Category: Fed Policy

Sorted Weekly Tweets

Sorted Weekly Tweets

Posted on by David Merkel

US Fiscal & Monetary Policy

 

  • Obama?s Budget Would Cap Romney-Sized Retirement Accounts http://t.co/3xC4YflVFO Might indirectly harm smaller accounts, article states Apr 05, 2013
  • Obama Budget Plan Would Curb Social Security Growth http://t.co/3wvyDuN3tE Small curbs; reinforces idea: can’t trust Govt on inflation Apr 05, 2013
  • Obamacare Sticker Shock: Are You Ready to Pay Double? http://t.co/hKaBmRzQMZ Getting bad enough that the Democrats might undo Obamacare… Apr 04, 2013
  • ?Greatest bond bubble in history? will burst in economic chaos, says Stockman http://t.co/SuFObaenCK Collins & Aikman makes him Cassandra Apr 04, 2013
  • How the Fed fueled an explosion in subprime auto loans http://t.co/g7r3Likl56 Cheap AAA financing + personal stories of aggressive lending Apr 04, 2013
  • Who will be the next Fed chair? Here are Wonkblog?s odds. http://t.co/44Bqhho05m Every one of these is a horrible idea, especially Yellen $$ Apr 03, 2013
  • Krugman should be careful tossing out the phrase ?cranky old man stuff.? It tosses like a verbal Boomerang. #livesinaglassshouse $$ #stones Apr 01, 2013
  • Stockman Warns of Crash of Fed-Fueled Bubble Economy http://t.co/wsxbP1tsTe Krugman called Stockman?s piece ?cranky old man stuff? $$ Apr 01, 2013
  • Fannie Mae and Freddie Mac Face New Problem: Profitability http://t.co/KobaLaMezt Some in Govt plan on keeping F&F under govt control $$ Apr 01, 2013

 

North Korea

 

  • Understanding Kim Jong Un?s Tantrums http://t.co/EeGXEUuvcH Has 2 prove tough guy bona fides to generals, while pushing modest reform agenda Apr 05, 2013
  • North Korean Nukes: How Worried Should We Be, and What Is Kim Jong Un Thinking? http://t.co/vsoaHvzQvI Mutual deterrence of first move Apr 04, 2013
  • Scooping Up North Korean Coins http://t.co/Sokc9jIfZe Jimmy Rogers picks up some unusual numismatic coins from North Korea. $$ Apr 01, 2013

 

Eurozone

 

  • Merkel Losing Allies in $700 Billion Shift to Renewables http://t.co/CEh2j8TE4p For a science PhD, she certainly tends 2 magical ideas Apr 05, 2013
  • Draghi Considers Plan B as Sentiment Dims Post Cyprus Fumble http://t.co/Wbu9ggM2cd Unwinding the Euro would be appropriate #unforcederror Apr 05, 2013
  • Le Fracking for Geothermal Heat Drawing Ire of French Oil http://t.co/5KHqRtfdO9 The French tie themselves in knots: irrational policies Apr 05, 2013
  • EU Unemployment: Titanic in Perspective http://t.co/uSxKOfNLn5 Summary of the EZone unemployment problem, culled from many websites Apr 04, 2013
  • A weakening Germany in a weaker EU http://t.co/CsuZ3KQ86x But can Germany rescue itself; whole EZone slowing down; time 4 action Mario! 😉 Apr 04, 2013
  • World from Berlin: ‘Germany Isn’t Living Up to EU Responsibility’ http://t.co/ozzZJbr5xR But what will Germany do when it has2rescue France? Apr 04, 2013
  • Audi Wants to Change a 45-Year-Old U.S. Headlight Rule http://t.co/V0aOqzGRi0 Only high & low-beams r allowed; Audi wants more variety Apr 04, 2013
  • Cyprus Turks Share Pain as Banking Crisis Revives Talk of Unity http://t.co/VmHELItCED Serious talks will come through younger politicians Apr 04, 2013
  • The ECB Fragmented Monetary Policy http://t.co/o8o8d0nucY Eurozone no longer has single monetary policy; euros not worth same everywhere $$ Apr 03, 2013
  • Euro Zone Unemployment Hits Record High http://t.co/lLgg6ZQVKg Fringe Europe suffers from the political dreamers post-WWII $$ #breakup Apr 03, 2013
  • Money Funds Meet Zero Yields by Breaking Buck Taboo: Euro Credit http://t.co/uD672kwCfP Short-term finance hits the wall in Eurozone $$ Apr 03, 2013
  • Slovenia?s Jazbec Inherits Bank System to Avert Bailout http://t.co/MDrCmuYmEk Don’t care how smart u r; pain involved in deleveraging $$ Apr 03, 2013
  • Texas wants its gold back! Wait, what? http://t.co/HuH7vg53Z8 This is a rational response to kleptocracy a la Cyprus. $$ Apr 02, 2013
  • Developing Nations Retreating from Euro as Reserve Currency http://t.co/tH91Uw76SC Predictable; can reserve currency allow confiscation? $$ Apr 02, 2013
  • President Hollande Failing to Control Unemployment Crisis http://t.co/XojVG1pZMl It would require considerable deregulation 2fix France $$ Apr 02, 2013
  • Sundown in America http://t.co/hpeIDbcvzl Much as I have not liked Stockman, the logic is decent; he is arguing for the free markets. $$ Apr 02, 2013
  • Mitch McConnell Prepares To Give Barack Obama The Political Shellacking Of A Lifetime http://t.co/AqOqm1Vwey Worth a read, PPACA is a dog $$ Apr 02, 2013
  • Wrong: Confessions of a Keynesian heretic http://t.co/MnUyIqdIZ2 Another believer in monetary alchemy, but not fiscal alchemy $$ #endthefed Apr 01, 2013

 

Japan

 

  • Wrong: Japan?s Brave New Monetary Era http://t.co/NxIU0Ovc4J Doing the same thing over & over & expecting a different result. Won’t work Apr 05, 2013
  • Japan’s Yen UnCompetitveness – Fukushima and the Yen – Hara-Kiri http://t.co/4UfjiH40XM Export > Import favors yen fall; now is vice-versa Apr 05, 2013
  • Kuroda to Bernanke: My Bazooka Is Bigger Than Your Bazooka http://t.co/4d2ocM3BJN “I can destroy my nation faster than u can. Nyaah! Nyaah!” Apr 05, 2013
  • Bank of Japan in Bold Bid for Revival http://t.co/DyKXQFLpsC We must devalue & inflate our way to prosperity! Apr 04, 2013

 

Church v State

 

  • Next few tweets will b controversial: Founder’s thoughts on “No establishment of religion” applied to the National govt, not the states Apr 04, 2013
  • Laws favoring certain churches persisted in various states until 1850s, & some had religious test oaths for officeholders into 20th Century Apr 04, 2013
  • The “test oaths” died for lack of use, clean up in the 1900s, was largely perfunctory. The next tweet contains today’s story Apr 04, 2013
  • Proposal would allow state religion in North Carolina http://t.co/SZIXiT2Xht Won’t pass modern constitution muster, but would in early 1800s Apr 04, 2013

 

Other US Politics

 

  • Seven Dumb Things Bankers Say http://t.co/2A5GTQn59w Among them that the big banks aren’t too big, & that the economy is not 2 financialized Apr 06, 2013
  • Deep in the Red of Texas, Republicans Fight the Blues http://t.co/UP2ZmRA4Fi Texas, future blue state, must motivate voters to care Apr 05, 2013
  • ‘Dear Airline, Here’s the Problem…’ http://t.co/6fBnR48kb0 Customized surveys home in on problems so airlines can fix complaints fast Apr 04, 2013
  • Pro-Gun Laws Gain Ground http://t.co/QXGXNbDwyZ Since Newtown Massacre, More States Ease Regulations Than Bolster Them Apr 04, 2013
  • Tough Calls on Prenatal Tests http://t.co/I4037KsAt8 Beware false positives; If u get a positive, do a 2nd invasive test 2 check Apr 04, 2013
  • 5 big Dodd-Frank battles http://t.co/Z7CfTuUVUA Volcker Rule, consumer bureau battle, random ratings, derivatives fight all on agenda Apr 04, 2013
  • Health Insurers Prevail in Medicare Fight With Washington http://t.co/Z8TskpLoi6 Another example of the perversity of the PPACA $$ #abolish Apr 03, 2013
  • Court says Stockton, California may proceed with bankruptcy http://t.co/DTgMt85Er1 Largest muni bankruptcy will challenge guarantors $$ $AGO Apr 02, 2013
  • Banks Win Dismissal of Substantial Portion of Libor Suits http://t.co/HzdRoTIYS8 Difficult 2 prove particular damage 2 claimants. $$ #toobad Mar 31, 2013
  • Frats Worse Than Animal House Fail to Pay for Casualties http://t.co/ViKN3I1Tb8 Very long article: national fraternities avoid liability $$ Mar 31, 2013

 

Financials

 

  • Wrong: Beware of those who cry ‘bubble’ about bonds http://t.co/DHvp60swjB Article argues about wrong classes of bonds; Tsys not bubble Apr 05, 2013
  • As Business Lending Rises, Concerns Emerge About Profit http://t.co/D8bdwXm5Re May b no defaults now, but loan pricing tighter than exp loss Apr 04, 2013
  • The Lurkers of Wall Street http://t.co/odjuKYZodt @reformedbroker Of “desk analysts” that turn to Stocktwits when they can’t find news Apr 04, 2013
  • Freeh Says Corzine?s Risky Strategy Helped Fell MF Global http://t.co/wSDrswvoYB B wary when companies pursue biz askew from main biz Apr 04, 2013
  • HSBC Converts Loan Clients to Enter Junk Top 10 http://t.co/2yj8hHMW4E Pay more in yield, but gain flexibility from fewer covenants Apr 04, 2013
  • Bond Traders Club Loses Cachet in Most Important Market http://t.co/7Hw4frsFOn It’s just not worth it 2b a primary UST dealer w/direct bids Apr 04, 2013
  • Financial ETF Falters Amid Bearish Bets as Bank Earnings Loom http://t.co/axMByUp3Zd Ratio of $SPY to $XLF is rising http://t.co/zz0tdIslzq Apr 04, 2013
  • I miss working in a life ins investment dept. You get to see all of the prospectuses for bizarre credit deals; u *feel* the credit cycle $$ Apr 04, 2013
  • Bitcoin?s largest market crashes after wild price swing http://t.co/SAEdfFOmAN Smile when u say Bitcoin & “crash course” in same sentence $$ Apr 03, 2013
  • Gross Says Buffett, Soros Careers Fueled by Expansion http://t.co/1WaBuu49bu Honest Gross; Taking 2much credit risk briefly looked good $$ Apr 03, 2013
  • Mortgage Gamble Pays Off for Wells http://t.co/S82N3MwglF Doing balance sheet lending w/an option to sell if conditions r good $$ FD: + $WFC Apr 03, 2013
  • Willow Fund as a Cautionary Tale for Investors http://t.co/UUsO9xUE2n Large strategy changes r always red flag; invalidates track record $$ Mar 30, 2013
  • Does Blame Predict Performance? http://t.co/K79d7gJgqS “Blame cultures” can improve investing by identifying &fixing problems w/foresight $$ Mar 30, 2013
  • Carl Icahn Unleashed: Wall Street’s Richest Man Is On The Attack — Just Ask Michael Dell http://t.co/Nck6h50plR Was interviewed 4 this $$ Mar 30, 2013

 

Other

 

  • Is Jeffrey Loria the Worst Owner in Sports? http://t.co/B5qrnvM9c3 & Rent-seeking in professional sports http://t.co/QmhopqxwAw ?cc @munilass Apr 04, 2013
  • Gold Slumps Toward Bear Market as Investors Cut Holdings http://t.co/2dOeIfPl4r Positive self-reinforcing liquidation of ETF units, mebbe Apr 04, 2013
  • A Man in the Mirror http://t.co/85QSn5dSSM Bill Gross says great investors have had a huge tailwind from growth of credit. What comes next? Apr 04, 2013
  • Firefox 20 is giving me fits w/a Javascript bug keeps popping up boxes that say “Error: missing ( after for” Also no posting 2 stocktwits Apr 04, 2013
  • Visa Demand Jumps http://t.co/MlszY9pJ9y Employers Set to Quickly Reach Cap on Skilled Foreign Workers $$ Companies race to get ltd # visas Apr 02, 2013
  • Republican Born Roosevelt Digs Deep for Texas Oil Found With CO2 http://t.co/DJ0DBx6YGV CO2 injection liberates tight oil in West Texas $$ Apr 02, 2013
  • Buffett?s Missed Airlines Bet http://t.co/eEf37K7iOI Remember Buffett invests like baseball w/”no called strikes.” No fat pitch 2 swing @ $$ Apr 01, 2013
  • Suzy Weiss: To (All) the Colleges That Rejected Me http://t.co/5jzMZGzSe9 Satirical article:useless things colleges look 4 in applicants $$ Apr 01, 2013
  • Airline Returns Refute Buffett Aversion 2 US Carriers http://t.co/CD3fFjhcOo Dead cat bounce & that qualifies2undo the history of losses? $$ Apr 01, 2013

 

Overly Large Nonbank Financials

?

  • $NLY $GLD $SPY $VWO ticker list 4 publicly traded Miscellaneous Financial Services companies w/ > $50B in assets $$ http://t.co/OIrnSfE5jY Apr 04, 2013
  • $AMP $BLK $BAM $SCHW $MS $UBS list of tickers 4 publicly traded Investment Services companies w/ > $50B in assets $$ http://t.co/6QiByewpnV Apr 03, 2013
  • $AIG $BRK/A $CB $CNA $HIG $L $TRV list of tickers 4 publicly traded P&C Insurance companies w/ > $50B in assets $$ http://t.co/2jVlnE5oVT Apr 03, 2013
  • $GNW $LNC $MET $PL $PRU $UNM list of tickers 4 publicly traded Life Insurers companies w/ > $50B in assets $$ http://t.co/cSoZnSL3LZ Apr 03, 2013
  • $AFL $CI $PFG $UNH $WLP list of tickers 4 publicly traded Acc & Health Insurance companies w/ > $50B in assets $$ http://t.co/5JFJCzxZOm Apr 03, 2013
  • $DFS $GE $SLM list of tickers 4 publicly traded Consumer Financial Services companies w/ > $50B in assets $$ http://t.co/4KPicolqgc Apr 03, 2013

?

