Fed Policy – Page 23 – The Aleph Blog

Sorted Weekly Tweets

Posted on 26 October 2012 by David Merkel

Insurance

Insurers Must Boost Reserves for Residential Mortgage Bonds http://t.co/z1Plcc9z Pretty trivial; change small, not worth making $$ Oct 26, 2012
The Randian and the Bailout http://t.co/45wGJSo2 Without a tax gift from the US Tsy, $AIG couldn’t pay off the bailout http://t.co/2O4k7vpA Oct 25, 2012
For that last tweet, full disclosure, long $AIZ for clients and me Oct 24, 2012
Assurant Reports 3rd Quarter 2012 Financial Results http://t.co/pTbHUunV Over 8.75 yrs $AIZ has shrunk its share count from 142M to 78M $$ Oct 24, 2012
Weschler Rise From Grace Leads to Role Advising Buffett http://t.co/uUlYUPVK Interesting tale of a guy who can deal4 & value companies $$ Oct 22, 2012
Goldman Sachs Creates a Dividend+Buybacks Measure, & 4 Insurer Stocks Shine http://t.co/myQ8Ga1e I own 2 of them 4 clients. Which 2? $$ Oct 22, 2012

Central Banking

Here Comes the Dollar Wave Again http://t.co/5EO5Ejve Defend exports, import inflation, asset bubbles “Our currency, but your problem.” Oct 25, 2012
Approach risks ?distorting? decisions & ?it might be economically inefficient 2try2 push prices up so much,? Shiller http://t.co/Bs5GJPGX Oct 24, 2012
Redacted Version of the October 2012 FOMC Statement http://t.co/2jOMkLje Note: CPI inflation is at 2%, also inflation expectations rising $$ Oct 24, 2012
FOMC Statement: http://t.co/E2BOFdrr Oct 24, 2012
“We fail 2c the direct link, or even an indirect link, btw the size of the Fed’s balance sheet & the unemp rate” http://t.co/bM149U5Z $$ Oct 24, 2012
Buffett: ‘”I get a little worried about continuously expanding” the Fed’s balance sheet, he said on CNBC.’ http://t.co/KWIVYBIS $$ Oct 24, 2012
Traders Calling Singer?s Bluff on Intervention as Koruna Gains http://t.co/Y1ml4EZ4 Czech National Bank playing with fire, will burn $$ Oct 22, 2012
Would mean that the external effect of loose monetary policy have been played out, & the next big move is coming (but from where)? $$ Oct 22, 2012
Worst Carry Trades Show Central Banks at Stimulus Limit http://t.co/IDxi6uVq Interesting thought: if carrytraders can’t make money… $$ Oct 22, 2012

Fiscal Cliff

Firms Hit Brakes Before Fiscal Cliff http://t.co/z1Plcc9z Tap brakes is more like it. Most think we won’t go over the cliff #gridlock $$ Oct 26, 2012
Aha! Here’s The REAL Reason Corporate Executives Are Freaking Out About The Fiscal Cliff http://t.co/oS8VZpsi Favors initiatives of Dems $$ Oct 22, 2012

Other

How Supap Kirtsaeng?s Textbooks Idea Led to Supreme Court http://t.co/h1CDWk1q What rights exist to re-sell something that you bought? $$ Oct 26, 2012
The Plot to Destroy America’s Beer http://t.co/3ElPpvvx A tale of cost-cutting, quality reductions. Light beers ascendant. $$ Oct 26, 2012
Sandy Nears Jamaica, Forecasters Weigh New England Threat http://t.co/R1HNSDm8 High Incidence, Low Power 4 Tropical Storms in 2012 $$ Oct 24, 2012
Calling All Germs http://t.co/BkfuReQq Cellphones Are Great for Sharing Photos?and Bacteria; Cleaning May Harm Screens $$ Oct 23, 2012
Romney?s Air Force Comparison Misses U.S. Edge in Jets http://t.co/3lFkg4KL There r some situations where more lower tech jets would help Oct 24, 2012
Dean, Marathon Split-Offs on Tap http://t.co/m5OLbAuI Post-split $DF looks interesting, if boring. More room 2 focus $$ Oct 22, 2012

Energy

Shale Glut Becomes $2 Diesel Using Gas-to-Liquids Plants http://t.co/sjUDsrVK This is the Holy Grail, because gasoline is tough2produce $$ Oct 26, 2012
The internal combustion engine is far from dead http://t.co/Ewa60lrw Most real improvements in energy efficiency deal w/fossil fuels $$ Oct 22, 2012
Americans Buying Fewer New Cars in Lifetime http://t.co/viB6dIlU long-term probably not a good sign; autos drive a lot of the economy $$ Oct 22, 2012
The Myth of Affordable Energy – Interview with Ed Dolan http://t.co/8jWI1faC Energy efficiency is increasing. Full cost pricing desirable $$ Oct 20, 2012

Demographics

Russian Funds Band Together to Repel Government Cash Grab http://t.co/72KWo3Bg Gotta b careful on pension funds cuz govts like 2 raid them Oct 26, 2012
More Americans delaying retirement until their 80s http://t.co/dZM4Tmqm This is the way it should be. Retirement s/b 4-5 years at most Oct 25, 2012
Can Japan?s Elderly Become Its Growth Engine? http://t.co/eqhsu54i This seems like wishful thinking to me. Spending from savings <> wages $$ Oct 24, 2012

Financials

U.S. securities regulator questions need for new broker standard http://t.co/iNUVJKIp Extending fiduciary standards 2 brokers in question Oct 24, 2012
Forcing frequent failures http://t.co/OL6WSfOM @interfluidity hits a home run in dealing with bank failures, & how to regulate Oct 24, 2012
Low Rates Pummel Banks http://t.co/577Fsc1i Borrowers Benefit, but Industry Lending Profits Hit Lowest Level in Three Years $$ Oct 23, 2012
Marsico: When Going Private Goes Wrong http://t.co/Vxyc40u7 June 2007 was the wrong time 2 LBO, then performance lags $$ My sympathies2them Oct 23, 2012
3 key money topics Romney-Obama debates ignored http://t.co/7j79IQ4V Housing prices, Investor protections & Retirement Savings $$ Oct 23, 2012
The end of stock market crashes? http://t.co/VjIALNEm I’m sorry, but the conclusion is bogus. Even if its works, only some could escape $$ Oct 23, 2012
Mortgage risks underestimated, economists conclude http://t.co/TFDpqz70 FHA uses a model that leads it to underestimate delinquency risk $$ Oct 22, 2012
Annaly Says Michael Farrell Dies After Cancer Diagnosed http://t.co/n5VNgi8m He was kind2me ~2000; willing2share ideas w/little me $$ $NLY Oct 22, 2012
Mortgage REITs: Not Just Yet http://t.co/20kPVBs2 I would be careful here & reduce exposure… they are always unstable vehicles $$ Oct 21, 2012
The Winner for Investors Is… http://t.co/eBQM5Ws4 @jasonzweigwsj points out the connection between returns & politics is tenuous $$ Oct 21, 2012

Economy

Firings Highest Since 2010 as Ford to Dow Face Slump http://t.co/9q87q63I This is the US economy. We can’t support workers relative2profit Oct 26, 2012
Weak Tea at Unilever Persists Amid Innovation at Rivals http://t.co/ryqjkEof Did not even know that Lipton was a Unilever brand $$ $UL $UN Oct 24, 2012
Doom Heralded at Hayman by Widening Trade Deficit: Japan Credit http://t.co/CZS09whs Japan?s debt is the ?cleanest dirty shirt.? Not. $$ Oct 23, 2012
Hunger Stalks My Father?s India Long After Starvation End http://t.co/dkVTXxaO Long article, makes me grateful that I can feed my kids $$ Oct 23, 2012
Electrolux, Philips Warn Of US Slowdown http://t.co/6k5hxTe2 Another soggy data point; less demand 4 bigger-ticket consumer items $$ Oct 22, 2012

