"History is a wonderful thing, if only it was true"
-Tolstoy

Friday, April 30, 2010

Model or not?

Pros and Cons of some of the ideas

Portland and “elite cities”: The new model | The Economist:

Is Oregon’s metropolis a leader among American cities or just strange?

Joel Kotkin, a Los Angeles-based demographer and author, thinks that places like Portland, San Francisco and Boston have become “elite cities”, attractive to the young and single, especially those with trust funds, but beyond the reach of middle-class families who want a house with a lawn. Indeed Portland, for all its history of Western grit, is remarkably white, young and childless. Most Americans will therefore continue to migrate to the more affordable “cities of aspiration” such as Houston, Atlanta or Phoenix, thinks Mr Kotkin. As they do so, they may turn decentralised sprawl into quilts of energetic suburbs with a community feeling.

That is not to belittle Portland’s vision. It is a sophisticated and forward-looking place. Which other city can boast that its main attraction is a bustling independent book store (Powell’s) and that medical students can go from one part of their campus to another by gondola, taking their bikes with them? Other cities will see much to emulate. Minneapolis, for example, this month displaced Portland as Bicycling magazine’s most bike-friendly city (“they got extra points for biking in the snow,” grumble Mr Adams’s staff). Adam Davis of Davis, Hibbitts & Midghall, a Portland polling firm, says that Oregonians like to consider themselves leaders but also exceptions. They are likely to remain both.

Buffett and Derivatives

Buffett and Derivatives: Exactly Where Does He Stand? - MarketBeat - WSJ

"Here’s how he put his thoughts — and the thoughts of his longtime partner Charlie Munger — in his most recent letter to shareholders:

We have long invested in derivatives contracts that Charlie and I think are mispriced, just as we try to invest in mispriced stocks and bonds. Indeed, we first reported to you that we held such contracts in early 1998. The dangers that derivatives pose for both participants and society – dangers of which we’ve long warned, and that can be dynamite – arise when these contracts lead to leverage and/or counterparty risk that is extreme. At Berkshire nothing like that has occurred – nor will it.

Not as fast as I once thought I was

Sub 5 seconds 0 to 60, 11 second quarter mile, 100MPH in 3rd gear
Was fast for it's time (1985) still impressive today, and almost 40MPG


What does the public want?

Pending decision on the next member of the Supreme Court

Lexington: The next Supreme Court justice | The Economist:

"Americans need protection, but from whom?
Everyone agrees that the constitution is supposed to protect the weak against the mighty. But Republicans and Democrats differ sharply as to which mighty institutions pose the greatest threat to the little guy. Democrats, by and large, think big corporations are the problem. Republicans think big government is. For example, Democrats deride the court for ruling that companies may spend as much money as they like on political ads at election time. This will allow the likes of Exxon Mobil to drown the voices of ordinary citizens, they say. Many Republicans, in contrast, applaud the court for stopping incumbent politicians using campaign-finance laws to silence critical speech about themselves.

In this instance, public opinion favours the Democratic position, while the constitution favours the Republican one. But in general Americans are warier of government than of capitalism. They may not want the Supreme Court to strike down Mr Obama’s health reforms, as some conservatives urge. But they do fret that their government is growing ever more costly and intrusive, and they fear that liberal judges will do little to restrain it even when it acts unconstitutionally. Conservatives add that, on the contrary, some judges use devious tricks to nudge the law leftward, such as citing foreign precedents, which can be cherry-picked from Europe. Mr Obama once said that his ideal judge would show “empathy” for the poor. Polls suggest that most Americans would rather their judges upheld the law dispassionately. It is a debate worth having, and it has only just begun.


Thursday, April 29, 2010

Inventories count

All relates to inventory cycles or behavior, and how inventories either drive the economy or amplify the moves.

In this case, it's not just steel or related, but all businesses.

Key to Recovery: Restocking All Those Shelves - BusinessWeek

What indicator is former Federal Reserve Chairman Alan Greenspan following most closely these days? No, it's not consumption, business investment, or even the jobs market. It's inventories. "That's a peculiar thing to say," the 84-year-old economist admitted in a Bloomberg Television interview on Mar. 26. But "inventories are critical now."