Replies & Retweets

 

  • @probability_wtd Many things concern me, including this. Really difficult 2c the government keeping their hands of pension monies. Apr 06, 2013
  • Buffett isn’t simple RT @researchpuzzler: my latest #wsjexperts comment, on lessons from Buffett http://t.co/vA3sdSIp11 HT @alephblog Apr 05, 2013
  • @LaMonicaBuzz They have both assets & liabilities in the yen; they try 2 keep it even, effect should b small | FD: + $AFL Apr 05, 2013
  • All significant energy use improvements have been more efficient use of oil, gas&coal RT @finemrespice: http://t.co/oBrHYmgszO <- Insanity. Apr 05, 2013
  • I would be fine w/that RT @Nonrelatedsense: @AlephBlog strikes me as better to eliminate dividend taxes for C corps Apr 05, 2013
  • “Just a market for speculators, because nothing physical is traded that producers want to hedge?” ? David_Merkel http://t.co/2IvwG2nAt9 $$ Apr 05, 2013
  • @neilbarofsky Really glad for you. I rarely get to meet any heroes. She was prescient. Apr 04, 2013
  • RT @DavidSchawel: MOAR mREITS: Blackstone backed Ellington Mortgage $EARN files for $100mil IPO. Let no yield hog be left without a 12% … Apr 02, 2013
  • @The_Analyst 15-20 years ago Apr 01, 2013
  • ‘ @The_Analyst Real-time, this is 18-20 years ago, but it illustrates modern problems. It will get closer to the present as I move along $$ Mar 31, 2013
  • RT @DavidSchawel: CS lessons from Cyprus: sr. bank debt no longer safe, uninsured bank deposits have been nailed in, and capital control … Mar 30, 2013

 

FWIW

 

  • My week on twitter: 44 retweets received, 3 new listings, 58 new followers, 45 mentions. Via: http://t.co/cPSEMLXpb8 Apr 04, 2013

 

Sorted Weekly Tweets

Sorted Weekly Tweets

Posted on by David Merkel

Cyprus & The Eurozone

 

  • Betray Your Bank Before Your Bank Betrays You http://t.co/H0nRJk7pLB Deposits over insured limit r a sitting target 2b taken in a crisis $$ Mar 29, 2013
  • Demolishing some myths about the single currency http://t.co/F34IpRQIbF A euro in Nicosia isn’t worth the same as a euro in Berlin $$ #ulose Mar 29, 2013
  • http://t.co/cbKK6ZNfW6 Neatest thing about the Eurozone interactive graphic: crisis comes in fits & spurts; u think it is over,& it’s not $$ Mar 29, 2013
  • Eurozone crisis: three-and-a-half years of pain http://t.co/VI8BUD48I8 Cool graphic that allows u2 explore the Euro-crisis blow-by-blow $$ Mar 29, 2013
  • Lines Form as Cyprus Banks Reopen http://t.co/0XxAiCFrwq How 2 destroy your banking system & bungle rescue, courtesy of the EZ & #Cyprus $$ Mar 28, 2013
  • MANDATORY CREDIT: BLOOMBERG SURVEILLANCE http://t.co/7bORsyhW8b Marc Faber talks2 Tom Keene & Alix Steel on stocks, Europe, Cyprus & gold $$ Mar 28, 2013
  • Italy?s failure to form a government doesn?t bode well for the euro http://t.co/V9nPcWFR60 EZone a political creature w/lousy economics $$ Mar 27, 2013
  • Money fled Cyprus as president fumbled bailout http://t.co/gl1J9z80MV Give the Russians credit (figuratively) 4 squeezing $$ out of Cyprus Mar 27, 2013
  • Euro zone overrates ability to curb contagion: Moody’s http://t.co/LpRdQ5RG2B Taxing insured deposits has opened up a can of worms $$ #dumb Mar 27, 2013
  • As a kid, we had a rule, “You can’t beat up my little brother. Only I get to beat up my little brother.” Cyprus: deposit insurance & levy $$ Mar 27, 2013
  • Cyprus banks remain closed to avert run on deposits http://t.co/JLDXoGD0T8 Won’t help; trust broken. Better 2 take money home, buy gold $$ Mar 26, 2013
  • Cyprus: It?s not over yet http://t.co/2qiIs9aN1b There will be a lot of pushback from Russia & wealthy Cypriots. Taxing Insured deposits? $$ Mar 26, 2013
  • Spain?s Swelling Debt Seen Impeding Rajoy Deficit Battle http://t.co/mapViHkfpk Unsure how Spain can escape. After that comes France $$ #woe Mar 25, 2013
  • Cyprus: crossing the green line http://t.co/whW4YR5a9t If I had $$ in a Greek, Italian, French or Spanish bank, I would withdraw some #theft Mar 25, 2013
  • Cyprus: The Operation Was a Success. Shame the Patient Died. http://t.co/79agrH1Mb5 Misery of Cyprus is a feature, not a bug $$ #norelief Mar 25, 2013
  • Cyprus weighs big bank levy; bailout goes down 2wire http://t.co/rm0fHJIfBo Small depositors lose 4%, big 20%. Policymakers gain new tool $$ Mar 25, 2013

 

Financial Sector

 

  • Why Bad Directors Aren?t Thrown Out http://t.co/ZuzGVZk99A Large Institutional Shareholders go along 2get along. Y irritate powerful ppl? $$ Mar 29, 2013
  • Surging Student-Loan Debt Is Crushing the System http://t.co/ckFHBbDc4R Avoid student debt if u can; most onerous form of debt in US now $$ Mar 29, 2013
  • Wells Fargo Beats Rivals to Oil-Boom Deposits, Study Says http://t.co/Ygt4ENMJqz FD: + $WFC | WFC bot little banks, grew them organically $$ Mar 29, 2013
  • Swiss Re settles dispute w/Berkshire Hathaway http://t.co/ADJ0zdufv9 Hasn’t developed same expertise U/W life policies as P&C $$ FD:+ $BRK/B Mar 29, 2013
  • 5 Financial Advisor Red Flags http://t.co/EKFVgc0poP There r2 many fake “credentials” in investing; the person matters more than letters $$ Mar 28, 2013
  • 5th Anniversary of Credit Crisis: Should u Buy CLOs? http://t.co/2sJzKv6LEi All loan participation funds@ prem2NAV http://t.co/qCRczPY0Mu $$ Mar 28, 2013
  • We?ve Already Built the Next Banking Disaster http://t.co/QjYzT4A9gz At minimum, we need to break up biggest 4 banks $C $JPM $BAC $WFC $$ Mar 28, 2013
  • Citigroup looks to cut cash holdings to boost earnings http://t.co/5FAoe3egno Every bank hates 2 keep slack liquid assets. Lowers ROE $$ $C Mar 27, 2013
  • The Best Way to Save Banking Is to Kill It @Matthew_C_Klein http://t.co/UP6c1DsMox Separating deposit-taking from credit creation $$ #yes Mar 27, 2013
  • A successful failure by @researchpuzzler http://t.co/cOC4Cpu9L1 Amazing what @pimco can do when it has less money to invest $BOND $$ Mar 27, 2013
  • US Cracks Down on ‘Forced’ Insurance http://t.co/MiWI6a5C1X Restrictions on banks profits on force placed insurance won’t harm insurers $$ Mar 27, 2013
  • Warren Buffett and Goldman Sachs: Explaining the Math http://t.co/H6AZImEyTl Buffett receives $GS shares equal 2 his profits on the trade $$ Mar 27, 2013
  • http://t.co/1a1TUDLI6H 44% of Americans think they’re covered 4 weather-related floods. Only 15% have bought a supplemental flood policy. $$ Mar 25, 2013
  • Falcone Follows Michael Jackson Path Taking Fortress Loan http://t.co/697JnVvocq $HRG Falcone tapping every loan source he can $$ #desperate Mar 25, 2013
  • Dealer inventory slump threatens market stability http://t.co/XpsoTJkrl0 Intermediation brings stability 2 mkts if intermediaries solvent $$ Mar 25, 2013
  • Mortgage Securitizers Didn?t Know Housing Was Going Bust http://t.co/rbw2qR2z8H Many drank the same poison Kool-aid they served to others $$ Mar 25, 2013

 

Rest of the World

 

  • US Writes Its Worries About Buying IT Gear From China Into Law http://t.co/OZJt59gZ80 Just imagine the backdoors that could be installed $$ Mar 29, 2013
  • Grooms at $18 Fuel IPO Ambitions for Indian Matchmaker http://t.co/liu9239lyU India needs 2 have dowry go reverse way; husband pays $$ Mar 28, 2013
  • How Asia and Robotland have dramatically changed the US labor market http://t.co/Clo8eqpM3w Biggest thing killing off low-end jobs: tech $$ Mar 28, 2013
  • Mr Yen cautions on Japan’s ‘unsafe’ debt trajectory http://t.co/iX4GAYAfoR Takehiko Nakao warns of consequences from 2 much govt debt $$ Mar 27, 2013
  • John Mauldin:”Might I suggest that a good trade would be to be long German government debt, short French debt? ” $$ neg carry, long disaster Mar 27, 2013
  • North Korea?s Economic Outlook: Cloudy with a Chance of Statistics by @steve_hanke http://t.co/XXWyKDffB9 Communism often cre8s inflation $$ Mar 27, 2013
  • Japanese Investors Start to Cut the Cord http://t.co/9oDHAhiSp8 Mrs Watanabe starts to buy stocks, even foreign & many other investments $$ Mar 27, 2013
  • Chinese housing bubble fears grow http://t.co/sejx6Yaj0P China grew its economy by forced investing, & the central planning is failing $$ Mar 27, 2013
  • Abe?s Inflation Exceeds Merkel?s After 14-Year Lag http://t.co/4s9838al6a All a race to the bottom; sound $$ will produce greater growth. Mar 27, 2013
  • US shale no panacea for Japan’s crippling energy bills http://t.co/siPd1kiheZ Infrastructure doesn’t exist 4 getting lotsa LNG 2 Japan $$ Mar 27, 2013
  • Brazil Soy Boom Bottlenecked as China Left Waiting http://t.co/sUtvoyp8yw Need 2invest transport infrastructure; tax importers/exporters? $$ Mar 26, 2013

 

Companies

 

  • REITs Trigger Fed Warning as Kain Tops $100 Billion http://t.co/4Lq6xm6Ka3 Shadow banking returns amid unconventional Fed policies $$ #panic Mar 28, 2013
  • M&A Stumbles Amid March Deal Drought http://t.co/sJlM7ndlnr “Can u say overvaluation, boys & girls? I thought u could; you’re special.” $$ Mar 28, 2013
  • Here’s Why Marissa Mayer Is About To Spend ~$200 Million On A YouTube Wannabe http://t.co/E5A42QAZac Buy small $ grow organically, smart $$ Mar 27, 2013
  • Is the $DELL Stub the Right Investment for You? http://t.co/ut9Mg65gLa Gun to the head, I would say “no.” 2 much leverage & excess supply $$ Mar 27, 2013
  • Summaries of What’s Wrong w/ $YHOO ‘s Summly Buy http://t.co/npVsxAj7Hj & http://t.co/KudImnOcdL & http://t.co/OhZfXoUwM3 $$ Mar 27, 2013
  • How the Maker of TurboTax Fought Free, Simple Tax Filing http://t.co/CYUea9aT8O Intuit benefits from complexity in the tax code $$ #simplify Mar 27, 2013
  • Fredriksen Bets $2.6B New Ships Will Beat Glut: Freight http://t.co/QtxTQaxJZF A bold bet that may fail 4 lack of sufficient capital $$ $FRO Mar 27, 2013
  • The Scariest Stock Chart in Town @ReformedBroker http://t.co/mg54zsX9s8 Good example of analyzing balance sheet strength of stockholders. $$ Mar 27, 2013
  • Cisco Is Keeping Its Promise Not To Buy Companies In The US http://t.co/GtWyy2bLpx Makes sense given US Tax laws | FD: + $CSCO $$ Mar 27, 2013
  • T-Mobile Becomes First Major Carrier to Drop Subsidies http://t.co/7tJ0FdJYmJ Probably a good strategy; differentiates & unbundles $$ Mar 27, 2013
  • Customers Flee Wal-Mart Empty Shelves for Target, Costco http://t.co/PAvNMUUVEP I see it also http://t.co/83s4J9aGA2 $$ Mar 26, 2013
  • Dell Says Blackstone, Icahn Offers May Be Superior http://t.co/jgHkKo6Jna Not sure I would want 2 win $DELL game; fixing ops very hard $$ Mar 25, 2013
  • Blackstone?s $DELL Bid Sets Stage for Rare Buyout Bidding War http://t.co/8KAGIEETOw Michael Dell may lose control of company he built $$ Mar 25, 2013
  • Heinz Sells $3.1B of New Bonds http://t.co/kMUfvlkyys Deal upsized, rated B1/BB-/BB-, lowest financing cost ever 4a LBO@ 4.25% 7.5yrs $$ #no Mar 25, 2013

 

US Monetary & Fiscal Policy

 

  • How the Fed Can Create a Market-Friendly Exit Strategy: Jeremy Siegel?s Proposal
    http://t.co/2VPzaCDnyg Listen 2 bank shareholders scream $$ Mar 29, 2013
  • Pentagon to Cut $41B After Getting More Funding http://t.co/SrcDNN4Fbn We could a lot of dead wood @ the Pentagon, expensive non-soldiers $$ Mar 29, 2013
  • Big Business Spars Over Rewriting Tax Code http://t.co/CRjZZzwLix Importer, Exporter, Services, REIT, MLP, PE: no common corptax position $$ Mar 29, 2013
  • The Exhausted US Consumer http://t.co/QgSkYM2onj Spent-up, not pent-up $$ Looks at Disposable Personal Income, which recently dropped Mar 28, 2013
  • Restaurant Chains Cut Estimates for Health-Law Costs http://t.co/Ed00DMDXAX Test Q: List all the ways that the PPACA fails $$ #needmorepaper Mar 28, 2013
  • Best Predictor of Financial Crisis: Huge Inflows of Foreign Money http://t.co/uOrBJ4OI96 Long assets financed w/short liabilities is why $$ Mar 28, 2013
  • Stockton Deficits May Total $100 Million, Forecast Shows http://t.co/Pu8oqu3zQA That’s the cash pmt curve of generous employee benefits $$ Mar 27, 2013
  • Stockton Bankruptcy Decision to Come Monday, Judge Says http://t.co/dulFxXxNwm $BEN $AGO & $MBI argue city didn’t negotiate in good faith $$ Mar 27, 2013
  • US Retail Sales: Very Soft Indeed! http://t.co/XSJSyChEHW Unusual in that seasonal adjustments typically go away on YOY figures $$ Mar 27, 2013
  • Brenner and Fridson: Bernanke’s World War II Monetary Regime http://t.co/RnHpvMlPL3 Sad but true. Bernanke robs savers to fund US Govt $$ Mar 26, 2013
  • States Build Cash Reserves, Raising Rainy-Day Debate http://t.co/uSiYVMjPGi State budgets should balance on an accrual basis. None do $$ Mar 25, 2013

 

Wrong

 