Retweets

Ya, true RT @glenntyrpa: @barnejek @AlephBlog @sikorskiradek Yea. When did Japan invade China? Was that 1930? 🙂 we Americans forget. Oct 26, 2012
RT @PragCapitalist: Today’s financial tip: don’t ever buy a boat. Instead, find a friend with a boat. If necessary, buy the friend. … Oct 24, 2012
Clever RT @BradErvin1: @AlephBlog @PragCapitalist This is Buffett, courtesy legacy @kevindepew articles @Minyanville http://t.co/dGTNG9kl $$ Oct 24, 2012
Stinks, just stinks RT @ritholtz: THE SELLSIDE: SAME AS IT EVER WAS Courthouse News Service http://t.co/K9LDmj5m via @CourthouseNews $$ Oct 24, 2012
RT @KathrynTully: The last of Sarah Thornton’s top reasons for quitting art market surely belongs in top 10 reasons not to be a journo. … Oct 24, 2012
RT @emckean: LOVE THIS RT @aniajakubek: There’s a Polish saying that means “Not my problem” & literally translates to “Not my circus … Oct 24, 2012
SIFMA gets an infamous big name to speak to them RT @LaurenLaCapra: #greenspan http://t.co/rjVlCfV5 Oct 23, 2012
At my house too RT @retheauditors: Halloween is dead to me. Oct 22, 2012

Replies

#FF @NickTimiraos @carney @grossdm @annsaphir @ritholtz @ToddSullivan @PlanMaestro @RolfeWinkler @LaurenLaCapra @davidgaffen @jennablan $$ Oct 27, 2012
@TraderNewsFeed No, I don’t think that. I think we should enjoy our work, and enjoy it for as long as we can, until we can no longer work $$ Oct 26, 2012
@rjwile True, but that’s the price of not saving enough. There is no right to a retirement. Someone send the EU the memo. $$ Oct 26, 2012
@OVVOFinancial I largely agree. Reducing the real value of debts would help. My only fear is that nominal incomes might not grow much $$ Oct 25, 2012
@OVVOFinancial Missed that, thanks. Still, the Chain-weighted PCE deflator is 1.5% yoy at present. Oct 25, 2012
@barnejek oops Oct 24, 2012
@PragCapitalist A boat is a hole in the water into which you pour money $$ That said, the recession created a lot of used boats 4 sale Oct 24, 2012
@tebaho I am not a Romney backer Oct 24, 2012
@EddyElfenbein lifted the stake above 50% by 1995. Oct 24, 2012
@EddyElfenbein In 1977, GEICO was ~6% of his public investments, before $BRK.B acquired 33% of the company by 1980, and buybacks + Oct 24, 2012
@EddyElfenbein In 1981, GEICO was ~30% of his public investments — no data on how big his private investments were then $BRK.B $$ Oct 24, 2012
@EddyElfenbein 1996-7 around 16% of pretax income. Prior to that, it was not wholly owned, and so Buffett acctd 4 it as an investment $$ Oct 24, 2012
@EddyElfenbein $BRK.B would not want to live without GEICO, but in my opinion, it could live without it Oct 24, 2012
@EddyElfenbein It’s about 5% of BRK’s pretax profits. The float it generates is very short and is only 5% of liabilities. Oct 24, 2012
@PragCapitalist It’s a conglomerate fueled by a set of huge insurance companies, where assets r sourced privately & publicly $$ $BRK.B Oct 24, 2012
@PlanMaestro @aarontask @TheStalwart I think it is spurious correlation b/c I c many other variable that r weak. US economy is flat. $$ Oct 24, 2012
@felixsalmon In the NT Greek, there r2 words for God’s will, &1 tells u God ordains everything, the other, he doesn’t approve everything Oct 24, 2012
@CflGator I would ask the question, how is $TGT going to deploy the capital? The answer probably lies there. Oct 24, 2012
@LDrogen America’s politicians have always made appeals based on religion, & then abandoned the religious voters that support them (not new) Oct 24, 2012
@joshuademasi I realize with Japan, it is unlikely 4 there 2b an external default, until the external debt gets big enough Oct 24, 2012
@aarontask This is a stock versus flow issue. The banks reap capital gains now, but it will reduce their future interest margins/income $$ Oct 24, 2012
@CflGator Think they are trying to free up capital for alternative uses. Oct 24, 2012
@LDrogen But all people have unprovable a priori opinions, and many will affect their views on public policy, whether “religious” or not Oct 24, 2012
@LDrogen It becomes the same paradox that philosophers go through with respect to the concept of free will vs determinism Oct 24, 2012
@LDrogen Even 2a Christian like me, God’s will is a highly nuanced, b/c there r 2 words in NT Greek 4 “will” & they mean different things Oct 24, 2012
@LDrogen One of my close friends came into existence as a result of a rape. Two good people adopted him; biological mother was courageous Oct 24, 2012
. @aarontask will look for it — if anyone has a link 2 it, pass it 2 me Oct 24, 2012
@joshuademasi Nations with their own currencies don’t have to default on debts. I think some will choose to default for political reasons $$ Oct 23, 2012
“This brings up something @ritholtz would say ~ blog traffic goes up during a crisis?” ? David_Merkel http://t.co/9U0OxjLe $$ Oct 23, 2012
@joshuademasi Not sure he will lose; he has a decent chance of being correct. Japan has preceded the global economy for past 20 years $$ Oct 23, 2012
“5. Tadas, as you have said before, investment/finance blogging is hard. And many of the best of us?” $$ David_Merkel http://t.co/EuaE0hmB Oct 23, 2012
@StephenShiflett I distrust polls generally. I am not a Romney supporter. Most statistical comments in the media r not well-founded $$ Oct 23, 2012
@StephenShiflett Stratification matters more. The size was smaller than most polls I c, & instant senses of who 1r often not correct Oct 23, 2012
@DUNNER2 @CBSNews Now there was a poll that no one asked for, the sample size was far too small, but actually had a real impact. Sad. Oct 23, 2012
@Shwaver should be more like 5% if the poll is well stratified, and most polls aren’t Oct 23, 2012
@thejudge1082 @cbsnews I would criticize that as well. Most polls are too small and not well stratified Oct 23, 2012
@nmariecrumbie @DJDougMadrid @cbsnews I am *not* a backer of Romney. I am voting for the Constitution Party. I am a statistician, are you? Oct 23, 2012
@Justsaying1104 @CBSNews size *always* matters. I am a statisticiam by training. The hyper-short news cycle forced out a poll Oct 23, 2012
@Justsaying1104 @cbsnews of course size matters — what I object to is trying to get instant answers to what people are thinking $$ Oct 23, 2012
@ituzzip On a 500 person poll the error bounds are wider +/- 5%. But Rs answer polls less often than Ds. Oct 23, 2012
@JW28 Sorry, I am not a Romney backer Oct 23, 2012
@DJDougMadrid I don’t believe in instant, & I am voting 3rd party. Oct 23, 2012
@StephenShiflett Most polls I see are double that, it was still small, given the short time after the debate. Oct 23, 2012
@CBSNews Small sample size Oct 23, 2012
@TheStalwart I think you are fair and balanced, because A third of the time I agree, a third I disagree, and a third I an in-between. $$ Oct 23, 2012
@wallstCS FD: long $SFG — You do realize that revenue is not a useful valuation metric for insurers, right? Earnings & Book r relevant $$ Oct 22, 2012
@groditi @GaelicTorus it drives a lot of technology development, materials science, design (or lack thereof), advertising, energy efficiency Oct 22, 2012
@BradErvin1 No, the point is that corrupt governments tend to spawn corruption in society Oct 20, 2012

Higher Taxes, Inflation, Default (Choose One)

Posted on 25 October 2012 by David Merkel

I am a mix of analysis and intuition. Few argue with my analysis, a decent number argue with my intuition.? But I am not the only one concerned about monetary policy.? Listen to Warren Buffett (pages 12-16, but he comments elsewhere on the cost of capital and the inability to compete on an unlevered basis because of low rates.? Buffett is uncomfortable with the idea that the Fed can expand its balance sheet indefinitely.? He doesn’t know why it won’t work, but he knows that there are no free lunches, and wonders what might happen as a result.

