-trade bait-and-switch maneuver...
"So what now?" asks the politician... "At 9.1% unemployment, at low single-digit GDP, where can we get more bang for our campaign buck?"
Last week the President urged the NEW Consumer Finance Protection Bureau to stop Bank of America from charging a $5 monthly fee for customer use of its debit cards: “You can stop it because if you say to the banks, ‘You don’t have some inherent right just to–you know, get a certain amount of profit. If your customers–are being mistreated. That you have to treat them fairly and transparently.”
Wow!! An American President just said “You don’t have some inherent right to get a certain amount of profit”… As opposed to, “you have every right to whatever profit you can muster, and the consumer has every right to take his business wherever he chooses”…. I think we call that FREEDOM!!!!
And I know, from personal observation, that even self-proclaimed fiscal conservatives are up in arms over B of A’s attempt to recoup the $2 billion/year it’s losing to the Durbin Amendment (reducing the “swipe fee” charged to retailers) – which is your classic case of government picking winners; i.e., retailers over banks… i.e., retailers over consumers…
Here’s Republican Buddy Roemer: “Wall Street grew to be a source of capital for growing companies. It has become something else: A facilitator for greed and for the selling of American jobs. Enough already.” “It is Main Street that is being foreclosed on; and it is Main Street that is suffering while the greed of Wall Street continues to hurt our middle-class.”
Someone help me out here: What precisely is the agenda of the Occupy Wall Streeters? What are their demands? Why are they there? I mean the big banks paid it (the bailout $) all back with interest. If they want the individual bailed out, shouldn’t they follow the bailout money back to Washington; i.e., “you got the money back, now give us some”…
Thursday, October 6, 2011
Steve Jobs Would Have Been Proud
Dear Luke,
I'm the guy who brought in the shattered iPad the other day... You know, the bald guy with the hoarse voice... As promised, I'm sending you my essay on my first Apple Store experience... But before you go there, I'd like to commend you for your professionalism and your (presumed) foresight...
You made a surprising call... For, as you could see, I was readily amenable to your half-off offer... But at the last minute you exercised your latitude (either believing you'd win a lifelong Apple loyalist, or perhaps I just caught you at a good moment) and handed me a brand new iPad, free of charge...
Now if indeed your intent was to secure yet another iLifer, I'm sorry my friend, you failed... Of course I may very well continue to buy Apple in the future, but that would be if, and only if, Apple continues to produce the absolute best technology... And I assure you, Mr. Jobs would have had it no other way - he surely didn't succeed by giving stuff away... I.e., everyone, you included, will ultimately act in [what they believe to be] their own separate interests. And that, as I hope you'll come to learn, is precisely how it should be...
You see, acting in your own (true) interest means, without exception, always being the very best you can be. And that, whether we're talking business or simply life in general, means always acting in the best interests of others...
Thus, in this instance Luke, your generosity (granted, you were spending Apple's money), my lack of loyalty notwithstanding, was not in vain after all... The experience was so unusual that the minute I stepped foot outside your store I was on the phone (iPhone), eager to tell any and all who'd listen about our encounter... Yes, your goodwill will indeed, I suspect, bring business Apple's way...
Given your youth, instincts and apparent intellect, I won't expect to see you during my next Apple Store experience - you will have surely stepped to your next rung by then... But I do ask that, when you take that step, you shoot me an email... I will eagerly consider whatever product or service you're promoting at that time, and, if a purchase is in order, I will insist on paying full price... For it is indeed in my, and society's, best interest that you succeed... I.e., the world needs more Lukes...
Sincerely,
Marty Mazorra
I actually have two Apple essays to share... Click...
What Makes Apple So Special
Apple (amazing!)
Here's another you may enjoy...
Repeat Pizza
And here are some great works I hope you'll read - or listen to on your iPod...
Road to Serfdom by F.A. Hayek
Free to Choose by Milton Friedman
The Wealth of Nations by Adam Smith
Atlas Shrugged by Ayn Rand
Globalization by Don Boudreaux
Wednesday, October 5, 2011
Thank You Mr. Durbin
Are you all sideways, like so many others, over Bank of America charging $5 a month for your debit card? Will you join Michael Moore, Susan Sarandon and the George Soros bunch (my the hypocrisy) and protest capitalism and the "rich"...