  • Wrong: Gold Declines in Worst Run Since 2001 as Economic Concerns Ease http://t.co/uB8EhvfpPk Gold is falling because of debt deflation $$ Mar 28, 2013
  • Wrong: Proving Greenspan Wrong Shows Why Rey Became Worthy to Bernanke http://t.co/PHHmWJpRgJ Proving Greenspan wrong is trivial $$ #tiny Mar 28, 2013
  • Wrong:Key US senator blames speculators for high ethanol RIN price http://t.co/PNvhTvVmXt Note Senator is from Iowa, which benefits most $$ Mar 27, 2013
  • Wrong: Why the Rich Don’t Give to Charity http://t.co/aHdPMnjTt1 The missing variable here is Christian faith; media is blind to that $$ Mar 27, 2013

 

Market Dynamics

 

  • Everybody is Furiously Looking for Bubbles http://t.co/gx4GTwxnTV Bubbles are financing phenomena; look 4 short finance of long assets $$ Mar 29, 2013
  • Morningstar: Stocks Are Close to Fair Value http://t.co/TLDpVrjF1M “US stock market is some 50 percent above its historic mean value” $$ Mar 28, 2013
  • Crises exist 2 eliminate things that don’t need 2b done; governments interfere w/ this process b/c they r in league w/those who skim society $$ Mar 28, 2013
  • When will the Bond Bubble Finally Burst? http://t.co/WomjY44B9I Fund flows, Fed, other CBs, Banks, & measured inflation supportive 4 now $$ Mar 27, 2013
  • Investors face a shrinking stock supply http://t.co/bC1ECjt2Xg Maybe we can get rid of Sarbanes Oxley b4 it kills the equity mkt entirely $$ Mar 27, 2013
  • Investing in a High Debt Environment http://t.co/3PxNmNg1Oz Concentrate on inflation, study interest rates & focus on business fundamentals Mar 27, 2013
  • Low Volume = Good Investment? Analysis of David’s “Neglected Stocks R Typically in Strong Hands” Thesis http://t.co/wbseitIGZF Good Stuff $$ Mar 27, 2013
  • Use free cash 4 buybacks when price < 90% of franchise value [FV], issue dividends above that. FV is where u rather issue stock than debt $$ Mar 26, 2013
  • Not Everyone Loves Dividends: Guy?s Argument is Worth Hearing http://t.co/BsMDyzazLZ Buybacks vs Divs: depends on undervaluation of stock $$ Mar 26, 2013
  • Warren Buffett and John Hussman On The Stock Market http://t.co/ynAhtJrDAY The Market Cap/GDP ratio indicates significant overvaluation $$ Mar 26, 2013
  • Investors Pile Into Housing as Landlords http://t.co/rteDMNUl0e Anytime investors become a large part of residential RE-> trouble $$ #bubble Mar 25, 2013
  • Buttonwood: Credit watch http://t.co/53WR3r3BW0 New book argues that investors should focus on the credit cycle, not economic growth $$ #duh Mar 25, 2013
  • How to Unlock That Stashed Foreign Cash http://t.co/qNOnrjyrVD If there are attractive foreign companies 2 buy, would b best use of $$ Mar 25, 2013

 

Other

 

  • Corn Supply Slumps Most Since ?75 on Ethanol Profit http://t.co/ScQ3slOlQ6 Corn supplies may tighten by summer, tough if another bad crop $$ Mar 29, 2013
  • Business Insider Just Told College Students Their Secrets of Success http://t.co/Yd1jLTzEl3 Sprinter & marathoner, act dumb, ask Qs, etc. $$ Mar 28, 2013
  • Leaked Photos of Johansson Expose Cloud’s Vulnerabilities to Social Engineering http://t.co/keayvi3iDL Take security seriously $$ Mar 28, 2013
  • Methadone Deaths Tied to For-Profit Clinics Prompt Bills http://t.co/GHEnOWPGpr They get paid per visit; few incentives 2 act ethically $$ Mar 28, 2013
  • 6 Reasons You Should Have Cyber Liability Insurance http://t.co/LhbASLS9pD U can make your computer invisible 2 the internet in 15 mins $$ Mar 28, 2013
  • Arms Race to Grow World’s Hottest Pepper Goes Nuclear http://t.co/sYW6fX5bZH I don’t get this; I eat spicy food for taste, not 2b macho $$ Mar 27, 2013
  • The New US Industrial Renaissance http://t.co/18ni9ClWEF A bit overstated but cheap energy & rising wages in China aid US competitiveness $$ Mar 27, 2013
  • Falling US Gasoline Demand: A Weaker US Economy? http://t.co/3QRS8G59a2 Gasoline is fairly core 2 consumption, when it goes down, trouble $$ Mar 27, 2013
  • Case-Shiller: Home Prices Post Biggest Rise Since 2006 http://t.co/nzgY1dSoZs But after the huge drop, it’s really just a dead cat bounce $$ Mar 27, 2013
  • Wringing Out Laundered Cash http://t.co/Ary4tMyjCF Always easier 2 press a civil suit than a criminal suit; look at the bankers 4 proof $$ Mar 27, 2013
  • 3D-Printed Polymer Skull Implant Used For First Time in US http://t.co/4rRlfPiVGP Offers high degree of customization 4 surgical repairs $$ Mar 26, 2013

 

Retweets & Replies

 

  • The local situation in the US can’t run too far ahead of the world. Too interconnected $$ RT @boes_ America http://t.co/8PaIt3uKR5 Mar 29, 2013
  • ‘ @JaredKastriner As for me, I play banker for my children. I pay 4 tuition & unavoidable costs. They pay avoidable costs& I lend 2 them $$ Mar 29, 2013
  • @JaredKastriner No, but it should make us consider whether college is needed, and maybe borrowing against the house might b better $$ Mar 29, 2013
  • ‘ @AndreCimini There r many incentives 4 politicians, regulators & businessmen 2 prolong a boom; I worked 4 a firm that foresaw it & made $$ Mar 25, 2013
  • I hold a CFA Charter, (and was an FSA — dues too expensive) but credentialing is overrated in almost all… http://t.co/kvogKAycVS Mar 28, 2013
  • Commented on StockTwits: Banks got bailed out after so many bad mortgage & other loans. A few hedge funds properl… http://t.co/4wMpKOQ8Nb Mar 28, 2013
  • @EddyElfenbein As a Christian, it embarrasses me. They misinterpret Revelation & it makes people think they can gauge when Christ will come Mar 28, 2013
  • ‘ @kyles09 My point is this: in 2007, the last time I saw something like this, it was right before loan pricing fell apart. That’s all. $$ Mar 28, 2013
  • ‘ @Nonrelatedsense I’m wrong, cancel that comment on the $PSX midstream assets. Thanks 4 the correction $$ Mar 28, 2013
  • Bitcoin $$ RT @groditi: OK, spill it, who’s gonna be the Big Short for BitCoin?. that parabola looks like it’s about to break any second now Mar 27, 2013
  • RT @SoberLook: Chart: Bitcoin’s unprecedented rally. Another way for Cyprus citizens to take funds out of the country – http://t.co/3cTt … Mar 27, 2013
  • I like it, thanks $$ RT @adamjbonesjones: @AlephBlog Short Frenchies vs EFSF bonds (over-collateralised, positive carry)…. Mar 27, 2013
  • Monster, yes. Greatest? No $$ RT @MattZeitlin: Whoever decided that tables and figures go at the end of papers is history’s greatest monster Mar 27, 2013
  • @Matthew_C_Klein Sometimes they hand out the Nobel Peace Prize 4 what they wish the world could b, hence Obama (drones), EZ (fantasyland) $$ Mar 27, 2013
  • RT @Matthew_C_Klein: For this they won the Nobel Peace Prize MT @SonyKapoor: EZ has made every country feel that they’ve been hard done by Mar 27, 2013
  • Patient is dying. More morphine. $$ RT @TheStalwart: RT @CNBC: Fed’s Kocherlakota: “Monetary policy is currently not accommodative enough.” Mar 27, 2013
  • Controlling system changes it RT @MatthewPhillips @CardiffGarcia:Fantastic NYFed paper financial risk monitoring http://t.co/vwJeUwzXDm $$ Mar 27, 2013
  • Extra points 4 USSR & Japan parallels RT @prchovanec: Apply these last three quotes (from “This Time is Different”) to China … discuss. Mar 26, 2013
  • [cute dog warning] I guess you did have to. RT @moorehn: Sorry. I had to. http://t.co/rJtgXqfQtx Mar 26, 2013
  • ‘ @kyles09 Good point, the rule mostly deals with excess cash over and above a low regular dividend $$ Mar 26, 2013
  • @ToddSullivan I could live with the word “moderate” 🙂 Mar 26, 2013
  • “Thing about low vol investing is that it is a moderate risk strategy, b/c it invests in stocks?” ? David_Merkel http://t.co/NzG183hkzG $$ Mar 25, 2013

 

FWIW

 

  • My week on twitter: 57 retweets received, 2 new listings, 60 new followers, 57 mentions. Via: http://t.co/cPSEMLXpb8 Mar 28, 2013

 

Sorted Weekly Tweets

Sorted Weekly Tweets

Posted on by David Merkel

Pettis / China

 

  • Modified Pettis: Peripheral country depositors will remember Cyprus & it will affect their future credibility w/deposit guarantees $$ Mar 22, 2013
  • Pettis: the idea that urbanization creates growth may have the causality backwards. It is far more likely that growth causes urbanization $$ Mar 22, 2013
  • Parsing the Words of the New Premier http://t.co/KggvVUZ0bf Li Keqiang: We need to leave to the market and society what they can do well $$ Mar 22, 2013
  • Closer Look: Parsing the Words of the New Premier – http://t.co/8LIiTxxqi0 Previous quote taken from Pettis, led me to this article $$ Mar 22, 2013
  • Li Keqiang: The reform is about curbing government power. As a self-imposed revolution, it will require real sacrifice and will be painful $$ Mar 22, 2013
  • Pettis: It turns out that we?ve seen record growth in debt. Is it really a surprise then that [China’s] economy is still growing quickly? Mar 22, 2013
  • Pettis:It isn?t until you write down the debt associated with the second bridge that you end up with a more meaningful measure of GDP. (3/3) Mar 22, 2013
  • official measures will have them contributing the same amount to GDP, even though the former creates real value & the latter does not (2/2) Mar 22, 2013
  • Pettis: If you spend $100 million each on two separate bridges, one of which is actively used and the other rarely used, (1/2) Mar 22, 2013
  • Biggest Solar Collapse in China Imperils $1.28 Billion http://t.co/yYgYpSpjAv Even w/subsidies solar is an inefficient technology $$ #duh Mar 21, 2013

 

FOMC

 

  • FED Optimistic Forecasts… http://t.co/MjilXrTSX1 The FOMC is always overoptimistic; they consider that 2b a part of their jobs $$ Mar 22, 2013
  • Wrong:US economy needs a third term of Ben Bernanke http://t.co/fStUDLjy7g A lunatic praises a dangerous lunatic leading US 2 Stagflation $$ Mar 22, 2013
  • That’s all folks! #FOMC $$ Mar 20, 2013
  • FOMC Central Tendency for Year end Fed Funds forecast: 2013 0.29%, 2014 0.55%, 2015 1.30%, Long run 4.01% $$ #FOMC Who can tell? Mar 20, 2013
  • FOMC Central Tendency 4 PCE inflation fcst since December 2012: 2013 1.55%, 2014 1.75%, 2015 1.93%, Long run 2.00% $$ #FOMC Way 2 optimistic Mar 20, 2013
  • FOMC Central Tendency Unemployment rt fcst since December 2012: 2013 7.35%, 2014 6.77%, 2015 6.20%, Long run 5.57% $$ #FOMC Way 2 optimistic Mar 20, 2013
  • FOMC Central Tendency for real GDP since December 2012: 2013 2.53%, 2014 3.17%, 2015 3.25%, Long run 2.43% $$ #FOMC Too optimistic 2014-5 Mar 20, 2013
  • FOMC Central Tendency Change in Fed Funds fcst since December 2012: 2013 -0.11%, 2014 -0.05%, 2015 -0.11%, Long run -.03% $$ #FOMC Mar 20, 2013
  • FOMC Change in Appropriate Timing of Policy Firming fcst since December 2012: 2.49 yrs, which shortens by 3.4 months $$ #FOMC Mar 20, 2013
  • FOMC Central Tendency Change in PCE inflation fcst since December 2012: 2013 -0.20%, 2014 -0.03%, 2015 -0.01%, Long run no change $$ #FOMC Mar 20, 2013
  • FOMC Central Tendency Change in Unemployment rate fcst since December 2012: 2013 -0.13%, 2014 -0.15%, 2015 -0.08%, Long run -0.03% $$ #FOMC Mar 20, 2013
  • FOMC Central Tendency Change in real GDP since December 2012: 2013 -0.10%, 2014 -0.32%, 2015 -0.13%, Long run -0.03% $$ #FOMC Mar 20, 2013
  • I am shocked that the Fed doesn’t have estimates on deposit insurance subsidies. That’s either a lie, or they should have that estimate $$ Mar 20, 2013
  • @pdacosta Good questions on Cyprus & deposit insurance subsidies $$ Mar 20, 2013
  • Go Pedro! Mar 20, 2013
  • Federal Reserve, Expected to Continue Stimulus, Tries to Reassure Investors http://t.co/DuoAg3hYTv Doing the same, expecting different $$ Mar 20, 2013
  • Bernanke Tightens Hold on Fed Message Against Hawks http://t.co/JyGTM0gP1f Wondered when this would happen; naive academic focuses power $$ Mar 20, 2013
  • Insights from Former Fed Chairmen http://t.co/q3RbM7sm9e Greenspan, meh. Volcker says some interesting things regarding removing stimulus $$ Mar 18, 2013
  • Fed’s Fisher: Too-big-to-fail banks are crony capitalists http://t.co/t65lN4kaaU Break them up & eliminate their funding advantages $$ Mar 16, 2013

?