Companies slashed stockpiles by a record amount last year as demand for their products nosedived. That aggressive de-stocking aggravated the downturn and helped make the decline the deepest since the 1930s. In fact, corporate shedding of inventories accounted for almost a third of the 2.4% contraction in the American economy last year.

Now, with the economy showing signs of recovering and sales picking up, the reverse dynamic is about to set in.

Monday, April 26, 2010

Gotta plan a re-visit



We were there just a year ago, promised ourselves that we'd return, on our own.

Now with a few more ideas

Our Tax Dollars at ... Work?

Message to Congress - please please please raise my taxes.
These workers need to be paid ...

Will Wall Street Be Saved by Porn? - Opinionator Blog - NYTimes.com:

"Goldman Sachs is in the federal dock, President Obama is in New York talking tough to Wall Street, regulatory packages are flying through Congress — what could possibly get in the way of the financial reform juggernaut? “The Securities and Exchange Commission is the sheriff of the financial industry,” reports Jonathan Karl of ABC News, “but a new government report obtained by ABC News has concluded that some senior employees spent hours on the agency’s computers looking at sites such as naughty.com, skankwire and youporn as the financial crisis was unfolding.”"

Sunday, April 25, 2010

Contrast

We're having the exterior of the cabin "cleaned up"
Jeff is doing an excellent job, UV protection in the stain, freshening the chinking (perma-chink)






Older is on the left (duh)

There goes the punch bowl

No shock and awe, except for maybe those who thought the party could go on forever, and maybe the politicians who thought they could deceive the voting public forever.

Work longer (duh) and either pay more taxes (likely) or get less from government (less likely) or both.

For nations living the good life, the party's over, IMF says: "Who doesn't want more balance in their life?

But the translation is a bit ruder, something on the order of: 'Suck it up. The party's over.'

To keep the global economy on track, people in the United States and the rest of the developed world need to work longer before retiring, pay higher taxes and expect less from government. And the cheap imports lining the shelves of mega-chains such as Wal-Mart and Target? They need to be more expensive."

Can it get worse ?

Unfortunately ... yes.

Who can offer up the worst choice?

Op-Ed Columnist - Running on Empty - NYTimes.com:

"The election season is starting in earnest, and already one thing is crystal clear. Both the Democrats and the Republicans are hopeless. It seems inconceivable that either party can possibly win anything. This may be the year when the Whigs finally get to make their comeback."

Why the Mediterranean Politics are what they are

Robert Kaplan with an excellent summary of the problems
Location location location

Op-Ed Contributor - For Greece’s Economy, Geography Was Destiny - NYTimes.com:

"Greece is where the historically underdeveloped worlds of the Mediterranean and the Balkans overlap, and this has huge implications for its politics and economy. For northern Europe to include a country like Greece in its currency union is a demonstration of how truly ambitious the European project has been all along. Too ambitious, perhaps, many Germans and other Northern Europeans are now thinking.

That Europe’s problem economies — Greece, Italy, Spain and Portugal — are all in the south is no accident. Mediterranean societies, despite their innovations in politics (Athenian democracy and the Roman Republic) were, in the words of the 20th-century French historian Fernand Braudel, defined by “traditionalism and rigidity.”"

Impact

An extension of thinking about the nexus of private philanthropy and private, for profit endeavors.
Do well by doing good.

Wealth Matters - With Impact Investing, a Focus on More Than Returns - NYTimes.com:


"The very phrase “impact investing” sounds rapacious, but it is an emerging hybrid of philanthropy and private equity that proponents say is about to become more widespread. It is also something that has some very rich people intrigued."

Beyond alleviation of poverty, help create productive lives.

Thursday, April 22, 2010

Interesting Thinking

I may not agree with every point, but I DO like Stewart's style of thinking.