Does The Durbin Amendment ring any bells? This was an add-on to Dodd-Frank (financial reg reform) that cut debit card swipe fees, paid by retailers, in half... Oh this was going to save the consumer some real moolah - as Walmart, etc. would surely pass those savings onto the customer...
Didn't we (those of us with a little experience) tell ya that ultimately the consumer pays for everything? That by the government picking winners and losers - in this case retailers over banks - that ultimately we all become losers? Well that's how it works folks... If you're angry at Bank of America over the debit card fee, over it trying to recoup the $2 billion the government just erased from its income statement and added to the retailers, you are sorely misplacing your anger... You're taking the bait my friend...
God forbid we should blame government for the 9% unemployment rate... No no it's the Chinese, it's the Banks... So let's do this: Let's Smoot-Holly (tariffs of The Great Depression [that's right - The Great Depression]) China and Dodd-Frank the financial sector: And let's pray that when our great great grandkids are looking back 80 years hence they don't say "look at what the China Currency Act and Dodd-Frank did "to" (not "for" I assure you) the economy way back in the early 2000s"....
Does The Durbin Amendment ring any bells? This was an add-on to Dodd-Frank (financial reg reform) that cut debit card swipe fees, paid by retailers, in half... Oh this was going to save the consumer some real moolah - as Walmart, etc. would surely pass those savings onto the customer...
Didn't we (those of us with a little experience) tell ya that ultimately the consumer pays for everything? That by the government picking winners and losers - in this case retailers over banks - that ultimately we all become losers? Well that's how it works folks... If you're angry at Bank of America over the debit card fee, over it trying to recoup the $2 billion the government just erased from its income statement and added to the retailers, you are sorely misplacing your anger... You're taking the bait my friend...
God forbid we should blame government for the 9% unemployment rate... No no it's the Chinese, it's the Banks... So let's do this: Let's Smoot-Holly (tariffs of The Great Depression [that's right - The Great Depression]) China and Dodd-Frank the financial sector: And let's pray that when our great great grandkids are looking back 80 years hence they don't say "look at what the China Currency Act and Dodd-Frank did "to" (not "for" I assure you) the economy way back in the early 2000s"....
Why Not the Bailers??
Seven hundred martyrs proudly bared the cold steel clamped tightly upon their wrists as they were hauled from Manhattan
Tuesday, October 4, 2011
Letter to Senator Corker
Open Letter to Tennessee Senator Robert Corker
Dear Mr. Corker,
This morning in an interview with CNBC's Joe Curnan you expressed your disappointment with the so-called China Currency Bill.
You said; "this is a terrible piece of legislation, we have a slowing economy, we have a financial crisis in Europe and now we want to create a trade war with the next largest economy in the world. It's terrible public policy... The last thing we need in this country is a trade war. What we need to do is address the issues that we have in this country. We need to do tax reform, entitlement reform, deficit reduction, we need a six-year highway bill (??), we need to look at regulations, we need to address our own issues and our lack of will to do that is leading us to find a boogyman and to try to create other issues that candidly are going to put us into a further downward spiral."
You nailed it!
Sincerely,
Martin L. Mazorra, consumer-at-large
Dear Mr. Corker,
This morning in an interview with CNBC's Joe Curnan you expressed your disappointment with the so-called China Currency Bill.
You said; "this is a terrible piece of legislation, we have a slowing economy, we have a financial crisis in Europe and now we want to create a trade war with the next largest economy in the world. It's terrible public policy... The last thing we need in this country is a trade war. What we need to do is address the issues that we have in this country. We need to do tax reform, entitlement reform, deficit reduction, we need a six-year highway bill (??), we need to look at regulations, we need to address our own issues and our lack of will to do that is leading us to find a boogyman and to try to create other issues that candidly are going to put us into a further downward spiral."
You nailed it!