Companies & Industries

 

  • Proto Labs seeks 1st acquisition shuns 3D printing http://t.co/56KeW8j4In Instead of creating by layers, start w/a block & cut away $$ $PRLB Mar 22, 2013
  • Old Tech Stocks, New Value: Santoli http://t.co/jfDtkOAwwX Tough part: estimating moat & probability of obsolescence, margin of safety $$ Mar 22, 2013
  • Health Insurers Warn on Premiums http://t.co/zzZI2s1s2h Wrote about this b4 law was passed. Was accused of bias $$ http://t.co/WCECEQYuns Mar 22, 2013
  • Plywood Becomes Hot Item in Housing Recovery http://t.co/2LMfLI43L1 4 confirmation, look here: http://t.co/HbnVnGdJmO Plywood on fire $$ Mar 22, 2013
  • As Crop Prices Surge, Investment Firms and Farmers Vie for Land http://t.co/B1ESXEnefd Presence of a large amount of borrowed $$ = bubble Mar 22, 2013
  • Intuitive Robosurgery Training Seen Lacking in Lawsuits http://t.co/VgyqOZqLMD Accidents r common & significant training of MDs needed $$ Mar 21, 2013
  • Gold Giants Shrink to Fit as Paulson Pushes Breakup http://t.co/9yXUb9Z11s Miners tend 2 overpay for marginal mines w/high variable costs $$ Mar 21, 2013
  • Americans Cut Restaurant Spending as Taxes Bite http://t.co/VAZELXMwM2 Less $$ available for small luxuries like eating out. Mar 20, 2013
  • Electronic Arts Ousts CEO as New Game Consoles Await http://t.co/QMDjN8uZmN Game systems shift away from use of PCs; $EA doesn’t adjust $$ Mar 19, 2013
  • Revealed: The Fragility of US Wireless Customer Loyalty http://t.co/j8U5wZ9GvT May be few choices, but wireless customers r not sticky $$ Mar 18, 2013
  • Corporate Cash Piles Grow to Record $1.45 Trillion, Moody?s Says http://t.co/0M84CE0tRi How much is domestic & not held 4 margin $$ Mar 18, 2013
  • Intermediate hold co debt has none of the protections of sr unsec parent co debt, or operating subsidiary debt. Not worth risks, avoid $$ Mar 18, 2013
  • $HRG Announces Debt Offering by F&G Life Hldgs http://t.co/APQvmAECv3 Total desperation w/intermediate holdco debt; Avoid, avoid, avoid $$ Mar 18, 2013
  • Private Equity?s $36B Retail Bet Not Going So Well http://t.co/xdQ9NzdAPs Retail does not work well w/leverage aside from mortgage debt $$ Mar 16, 2013

 

Cyprus

 

  • It?s Up to Putin Now: Cyprus Looks to Russia For Love?and Money http://t.co/CJdlAmyM5A Many Russians would lose $$ in Cypriot Bank default Mar 22, 2013
  • Just Let the Troubled Banks in Cyprus Fail http://t.co/0lSyyTjWIJ @carney gets it right. Protect small deposits, wipe out equity, etc. $$ Mar 22, 2013
  • ECB May Cut Emergency Funding to Cypriot Banks after Refusal http://t.co/jssqb7og4u If Cyprus’ banks fail, will anything else fail? $$ Mar 21, 2013
  • Cyprus banks dwarf economy thanks 2funds from wealthy foreigners http://t.co/GbElR3bcTP Countries w/large financial sectors tend 2b risky $$ Mar 20, 2013
  • BlackRock CEO Fink Says Cyprus Instability Will Be Resolved http://t.co/E3RYIDQENi The politics r pretty toxic; time 2end euro experiment $$ Mar 20, 2013
  • Outcry over Cyprus bailout taxing bank accounts http://t.co/kQ7DJgUN7P If it can happen in Cyprus, it can happen where you are too $$ #boo Mar 20, 2013
  • Daylight robbery in Cyprus will come to haunt EMU http://t.co/HsrbbJUVKk Imagine the US grabbing a portion of bank deposits in 1933 $$ #yuck Mar 20, 2013
  • Deauville Zombie Strikes as Cyprus Tax Inflames Crisis http://t.co/pkStGZyh5M Hard 2 believe confiscation of deposits wouldn’t lead 2runs $$ Mar 19, 2013
  • The Cyprus precedent @FelixSalmon http://t.co/EXBLMXj3by Taxing via confiscation doesn’t affect incentives, except the incentive 2 hide $$ Mar 18, 2013
  • Cyprus: What Were They Thinking? and some other notes http://t.co/LJPQ7FRSaT Try 2tax depositors, esp Russians, trigger a bank run, great $$ Mar 18, 2013
  • Cypriot authorities in revised deal talks http://t.co/f7NXFf5B9S This is getting desperate. Remember when they said subprime was small? $$ Mar 18, 2013
  • Dejected official: ?If this is successful then it will be used in the future… If this is not successful then who cares about Cyprus.? $$ Mar 18, 2013
  • Depositors Pay Price in Cyprus Bailout Deal http://t.co/CssNI6QUXK Imagine waking up one morning & 10% of your bank deposits r gone $$ #augh Mar 16, 2013

 

Energy

 

  • Sierra Club blasts new plan to improve fracking http://t.co/izJx8axguf Really depends on how much CO2 truly affects climate, jury is out $$ Mar 22, 2013
  • Ethanol Slumps Against Gasoline on Speculation Imports to Climb http://t.co/nFGWml3HBZ Profitable to import Brazilian ethanol caps prices $$ Mar 22, 2013
  • HEARD ON THE STREET: Chevron, Shell and Big Oil’s Big Divide http://t.co/zcrclj78XS FD: + $CVX | Smart move was focusing on crude oil $$ Mar 20, 2013
  • Wow, North Dakota, That?s a Lot of Oil http://t.co/NzKU4rhswH Up ~1000% in 10 years, would b more w/better transport (pipelines) $$ Mar 20, 2013
  • Consumers to Pay $13B Price as Ethanol Upends Refiners http://t.co/qRr3ZnGPnB Ethanol an expensive fuel; we would not use it w/o govt req $$ Mar 19, 2013
  • Valero Cancels Sale of California Refineries http://t.co/tu1lXOLBe4 Now better 2 retain them, if cheap oil can b sent there via rail $$ $VLO Mar 19, 2013
  • Suntech Said to Get Default Notice on $541M Unpaid Bonds http://t.co/hiA8ZfvW2K Equity likely 2b wiped out, even w/some willing 2 4bear $$ Mar 17, 2013
  • Canada Wonders Why Crude Oil Is Coming From Texas http://t.co/aIKRNA7UoT This is the price of not permitting pipelines; US oil by tankers $$ Mar 16, 2013
  • Three Years After the Spill, BP Gets Bullish http://t.co/owgnHfH9w5 FD: + $BP | Lots of valuable assets, but has the culture changed? $$ Mar 16, 2013

 

Financial Sector Issues

 

  • JP Morgan to Issue Its First Mortgage Bond Since 2007 http://t.co/M38KF7463e Reps & warranties weakened; harder 2 put back 2 originators $$ Mar 21, 2013
  • ?In money management what sells is the illusion of certainty.? http://t.co/iiqXAHTRZ8 @researchpuzzler comments on words of @John_Hempton $$ Mar 22, 2013
  • SumZero Honors: 14 Top Buyside Analysts http://t.co/cZRnfBQJVd @sumzero does a study of buyside analysts to find the best quietly working $$ Mar 22, 2013
  • Proxy sites dump 1-click vote button on SEC concerns http://t.co/nycHC62TUa Levels the playing field a little bit; mgmt has 2 much power $$ Mar 21, 2013
  • Masked by Gibberish, the Risks Run Amok http://t.co/bKvbpCRyvZ Floyd Norris can write me 4 clarity, or read this: http://t.co/bhJwuegzP5 $$ Mar 22, 2013
  • Buffett Says Bet on Natural Juices of Market http://t.co/gyGA34vVMP USA is the most flexible place in the world, but stocks aren’t cheap $$ Mar 21, 2013
  • DeMarco pushes for 5-year wind down of GSEs http://t.co/aApiRMzoIK Don’t c how politics work here; pols don’t like 2 give up piggy bank $$ Mar 20, 2013
  • Could gold be the next Libor scandal? | Business http://t.co/gstTm7EWQA Looks like real trades take place, so it doesn’t seem the same $$ Mar 20, 2013
  • Workers Saving Too Little to Retire http://t.co/tWMYk3cpg8 I know of few people who save 20% of their incomes over 40 years $$ #prettytough Mar 19, 2013
  • Stock Bulls Get New Member of Club http://t.co/qEOMyG47WM I dunno, this makes me nervous. But 3% more upside in 2013 is no raving bull $$ Mar 19, 2013
  • Quantitative easing does little to boost gold prices http://t.co/o42EZUMk3T Gold prices react to inflation adjusted cost of carry $$ Mar 18, 2013
  • Traders Short Junk-Bond ETFs as Gains Top 100%: Credit Markets http://t.co/4CmFy3ebaC Short interest = 11.5% of total outstanding shares $$ Mar 18, 2013
  • Wrong: Want to Fix the Deficit? Get Real http://t.co/3fuRoKKw6S Increasing the deficit from here would worsen our long-term problems $$ Mar 16, 2013
  • Boo! Derivatives, Japan, $$ demise, pension defaults, debt jubilee RT @StockTwits: Zombie Swans from Outer Space http://t.co/jcNoTTzolI #boo Mar 16, 2013
  • How to Safeguard Your 401(k) http://t.co/HRCNqz1RkJ If plan has annual match, do not count on it. Avoid employer stock; know plan rules $$ Mar 16, 2013
  • Company Insiders Are Dumping Shares! Or Are They? http://t.co/D5cgLmM902 Best to look at what insiders do, not the large outside holders $$ Mar 16, 2013
  • If third-party custody fails in any significant way, i.e. bigger than what happened w/MF Global, all public investing will b ruined $$ Mar 16, 2013
  • Are Your Assets Safe?No Matter What? http://t.co/vWvSVno7JC @jasonzweigwsj talks about custody; strong incentive 4 present system 2 work $$ Mar 16, 2013
  • Golden State Hits Golden Age Of Bank M&A http://t.co/WLFhPq8jFC Higher capital requirements create demand for banks 2 merge in California $$ Mar 16, 2013

 

Rest of the World

 

  • Is Emerging Market Debt Undervalued? http://t.co/8hSOukeOKf I tend 2 think so, but performance so far this year has been subpar $$ Mar 22, 2013
  • Bank of Japan vows ‘all means available’ to smash deflation http://t.co/AJ27okuZFZ Difficult 2 have inflation w/shrinking population $$ Mar 22, 2013
  • BRICs: a Slowing Dilemma http://t.co/furMgL5VTO The BRICs r not a natural group; very different econ, but as GWP growth slows, so do they $$ Mar 21, 2013
  • RAHN: Where will the next financial crisis begin? http://t.co/x2rBMqCJUG Numerous countries r poised 2 lead global tailspin; I pick EZone $$ Mar 21, 2013
  • Spanish Banks Cut Developers as Zombies Dying http://t.co/CxRucV5Y7h Bottom not yet found for Spanish Real Estate $$ #bringoutyerdead #thud Mar 21, 2013
  • Europe?s work is far from over http://t.co/JfIY5PRW4f This is a colossal example of government management of the economy gone awry $$ #endit Mar 20, 2013
  • Canadian Household – Drowning in Debt http://t.co/XsdSDPBUn8 Canada: poster child 4 Central Bank-induced bubbles, amid good fiscal policy $$ Mar 20, 2013
  • BRICs Abandoned by Locals as Fund Outflows Reach 1996 High http://t.co/Xv4QZrNmSX Locals r throwing in the towel on stocks; time 2 buy? $$ Mar 16, 2013
  • Argentina Debates Pope’s Political Past http://t.co/FY25FtCCF2 Probably one where the truth will never b known; hard to fight a dictator $$ Mar 16, 2013

 

US Politics & Policy

 

  • Stockton Creditors Face Long Odds to End City Bankruptcy http://t.co/WcEuHjJft1 Think Stockton’s gambit will lose $$ cc: @munilass Mar 22, 2013
  • Gingrich-Santorum ?Unity Ticket? Almost Toppled Romney http://t.co/8jBjvs868Q G+S-> 0+0 = -1. Romney= -2. All R candidates fatally flawed $$ Mar 22, 2013
  • Getting the CIA Out of the Drone War http://t.co/kWcxz4mooN It matters less who does it, because there is no moral basis for it $$ #enditnow Mar 22, 2013
  • Mary Pat Christie Juggles Roles as Political Facilitator http://t.co/04VJb6UcbD Interesting background piece on Chris Christie’s wife $$ Mar 22, 2013
  • Postal Service Can?t Cut Saturday Delivery, GAO Says http://t.co/3BbcJ1arge Loss of Saturday would b start of end 4 USPS> less relevant $$ Mar 21, 2013
  • Rotten Tomatoes for a Billion-Dollar Farm Payout http://t.co/8FMfZnvqZC Ag is doing well in the US. Time to shut down much of the Ag Dept $$ Mar 21, 2013
  • California Nonpartisan Districting Ousts Life Incumbents http://t.co/1edUiXyizM Minimize internal boundaries subject 2 law requirements $$ Mar 20, 2013
  • Army Carbine Program May Waste $1.8 Billion, Report Finds http://t.co/WQOhHRZ5Mw Another area of DoD waste. Insiders tell me -> lots more $$ Mar 20, 2013
  • The Smarter Healthcare Consumer Myth http://t.co/BSdzrzQmMu Many underinsured people do not go to see a doctor when they are sick $$ Mar 19, 2013
  • Puerto Rico slides toward insolvency http://t.co/WaOVo1dWUa Puerto Rico exists to make California look responsible & Illinois honest $$ Mar 18, 2013
  • Or, as the late Bob Casey (former Governor of PA) once said, “You can’t lose if you are a pro-life Democrat.” $$ Mar 18, 2013
  • RNC Issues Scathing Analysis of GOP http://t.co/CsROwzkNxT Sounds dumb. Does not grasp the reliance of the GOP on moral issues voters $$ Mar 18, 2013
  • It’s a Lonely Quest for Land-Tax Fans, But, by George, They Press On http://t.co/yt8tPEVgjV Candidate 4 dustbin of history, dying hard $$ Mar 18, 2013
  • Republicans Foil What Majority Wants by Gerrymandering http://t.co/h2gMnsO5cp I live in MD, w/Democrat Gerrymander http://t.co/9ORTUnVjo9 $$ Mar 18, 2013
  • Roadkill May Reach Montana Menus Under Bill Allowing Fare http://t.co/5UsoOXeAsr Interesting 2c differences in state policies 4 roadkill $$ Mar 17, 2013
  • Obama Will Use Nixon-Era Law to Fight Climate Change http://t.co/HxRrpdoajr Expands National Environmental Policy Act to Climate Change $$ Mar 16, 2013

Other

 