Or, read this piece that disses quantitative easing.? Truth, there is no easy transmission mechanism between quantitative easing and employment.? It is a fools game, and when I say that, I say that neoclassical economists are sophomores, that is, “wise fools.”

Are they bright? Yes.? Have they imbibed dumb ideas that have a patina of intelligence? Yes.? Too much private debt leads to banking crises.? Too much public debt leads to worries over higher taxes, inflation and default, which inhibits private action, leading to a slower economy.

The Federal Reserve has discovered that they have a real balance sheet.? They not only have a liability policy, as in the old days, but they have an asset policy, allowing them to take on pseudo-fiscal stimulus.? Sadly, the idea that a central bank should not take asset risks is out the window.

Just as the referendum process makes legislators lazy, in the same way delegating economic policy to a central bank makes legislatures lazy — they can do nothing, and let the central bank react.

Part of the problem here is that we are relying on the models of the economists who argued that debt is neutral, and could not see the crisis coming.? Debt is the problem.? Debt-based systems are inherently inflexible and lead to crises when they are too big.? All significant economic crises are debt crises.

We need to get the neoclassical economists out of the Fed.? They can’t think broadly enough to see the problems we are in.? We need people who can think long-term, like actuaries and value investors.? (Please tell the SOA, CAS, and CFA Institute to rid their curricula of neoclassical economics.)? There is enough intelligence in those two groups that a new theory of what to do could emerge, perhaps realizing that optimizing the short-term ruins the long-term, and vice-versa — sometimes you have to take a depression to realign your economy.

In general, the US Government has not displayed any real talent in managing the economy.? If I could rewrite the Constitution, I would limit the Federal role in matters economic, and eliminate the possibility of a central bank.? Even when it did work well under Martin and Volcker, it does not make up for Greenspan, Bernanke, Burns, Miller, Harding, Crissinger, and Young.

I would also require balanced budgets on an accrual basis, ending the problems of non-funding Social Security and Medicare.? The problem of promises now, performance later will bite us hard, and most of the rest of the world also, because changing old age security from a personal issue to a collective issue has this problem: there is no reason for any husband and wife to have more children.? This is hitting the rest of the world harder than the US, because the (mostly dead) Protestant optimism of the US leads people to have more have more children. (Please remember that the group in history that had the largest completed family size was not the Catholics or the Mormons, but the New England Puritans, who averaged 9.5 children in families where the wife survived.)? Also note that Puritan husbands cared for their wives deeply.

As for me, my wife and I bore 3 children, but not for lack of trying for more.? We never used birth control.? We also adopted 5, sending us through the social work system 5 times.? It is challenging to raise a large family, but it was worth it.? We are on the receding side of it, with our youngest now aged 10.? The challenge of raising older children is significant.

Um, I got off-track.? The grand scheme is that many think that they can borrow big in the present, and it won’t have any significant consequences in the future.? That idea will fail in some way in the future, but how it fails is an open issue.

Redacted Version of the October 2012 FOMC Statement

Posted on 24 October 2012 by David Merkel

Comments

No big changes.? The FOMC?s views on household spending and inflation have risen.? Note that the CPI is at their 2.0% line in the sand.
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.

A Statement to Dr. Bernanke:

More debt will not get us out of this crisis.? The Great Depression ended when enough debts were compromised, paid off, or cancelled, which from my study is 1941, before World War two started.

Your policies further aid the growth of the budget deficit, and encourage malinvestment in housing and banking, two things in a high degree of oversupply.? The investments in MBS only help solvent borrowers on the low end of housing, who don?t really need the help.? Holding down longer-term rates on the highest-quality debt does not have any impact on lower quality debts, which is where most of the economy finances itself.

The problems with unemployment are structural, not cyclical.? Labor force participation rates continue to decline.? There is greater labor competition around the world, forcing down wages on the low end.? There is nothing that monetary policy can do to change this.? You can create stagflation through your policies, but not prosperity.

When inflation does arrive, the FOMC is going to find it very hard to raise Fed Funds or shrink its balance sheet.? The banks will not react well as you try to shrink, and the long rates that you have held down will react violently.

You haven?t thought through all of the ?second order? effects of your policy.? Even the ?first order? effects, which favor the rich over the poor, seem to elude you.? Assets rise, helping the rich.? Interest rates fall, helping the rich who can borrow.? Commodity prices rise, harming the poor.

Insanity is doing the same thing over and over, and expecting a different result.? When will you realize that the policies of the Fed aren?t helping, and need to be abandoned?

Sorted Weekly Tweets

Posted on 19 October 2012 by David Merkel

Sorry I missed last week.? Thanks to those who like this.

Monetary Policy

Black Monday and the Greenspan put http://t.co/f9nvCtLd Initial error of Alan Greenspan. Fine-tuning monetary policy 2 remove volatility $$ Oct 20, 2012
Southeast Asia Seen Leading Rate Increases Next Year http://t.co/KFsz14Wj I doubt it; $$ laxity is the rule of the time; tough 2 fight Oct 19, 2012
Wall Street CMOs Crushed as Sales @ 3-Yr Low http://t.co/n4avsQeR Wouldn’t call a 15% drop “crushed.” Fed feeding on their collateral $$ Oct 18, 2012
Fed-Induced Stock P/E Gains Seen Ending Soon http://t.co/FdN3zvgm Effects of QE3 s/b fully anticipated by now. $$ Oct 18, 2012
Currency Wars: US Attack http://t.co/XbjCmjhB Axel Merk criticizes Bernanke’s claim that US monetary policy isn’t a major prob 4 emg mkts $$ Oct 17, 2012
Yes, it is more complex, but easy developed country monetary policy does make life tough for emerging… http://t.co/qPiFz9pQ Oct 15, 2012

Financial Blogging

The Critic Wall Street Loves to Lunch With http://t.co/ZdomDj3R @felixsalmon one of the leaders of financial blogging gets profiled here $$ Oct 20, 2012
6 blogs u should be reading http://t.co/7aohlAcp @reformedbroker @thestalwart @calculatedrisk @pragcapitalist @convertbond & Bess Levin Oct 18, 2012

Hoisington

Prior tweets courtesy of Van R. Hoisington & Lacy H. Hunt, Ph.D. Whole thing will be posted here http://t.co/pZ4jJrQ1 in a few days $$ Oct 12, 2012
Until the excessive debt issues r addressed, the multiyear trend in inflation, & thus the long Treasury bond yields will remain downward $$ Oct 12, 2012
“During all of the Fed actions since 2008 the velocity of money has plummeted and now stands at a five decade low” Hoisington & Hunt Oct 12, 2012
A jump in daily essentials has a more profound negative impact on living standards in economies with lower levels of real per capita income. Oct 12, 2012
How the Fed expects economic traction from higher stock prices when rising commodity prices r curtailing real income & spending is puzzling Oct 12, 2012
These three studies show that the impact of wealth on spending is miniscule?indeed, ?nearly not observable.? Hoisington Oct 12, 2012
“Fed Chair Ben Bernanke and other Fed advocates believe the ?wealth effect? of QE3 will bring life to the economy.” Hoisington Oct 12, 2012
Prior Tweet quotes Hoisington & “unintended consequence of these Federal Reserve actions, however, is to actually slow economic activity” Oct 12, 2012
QE3 is a tacit admission by the Fed that earlier efforts failed, but this action will also fail to bring about stronger economic growth. $$ Oct 12, 2012