Findings - Earth Day Challenge - 7 New Rules for the Environment - NYTimes.com:

"On the 40th anniversary of Earth Day, is the middle-aged green movement ready to be revived by some iconoclastic young Turqs?

No, that’s not a misspelling. The word is derived from Turquoise, which is Stewart Brand’s term for a new breed of environmentalist combining traditional green with a shade of blue, as in blue-sky open-minded thinking. A Turq, he hopes, will be an environmentalist guided by science, not nostalgia or technophobia."

Monday, April 19, 2010

Works wonders - with tax dollars

When will be the time for switch-over

The rise of Big Solar: Growing pains | The Economist

"Solar energy is popular because it is clean and abundant. The problem is that it remains expensive. According to recent calculations by the International Energy Agency, power from photovoltaic systems (solar cells) costs $200-600 a megawatt-hour, depending on the efficiency of the installation and the discount rate applied to future output. That compares with $50-70 per MWh for onshore wind power in America, by the IEA’s reckoning, and even lower prices for power from fossil fuels, unless taxes on greenhouse-gas emissions are included. The costs of solar are dropping; in some sunny places it may, in a few years, be possible to get solar electricity as cheaply from a set of panels as from the grid, and later on for solar to compete with conventional ways of putting electricity into the grid. But for the moment there would be no significant market for solar cells were it not for government subsidies."

More Orthodoxy bashing

More bashing of the simplistic views of "Classical" Economics
By George Soros

Economics focus: Twin peaks | The Economist:

"In 1996, David Colander of Middlebury College, in Vermont, expressed his dissatisfaction with decades of economics by invoking a lofty analogy. He felt macroeconomists had clawed their way up a mountain, only to discover, when they broke through the clouds, that a neighbouring mountain would have taken them higher. On April 8th-10th Mr Colander joined many disgruntled economists at King’s College, Cambridge, for the inaugural conference of the Institute for New Economic Thinking (INET). The Institute is sponsored by the renowned investor George Soros. He has promised to spend $50m spread over ten years to help economists climb the right mountain."

Well if not the Euro ...?

What about back to the Yen?
Nah

Japan's debt problem: Sleepwalking towards disaster | The Economist:

"Over the past two decades the country has stumbled in and out of deflation, slipped down the global league tables on many social indicators and amassed the largest gross public debt-to-GDP ratio in the world (a whopping 190%). Yet government-bond yields have remained stubbornly low and living standards, by and large, are high. Visit the country and you will see no outward sign of crisis. Politicians and policymakers have bickered and schemed, but have mostly chosen to leave things as they are.

That cannot go on much longer. The figures are getting worse. Japan urgently needs radical policies to tackle the problems, and new leaders to implement them."

More here :

Japan's debt-ridden economy: Crisis in slow motion | The Economist:

Japan's debt-ridden economy
Crisis in slow motion
Japan’s government will eventually have a disaster on its hands if it fails to tackle the deep-seated problems of debt and deflation"

Euro not ready for Prime Time?

For some time I've doubted the future of the Euro

Now we have this : good read, and follow link to the full article

Greece's debt crisis: Three years to save the euro | The Economist

"This to-do list is alarmingly long, which is why European politicians are deluding themselves if they think the Greek crisis has been resolved with this week’s rescue. Because Greece was small enough to bail out, they have bought a temporary reprieve. Now they must use the time wisely."

Long time ago ...

Heard the news and checked it out

East Lansing house fire displaces 11 residents | lansingstatejournal.com | Lansing State Journal

In a prior life (back in the 70's) I hung out at "Elm Place" with friends ...

We won't go into what all may or may not have transpire there (G)


Sunday, April 18, 2010

Hope for the best, prepare for worse

Hopefully this all "blows over" but maybe not, and the Reuters analysis doesn't go quite far enough
What if Katia (a larger, adjacent) volcano goes?

SCENARIOS-Potential scenarios for volcano gas cloud crisis
| Reuters
:

"If the cloud remains stubbornly over Europe for a sustained period of time, perhaps weeks or longer, the travel sector would take a serious hit. Wider industries would also be affected from high-tech manufacturing to supermarkets and event organisers."