  • The Beatles vs. the Taxman: A Former Manager Recalls Yesterday http://t.co/wNikAvMAdh Union of music,culture &finance cc: @reformedbroker $$ Mar 22, 2013
  • The Odd, Enduring Power of D?rer’s ‘Praying Hands’ http://t.co/QzEQsRYalP An idol 2b destroyed; far better 2 pray, regardless of hands $$ Mar 22, 2013
  • ‘The Croods’: Making the Cartoons Sing http://t.co/Pj50Vytvuo As a musician, I find this article makes me optimistic on popular music $$ Mar 22, 2013
  • ‘BioShock Infinite’: A Videmeogame With a Political Philosophy http://t.co/NzxQqrTXkM Americans r exceptional; doesn’t mean they r good $$ Mar 22, 2013
  • The Branding of ‘Liger’: Tiger Woods and Lindsey Vonn http://t.co/AW1CGnYHLh Two attractive sports stars dating? A marketing opportunity! $$ Mar 21, 2013
  • Inside the Art of Handling Negative Online Reviews http://t.co/vzsenUcvjq When negative reviews come, act quickly, it could wipe you out $$ Mar 21, 2013
  • Silicon Valley looks to Amy Andersen for love, at $50K a pop http://t.co/yVj37tUL9C Awkward men seeking wives need tailored personal help $$ Mar 20, 2013
  • How To Quarantine Java Like The Disease That It’s Become http://t.co/uhUcbRhFqh Sadly, I have to keep Java 4 my trading platform $$ #poison Mar 19, 2013
  • Study: Delaying marriage hurts middle-class Americans most http://t.co/ynHKcN4m4x Putting off marriage often means marriages don’t happen $$ Mar 18, 2013
  • Helmets Preventing Concussion Seen Quashed by NFL-Riddell http://t.co/FF4Gh6Viyn Long story on how conflicts of interest led2 concussions $$ Mar 18, 2013
  • With Speech, Cardinal Set Path 2 Papacy http://t.co/rDDOXEwCA2 Argued RC Church was 2 introspective, better 2b out doing good, short talk $$ Mar 17, 2013
  • The New Unmarried Moms http://t.co/1hnxyrE67R Teen pregnancy reduced, childbearing outside wedlock rising among 20-somethings $$ #bad4kids Mar 16, 2013
  • New York Is Sterilizing Its Rats. Here’s How http://t.co/qryyCDiLoK Tasty stuff for rats that renders them infertile in 4 days $$ #whoknew Mar 16, 2013

 

Replies & Retweets

 

  • Could work $$ RT @steve_hanke: @AlephBlog @carney or try a swap. Here’s how we did it in Latin America: http://t.co/fvT6V6dX9u| #Cyprus Mar 22, 2013
  • @SconsetCapital In China, if the gov’t builds two bridges in a BOGO deal, I don’t think you’d want the free one 😉 Mar 22, 2013
  • @Donald_Shekels No, not with the Asian operations Mar 22, 2013
  • @Donald_Shekels I could have said worse than I did, but I worry about getting sued. Mar 22, 2013
  • @JPDesloges You are off to a good start at Financial Iceberg. Keep it up. Mar 21, 2013
  • @agnestcrane Global Inequality is dropping, though. Global wages converging. “Rethinking Comparable Worth” http://t.co/qBWe9kxnim $$ Mar 21, 2013
  • Get well soon! RT @StockTwits: StockTwits Is presently down. Apologies for the inconvenience. We should be back up shortly. $$ Mar 21, 2013
  • @exMBB No. But title insurers had a rough time after housing bubble. Fraud drives most title insurance claims. Title insurance is complex Mar 20, 2013
  • @exMBB It’s all heavily depreciated. Not an issue. Mar 20, 2013
  • Commented on StockTwits: You’ve got it, Charles. Where IB is good it is very, very good, & where it is bad it is … http://t.co/o4fpUt2j66 Mar 20, 2013
  • @sleepyhungry It’s like a barrier option. Once it is breached it is over — this is only the 7th time I have done this. U made me smile Mar 20, 2013
  • Doing what their targets do RT @rcwhalen: Foreclosure Processor Prommis Holdings Files Chapter 11 http://t.co/mE30yP1gtj $$ Mar 19, 2013
  • But I think he is running out of options $$ $HRG RT @Nonrelatedsense: @AlephBlog continually amazed by Falcone. How does he do it? Mar 18, 2013
  • Extracts purchase price, retains control, kills bond buyers RT @Nonrelatedsense: continually amazed by Falcone. How does he do it? $$ Mar 18, 2013
  • I liked the photo RT @fundmyfund: @ritholtz what are you looking at in the new blog photo – a bird, a plane, or superman? Mar 18, 2013
  • RT @Royal_Arse: Mr. Merkel @AlephBlog is far more diplomatic than I in his tweet regarding pipeline construction. https://t.co/HIE2ngC4A3 Mar 16, 2013
  • @pdacosta 2 create a synthetic, u need 2 speculators: yield hog who wants a security @ a high yield, & a speculator who wants 2 short it Mar 16, 2013
  • @pdacosta If that ever had to happen, would b a crisis b/c synthetics r more numerous than organic. They can b & were created @ will. Mar 16, 2013

 

FWIW

?

  • My week on twitter: 54 retweets received, 2 new listings, 31 new followers, 58 mentions. Via: http://t.co/cPSEMLXpb8 Mar 21, 2013
  • Here’s my NCAA Bracket: http://t.co/ZK22T2bKnV #BlindfoldBracket2013 I’m no great fan of College Basketball, but I gave it a try $$ Mar 20, 2013
  • David Merkel (AlephBlog) on Twitter http://t.co/PsixuvsqiX Here’s a shout-out to my 7000th Twitter follower, Peter Saris @BMCA2461. Thanks! Mar 20, 2013

?

Redacted Version of the March 2013 FOMC Statement

Redacted Version of the March 2013 FOMC Statement

Posted on by David Merkel
January 2013 March 2013 Comments
Information received since the Federal Open Market Committee met in December suggests that growth in economic activity paused in recent months, in large part because of weather-related disruptions and other transitory factors. Information received since the Federal Open Market Committee met in January suggests a return to moderate economic growth following a pause late last year.

 

 Shades GDP view up.
Employment has continued to expand at a moderate pace but the unemployment rate remains elevated. Labor market conditions have shown signs of improvement in recent months but the unemployment rate remains elevated. Shades their view enmployment up.? So long as discouraged workers increase, this is a meaningless statement.
Household spending and business fixed investment advanced, and the housing sector has shown further improvement. Household spending and business fixed investment advanced, and the housing sector has strengthened further, but fiscal policy has become somewhat more restrictive. New fiscal policy comment, but it should read, ?fiscal policy has become somewhat less loose.?
Inflation has been running somewhat below the Committee?s longer-run objective, apart from temporary variations that largely reflect fluctuations in energy prices. Longer-term inflation expectations have remained stable. Inflation has been running somewhat below the Committee’s longer-run objective, apart from temporary variations that largely reflect fluctuations in energy prices.? Longer-term inflation expectations have remained stable. No change.? TIPS are showing flat inflation expectations since the last meeting. 5y forward 5y inflation implied from TIPS is still near 2.86%.

The FOMC is wrong on inflation.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. No change. Any time they mention the ?statutory mandate,? it is to excuse bad policy.
The Committee expects that, with appropriate policy accommodation, economic growth will proceed at a moderate pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. The Committee expects that, with appropriate policy accommodation, economic growth will proceed at a moderate pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. Emphasizes that the FOMC will keep doing the same thing and expect a different result than before. Monetary policy is omnipotent on the asset side, right?
Although strains in global financial markets have eased somewhat, the Committee continues to see downside risks to the economic outlook. The Committee continues to see downside risks to the economic outlook. Shades down their views of the global financial markets.
The Committee also anticipates that inflation over the medium term likely will run at or below its 2 percent objective. The Committee also anticipates that inflation over the medium term likely will run at or below its 2 percent objective. No change. CPI is at 2.0% now, yoy, so that is quite a statement.
To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee will continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month.? The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. No change.

Does not mention how the twist will affect those that have to fund long-dated liabilities.

Wonder how long it will take them to saturate agency RMBS market?

Operation Twist continues.? Additional absorption of long Treasuries commences.? Fed will make the empty ?monetary base? move from $3 to 4 Trillion by the end of 2013.

 
Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative. No change.
The Committee will closely monitor incoming information on economic and financial developments in coming months. The Committee will closely monitor incoming information on economic and financial developments in coming months. No change. Useless comment.
If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until such improvement is achieved in a context of price stability. The Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. No real change.
In determining the size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases. In determining the size, pace, and composition of its asset purchases, the Committee will continue to take appropriate account of the likely efficacy and costs of such purchases as well as the extent of progress toward its economic objectives. Maybe they are hedging a little here ? if they get close to their objective, they might start? to reduce policy accommodation?
To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. No change.

Promises that they won?t change until the economy strengthens.? Good luck with that.
In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee?s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. Not a time limit but economic limits from inflation and employment.

Just ran the calculation ? TIPS implied forward inflation one year forward for one year ? i.e., a rough forecast for 2014, is currently 2.32%.? Here?s the graph.? The FOMC has only 0.18% of margin in their calculation if they are being honest, which I doubt.

 
In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. No change.
When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. No change.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Charles L. Evans; Jerome H. Powell; Sarah Bloom Raskin; Eric S. Rosengren; Jeremy C. Stein; Daniel K. Tarullo; and Janet L. Yellen. Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Charles L. Evans; Jerome H. Powell; Sarah Bloom Raskin; Eric S. Rosengren; Jeremy C. Stein; Daniel K. Tarullo; and Janet L. Yellen. No change
Voting against the action was Esther L. George, who was concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations. Voting against the action was Esther L. George, who was concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations. Esther George takes up the thankless task of telling the FOMC that they are doing more harm than good.

?

Comments

  • Notable: they mention that fiscal policy is less accommodative.? Also, some new language leaves room for policy gradualism.
  • Not so notable: they shade up their views on GDP and employment, and shade down their views on global financial market stability.
  • I really think the FOMC lives in a fantasy world.? The economy is not improving materially, and inflation is rising. Note that the CPI is close their 2.5% line in the sand.? TIPS-implied inflation 1X1 (one year ahead for one year) is 2.32%, and 5X5 is around 2.86% annualized.
  • Current proposed policy is an exercise in wishful thinking.? Monetary policy does not work in reducing unemployment, and I think we should end the charade.
  • In my opinion, I don?t think holding down longer-term rates on the highest-quality debt will have any impact on lower quality debts, which is where most of the economy finances itself. When this policy doesn?t work, what will they do?
  • Also, the investment in Agency MBS should have limited impact because so many owners are inverted, or ineligible for financing backed by the GSEs, and implicitly the government, even with the recently announced refinancing changes.
  • The key variables on Fed Policy are capacity utilization, unemployment, inflation trends, and inflation expectations.? As a result, the FOMC ain?t moving rates up, absent increases in employment, or a US Dollar crisis.? Labor employment is the key metric.
  • GDP growth is not improving much if at all, and the unemployment rate improvement comes more from discouraged workers.

 

Question for Dr. Bernanke

Ever liability is someone else’s asset.? Aren’t you doing nothing by trying to hold long term interest rates lower?

Trust & Growth

Trust & Growth

Posted on by David Merkel

I read John Mauldin’s newsletters.? In the most recent one, he published what Dylan Grice said about trust in economics.? It reflects my own views, so I want to quote the the piece a little bit, and add my own thoughts.

Of the many elemental flaws in macroeconomic practice is the true observation that the economic variables in which we might be most interested happen to be those which lend themselves least to measurement. Thus, the statistics which we take for granted and band around freely with each other measuring such ostensibly simple concepts as inflation, wealth, capital and debt, in fact involve all sorts of hidden assumptions, short-cuts and qualifications. So many, indeed, as to render reliance on them without respect for their limitations a very dangerous thing to do. As an example, consider the damage caused by banks to themselves and others by mistaking price volatility (measurable) with risk (unmeasurable). Yet faith in false precision seems to us to be one of the many imperfections our species is cursed with.

?One such ?unmeasurable? increasingly occupying us here at Edelweiss is that upon which all economic activity is based: trust. Trust between individuals, between strangers, between organizations… trust in what people read, and even people?s trust in themselves. Let?s spend a few moments elaborating on this.
?
First, we must understand the profound importance of exchange. To do this, simply look around you. You might see a computer monitor, a coffee mug, a telephone, a radio, an iPad, a magazine, whatever it is.? Now ask yourself how much of that stuff you?d be able to make for yourself. The answer is almost certainly none. So where did it all come from? Strangers, basically. You don?t know them and they don?t know you. In fact virtually none of us know each other. Nevertheless, strangers somehow pooled their skills, their experience and their expertise so as to conceive, design, manufacture and distribute whatever you are looking at right now so that it could be right there right now. And what makes it possible for you to have it? Exchange. To be able to consume the skills of these strangers, you must sell yours.? Everyone enters into the same bargain on some level and in fact, the whole economy is nothing more than an anonymous labor exchange. Beholding the rich tapestry this exchange weaves and its bounty of accumulated capital, prosperity and civilization is a marvelous thing.
Trust is core to all economic activity.? You only want to act if you think you will not be cheated.? Poor societies are often characterized by a lack of trust, which hampers exchange, and hampers credit as well.? To the degree that you doubt that you will be rewarded for the fruits of your labor, you will face frictional costs in doing business, and you might reduce your business in areas that don’t seem to be worth the risk.
Lying & cheating raises the costs for businessmen, which leads them to reduce activity by spending effort on fraud prevention, or raise prices to cover costs from fraud.? That reduces total economic activity — as prices rise, quantity falls.
But there is another more pervasive way to reduce trust.? It is to move the economic goalposts by changing the value of money.? Why does the Fed think it is doing something good by manipulating interest rates?? First, most central bank governors have not done it well.? They ease far too much, and tighten far too little.? They don’t take away the punchbowl when needed, or to the degree needed when the party gets hopping.
The result is too much debt, and an eventual liquidity trap which we are now in, and which the present Fed intensifies.? From Grice:
So now we know we have a slightly better understanding of who pays: whoever is furthest away from the newly created money. And we have a better understanding of how they pay: through a reduction in their own spending power. The problem is that while they will be acutely aware of the reduction in their own spending power, they will be less aware of why their spending power has declined. So if they find groceries becoming more expensive they blame the retailers for raising prices; if they find petrol unaffordable, they blame the oil companies; if they find rents too expensive they blame landlords, and soon. So now we see the mechanism by which debasing money debases trust. The unaware victims of this accidental redistribution don?t know who the enemy is, so they create an enemy.
The actions of the Fed are not costless, they take purchasing power away from others.? Further, the Fed will find it exceptionally difficult to remove policy accommodation when the time comes to do so.? Why?
It is a constant that the more the Fed eases, the worse the adjustment is when the tightening comes.? This one will be a Lollapalooza.? I have often said that Fed tightening cycles end when something blows up.? But what happens if something significant blows up early in their tightening cycle, and inflation is still running hot?? Or that interest rates have risen enough that there is no way that the US Government can ever repay their debts?
This is the second aspect of trust.? What is my money worth?? Why do we have these worthless bureaucrats with bad economic theories trying to manipulate our actions, when they lead us into overindebtedness?? Yes, in the short-run it looked good, BUT WHO IS LOOKING OUT FOR THE LONG RUN! Where, pray tell, are the statesmen looking out for our long-term well-being?? Ron Paul has retired.? Tom Coburn acts in the shadows.? Rand Paul is new… is there anyone else thinking long-term?? I see little of it in DC, in either party.
Few want to take the political & economic pain necessary to reduce debts and liabilities that we will not be able to pay.? And as such, businessmen limit their activities, because they don’t see benefits to taking risk in an abnormal environment., and growth reduces.
As I said to a friend today:

We live in unusual times.? Long-term valuation measures are flashing red.? Some short-term measures are flashing green.? Marginal productivity of capital is declining, and so firms use excess cash and borrowing capacity to pay dividends and buy back stock, because profitable organic growth opportunities are few.? That is not a great environment to be long stock.?