Sincerely,
Martin L. Mazorra, consumer-at-large
Letter to Senator Hagan
Open letter to North Carolina senator Kay Hagan...
Dear Ms. Hagan,
Last evening in an interview with CNBC's Larry Kudlow you voiced your support for the so-called China Currency Bill that looks to be receiving overwhelming support in the U.S. Senate.
Dear Ms. Hagan,
Last evening in an interview with CNBC's Larry Kudlow you voiced your support for the so-called China Currency Bill that looks to be receiving overwhelming support in the U.S. Senate.
Letter to Senator Hagan
Open letter to North Carolina senator Kay Hagan...
Dear Ms. Hagan,
Last evening in an interview with CNBC's Larry Kudlow you voiced your support for the so-called China Currency Bill that looks to be receiving overwhelming support in the U.S. Senate. You accuse China of manipulating its currency in a manner that makes its goods cheaper in the U.S. and U.S. goods more expensive in China. You confessed that yours is a manufacturing state and has lost some 100,000 jobs over the past few years... You assign zero blame to the unions, to stifling regulations or to the U.S. corporate tax structure... China is the sole culprit, by your estimation... Am I wrong?
Therefore you support this bill that, by imposing import tariffs, would serve [you believe] to reverse the trend - i.e., make Chinese goods more expensive to U.S. consumers and U.S. goods cheaper to Chinese consumers... Let me get this straight, you honestly believe that we, as a nation, would in some way benefit from legislation that would, as you say, have a direct negative impact on the U.S. consumer's net spendable income? Or are you saying that you're willing to sacrifice the consumer-at-large in what will surely turn out to be a vain attempt to aid manufacturers in your home state? Or is it the obvious - a feeble attempt to distract the voter from the more pressing issue; you and your colleagues' (both sides of the aisle) unbridled misuse of public funds?
Sincerely and Frustratedly Yours,
Martin L. Mazorra, Consumer-at-large...
Dear Ms. Hagan,
Last evening in an interview with CNBC's Larry Kudlow you voiced your support for the so-called China Currency Bill that looks to be receiving overwhelming support in the U.S. Senate. You accuse China of manipulating its currency in a manner that makes its goods cheaper in the U.S. and U.S. goods more expensive in China. You confessed that yours is a manufacturing state and has lost some 100,000 jobs over the past few years... You assign zero blame to the unions, to stifling regulations or to the U.S. corporate tax structure... China is the sole culprit, by your estimation... Am I wrong?
Therefore you support this bill that, by imposing import tariffs, would serve [you believe] to reverse the trend - i.e., make Chinese goods more expensive to U.S. consumers and U.S. goods cheaper to Chinese consumers... Let me get this straight, you honestly believe that we, as a nation, would in some way benefit from legislation that would, as you say, have a direct negative impact on the U.S. consumer's net spendable income? Or are you saying that you're willing to sacrifice the consumer-at-large in what will surely turn out to be a vain attempt to aid manufacturers in your home state? Or is it the obvious - a feeble attempt to distract the voter from the more pressing issue; you and your colleagues' (both sides of the aisle) unbridled misuse of public funds?
Sincerely and Frustratedly Yours,
Martin L. Mazorra, Consumer-at-large...
Monday, October 3, 2011
Where Left and Right Merge (white board lesson)
Plain and simply, the imposition of what the consumer will be fooled to believe are punitive (U.S. job saving) tariffs on foreign imports - per the coming proposal from a bipartisan (left and right merge on this one) band of manipulators (lead by Democrat Shumer and Republican Graham), at the behest of Presidential-wannabes Mit Romney and Michele Bachman - would, if passed, only serve to hurt Americans employed by American exporters, Americans who work for American businesses that benefit from our discretionary spending - and virtually every other American consumer through higher prices of everyday items. I.e., the net result of protectionism is forever the taking of money from the consumer-at-large and the handing it to a select (politically powerful) few.
Thus, the mere suggestion that this politically-inspired proposal, were it to pass, would do anything other than severely hurt our already limping economy, is an utter insult to our intelligence. Shumer, Graham and the candidates are either profoundly ignorant or assume so of us.