Saturday, April 17, 2010

Time for a dose of humility?

Compared to Mother Nature, man's efforts/impact may be puny

Risk of Katla: Could 2nd Icelandic Volcano Eruption Follow?

Iceland is a volcanic hot spot on the Mid-Atlantic Ridge, which is the dividing line between the Eurasian and North American continental plates. The country's three major volcanoes -- Hekla, Katla and Grimsvotn -- lie along this boundary. Altogether there are 35 active volcanoes on and around the island. Icelandic settlement reaches back to the late 9th century AD, with three documented instances of an eruption in the Eyjafjallajökull volcano preceding an eruption in Katla, but 22 documented eruptions in the much more active Katla in the same period. This connection has not been lost by geologists observing the disaster. Icelandic history is rich of tales of the might of the much-feared Katla volcano.

Eyjafjallajökull, which is currently filling the sky above northern Europe with ash, is a minor player in Icelandic terms -- though its last eruption lasted for more than a year, from December 1821 to January 1823. It began erupting soon after midnight on March 20th this year and the first eruption lasted for three weeks. It erupted for a second time on Wednesday April 14th and the lava is now coming out ten times faster than the last eruption. This eruption has many of the same characteristics as the eruptions in the 19th century.


2010-04-17-ejafjalla16apr20105.jpg



More links :
Past eruptions Eyjafjallajkull and the Biggest Volcanic Eruptions - WSJ.com

Uh Oh

Iceland Eruption Wasn’t That Powerful, but Effects May Linger - NYTimes.com

Bill Burton, associate director of the United States Geological Survey’s volcano hazards program, said the current eruption under the Eyjafjallajokull glacier bore similarities to the last eruption there, in 1821. “We seem to be reprising that episode again,” he said.

That eruption continued, on and off, until 1823. While no one can predict how long this one may last, Dr. Burton said, in volcanology, “The past is the key to the present.”

He added, “So if the other eruption lasted for two years, this one might as well.”

Ongoing coverage here : Views of Volcanic Ash Plume Over Europe - The Lede Blog - NYTimes.com

Hopefully, we'll stick with a small eruption

Laki - Wikipedia, the free encyclopedia

The system erupted over an 8 month period during 1783-1784 from the Laki fissure and the adjoining Grímsvötn volcano, pouring out an estimated 14 km3 (3.4 cu mi) of basalt lava and clouds of poisonous hydrofluoric acid/sulfur-dioxide compounds that killed over 50% of Iceland's livestock population, leading to famine which killed approximately 25%[4] of the population.

The meteorological impact of Laki resonated on, contributing significantly to several years of extreme weather in Europe. In France a sequence of extremes included a surplus harvest in 1785 that caused poverty for rural workers, accompanied by droughts and bad winters and summers, including a violent hailstorm in 1788 that destroyed crops. This in turn contributed significantly to the build up of poverty and famine that may have contributed to the French Revolution in 1789. Laki was only a factor in a decade of climatic disruption, as Grímsvötn was erupting from 1783–1785 and a recent study of El Niño patterns also suggests an unusually strong El-Niño effect from 1789-93.[9]

Comment on the Economist coverage :
Don't mess with those Nordic folk
"Iceland strikes back. Anyone who has seen the movie "Direktoren for det hele" by the danish director Lars von Trier nows that it is not advisable to upset a person from Iceland. As he the director himself found out, it does not matter that you are the director, you do not tell a person from Iceland (Bjork in Dancer in the dark) how to act, no matter that she has never acted before, she will not accept directions and she will never again expose herself to anything of the sort that means she will be told what to do. Unfortunately, the governments of Britain and Holland did not realise that and insisted that Iceland should repay their debts and do it now. If you think that the people of Iceland did not have anything to do with the vulcano errupting right now, you are kidding yourself."