Further harming the environment is the tight coupling of government policies on monetary policy and the deficit.? Thus, even with bonds, I?m playing it relatively safe.? To me, this is mostly a time to preserve capital.

Economic growth requires trust in society.? Without trust, there is no growth.? That means policies and laws have to be long-term & dependable.? When things change too much, economic actors slow down, because it takes time to work through change.? (And that’s another reason why the PPACA will be a job-killer, and slow down the economy.? It is too big, too complex, too burdensome — it was not designed to extend healthcare, but to destroy the relatively good pre-existing private system.)

I am not surprised that growth has slowed; I am surprised that markets are as high as they are.? When the Fed finally overreaches their abilities, we will painfully learn the governments and central banks are not omnipotent, and that they more often hinder our prosperity than not.

Linear Thinking in a Chaotic World

Linear Thinking in a Chaotic World

Posted on by David Merkel

If some is good, then more is better.? That’s the way simpleminded people think.

Think of alcohol.? A little is good, but past a certain point, more is bad.

I think about central banking the same way.? Until recently, quantitative easing seemed to stimulate the economy, but each increasing dose has done less.? The last one seemed not to work at all, and long rates rose amid buying of bonds by the Fed.

The same applies to running deficits.? Perhaps the Keynesian solution works when there is adequate borrowing capacity in the private sector, but when many cannot borrow more, running high deficits may scare businessmen and consumers, because they wonder whether the system is stable or not, how the books will eventually balance, etc.? Inflation, deflation, higher taxes, currency depreciation… there are so many possibilities.

The leaders in simple-mindedness are Ben Bernanke, and Shinzo Abe of Japan.? Add in George Bush, Jr., and Barack Obama — deficits don’t matter.? They are like Fat Freddy with a hammer; every problem looks like a nail, and he will whack it with his hammer.? BAM!? It’s better, right?

Economies are complex because people are complex, and groups of people are even more complex.? The simplistic tools of neoclassical macroeconomics do not work in situations where there is too much debt, but the ideologues display confidence to the watching world.

When this pattern breaks it will be ugly, and I don’t know when or how it will be ugly.? It all depends on whether policymakers move to inflate or deflate.? You might say, “Of course they will inflate.”? Many thought that in the Great Depression, and they were wrong.

My main point here is that we all know less than we think about the future.? We have no idea as to what might finally derail the policy monoculture of the dominant nations — large deficits and loose monetary policy, but it will derail, and how it will resolve is a mystery.

So diversify your asset allocation into things that benefit from inflation and deflation — maybe you will keep something after the crisis hits.? After all, the looser monetary policy is, the worse the adjustment when the tightening comes, and monetary policy has never been looser than this since 1790.

Sorted Weekly Tweets

Sorted Weekly Tweets

Posted on by David Merkel

US Politics & Economic Policy

 

  • Employers Blast Fees From New Health Law http://t.co/FfuBRO2HQp Phases in the added costs of covering sick people previously uninsured $$ Mar 15, 2013
  • Conservative Groups Warn GOP Lawmakers About Deals With Obama http://t.co/vui4GOINCw If this were a 2-player game, would have been solved $$ Mar 15, 2013
  • Gundlach: Investors are asking the Wrong Question http://t.co/xA1UgvCica ht: @ReformedBroker QE as a permanent affair w/which we have 2 live Mar 15, 2013
  • New Group Pushes Corporate-Tax Overhaul http://t.co/P3dwgqQON6 Trying 2 End Double Taxation of foreign profits. Hasn’t worked so far $$ Mar 14, 2013
  • The Almighty Dollar Is Back http://t.co/F3iP3Zblyk Skeptical. Waiting for the Fed to announce increase of QE to send the $$ back down Mar 14, 2013
  • GIs Fighting Nazis Last Time Factory Workers Toiled Longer http://t.co/pVMlMGFRQ0 This is optimistic for new hiring $$ Mar 14, 2013
  • Grand Bargain Taxes, Entitlements Cuts Await Deal Makers http://t.co/gJZ2c4Uc17 My sense is that we r heading 4 another deadlock $$ Mar 14, 2013
  • Refusal to Expand Medicaid May Cost Employers $1 Billion http://t.co/kpxJmCeZvT Pressure is going to grow to eliminate PPACA & Medicaid $$ Mar 14, 2013
  • US Growth = Inventories http://t.co/dOIp5n9sPH Much of the presumed growth in the US is just rebuilding of inventories to a peak level $$ Mar 12, 2013
  • GOP Budget Establishes Contrast With Democrats http://t.co/ocLQndOvsP No chance of it being passed, but gives an idea of where 2 sides r $$ Mar 12, 2013
  • SEC Charges Illinois Over Pension Funding http://t.co/MxEF6hPYPy This is how it should be. No one gets punished in the slightest. $$ Mar 12, 2013
  • Note from last tweet: a lot of ppl want to punish bankers, what about state officials who lie – they r much bigger, where is the outcry? $$ Mar 12, 2013
  • Fed mulls putting a ‘not for sale’ sign on its assets http://t.co/uZAcaHmLeO A sign of weakness from the Fed; they know they r trapped $$ Mar 10, 2013

 

Roman Catholic Church

 

  • Jesuits Had Past Struggles With Popes http://t.co/P8Vy8YEifr In the RC church, they have top liberation theologians &their top opposition $$ Mar 14, 2013
  • Ten things you probably didn?t know about the Jesuits http://t.co/tFijZNMkV9 If the Church have defined anything to be black… amazing $$ Mar 14, 2013
  • The sins of the Argentine church http://t.co/FTzKlsq1I7 New Pope may have been complicit w/Military Dictators killing their enemies. $$ Mar 14, 2013
  • The Changing Church http://t.co/mDPol6orR5 Interesting 2c change in locations of Cardinals. Size of RC church overstated, many not active $$ Mar 14, 2013
  • How Is the Pope Elected? http://t.co/j8p5L9dB5I A little late, but I thought this was an interesting infographic on papal elections $$ Mar 14, 2013
  • African Catholics Look to Black Pope to Safeguard Tradition http://t.co/vxZrJJDgvv US Media does not get how traditional most Catholics r $$ Mar 13, 2013
  • Black Smoke Signals No New Pope http://t.co/9qp8nzlbRb More & less unity in RCC than commonly thought. More: Europe, Less: elsewhere $$ Mar 12, 2013

 

Financial Markets

 

  • To all of the fixed income followers out there: someone asked me today to recommend good bond blogs. What would you recommend? Mar 15, 2013
  • Highest Bond Yield at Auction in a Year Could Be Sign of Things to Come http://t.co/fShhD5iAlp Or it could be a buying opportunity $$ Mar 15, 2013
  • $OAK Founder Knows How to Get an Edge in Investing http://t.co/TaRQSiK5gI “Experience is what u get when u didn’t get what u wanted.” $$ Mar 14, 2013
  • Smallcap Stock Volatility Index Hits All-Time Low http://t.co/l6tCXV7VS4 Complacency is the rule of the the day among small cap stocks $$ Mar 14, 2013
  • 5 ways Warren Buffett invests that you don?t http://t.co/AeCs8fqe6g Good job describing what parts of Buffett’s strategies can b mimicked $$ Mar 14, 2013
  • Team Alpha Retirement Portfolio: Dividend Investing Vs. Annuity Purchasing http://t.co/HNHqI40vDP Example of y I don’t read Seeking Alpha $$ Mar 14, 2013
  • New Carlyle Group Fund Lowers Bar for Investors http://t.co/xiCTwy07Zk As @reformedbroker aptly put it, “Muppet Bait” Avoid. Avoid. $$ Mar 14, 2013
  • Fidelity to Expand ETF Relationship With BlackRock http://t.co/d4PIiCb7oh Fidelity says “Me 2,” by partnering with $BLK . No value added $$ Mar 14, 2013
  • moving down-market http://t.co/qP0YSWKubG @researchpuzzler has it right, inviting small accounts in means opportunities r getting worse $$ Mar 14, 2013
  • Historical S&P 500 Price to Sales (P/S) Chart http://t.co/dm2ZhDDgtE Useful little chart – around avg now, but profit margins r a record $$ Mar 13, 2013
  • SP500 Bull and Bear Factors – Not so Fun Damentals! http://t.co/5OjwvLbLPw Bull factors: QE, Buybacks, Yen. Bear: Econ data, Earnings mo $$ Mar 13, 2013
  • Gold Sales From Soros Reveal 12-Yr Bull Run Decay http://t.co/ze7DSsdIkN Makes me want 2 do a piece on $$ weighted vs time weighted on $GLD Mar 13, 2013
  • Why (Most) People Hate Good Financial News http://t.co/PZcf1usKD1 Regret is a strong force in psyche of amateur investors: missing out $$ Mar 12, 2013
  • How Much Of The Stock Market?s Growth Is Caused By Its Shrinking? http://t.co/Kfxipqvr1Y I would be skeptical here; capital changes weak $$ Mar 12, 2013
  • Securities Lending: Worth The ?Risk? http://t.co/AZxSKFzM2T When done right, sec lending is almost free money, the risks r low. $$ Mar 12, 2013
  • New ETF Underway for Distressed Debt http://t.co/Wp3ZPwaZqj Bad idea. Creating indexes for distressed bonds will be hard, Won’t attract $$ Mar 12, 2013
  • Firms Send Record Cash Back to Investors http://t.co/n0vNv0ppei A sign of economic weakness; there are few places to invest for growth $$ Mar 10, 2013

 

Wrong

 

  • Wrong: Amazon Preparing Bid For Barnes And Noble? http://t.co/qYB3yE6u8U Combination would not be allowed by the FTC $$ Mar 13, 2013
  • Wrong: Why Insurers May Be Unprepared for the Next Big Storm http://t.co/WuJIpvtVBj Most P&C insurers have more than adequate reserves $$ Mar 13, 2013
  • Wrong: The US can?t afford a Chinese economic collapse http://t.co/9vskptvxvx We can afford it; China won’t affect much in the US $$ Mar 12, 2013

 

Rest of the World

 

  • China s Next Potential Bubble: Hello, Anybody Home? http://t.co/IstgcTQZCN Trapped. Potential sellers need prices 2 stay high, buyers low $$ Mar 15, 2013
  • Embrace consumption, IMF’s Zhu urges China http://t.co/TAc5toyktZ Easier said than done. Party not ready to give people more freedom. $$ Mar 15, 2013
  • Nordic Testicular Cancer Mystery Prompts Chemicals Probe http://t.co/LqwH8klTLq Interesting, might be a combo of genetics & environment $$ Mar 15, 2013
  • Jeffrey ??s Japan Stocks http://t.co/lvhM6LFXAv?s-japan-stocks/?utm_source=dlvr.it&utm_medium=twitter Weak yen drives Japan stocks up $$ Mar 15, 2013
  • Recent cyberattacks could be part of a Chinese military strategy started nearly 20 years ago http://t.co/NxZ99g2ZKo Explains what is up now Mar 14, 2013
  • Brazil?s Richest Family Forging $13 Billion Niobium Dream http://t.co/2MHbOkhHPd Stronger flexible steel from a Brazilian tech company $$ Mar 14, 2013
  • Even Berlusconi Can?t Slow Bulls Boosting Euro View http://t.co/PV2mGvfHRr Great 4 core Eurozone, bad news 4 the fringe Eurozone $$ Mar 13, 2013
  • Chinese inflation hits 10-month high http://t.co/rGZJHoZsqj The end of the cycle comes when Chinese inflation gets out of control $$ Mar 13, 2013
  • Snow Causes European Travel Chaos http://t.co/tz3afCLET9 That’s one thing about weather & climate, constantly changing & always will $$ Mar 13, 2013
  • Should You Bond With Azerbaijan? http://t.co/gpE429eGa8? by @jasonzweigwsj | Emerging market govts are better run than developed govts $$ Mar 12, 2013
  • Norway Fund Flees Currencies Tainted by Stimulus Addiction http://t.co/X7YasIGkKn Rational response2 depreciating currencies: hail Norway $$ Mar 12, 2013

 

Banks

 

  • JP Morgan’s Jamie Dimon showed too much hubris and too little humility http://t.co/4feQB2Q6Jx @moorehn highlights cultural problem @ $JPM $$ Mar 15, 2013
  • Bubble Exchange: Technology vs Financials http://t.co/BJKoaFfjdo Suggests that financials, not tech, will do better in the future $$ Mar 15, 2013
  • EU Said to Plan Concession on Tax Credits as Bank Capital http://t.co/Ss3J4KBGbv Deferred Tax Assets should not be allowed as capital $$ Mar 15, 2013
  • Deferred Tax Assets r only valuable if a company makes $$ in the future, which for a bank in distress is less likely; should not b capital Mar 15, 2013
  • Beware of a New Banking Bubble http://t.co/gr5c2S9NaI Three recent deals involved premiums of 32% to 83% above tangible book value $$ #fire Mar 14, 2013
  • Fisher and Rosenblum: How to Shrink the TBTF Banks http://t.co/pNfzML2A22 Could work, roll back safety net, keep pieces small, holdcos fail Mar 14, 2013
  • 5 Big Questions for the Future of Retail Banking http://t.co/sCKi6QjfCu Branches buy/sell, online/mobile, layoffs, interest margins down $$ Mar 14, 2013

 

Companies & Industries

 