Rest of the World

Devastating Photos Of India’s Illegal Coal Mines http://t.co/iiuN8bo9 Government nationalizes coal mines; mafia springs up2 mine coal $$ Oct 20, 2012
Why China Has The Worst Farms In The World http://t.co/zFnHnLH8 Worst in the sense of productivity per worker; they have lots of workers $$ Oct 19, 2012
Why Indians Are Getting Poorer http://t.co/PMyTpfEC Over past year, the Indian currency lost around 20% of its value against the US $$ Oct 19, 2012
China Faces Tough Choice on Growth http://t.co/i0i1n35l Does the CCP continue to favor short-term self-interest, or long-term power? $$ Oct 19, 2012
Zhang Weiying: China’s Anti-Keynesian Insurgent http://t.co/TGNGlo9e Fascinating tale of an Austrian economist surviving in China $$ Oct 13, 2012
Iran Low on Options as Hyperinflation Concerns Spark Gold Dash http://t.co/rYqDjinO Hyperinflations spawn currency substitutions: gold, $$ Oct 09, 2012
Chavez Win Called by BofA Sparks Selloff as Barclays Flops http://t.co/DNPxpVzO Sad that Chavez won, but the bonds reflected a loss $$ Oct 09, 2012
Cheapest Chinese Stocks Since ?97 Not Enough to Signal Rally http://t.co/rTEm2MNF Noneconomic actors compete & drive down future profit $$ Oct 08, 2012
The Iran Hyperinflation Fact Sheet http://t.co/bitjVaqn From my former professor @ JHU, Steve Hanke. Financial sanctions r biting in Iran $$ Oct 07, 2012

Financial Reform

A Simpler Way to End Too Big to Fail http://t.co/z680Sq1q Limit non-deposit liabilities; banks will scream; worthy 2b tried $$ Oct 19, 2012
EU, Japan Warn Against New US Swaps Rules http://t.co/9F7hTHpy Technical efficiency of mkts is less important than resiliency of mkts $$ Oct 18, 2012
Ex-GE Bankers Convicted of Municipal Bond Bid-Rig Scheme http://t.co/fFnANPyk 4 years of jail time; restitution plus 20% would b better $$ Oct 18, 2012
Swaps Collateral Costs May Increase Under Rules Weighed by SEC http://t.co/hbrVnyHx Raises costs some, probably the right idea $$ Oct 17, 2012
Treasurers Worry Over Accounting for MMF Changes http://t.co/RtF6jlve Geithner tries MMF reform. Better: http://t.co/vuNGATPK $$ Oct 16, 2012

Energy

Gasoline prices _ finally _ begin to slide http://t.co/zuEXNaIx Refineries finally catch up w/maintenance, outages & demand $$ Oct 19, 2012
First oil nears for Kazakhstan’s supergiant field http://t.co/Bzx5q6Td Kazakhstan reduces the amount of time that foreigner scan profit $$ Oct 18, 2012
California Asks Court to Reinstate Carbon Fuel Standard http://t.co/gLqnqTdj I am happy that I left California at age 27; unrealistic $$ Oct 17, 2012
Gas Market Stung by Rapid Traders http://t.co/UI9DqJjI HFT and “news” trading games in the futures markets. Running stops is not new $$ Oct 16, 2012

Eurozone

Spanish Borrowing Costs Ease http://t.co/evRNryY7 It won’t last, but enjoy it 4 now. $$ Oct 18, 2012
Retirement No Option for Older Workers in Europe?s Crisis http://t.co/KgjUYc01 Problem is greater in Europe because of lower fertility $$ Oct 17, 2012
Hollande Robbed of Growth Engine as Companies Cut Investment http://t.co/ZGdrllIG Logical 2 invest less when EU & France r a mess $$ Oct 12, 2012
EU Wins Nobel Peace Prize http://t.co/VoTaN3ZK Nobel committee finally “jumps the shark.” The EU is unstable; a war waiting 2 happen $$ Oct 12, 2012
Spanish Bonds Risk Forced Selling as Rating Approaches Junk http://t.co/yO8XWNl4 The Rating agencies r flawed, but on credit they r honest Oct 12, 2012
IMF?s Blanchard: Healing From Crisis Could Take Decades http://t.co/NXYmLjU3 Crisis won’t b healed until total debt levels normalize $$ Oct 11, 2012
IMF Sees ?Alarmingly High? Risk of Deeper Global Slump http://t.co/B7Dg9Ah9 A stopped clock is right twice/day, $ the IMF is right now $$ Oct 09, 2012
Why a U.S. buyout firm is investing in Greece http://t.co/26oB31e9 ht: @danprimack – Companies w/global markets insensitive 2 local probs $$ Oct 08, 2012
Sicily, a Portrait of Italian Dysfunction http://t.co/w3dn2JFe Core Europe is to Italy as Italy is to Sicily. $$ gone & hard work starts Oct 08, 2012

Politics

Dem convention used corporate cash, despite pledge http://t.co/vCJuCrSa No one is truly a politician until they break a promise $$ Oct 18, 2012
Obama Pursuing Leakers Sends Warning to Whistle-Blowers http://t.co/hZ86Cx6O Hard to believe, but Obama outdoes Bush, Jr. 4 opacity $$ Oct 18, 2012
Romney?s Rates Seen Spurring Growth Too Little 2 Late http://t.co/fcogGy0V Nice 2c Obama & Romney competing 4 who can harm economy most $$ Oct 18, 2012
A123 Bankruptcy Gives Romney New Example of Green-Energy ?Loser? $$ $AONE http://t.co/gR2LvxRV Make green energy advocates take Physics Oct 17, 2012
Sorry, US Recoveries Really Aren?t Different http://t.co/5cseU4Nn Reinhart & Rogoff take on Romney’s advisors who say the US is different Oct 16, 2012
Romney Rolls in Rural Vote That May Provide Swing-State Margins http://t.co/D3dSdJBB Interesting perspective, but is that a big bloc? $$ Oct 16, 2012
Dividends: Start Screaming http://t.co/B37C7k9a This one is tough. Probability of a cooperative Congress after the elections is low $$ Oct 13, 2012
California Facing $5 Gasoline Stirs Brown to Relax Rules http://t.co/uQUPOz8f There is a pain point 4 everyone, just found 4 CA gas $5 $$ Oct 08, 2012

Economic Strength / Weakness

Winners and losers as US weather patterns change http://t.co/1txs8dcg Worth a read 4 the list of winners & losers near the end $$ Oct 18, 2012
Challenges forcing change in trucking strategy http://t.co/mHjc4udb Definitely a soggy data point; US & global economies seem 2b slowing $$ Oct 18, 2012

Agriculture

Corn States Lead Record Crop-Loss Payout http://t.co/c1wzXD14 Crop insurers take a hit.