Of course non-competitive U.S. industries lose jobs to trade, but other (competitive) industries benefit mightily. Here's my rendition of a story Don Boudreaux tells in his book Globalization (a great read):
Imagine there are only two countries in the world, China and the U.S... And China wants absolutely nothing from the U.S.. Therefore, being that U.S. dollars offer them no value, the Chinese refuse to sell U.S. citizens a single item. That's a bummer, cause we really want their tires. However, when a third country, Australia, enters the story, opportunity presents itself. Australians desire U.S. software, while China wants Australian wool. So then:
1. China sells tires to the U.S....
2. China now has U.S. dollars to buy wool from Australia..
3. Australia now has U.S. dollars to buy software from the U.S....
Now I'll add the manipulation: The United Steelworkers Union cries foul (actually happened in '09 by the way), buys favor with a U.S. President (Obama) - who points to the trade deficit with the surely-cheating China - and Voilà ! we tariff Tianjin Tires. And, alleluia, we save American (tire manufacturing) jobs. And, alas, we destroy American (tech industry, etc.) jobs.
Here's me illustrating the above:
Thus, the mere suggestion that this politically-inspired proposal, were it to pass, would do anything other than severely hurt our already limping economy, is an utter insult to our intelligence. Shumer, Graham and the candidates are either profoundly ignorant or assume so of us.
Of course non-competitive U.S. industries lose jobs to trade, but other (competitive) industries benefit mightily. Here's my rendition of a story Don Boudreaux tells in his book Globalization (a great read):
Imagine there are only two countries in the world, China and the U.S... And China wants absolutely nothing from the U.S.. Therefore, being that U.S. dollars offer them no value, the Chinese refuse to sell U.S. citizens a single item. That's a bummer, cause we really want their tires. However, when a third country, Australia, enters the story, opportunity presents itself. Australians desire U.S. software, while China wants Australian wool. So then:
1. China sells tires to the U.S....
2. China now has U.S. dollars to buy wool from Australia..
3. Australia now has U.S. dollars to buy software from the U.S....
Now I'll add the manipulation: The United Steelworkers Union cries foul (actually happened in '09 by the way), buys favor with a U.S. President (Obama) - who points to the trade deficit with the surely-cheating China - and Voilà ! we tariff Tianjin Tires. And, alleluia, we save American (tire manufacturing) jobs. And, alas, we destroy American (tech industry, etc.) jobs.
Here's me illustrating the above:
Saturday, October 1, 2011
Whataya Do?
Last quarter, after Friday's sell-off, now owns the distinction of being the worst for stocks since Q1 2009... Five months in a row of declines = worst string since the six-month melee that ended in February '09...
While there's scant optimism for Q4 (typically the best quarter of the year), pessimism is clearly the order of the day...
So whataya do? Whataya do when stocks are taking a hit the likes of which we haven't seen since the last bear market bottomed? The likes of which we haven't seen since the last bear market bottomed?? Since the last bear market bottomed?? Since the last bear market bottomed?? Bear market bottomed...... market bottomed..... market bottomed....
OMG!!!!!!! WE SHOULD BE BUYING STOCKS!!!!!
Now calm down tiger! History doesn't always repeat itself - and I'm certainly not forecasting the bottom - the market could very well continue its descent... But make no mistake, when it does bottom it will do so in the midst of extreme pessimism - just like March 2009...
While there's scant optimism for Q4 (typically the best quarter of the year), pessimism is clearly the order of the day...
So whataya do? Whataya do when stocks are taking a hit the likes of which we haven't seen since the last bear market bottomed? The likes of which we haven't seen since the last bear market bottomed?? Since the last bear market bottomed?? Since the last bear market bottomed?? Bear market bottomed...... market bottomed..... market bottomed....
OMG!!!!!!! WE SHOULD BE BUYING STOCKS!!!!!
Now calm down tiger! History doesn't always repeat itself - and I'm certainly not forecasting the bottom - the market could very well continue its descent... But make no mistake, when it does bottom it will do so in the midst of extreme pessimism - just like March 2009...
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