  • Lawmakers Examine Ethanol Credits’ Affect on Gas Prices http://t.co/5RHXnKcuFG Wasteful program doesn’t aid conservation adds 2 pollution $$ Mar 15, 2013
  • 5 beloved tech products that were sentenced to death http://t.co/bg4S90UHlZ Impending death of Google Reader makes writer wax nostalgic $$ Mar 15, 2013
  • Google and Bing Say the Future of Search Is Conversational http://t.co/mx2gfh6oSr Software improves ability 2 understand contextual data $$ Mar 15, 2013
  • Herbalife short-seller sues banks, Icahn over alleged fraud http://t.co/NaL4X9aXW3 Losing investor throws good $$ after bad, will not win Mar 14, 2013
  • Evolv, Making Hourly Workers More Profitable, Lands $15 Million http://t.co/DDEyoCk7Ay Improves retention of the employees u want 2 keep $$ Mar 14, 2013
  • Lincoln?s Cooper Shuns Shoot-For-Moon Funds After Goldman http://t.co/7PdLGT5TGb This does not make me feel better about $LNC. Avoid. $$ Mar 14, 2013
  • How Benjamin Franklin Invented the Mail-Order Business http://t.co/TC6DmWsZck A look at the precursors to mail-order retail. Interesting $$ Mar 14, 2013
  • Lego Builds New Billionaires as Toymaker Topples Mattel http://t.co/jxkqNatzZk Family controls 75% of the operation through Kirkbi A/S $$ Mar 14, 2013
  • 8 Megatrends Defining the Oil & Gas Industry http://t.co/Taz5Dsujwh Nationalization, Ending subsidies, Green, New frontiers, LNG, M&A $$ &c Mar 14, 2013
  • Blackstone Said to Get $2.1 Billion Loan for Home Purchases http://t.co/qDg7DrSBGk I’m skeptical, don’t think renting homes is scalable $$ Mar 14, 2013
  • Many hospitals, doctors offer cash discount for medical bills http://t.co/ckLOHxh1TH ht: @dpinsen | Sometimes ucan pay less w/o insurance $$ Mar 13, 2013
  • Gas Rigs Drop to Fewest Since 1999 as Drilling Declines http://t.co/b3YztqbTqs Almost like the old days when they would flare off natgas $$ Mar 13, 2013
  • Starr Proceeds With Fight Over $AIG Rescue http://t.co/WPNIOyib7B I don’t think he will win, but Greenberg will get his day in court $$ Mar 13, 2013
  • Beating The Downturn By Degrees http://t.co/9BT69ix6Fs Good summary article on the for-profit educators $$ Mar 13, 2013
  • Liberal-Arts Colleges Dangle Deals to Woo Students http://t.co/v3Qd07x8AD Pay for 4 years & never have 2 pay again; u *can* finish 4 free $$ Mar 13, 2013
  • InTrade Online Betting Site Shuts Down Abruptly http://t.co/Rb0Ppald2u A long shot from the start, current bettors may b stuck w/the loss $$ Mar 12, 2013
  • Green Cars Have a Dirty Little Secret http://t.co/wk5UfvYiYn Producing and charging electric cars means heavy carbon-dioxide emissions. $$ Mar 12, 2013
  • Uninsured Americans Get Hit With Biggest Hospital Bills http://t.co/6QeybZMIz8 First value of insurance is buying power lowering prices $$ Mar 12, 2013

 

Other

 

  • Jim Gaffigan Is the King of (Clean) Comedy http://t.co/RhUM30krSU Heartening 2c clean humor getting attention; certainly harder 2 do $$ Mar 15, 2013
  • The Bearded Man http://t.co/ub5n07UjFZ I’m no trendsetter. If you’re out of fashion long enough, eventually u accidentally get in fashion $$ Mar 15, 2013
  • Does money taint the sharing economy? http://t.co/yTjd3w8ThO If you want an organization to last, there must be a profit margin $$ Mar 15, 2013
  • Scientists find how deadly new virus infects human cells http://t.co/YLfoqPbvJ1 Disease is similar to SARS. Infected 15, killed 9 $$ Mar 14, 2013
  • Former Ravens May Outnumber Ravens http://t.co/SIxpATVmC6 Noticed in Baltimore; curse of the Joe Flacco contract; less $$ for rest of team Mar 14, 2013

 

Retweets & Replies

  • ‘ @tradewins @moorehn The problems are concealing data from the regulators, & Dimon perhaps concealing what he truly knew at the time $$ Mar 16, 2013
  • @TWealthMgmt Yeah, they are good, & I mentioned them. Seems many bond blogs have folded; they had a finite maturity 😉 Mar 15, 2013
  • @nelson3748 Railroads r scarce; impossible to replicate; has a big moat w/pricing power; trucking has no moat; scale is needed Mar 14, 2013
  • I just left a comment in “5 ways Warren Buffett invests that you don?t – Jonathan Burton’s Life Savings – MarketWat?” http://t.co/2tjAaDwkV7 Mar 14, 2013
  • Yes, but the nice thing about Pi day is that it has been a round RT @EddyElfenbein: Celebrating Pi Day seems so irrational. Mar 14, 2013
  • @EliHoffmann Don’t get me wrong I *like* dividends & have for a long time. They r more frail than the new advocates assume Mar 14, 2013
  • @EliHoffmann There r other things he got wrong re insurance, but the faith in dividends is naive. They get cut in bad periods like the ’70s Mar 14, 2013
  • @EliHoffmann Annuities r guaranteed by state guarantee funds Mar 14, 2013
  • @DavidSchawel Thanks, but r u bullish on it or neutral? Mar 14, 2013
  • @DavidSchawel How successful? Mar 14, 2013
  • No RT @pdacosta: VZ president says Chavez, now close to Christ, had a hand in choice of South American pope http://t.co/WYR2izYIsk Mar 14, 2013
  • “Pretty cool. Billy Joel took a chance on the student, and it was beautiful. Kid had moxie.” ? David_Merkel http://t.co/YBUfXDNSGH $$ Mar 14, 2013
  • UCan say that again RT @ReformedBroker:Muppet Bait MT @researchpuzzler:Don’t miss your chance 2 play w/big boys of PE http://t.co/5fg2tLPXS3 Mar 14, 2013
  • Listening to broadcasters in Rome, it reminds me of the Super Bowl when the power went out; gotta say something, but not much to say… $$ Mar 13, 2013
  • . @scott_matagrano Also, $AIG’s domestic life companies were BK until rescued b/c of sec lending… long story: http://t.co/EmnSclWqVS $$ Mar 13, 2013
  • @scott_matagrano Not *quite* riskless. There were some bond trades I could not execute b/c we could not get the shares back. Mar 13, 2013
  • @merrillmatter I don’t but some of my clients do. Mar 13, 2013
  • @ReformedBroker Hey Josh, where is that indicator now? Mar 12, 2013
  • @weelifeworkplay Saw that, but property tends not to vary in value as much as currencies do. Owning land tends to preserve value, mostly $$ Mar 12, 2013
  • @prchovanec In a word, overvalued. P/E measurements of value fluctuate too much b/c earnings varies more than sales or book $$ Mar 12, 2013
  • @exMBB I avoid life companies that primarily write variable business; the accounting quality is poor. No opinion on $PNX $$ Mar 12, 2013
  • @SagittaCapital I’m afraid that one is a ‘No.” I don’t have a lot to say there. Mar 12, 2013
  • @60Minutes @sherylsandberg That’s dumb. It could just be rudeness, or ego, and the same applies to boys. Will to power <> leadership $$ Mar 11, 2013
  • @prchovanec P/E is more significant in the short-run. CAPE10 & Q-ratio more significant in the long run. $$ Mar 10, 2013

 

FWIW

 

  • My week on twitter: 48 retweets received, 11 new listings, 51 new followers, 55 mentions. Via: http://t.co/cPSEMLXpb8 Mar 14, 2013

 

Shrinking Economies Deserve Gridlock

Shrinking Economies Deserve Gridlock

Posted on by David Merkel

This will be very short.? Growth solves a multitude of economic sins.? So what prevents countries from encouraging growth?

  • Cronyism
  • A shrinking population, or something near that.
  • Too much regulation that affects production or hiring.
  • Cultural decay.

When economies stop growing, factions argue over their slice of the pie.? Gridlock ensues, and nothing good comes of it.

I wish I could be more optimistic here, but the world works better amid growth, but the policies of our governments suppress that.

A large part of this says don’t press your own agenda, it is not good for everyone else.? A freer economy creates more growth, freedom promotes opportunity.

But an economy where taxes are regular and predictable promotes growth also — corporations can plan for the longer-term, and not worry that current investments might earn less from higher future taxes.? Businessmen want predictable future taxes, which is one reason why a budget that is way out of balance concerns them.

Politicians do better with a rapidly growing economy because their revenue base allows them flexibility, because taxes received will rise without government action.? To them, the growing economy is magic — the gift that keeps on giving, but they have no idea what affects it.? They want to see the economy grow, aiding their efforts, but they engage in all manner of regulations that reduce growth.

The back-and-forth on issues like this produces gridlock, where deficits persist, amid growing needs elsewhere, and constrained taxes. I don’t see how 15% of the US states escape bankruptcy, even though they can’t do that.? There will be many significant fights over employee benefits in the states over the next 20+ years.? Only when we get past this black hole will growth revive.? (Add in normal monetary policy as well…)

 

Sorted Weekly Tweets

Sorted Weekly Tweets

Posted on by David Merkel

Rest of the World

 

  • West Australia Set to Stay Liberal Highlighting Gillard?s Plight http://t.co/8Vp0mjPjJt Some Labor policies r perceived 2b anti-mining $$ Mar 07, 2013
  • Top Stock Kroton?s School-Loans Growth Decelerates http://t.co/NrmeHL4hP9 Brazil goes down the student loan path US has. Better results? $$ Mar 07, 2013
  • Merkel Looks East for Austerity Allies in Hollande Talks http://t.co/3uSJ5frCcm Austerity is getting 2b a tougher sell; when does it end? $$ Mar 07, 2013
  • Saudi Next Generation Has US Imprint as King Picks Leaders http://t.co/GBReGpuS2x Wahabiism won’t accept cultural reforms; 2 optimistic $$ Mar 07, 2013
  • Impotent Mursi Losing Grip on Egypt as Unrest Prompts Reversals http://t.co/tsm8FzIs5x Anarchy rules as Mursi putters; no 1 2 replace him $$ Mar 07, 2013
  • EU Unemployment: Titanic in Perspective http://t.co/StpmdeBEm7 ~12% unemployment across the EU & still rising. Sound like a success 2u? $$ Mar 06, 2013
  • Pound?s World-Worst Drop Seen Growing in Pimco Math http://t.co/4yqRnOldzj Everyone wants a cheaper currency in the race 2 the bottom $$ Mar 06, 2013
  • China ‘fully prepared’ for currency war http://t.co/cdR7AWWTHw Brave words from a country w/an immature financial system $$ Mar 06, 2013
  • Japan’s Economic Bad Mix : Yen, Oil and China http://t.co/ELaLyiQe9e Not a question of Japan getting into trouble, only what catalyzes it $$ Mar 05, 2013
  • Reforms Stall in Athens as Troika Considers Next Aid Tranche for Greece http://t.co/P0n3aSAe9u Still don’t c how Greece avoids leaving EZone Mar 03, 2013

 

Energy

 

  • Chevron Shale Bet Down Under Makes Senex Target http://t.co/GnfWLIKi98 That’s why gas found in Australasia is so valuable FD: long $CVX $$ Mar 07, 2013
  • Ethanol Outpaces Gasoline on Longest Supply Drop Since 2010 http://t.co/FluutBbaoa Margins r wide enough shut capacity reopens $$ FD: + $VLO Mar 07, 2013
  • Conoco Says US Should Consider Allowing Oil Exports http://t.co/D6FqHkZIvO Now that we make more than we consume, y not sell excess? $$ Mar 07, 2013

 

Other

 

  • When ‘Jazz’ Was a Dirty Word http://t.co/cpipuRDcNi Fascinating 2c how jazz musicians rejected the label, but played w/great enthusiasm $$ Mar 09, 2013
  • Making a Liberal-Arts Education Pay http://t.co/Ob8wZyKb7Z Trouble w/liberal arts: not enough science & math; written by an English prof $$ Mar 07, 2013
  • Stress at Work: Why Women Feel It More Than Men http://t.co/AeLwohdPvL Women tend 2 ‘Tend and Befriend.’ Men tend 2 fight/act or leave $$ Mar 07, 2013
  • Rice Glut Expands With Farms Poised for Record Crop http://t.co/6M5bUdEQyF I’ve heard there r animal feed shortages, can rice b used? $$ Mar 06, 2013
  • In Geology, Old-Timers Can Be Worth Their Weight in Gold http://t.co/4c7TP8TKxg They analyze plants, animals, not just computer analyses $$ Mar 05, 2013
  • Many Avoid Tough Path to Citizenship http://t.co/9HEiMYmQTf Costs time & $$, effort from studying, hiring a lawyer, etc. Mar 05, 2013
  • As Pirates Run Rampant, TV Studios Dial Up Pursuit http://t.co/KdBMYEIpOg Story of television trying to eliminate piracy and not winning $$ Mar 05, 2013
  • Glad that Venezuela does not have to suffer through more of Chavez, but sad 4 him. Now, what will the election result be? $$ Mar 05, 2013

?

Companies

 

  • Icahn Unbound Takes Activism to New Peak in Deal Fights http://t.co/M2eAw3DLWc He’s having a lot of fun going after poorly planned deals $$ Mar 09, 2013
  • Why Vodafone Should Head for a Verizon Exit http://t.co/0FusnV2ZzG $VOD should make $VZ pay up, they have less need 2 act | FD: + $VOD $$ Mar 07, 2013
  • Boeing Said to Boost 787 Battery Tests As Carmakers Aid http://t.co/yOqFiyGlx0 2 Many batteries passing “quality control” @ manufacturer $$ Mar 07, 2013

 

Market Impact

?

  • Wrong question. by @ReformedBroker http://t.co/jzY7UcQYuS Tie your hands w/asset allocation. Give yourself limited movement re fear/greed $$ Mar 07, 2013
  • Proof the Fed is Juicing the Markets http://t.co/6RDGyEDueG Correlation is not proof, but the monetary base is highly correlated w/DJIA $$ Mar 07, 2013
  • Welcoming, and Worrying About, a Record Market http://t.co/K3fdzRpOJ6 Last inflation adjusted DJIA high was not Oct-2007, but Jan-2000 $$ Mar 06, 2013
  • Young Adults Retreat From Piling Up Debt http://t.co/FRIgpI8ELb Saving is the secret to getting the big ticket items 2 make life pleasant $$ Mar 06, 2013
  • Qualified Private Activity Bonds Come Under New Scrutiny http://t.co/LHNuPoAWjQ Corporations have access to issuing tax-exempt bonds $$ Mar 06, 2013

?