Taxpayers get hosed. Farmers doing fairly well $$ Oct 18, 2012

Drought brings record US cost for crop insurance subsidy http://t.co/ceUOLMUQ 2012, Taxpayers pay more, Insurers pay some, farmers benefit Oct 17, 2012
Milk-Cow Drought Culling Accelerates as Prices Jump http://t.co/WvHEturP Anything involved in animal husbandry is having tough time now $$ Oct 11, 2012
Midwest Drought Claims Poultry Producer http://t.co/9K4cL3Gx Many firms involved in the meat biz r having a rough time now. $$ Oct 11, 2012
At this rate, growing tobacco should be prohibited. Oh, wait, we tried that with alcohol. Never mind. $$? http://t.co/hU9nI6l2 Oct 09, 2012

Market Dynamics

Throwing Out Insiders Won’t Fix Corporate Boards http://t.co/ANKyNPiq Good boards watch over mgmt & have decent industry & company knowledge Oct 17, 2012
All-Time Highs, Almost There http://t.co/Aj1LR8AY Will the market hit new highs this year, in 2013, or when? $$ Oct 17, 2012
Legg Mason?s Miller Redeemed as Housing Bull http://t.co/n3tRTmF6 2 soon 2 say. Miller doesn’t seek a “margin of safety” when investing $$ Oct 15, 2012
Vanguard to JPMorgan Dodging Neediest Borrowers http://t.co/PsNN8UKG This is what you tend to see 1-2 years in advance of the crash $$ Oct 14, 2012
As an aside, there’s kind of a rule of thumb for Bermuda insurers on buybacks: >1.3x tangible book: special dividends. <1.3x TB buybacks $$ Oct 12, 2012
The Buyback Epidemic http://t.co/l9SvTwZM @reformedbroker notes that buybacks make less sense, the higher valuations get. I concur $$ Oct 12, 2012
New Regime http://t.co/L2JaQC2J @reformedbroker notes a sea change in the markets. I’ve been heading that way; still thinking about it $$ Oct 12, 2012
CNBC: Jim Rogers vs. Marc Faber (FULL) 10/04/2012 http://t.co/b5sEOEZb Faber & Rogers on the same segment? What a hoot! $$ $GLD $SPY $TLT Oct 12, 2012
OCC Forced JPMorgan, Wells Fargo to Write Down Home-Equity Loans http://t.co/qxXjXBoS FD: + $WFC – ’bout time. Recoveries poor on HEL $$ Oct 12, 2012
California Leading U.S. Out of Housing Bust http://t.co/oEaOG4nf I would be wary of “dead cat” bounces here $$ Oct 12, 2012
Bubble-Era Financing Returns as Profits Falter http://t.co/yhxBEFxq Pay-in-kind bonds return, very nice. 2 years of rally left at most $$ Oct 11, 2012
Wrong: Bullish Sign for Stocks: Leverage Is Up http://t.co/1Qvcdkh9 What matters more is whether leverage will rise in the future $$ Oct 09, 2012
Not New York Towers Rise With Embrace of Yield http://t.co/3MKpRdVi When vacancy rates r this high, ordinarily rents fall. Y not now? $$ Oct 08, 2012

Other

Welcome to the ?Desert of the Real? ? a postmodern economy http://t.co/g42NKcoa Increasing abstraction destroys economic intuition $$ Oct 18, 2012
Why Data Will Never Replace Thinking http://t.co/Yhi5xWaR Every bit of data requires the creation of a hypothesis to give it meaning $$ Oct 17, 2012
Global Finance Chiefs at Odds http://t.co/av5MQ01i Everyone pursuing similar policies (Loose $$ & deficits) reduces effectiveness 4 all Oct 15, 2012
Heidi N. Moore joins the Guardian’s US Team as Finance & Economics Editor http://t.co/In2oDnC6 Congrats @moorehn ! Will b reading u there $$ Oct 15, 2012
I’m not much of an #Orioles fan, but don’t you have to love a team of nobodies who can challenge the highly paid #Yankees? $$ Oct 12, 2012
Tech Firms Become Real- Estate Trusts http://t.co/GrHU2bo5 Tech firms that own a lot of real estate take advantage of becoming REITs $$ Oct 11, 2012
The UN has declared today as the International Day of the Girl Child http://t.co/L0nS6wtd Sex selection abortion kills the most girls $$ Oct 11, 2012
Please follow Cato Scholar and JHU professor that I learned a lot from: @steve_hanke Oct 10, 2012
Musk?s SpaceX Launches Craft for Space Station Deliveries http://t.co/Z3MH68Ud Space age begins as governments r less of a factor $$ Oct 08, 2012

Insurance

Insurers Shed Annuity Assets http://t.co/bUZ2brqT This doesn’t feel right. other times when financial guys buy insurers, doesn’t work $$ Oct 18, 2012
If Only T. Boone Pickens Had Died http://t.co/tpXYGeCV Score: TB Pickens 0, Wealthy donors 0, Oklahoma State Univ. 0, Life Actuaries 1 $$ Oct 08, 2012

Replies & Comments

@PlanMaestro 2 notes: rsv strengthing in Australia a concern, but not big. 2) Low ROE biz of the 90s is fading; life re was a loser then $$ Oct 20, 2012
@PlanMaestro I love $RGA . Good mgmt team. Less interest rate & stock market dependent than life insurers FD: long RGA for me and clients $$ Oct 20, 2012
@TheStalwart I get a few ridiculous marketing requests/day. Do all bloggers get them? I reply2them this picture $$ http://t.co/TGc2q4Er Oct 19, 2012
@BarbarianCap Sigh. Baltimore County is not as far gone as Baltimore City (which is also a county), but this is not wise or arms length $$ Oct 19, 2012
I just left a comment in “6 Wall Street blogs you should be reading – Jon Friedman’s Media Web – MarketWatch” http://t.co/qpeTAHcI Oct 18, 2012
@MattGGriffith Thanks. Will probably do a post in the near future expaning on that last paragraph. It struck me at the end $$ Oct 18, 2012
@laurenfosternyc Have you ever seen the “Gold Medal Gold Model?” http://t.co/5rPvqfEz Gold prices r a function of real interest rates $$ Oct 18, 2012
@CflGator these are deferred annuities so the life table plays no role. Problem is investing “too clever” inside a regulated life insurer $$ Oct 18, 2012
I just left a comment in “Student-loan debt is a good investment – Outside the Box – MarketWatch” http://t.co/AnaHcGKh Oct 15, 2012
I just left a comment in “Student-loan debt is a good investment – Outside the Box – MarketWatch” http://t.co/22AyCQ9I Oct 15, 2012
. @paulnovell It will be public in a few days — they e-mail it out to friends & clients b4 posting it here: http://t.co/pZ4jJrQ1 $$ Oct 12, 2012
@wanderinggull Which? I don’t know. What was meant to produce “ever closer union” seems to be producing the opposite. Nobel = Pollyanna Oct 12, 2012
“Good post, Josh. You have identified many of the best. No one of us covers it all; it’s a strong list” ? David_Merkel http://t.co/3Qg6WWZk Oct 10, 2012
@munilass Get to sleep, Babylass will need you tomorrow. 🙂 Oct 09, 2012
@PavChyt @matinastevis Her *former* husband. She kept the name b/c it was good politics. She did not keep him. Oct 08, 2012
@PavChyt @MatinaStevis I received the name Merkel at birth. Angela got it from her 1st husband. At least people r spelling it right now $$ Oct 08, 2012

Retweets

Yeah, & that is BV net of AOCI RT @PlanMaestro: $RGA : book value per share http://t.co/EQWDgiSL FD: long $RGA for myself & clients Oct 20, 2012
Jack speaks the truth, listen 2 him $$ RT @ReformedBroker: Jack Bogle: Get Out of the Casino http://t.co/gL0siD6v Oct 18, 2012
RT @fivethirtyeight: All polling data is massaged A LOT in an era when only 10% of people respond to surveys. So that also introduces a … Oct 17, 2012
RT @MuniCredit: Citi Muni Presentation: http://t.co/ONrQe9gA #muniland h/t: @bondgirl Oct 12, 2012
I appreciate retweets RT @LSilverspar: Not enough for the value of your posts. If you value the retweets, I will do so far more often. $$ Oct 12, 2012
RT @danprimack: Every time people get all worked up over a national presidential poll, I wonder if the electoral college was eliminated … Oct 08, 2012
True of many notable CEOs w/earnings 2 smooth RT @rcwhalen: GE’s Jack Welch Knows All About Cooking the Books http://t.co/5vJeRux6 $$ Oct 08, 2012
RT @Convertbond: “Markets are increasingly distorted by Central Banks, attempts to squeeze drops of growth from overindebted developed w … Oct 07, 2012
Shock! $$ RT @BarbarianCap: Revised Greek GDP figures show recession deeper than thought http://t.co/FCspv2gU. > data released friday night Oct 06, 2012

Forest Fires and Central Banking

Posted on 13 October 2012 by David Merkel

We can create a force that eliminates forest fires, but there will be a cost.? A certain amount of forest fires are normal, and if we don’t have small forest fires, we will have big ones that happen infrequently, and cause a lot of damage.