Tuesday, April 06, 2010

How about some upbeat stuff

Demographics - US Wins

Op-Ed Columnist - Relax, We’ll Be Fine - NYTimes.com:

"Over the next 40 years, demographers estimate that the U.S. population will surge by an additional 100 million people, to 400 million over all. The population will be enterprising and relatively young. In 2050, only a quarter will be over 60, compared with 31 percent in China and 41 percent in Japan.

In his book, “The Next Hundred Million: America in 2050,” uber-geographer Joel Kotkin sketches out how this growth will change the national landscape. Extrapolating from current trends, he describes an archipelago of vibrant suburban town centers, villages and urban cores."

Some fair thinking

Such things as adjusting retirement age (I'd be more aggressive), trim mortgage deduction (good luck with that) and I'd be concerned on the charitable contribution deduction trim.

Slashing the Deficit without Massive Tax Hikes - BusinessWeek

Sunday, April 04, 2010

What can Europe Do?

Follow up to the "Brilliant Idea" post on Euro-idea of "no growth"

Europe is fighting a loosing battle with demographics (they are getting old), and rising powers just "don't care" ... or worse.

"John Hulsman, an American writer on foreign policy, recently noted that rising powers such as China, Russia, India and Brazil are, if anything, even more hostile to the idea of binding rules or treaties that impinge on their sovereignty than the Americans are. Citizens of these powers “see much of the current international architecture as a confidence trick designed to keep their country from assuming its proper place in the world,” Mr Hulsman commented."



Charlemagne: Foreign-policy wisdom and folly | The Economist:

"Here are some unglamorous things that Europe can do to count in this new world. Stick to the rule of law: being predictable is a source of strength. Whether negotiating free-trade pacts, or the accession of such neighbours as Turkey, the EU bureaucracy is designed to keep making the same demands, over and over again. Foreign partners that comply know their rewards will be market access, entry to the EU and so on. Above all, stay rich: so Europe must find new sources of growth. It does not matter whether a declining Europe speaks with dozens of voices or one: nobody will listen."

Congress? - it's broken

With gerrymandering (which will only get worse with the Census data) and shrill partisanship, it's broken.

Congress fails to represent the voters.

What Happens When Congress Fails to Do Its Job? - Newsweek.com:

"What drove Bayh from office, rather, was that he'd grown to hate his job. Congress, he wrote in a New York Times op-ed, is 'stuck in an endless cycle of recrimination and revenge. The minority seeks to frustrate the majority, and when the majority is displaced it returns the favor. Power is constantly sought through the use of means which render its effective use, once acquired, impossible.'"

Brilliant thinking

Where oh where to invest?
Areas where growth is accepted, where there is a sense of progress, and improving both one's own lot in life and the lives of others, or where we have reached "the end"?

Europe is a inhabited theme park, it's time has passed.

The Return of No-Growth Economics - Newsweek.com:

"Take the worst economic crisis in 60 years. Combine it with the erosion of the West's predominance. Add apocalyptic warnings of climate change. What you'll get are some radical new ideas.

One of those now swirling through the European zeitgeist turns out to be a very old one, albeit in new garb. It's the revival of the assertion that economic development is and should be finite—limited today by scarce resources, overpopulation, and rising sea levels."

Saturday, April 03, 2010

Even More Investment Stuff

Prior posts on bonds vs. equities
What about Real Estate
Nope

Economist Robert Shiller: Is a Double Dip in Housing Ahead? - BusinessWeek:

"You've said that 90% of the housing market is supported by the government.

Well, it's 80% or 90%. Really almost the whole market now is government. And we know this can't last."

More PIMCO on "New Normal:

Equities yes, Bonds no, consider private equity, and/or private entities where you have influence (ownership?)

A Bond King Turns Bearish - BusinessWeek

"Under what Pimco calls the "new normal," investors should expect lower-than-average historical returns with heightened government regulation, lower consumption, slower growth, and a shrinking global role for the U.S. economy. Huge borrowing in nations including the U.S., U.K., and Japan will eventually lead to inflation as governments sell record amounts of debt to finance surging deficits, Gross predicts."