US Government & Economic Policy

 

  • Yale Suing Former Students Shows Crisis in Loans to Poor http://t.co/nhc0JjmEj5 Loan programs seem cheaper in the short run, deceptive $$ Mar 07, 2013
  • Tom Coburn?s Campaign Against Government Waste http://t.co/SeIO1CIQI5 Coburn fights for what is right regardless of what the GOP thinks $$ Mar 07, 2013
  • Nurses Spar With Doctors as 30 Million Insured Seek Care http://t.co/jgCNVanub3 These fights will be more common as Obamacare proceeds $$ Mar 06, 2013
  • S&P Credibility Seen Eroded by Complicity in Soured Deals http://t.co/VsYxQL4wfw Where r the complaints about regulators forcing ratings? $$ Mar 06, 2013
  • Warren Buffett Sees ‘Hair Trigger’ When Fed Shifts Stance http://t.co/28nIn3rDiw Right. Now if he would spend time speaking truth 2 power $$ Mar 06, 2013
  • US Sequestration : Market Impact on financial assets http://t.co/6zUZXo2yWq Would nitially b deflationary, but lead to growth later IMO $$ Mar 05, 2013
  • Dr Copper and his funny friends dont agree with SP500 – Divergence ! http://t.co/TpmemT4Ai6 Real economy not doing as well as S&P 500 $$ Mar 03, 2013
  • US Restaurant Index and US Consumer Confidence http://t.co/4Bc83xsrbU Restaurants r sensitive indicators of consumer behavior: weak now $$ Mar 03, 2013
  • Federal Reserve: What Happens When It Runs Out of Ammo? http://t.co/F2jHPEROU3 What happens when they need2tighten & reaction is violent $$ Mar 03, 2013
  • Two Scenarios for Future of ‘Big Finance’ http://t.co/DdQwk7Jyj6 Finance still needs 2 shrink, the economy needs total debt 2b < 2x GDP $$ Mar 03, 2013
  • US Incomes Fall, Spending Rises http://t.co/ldYgPDETEc What do you expect when you add back the payroll tax? $WMT takes a hit also $$ Mar 03, 2013
  • Druckenmiller Sees Storm Worse Than ?08 as Seniors Steal http://t.co/A0eSwqZYab It is very bad, but I don’t get the $211T number, too big $$ Mar 03, 2013
  • Obama Orders Cuts That Will Be ?Slow Grind? on Economy http://t.co/lgzqxK8iWw Next stop, 3/27 when the spending authorization expires $$ Mar 03, 2013
  • Obama Makes Cuts Personal in Strategy to Bend Congress http://t.co/AqjKaD865f May try to mismanage sequester to embarrass Republicans $$ Mar 03, 2013

Markets

 

  • Edge: Milevsky, Ritholtz, Zweig, Ferri & More http://t.co/N5CIsbv4x4 This year?s Edge Q is What *should* we be worried about? I’m in it 2 $$ Mar 05, 2013
  • Kass Takes Buffett?s Challenge to Present Bearish Questions http://t.co/WEmq4Y57Cn @DougKass gets fun of poking holes in Warren’s theses $$ Mar 05, 2013
  • Buffett’s Advice to Apple’s Tim Cook: Ignore Einhorn http://t.co/5z6QEoMBAm Warren tells him to manage for the long haul. Wise words $$ Mar 05, 2013
  • Investing methods that beat the market http://t.co/1CFvZQMwLf Momentum, small cap, value, yield — can all be mimicked through ETFs $$ Mar 05, 2013
  • Birinyi Says Buy Mining, Technology Shares as Bull Ages http://t.co/ywui2NoQwL Yes 4 tech, but miners have over developed, poor profits $$ Mar 05, 2013
  • How much do stocks really return? http://t.co/J3u19M5AmP Good article, but I think the advantage of stocks over inv grade bonds is ~1%/yr $$ Mar 05, 2013
  • Say Goodbye to the 4% Rule for Retirement http://t.co/AhWrDqfOdy Better rule: Ten-year Tsy yield +2% if bullish, +1% neutral, +0% bearish $$ Mar 05, 2013

 

Other

 

  • In Florida, Sinkhole Risks Grow With Urban Expansion http://t.co/VRX7vsSqDr West Central Florida has a sinkholes, could lose 4 counties? $$ Mar 07, 2013
  • Imagining a Post-Bundle World for Cable TV http://t.co/U86Jducpeg Popular shows/networks would do better, less popular would suffer $$ Mar 03, 2013

 

Replies & Retweets

  • Why should the companies you listed pay 6%, when all of them could issue senior unsecured for less than that? http://t.co/Shc5Rq4c8F Mar 07, 2013
  • @The_Analyst They would give up that much to avoid being sr unsec liability?? Mar 07, 2013
  • Bigtime MT @BarbarianCap: $PRU >Annuity Fees Would Make Bankers Dance http://t.co/brvonxtRHS >> CEO touting how expensive their products r Mar 07, 2013
  • You can say that again RT @munilass: This is beautiful. The use of drones is finally getting the attention it deserves. Mar 07, 2013
  • Good one! RT @JMucken: @AlephBlog It would be metaphorical to give the winner a “gold” medal. Mar 06, 2013
  • I agree w/that, as it says in Romans 3:8 http://t.co/wYE9utGxjD RT @cogent_rambling: Bad doesn’t erase good. http://t.co/6yCqpHp405 Mar 06, 2013
  • RT @agnestcrane: I’d say credit markets feel pretty good about banks ahead of stress tests. BofA, GS, MS CDS spreads have more than halv … Mar 06, 2013
  • I use that when I worry about retailer spam RT @cullenroche: On a more serious note, why in the world do I still use my Yahoo email account? Mar 06, 2013
  • Maybe we could turn competitive devaluation into an Olympic sport. Send all finance ministers & central bankers 2 Sochi w/a 1-way ticket $$ Mar 06, 2013
  • @Fullcarry Thanks for the info, helps Mar 05, 2013
  • Jesus will surprise him RT @mattrixDOTinfo: re: Chavez and being sad. It’s a shame Chavez will now have 2b held accountable to our Maker. Mar 05, 2013

 

FWIW

  • My week on twitter: 39 retweets received, 2 new listings, 90 new followers, 36 mentions. Via: http://t.co/cPSEMLXpb8 Mar 07, 2013
Sorted Weekly Tweets

Sorted Weekly Tweets

Posted on by David Merkel

Berkshire Hathaway

 

  • $BRK.B The preferred has 2 other features that materially increase its value: at some point it will b redeemed @ a significant premium price Mar 01, 2013
  • …the preferred also comes with warrants permitting us to buy 5% of the holding company?s common stock for a nominal sum $$ FD: + $BRK.B Mar 01, 2013
  • Buffett to Update His Acquisition Hunt http://t.co/OHzvc2xQBW Buffett has more than enough $$ to buy what he wants; free cash flow is huge Mar 01, 2013
  • We Want Your Questions for Warren Buffett http://t.co/7GiMfdYbst Mail in your questions for Warren Buffett & do it here. I wil do so. $$ Mar 01, 2013

Full Disclosure: long BRK/B

 

Monetary Policy

 

  • Federal Reserve: What Happens When It Runs Out of Ammo? http://t.co/F2jHPEROU3 What happens when they need2tighten & reaction is violent $$ Mar 03, 2013
  • Fed Could Slow Bond Selloff http://t.co/HifHyKx4Su And so they dream, not realizing tightening cycles r proportionate to loosening cycles $$ Mar 01, 2013
  • Bernanke Says U.S. Must End ?Too Big to Fail? Bank Subsidy http://t.co/ScBqYKo3oG Easy2do: keep raising deposit ins prems till banks balk $$ Feb 28, 2013
  • Kuroda?s Inflation Failure Seen in Long Bond Rally http://t.co/EuDTpe0kPd Most nations of the world r trying voodoo economics, Japan most $$ Feb 28, 2013
  • Bernanke?s Stimulus Spurring US Employment in Housing http://t.co/GYhrkyWGI8 I would be more optimistic if new sectors were prospering $$ Feb 25, 2013
  • Trade protectionism looms next as central banks exhaust QE http://t.co/M5jJDSbxrD Weakening your currency can give a temporary advantage $$ Feb 25, 2013

 

US Economy

 

  • Dr Copper and his funny friends dont agree with SP500 – Divergence ! http://t.co/TpmemT4Ai6 Real economy not doing as well as S&P 500 $$ Mar 03, 2013
  • US Restaurant Index and US Consumer Confidence http://t.co/4Bc83xsrbU Restaurants r sensitive indicators of consumer behavior: weak now $$ Mar 03, 2013
  • US Incomes Fall, Spending Rises http://t.co/ldYgPDETEc What do you expect when you add back the payroll tax? $WMT takes a hit also $$ Mar 03, 2013
  • Obama Orders Cuts That Will Be ?Slow Grind? on Economy http://t.co/lgzqxK8iWw Next stop, 3/27 when the spending authorization expires $$ Mar 03, 2013
  • Obama Makes Cuts Personal in Strategy to Bend Congress http://t.co/AqjKaD865f May try to mismanage sequester to embarrass Republicans $$ Mar 03, 2013

 

Rest of the World

 

  • Reforms Stall in Athens as Troika Considers Next Aid Tranche for Greece http://t.co/P0n3aSAe9u Still don’t c how Greece avoids leaving EZone Mar 03, 2013
  • Ivory Coast?s Women Reject Equality in Household Debate http://t.co/1AuTdZTb9r Equality means men don’t have to support their households $$ Mar 01, 2013
  • Japanese Revival Seen in Honda?s First Plant in 49 Years http://t.co/oKo5aBuxhA $HMC new factory comes just as weak yen boosts prospects $$ Feb 28, 2013
  • Wrong: Berlusconi?s Surge Shows Why Europe Needs a Deeper Union http://t.co/f3dQLVA6zB Rather, it shows why the Eurozone should fold $$ Feb 28, 2013
  • India May Curb Widest BRIC Budget Gap for Rate-Cut Room http://t.co/kqhBm895gt BRIC should not b a group; problems r very dissimilar $$ Feb 28, 2013
  • Asia s Huge Debt Growth Problem: Remember 1997? http://t.co/dZ3nAnFyXe Bank lending/GDP in Asia exceeding levels at 1997 crisis $$ Feb 28, 2013
  • $20 Phone Stars at Mobile World Congress http://t.co/mbKdgSMwso And it can go 35 days without charging; $NOK – hero of developing world $$ Feb 28, 2013
  • Ruchir Sharma: China Has Its Own Debt Bomb http://t.co/DaoTuJGO17 China is so bad off that no one would want to be in their position. $$ Feb 26, 2013
  • China?s premature overheating http://t.co/2YBgqsA365 Need to free the economy, end force-feeding of credit to glutted sectors & cronies $$ Feb 26, 2013
  • Canadian Economy Tumble http://t.co/sDbAj0uajE Compilation of articles showing the slowing Canadian consumer, & its effect on the economy $$ Feb 25, 2013
  • Has Spain?s Economic Contraction Become Self Perpetuating? http://t.co/XOSFgBL6yb Population shrinkage from migration kills entitlements $$ Feb 24, 2013
  • Pettis: Countries w/higher external debt levels r constrained in their ability2wage currency war w/countries w/lower external debt levels $$ Feb 24, 2013

 

Financial Sector & Pensions

 

  • Two Scenarios for Future of ‘Big Finance’ http://t.co/DdQwk7Jyj6 Finance still needs 2 shrink, the economy needs total debt 2b < 2x GDP $$ Mar 03, 2013
  • Druckenmiller Sees Storm Worse Than ?08 as Seniors Steal http://t.co/A0eSwqZYab It is very bad, but I don’t get the $211T number, too big $$ Mar 03, 2013
  • McGraw Fighting U.S. Justice Recalls AmEx Battle to Save Company http://t.co/R6likSWxrk He fights valiantly against those who r evil $$ Mar 01, 2013
  • Rule Split to Put U.S. Banks at a Loss http://t.co/BUAORxUyjt This is overstated; the real cash flow happens through statutory accounting $$ Mar 01, 2013
  • Gatsby, Galbraith and the Myth of Coolidge?s Crash http://t.co/prutRWBzHS The Crash caused by debt over-accumulation, like current crisis $$ Feb 28, 2013
  • Payday Loans Get US Consumer Bureau Scrutiny as ?Debt Traps? http://t.co/cfYHHUPsX7 This is one area where I would favor fiduciary stds $$ Feb 28, 2013
  • Providence, R.I. claims firm missed $10 mln in pension costs http://t.co/GgHm2FAIIT Suing the actuarial firm for liability miscalculation $$ Feb 28, 2013
  • Wells Fargo Credit Profile Hurt by Heinz Deal, Moody?s Says http://t.co/ND3APjqqfk | FD: long $WFC I think the $HNZ loan is well-proected $$ Feb 26, 2013

 

Other

 

  • Imagining a Post-Bundle World for Cable TV http://t.co/U86Jducpeg Popular shows/networks would do better, less popular would suffer $$ Mar 03, 2013
  • Assembly-Line Pizza Draws Hungry Fast-Casual Investors http://t.co/cozthTImDm Pizza to order will be available at reasonable prices $$ Mar 01, 2013
  • Too Much OIL http://t.co/PLBMRD24Vw Provides one useful tailwind for the US economy $$ Feb 26, 2013
  • Joel Kotkin: America’s Red State Growth Corridors http://t.co/ydjK0zKPyf Pro-business states tend to attract more biz & population $$ #texas Feb 26, 2013
  • Dennis Gartman: Selloff More Than a Rumble http://t.co/Y9IBBPHAyf Sometimes when weak holders arrive, an event like Italy trip them up $$ Feb 25, 2013
  • Generic-Drugs Court Decision Irks Businesses http://t.co/RJEEWut9Cs I don’t think this precedent will stand after the appeals process $$ Feb 25, 2013
  • I finally wrote my “big think piece” regarding security pricing. Here it is: http://t.co/hE6EGgjcJZ Death 2 Modern Portfolio Theory! $$ #FTW Feb 24, 2013
  • You’re Not as Good an Investor as You Think You Are http://t.co/2caH2rv5Rf We deceive ourselves to feel good $$ by @jasonzweigwsj Feb 23, 2013

Comments & Retweets

  • @PScatterpatter I posted a link to a smaller document with last night’s blog post http://t.co/ndWwIgtwPC Mar 01, 2013
  • @PScatterpatter Ernst & Young put it together to teach their own people Feb 28, 2013
  • @kyles09 I don’t see anyone willing to outbid & pay breakup Feb 28, 2013
  • @applehead72 enough refining, but not in right spots, also not enough transport abilities Feb 28, 2013
  • @Nonrelatedsense Didn?t know that, thanks. Feb 26, 2013
  • Anyone else have a problem that the latest Java 7 release (update 15) causes some programs to fail, like IB’s TWS? Feb 25, 2013
  • “Josh, if you have 4-6 hours to read it, the book “Once in Golconda,” gives the flavor of the?” ? David_Merkel http://t.co/jaZDnLqKvt $$ Feb 24, 2013
  • “Well done, from dyed-in-the-wool fundamentalist. As an example, Buffett has a bin on his desk?” ? David_Merkel http://t.co/1rAp8LeP85 $$ Feb 24, 2013

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FWIW

  • My week on twitter: 24 retweets received, 117 new followers, 37 mentions. Via: http://t.co/cPSEMLXpb8 Feb 28, 2013

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Full Disclosure: long BRK/B, WFC

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