Central banking is similar. Good central banking allows for the extinguishing of a lot of bad debts.? Bad debts should fail, and the Fed should not rescue them.? Better that the Fed should imitate William McChesney Martin, Jr., and allow recessions to do their good work, eliminating bad debts that would otherwise encumber the economy.

?I?m the fellow who takes away the punch bowl just when the party is getting good.? ? Fed Chairman William McChesney Martin, Jr.? He was a great central banker, as was Volcker.? Both of them embraced pain.? Wimps, like Greenspan, Burns, and Bernanke, embraced no pain, and assumed that their lame efforts to support the economy would actually aid things.

The Fed should have a single mandate, but it is not the mandate commonly proposed.? The Fed should restrain the total growth of credit in the economy, and ignore inflation and unemployment.? Let the Fed defend us against depressions.? It can succeed at that.

As for inflation and unemployment, the Fed can state that they can’t do anything about unemployment, which is largely true.? Inflation — that they can do, if it is desired, but they will need to stop doing QE, and do unsterilized purchases of debt.

That’s all for now.? Just remember that the government has a hard time interfering in the economy.? It doesn’t work, but they try to make it look like it works.

Democrats, Republicans — just remember that they can’t deliver what they promise you.

Sorted Weekly Tweets

Posted on 12 October 2012 by David Merkel

Hoisington Capital Management

. @paulnovell It will be public in a few days — they e-mail it out to friends & clients b4 posting it here: http://t.co/pZ4jJrQ1 $$ Oct 12, 2012
Prior tweets courtesy of Van R. Hoisington & Lacy H. Hunt, Ph.D. Whole thing will be posted here http://t.co/pZ4jJrQ1 in a few days $$ Oct 12, 2012
@wanderinggull Which? I don’t know. What was meant to produce “ever closer union” seems to be producing the opposite. Nobel = Pollyanna Oct 12, 2012
Until the excessive debt issues r addressed, the multiyear trend in inflation, & thus the long Treasury bond yields will remain downward $$ Oct 12, 2012
“During all of the Fed actions since 2008 the velocity of money has plummeted and now stands at a five decade low” Hoisington & Hunt Oct 12, 2012
A jump in daily essentials has a more profound negative impact on living standards in economies with lower levels of real per capita income. Oct 12, 2012
How the Fed expects economic traction from higher stock prices when rising commodity prices r curtailing real income & spending is puzzling Oct 12, 2012
These three studies show that the impact of wealth on spending is miniscule?indeed, ?nearly not observable.? Hoisington Oct 12, 2012
“Fed Chair Ben Bernanke and other Fed advocates believe the ?wealth effect? of QE3 will bring life to the economy.” Hoisington Oct 12, 2012
Prior Tweet a quotes Hoisington & “unintended consequence of these Federal Reserve actions, however, is to actually slow economic activity” Oct 12, 2012
QE3 is a tacit admission by the Fed that earlier efforts failed, but this action will also fail to bring about stronger economic growth. $$ Oct 12, 2012

Please Follow

#FF @japhychron @danprimack @treehcapital @insidermonkey @vitaliyk @herbgreenberg @tracyalloway @nancefinance @marykissel @diana_olick $$ Oct 13, 2012
Please follow Cato Scholar and JHU professor that I learned a lot from: @steve_hanke Oct 10, 2012

Market Dynamics

As an aside, there’s kind of a rule of thumb for Bermuda insurers on buybacks: >1.3x tangible book: special dividends. <1.3x TB buybacks $$ Oct 12, 2012
The Buyback Epidemic http://t.co/l9SvTwZM @reformedbroker notes that buybacks make less sense, the higher valuations get. I concur $$ Oct 12, 2012
New Regime http://t.co/L2JaQC2J @reformedbroker notes a sea change in the markets. I’ve been heading that way; still thinking about it $$ Oct 12, 2012
CNBC: Jim Rogers vs. Marc Faber (FULL) 10/04/2012 http://t.co/b5sEOEZb Faber & Rogers on the same segment? What a hoot! $$ $GLD $SPY $TLT Oct 12, 2012
Bubble-Era Financing Returns as Profits Falter http://t.co/yhxBEFxq Pay-in-kind bonds return, very nice. 2 years of rally left at most $$ Oct 11, 2012
Wrong: Bullish Sign for Stocks: Leverage Is Up http://t.co/1Qvcdkh9 What matters more is whether leverage will rise in the future $$ Oct 09, 2012

Rest of the World

Zhang Weiying: China’s Anti-Keynesian Insurgent http://t.co/TGNGlo9e Fascinating tale of an Austrian economist surviving in China $$ Oct 13, 2012
Hollande Robbed of Growth Engine as Companies Cut Investment http://t.co/ZGdrllIG Logical 2 invest less when EU & France r a mess $$ Oct 12, 2012
EU Wins Nobel Peace Prize http://t.co/VoTaN3ZK Nobel committee finally “jumps the shark.” The EU is unstable; a war waiting 2 happen $$ Oct 12, 2012
Spanish Bonds Risk Forced Selling as Rating Approaches Junk http://t.co/yO8XWNl4 The Rating agencies r flawed, but on credit they r honest Oct 12, 2012
IMF?s Blanchard: Healing From Crisis Could Take Decades http://t.co/NXYmLjU3 Crisis won’t b healed until total debt levels normalize $$ Oct 11, 2012
IMF Sees ?Alarmingly High? Risk of Deeper Global Slump http://t.co/B7Dg9Ah9 A stopped clock is right twice/day, $ the IMF is right now $$ Oct 09, 2012
Iran Low on Options as Hyperinflation Concerns Spark Gold Dash http://t.co/rYqDjinO Hyperinflations spawn currency substitutions: gold, $$ Oct 09, 2012
Chavez Win Called by BofA Sparks Selloff as Barclays Flops http://t.co/DNPxpVzO Sad that Chavez won, but the bonds reflected a loss $$ Oct 09, 2012
Why a U.S. buyout firm is investing in Greece http://t.co/26oB31e9 ht: @danprimack – Companies w/global markets insensitive 2 local probs $$ Oct 08, 2012
Sicily, a Portrait of Italian Dysfunction http://t.co/w3dn2JFe Core Europe is to Italy as Italy is to Sicily. $$ gone & hard work starts Oct 08, 2012
Cheapest Chinese Stocks Since ?97 Not Enough to Signal Rally http://t.co/rTEm2MNF Noneconomic actors compete & drive down future profit $$ Oct 08, 2012
The Iran Hyperinflation Fact Sheet http://t.co/bitjVaqn From my former professor @ JHU, Steve Hanke. Financial sanctions r biting in Iran $$ Oct 07, 2012

US Real Estate

OCC Forced JPMorgan, Wells Fargo to Write Down Home-Equity Loans http://t.co/qxXjXBoS FD: + $WFC – ’bout time. Recoveries poor on HEL $$ Oct 12, 2012
California Leading U.S. Out of Housing Bust http://t.co/oEaOG4nf I would be wary of “dead cat” bounces here $$ Oct 12, 2012
Tech Firms Become Real- Estate Trusts http://t.co/GrHU2bo5 Tech firms that own a lot of real estate take advantage of becoming REITs $$ Oct 11, 2012
Not New York Towers Rise With Embrace of Yield http://t.co/3MKpRdVi When vacancy rates r this high, ordinarily rents fall. Y not now? $$ Oct 08, 2012