Book Reviews

A series of book reviews on the Finance Crunch
(Banking Should Be Boring)

Blaming Bankers for the Failings of Economists: Richard Posner - BusinessWeek

"The principal economic lesson is the inherent instability of the financial sector and the consequent need for alert, intelligent regulation."

Defusing the Banks' Financial Time Bomb - BusinessWeek

Here's an offer: Invest a lot of money in a faltering project, and if things go well, you'll get your money back and maybe a little upside; but if it all goes south, you'll bear the entire loss. Not exactly the sort of terms to which anyone of sound mind would agree.

But this, says Robert Pozen, is exactly what the government signed on for in 2008—and more than just once—as the financial world swayed on the brink of collapse. In Too Big to Save? How to Fix the U.S. Financial System, Pozen, an eminent money manager and authority on financial regulation, rails against the waste and poor judgment that characterize many of the bailout deals of that year. His term for it is "one-way capitalism"—since only the banks were in line for real gains. And readers won't be able to mistake his disgust that the players who had taken the most foolish risks found themselves in the most advantageous spots."


The financial crisis and the future of regulation: Blame game | The Economist

Two influential economists take a potshot at financial policymakers. Why don't their criticisms add up?

Freefall: America, Free Markets and the Sinking of the World Economy. By Joseph Stiglitz.

13 Bankers: The Wall Street Takeover and the Next Financial Meltdown. By Simon Johnson and James Kwak.

The financial crisis explained: A novel view | The Economist: "Books & Arts

The financial crisis explained
A novel view

IOU: Why Everyone Owes Everyone and No One Can Pay. By John Lanchester. Simon & Schuster;"

...those who want to make sense of it all will have to make do with the factual analysis of John Lanchester, a British writer of fiction.

Mr Lanchester’s short book will not add much to the knowledge of your average hedge-fund manager and central banker. Anyone who has slalomed through the avalanche of specialist tomes on the crisis will recognise many of his sources. But for the neophyte reader, Mr Lanchester demonstrates both an impressive grasp of the detail and, more importantly, the ability to convey it in a down-to-earth and witty style.


Prophets of the financial crisis: All geek to them | The Economist:

Those that did win

The Big Short: Inside the Doomsday Machine. By Michael Lewis. Norton;

and a whistle blower on Madoff

No One Would Listen: A True Financial Thriller. By Harry Markopolos. Wiley;

More on the Church

It all comes to a head during "Holy Week:

Peggy Noonan: The Catholic Church's Catastrophe - WSJ.com:

"There is an interesting and very modern thing that often happens when individuals join and rise within mighty and venerable institutions. They come to think of the institution as invulnerable—to think that there is nothing they can do to really damage it, that the big, strong, proud establishment they're part of can take any amount of abuse, that it doesn't require from its members an attitude of protectiveness because it's so strong, and has lasted so long."

and

"It is damage that will last at least a generation. It is an actual catastrophe, a rolling catastrophe that became public first in the United States, now in Europe. It has lowered the standing, reputation and authority of the church. This will have implications down the road."

Huh?

Talk about paranoia

Vatican Priest Likens Criticism Over Abuse to Anti-Semitism - NYTimes.com:

"...the Catholic Church has felt under attack from recent news reports and from criticism over how it has handled charges of child molesting against priests in the past."

Important invstment thinking

Not bonds, but Equities
Maybe better yet is to operate a small business, with local orientation.

Food distribution makes sense.

Pimco's New Normal - Forbes.com:

"These days Gross and El-Erian are singing from the same songbook. The name of the tune is 'The New Normal,' a term that Gross coined last March and that just might define the economic landscape for years, or decades, to come. 'When the U.S. and global economy reset after the crisis, [the global economy] will look different,' says El-Erian. 'This has implications for investment strategies, how you run a business and what you offer your clients.'

According to the Pimco party line, those implications are rather grim for the U.S. A year ago Gross told Forbes that our future will likely include a lowered living standard, high unemployment, stagnant corporate profits, heavy government intervention in the economy and disappointing equity returns. Nor, with interest rates already low, can investors expect much from bonds, other than their mediocre coupons."