Agriculture

Milk-Cow Drought Culling Accelerates as Prices Jump http://t.co/WvHEturP Anything involved in animal husbandry is having tough time now $$ Oct 11, 2012
Midwest Drought Claims Poultry Producer http://t.co/9K4cL3Gx Many firms involved in the meat biz r having a rough time now. $$ Oct 11, 2012

Other

I’m not much of an #Orioles fan, but don’t you have to love a team of nobodies who can challenge the highly paid #Yankees? $$ Oct 12, 2012
The UN has declared today as the International Day of the Girl Child http://t.co/L0nS6wtd Sex selection abortion kills the most girls $$ Oct 11, 2012
If Only T. Boone Pickens Had Died http://t.co/tpXYGeCV Score: TB Pickens 0, Wealthy donors 0, Oklahoma State Univ. 0, Life Actuaries 1 $$ Oct 08, 2012
Musk?s SpaceX Launches Craft for Space Station Deliveries http://t.co/Z3MH68Ud Space age begins as governments r less of a factor $$ Oct 08, 2012
California Facing $5 Gasoline Stirs Brown to Relax Rules http://t.co/uQUPOz8f There is a pain point 4 everyone, just found 4 CA gas $5 $$ Oct 08, 2012

Comments

“Good post, Josh. You have identified many of the best. No one of us covers it all; it’s a strong list” ? David_Merkel http://t.co/3Qg6WWZk Oct 10, 2012
At this rate, growing tobacco should be prohibited. Oh, wait, we tried that with alcohol. Never mind. $$? http://t.co/hU9nI6l2 Oct 09, 2012

On Angela

@PavChyt @matinastevis Her *former* husband. She kept the name b/c it was good politics. She did not keep him. Oct 08, 2012
@PavChyt @MatinaStevis I received the name Merkel at birth. Angela got it from her 1st husband. At least people r spelling it right now $$ Oct 08, 2012

Retweets

RT @MuniCredit: Citi Muni Presentation: http://t.co/ONrQe9gA #muniland h/t: @bondgirl Oct 12, 2012
I appreciate retweets RT @LSilverspar: Not enough for the value of your posts. If you value the retweets, I will do so far more often. $$ Oct 12, 2012
My week on twitter: 22 retweets received, 22 new followers, 16 mentions. Via: http://t.co/SPrAWil0 Oct 11, 2012
RT @danprimack: Every time people get all worked up over a national presidential poll, I wonder if the electoral college was eliminated … Oct 08, 2012
True of many notable CEOs w/earnings 2 smooth RT @rcwhalen: GE’s Jack Welch Knows All About Cooking the Books http://t.co/5vJeRux6 $$ Oct 08, 2012
RT @Convertbond: “Markets are increasingly distorted by Central Banks, attempts to squeeze drops of growth from overindebted developed w … Oct 07, 2012
Shock! $$ RT @BarbarianCap: Revised Greek GDP figures show recession deeper than thought http://t.co/FCspv2gU. > data released friday night Oct 06, 2012

Sorted Weekly Tweets

Posted on 5 October 2012 by David Merkel

Rest of the World

Chavez ?Likely? to Lose, Supporting Bonds, Barclays Says http://t.co/zcufsNLN Something optimistic 4a Friday afternoon; but will he go? $$ Oct 05, 2012
Spain Sees Divorce Driving Breakup of Towns in Recession http://t.co/J423DVhS Badly handled, economic problems lead2 relationship problems Oct 05, 2012
BOJ Seeks Help Against Deflation http://t.co/G1ONwoA7 Contrary to popular belief, low central bank policy rates inhibit growth $$ Oct 05, 2012
Europe Jumps on Bank-Overhaul Bandwagon http://t.co/daaAcm0l also http://t.co/oxESdQiY Basel has done a bad job setting capital levels Oct 03, 2012
How ECB Chief Outflanked German Foe in Fight for Euro http://t.co/KWlbuvkT Clever politician sways Merkel through Hollande & wins4now $$ Oct 03, 2012
The real risk is the Capriles wins by a little, & Chavez finds a way to retain power. $$ http://t.co/k5f5082A Oct 03, 2012
Property Funds, Bonds Supplant Europe Lenders http://t.co/ebXwgIxa Banks can’t lend; watch currency risk, liquidity risk & credit risk $$ Oct 02, 2012
Longest Rally in Nine Years for JGBs on Deflation http://t.co/dCzC59cM 6th straight quarter of gains: matches a similar stretch in 2003 $$ Oct 02, 2012
Norway?s Wealth Fund Targets U.S. Real Estate by End 2013 http://t.co/JQalAy2U They have a long time horizon; this isn’t 4 speculators $$ Oct 02, 2012
Spain Expects a Wider Budget Gap http://t.co/5AHLEGGI No surprise, Eurozone numbers r routinely gamed, b/c there is no enforcement $$ Oct 02, 2012
Trade Slows Around World http://t.co/YkTFRBDE Kind of a soggy feeling w/China slowing, huge gov’t deficits & loose $$ policy Oct 02, 2012

Energy

Bakken Crude Prices Rise as Railroad Reach Grows http://t.co/m34o45AD Fascinating 2c transportation matching crude supply & demand $$ Oct 05, 2012
Natural Gas Glut Pushes Exports http://t.co/ycNBikZR Usually big, aggressive investments don’t work out. Small ones are manageable $$ Oct 05, 2012
California Refiners Ration Gasoline as Prices Near Record http://t.co/sWGlRBF1 also http://t.co/gk85k7jC Price of EPA fuel rules $$ Oct 05, 2012
Regulations help create shortages because gas in 1 area can’t be used in another. Time to simplify & have fewer blend? http://t.co/Y925MhFg Oct 04, 2012

Companies

Jet-Lease Billionaire Udvar-Hazy Takes On $AIG Hand That Fed Him http://t.co/04THKwF7 When AIG bot ILFC, took stock to avoid taxes, oops Oct 05, 2012
Apple?s Steve Jobs: What He Knew in 1983 http://t.co/JyLPvlbW Jobs was an amazing guy. What he foresaw makes him even more amazing. $$ Oct 04, 2012
Dan Loeb and Boyz II Men: Break Up Murphy Oil http://t.co/MdPhjujW $MUR doesn’t want to break up, but many oils cos r going that way $$ Oct 04, 2012

Federal Reserve

When central banks feel they need to reveal more & show action, they fall into a trap of over-acting, which leads to a liquidity trap $$ Oct 05, 2012
Fed Seeks to Clarify Plans http://t.co/DzOT2NXj Fed transparency is a bad idea. Fed managed $$ policy better when it revealed little Oct 05, 2012
Rubik?s Revolutions http://t.co/Q3SAYuJ6 @izkaminska takes us through the vagaries of why QE doesn’t do that much. We r Japan now $$ Oct 03, 2012
Don?t call it money printing, rubiks cube edition http://t.co/Eo5vkEkN No, QE is not money printing, but it won’t be easy 2 undo $$ Oct 03, 2012
Bernanke Seeks Gains for Stocks in Push for Jobs http://t.co/Xby6Bvd9 Monetary policy favors the rich over the poor in the current Fed $$ Oct 03, 2012
TIPS Show Inflation Alarm Fading as Options Give Fed Time http://t.co/YgLi0BDr Off ~15 bps since QE3 launch $$ http://t.co/J90Ch2FL Oct 02, 2012

Market Dynamics

Despite Gains, Many Flee Stock Market http://t.co/JRhWY0c8 Y retail investors tend to lose- fail 2 buy & hold @ a moderate risk level $$ Oct 05, 2012
Investors Jump Off the ‘Junk’ Pile http://t.co/iqbZRo5b New record in junk issuance, & a very low proportion of BBs, feels like 2006 $$ Oct 05, 2012
Merrill Lynch, Morgan Stanley, Wells Fargo Keep Losing Market Share, And They May Be OK With It http://t.co/1gKpSevF RIAs Ascendent $$ Oct 04, 2012
My (Not so) Golden Rules About Investing (& Not Investing) http://t.co/YNReadXs HT: @reformedbroker 25.75 tungsten-filled investing rules $$ Oct 04, 2012
Early Impact Of 401(k) Fee Disclosure Rules http://t.co/HBdtk7Oy This will be big. When you really c how much expenses they charge, ouch $$ Oct 04, 2012
They’re back! Yield hunt pushes funds into CLOs, CDOs http://t.co/x47V6xSc Into the final phase of the credit rally. Wind it tighter! $$ Oct 04, 2012
Stop Me Before I Do Something Stupid http://t.co/tOjyLW7R Tips for becoming a more disciplined investor?and boosting your returns $$ Oct 03, 2012
The Three Most Overrated (& Underrated) Financial Planning Recommendations http://t.co/eIMjtTjt Worth a read $$ Oct 03, 2012
For Warren Buffett, the cash option is priceless http://t.co/srmJcalh If you have the discipline, the cash option has value, if not no $$ Oct 03, 2012
Damages http://t.co/MzXBB2QR Bill Gross takes an inflationary view, & assumes that the deflationary forces of the world will go away $$ Oct 03, 2012
Dylan Grice Writes His Most Negative Note Ever http://t.co/VIhFGEEc Notes that the present QE policy favors the rich over the poor $$ Oct 02, 2012
America?s new subprime boom: This time it?s cars http://t.co/EBkXqw0a This will b a positive trend for 2 yrs; worry out in 2014 $$ Oct 02, 2012
6 reasons to dump a bad mutual fund http://t.co/IleCG33t Could b simpler: sell when you find a fund w/better prospects net of loads $$ Oct 02, 2012

Politics

The Romney Reboot Arrives http://t.co/ViEoTb5L I’m voting 3rd party, but it is interesting 2c the presidential contest liven up $$ Oct 04, 2012
How to Make an Ailing World Economy Even Sicker http://t.co/XDiOkq5U The idea of gradually reducing the deficit is politically naive $$ Oct 03, 2012
Romney’s Middle-Class Tax Sale http://t.co/qywvSVXM The devil is in the details, & true of Obama as well. Ended up being Bush-plus $$ Oct 03, 2012
Romney Floats Idea of Itemized Deduction Cap http://t.co/E5nkUUO3 Has to be a cleaner way 2 do this. Ah, return to TRA ’86. Simple $$ Oct 03, 2012
Obama Cabinet Flunks Disclosure Test With 19 in 20 Ignoring Law http://t.co/Nt07Bgwu Less transparent than Bush http://t.co/NZ6A3PIs $$ Oct 02, 2012

Bank Regulation

Bank-Friendly US Regulator Shifts Focus to Revamp Reputation http://t.co/xUVY1UOE OCC is actually going to regulate banks?! Who knew? $$ Oct 04, 2012
Freddie’s Foreclosure Plan Hits Roadblock http://t.co/XrUeAjze We don’t get it. After 2 much debt financing housing we seek more debt $$ Oct 03, 2012
Banking should be a low ROE business.? High capital levels keep the banking system safe. $$ http://t.co/uUntNaXw Oct 03, 2012
Intelligence Exits Washington, Vacancies Rise http://t.co/VJt1y4KU Will b interesting 2c how comm RE pricing shifts as Wash DC retrenches Oct 03, 2012
Banks Like Munis; Mom-and-Pop Investors Don’t http://t.co/ugDPBL4F I don’t get how banks w/short liabilities can buy long munis $$ Oct 03, 2012
Sheila Bair: The one thing banking regulators should do now http://t.co/tu5jGYx4 Her solution is to raise capital requirements $$ Oct 02, 2012
A Very Strange Way to Assess the Safety of Banks http://t.co/8u05kbZO Simpler metrics than Basel r needed; complex ones r easy 2 game $$ Oct 02, 2012

Other

Big Picture Conference 10/10/12 http://t.co/IrsvZtU0 Lineup: Barofsky, Grice, Yamarone, O’Shaughnessy, Ritholtz, Rosenberg, Bianco & more $$ Oct 04, 2012
Bill Gross calls for a balanced budget so that all Treasury bonds & his bonds will get paid in full. $$ http://t.co/lTzq5zmf Oct 02, 2012
SEC Leads From Behind as High-Frequency Trading Shows Data Gap http://t.co/H6YnjVWr SEC way behind $NDAQ & $NYX in understanding HFT $$ Oct 02, 2012

Comments

RE: She bought Paypal, the most valuable part of $EBAY . What more could you ask for? $$ http://t.co/tfEVghRF Oct 04, 2012
Commented on StockTwits: Name 3 insurers that have managed Life & P&C operations well… I am a former insurance buy… http://t.co/aMsgW4nN Oct 03, 2012
Commented on StockTwits: Pretty certain that the DTAs would be divided up in a breakup. Insurance acctg tracks DTAs … http://t.co/NGmkWSmk Oct 03, 2012
RE: @bloombergview This really seems like wishful thinking. Huge difference in the way most Muslims & Westerners thin? http://t.co/rMt8w3zf Oct 03, 2012
Commented on StockTwits: $HIG has issues with variable products 2a higher degree, even though $AIG has the same issu… http://t.co/JWzZSvrV Oct 03, 2012
Commented on StockTwits: There r no synergies btw each of the 3 groups: no advantage to having P&C, Life & Other tog… http://t.co/sRU7zWys Oct 03, 2012
Commented on StockTwits: I would split P&C & Life & everything else — still a valid idea. http://t.co/FPAXZZUX Oct 02, 2012
RE: @PS46MMUCF4PDUIQ4LRUF3DMW2A That doesn’t solve “fat finger” problems, rogue automated trader, or feedback loop pr? http://t.co/EgjYsqbZ Oct 02, 2012

Replies

@incakolanews Could be… or maybe Barclays is trying to reduce its VZ bond inventory… Oct 05, 2012
. @The_Analyst The life insurance industry got burnt on CDO crops 1 (1998) & 2 (2001), but not 3 (2008), what will crop 4 yield? $$ Oct 04, 2012
@BlackRaven999 Both stock & flow are important, that is what makes this complex 2 understand Oct 03, 2012
@DividendMaster I think that either a significant recession &/or inflation is unavoidable. Delayed deficit decline means no deficit decline Oct 03, 2012
@BlackRaven999 Waiting till maturity leaves QE deposits in the system 4a long time due to twist. All removal of policy accommodation is hard Oct 03, 2012
@hook910 Take it up w/Buffett who has done it successfully. Intelligent businessmen do it: buy cheap assets when opportunities allow. $$ Oct 03, 2012
@hook910 With a long enough time horizon, and patient capital, market timing can succeed, value mgrs do this. This is what Buffett & FPA do Oct 03, 2012
@hook910 So you admit that the value of dry powder does change over time. Thanks! 😉 Oct 03, 2012
@hook910 It is not on option on cash, but cash can b thought of as an option on other assets. Was dry powder valuable in late 2008? Yes $$ Oct 03, 2012
@wanderinggull I think it is a bit of a stretch Oct 02, 2012
@DividendMaster They r attempting to lock in a smaller loss. Wonder when the yield on the 30-yr TIPS goes negative? $$ Oct 02, 2012
@ReformedBroker I respect Chuck Royce, but basically he is estimating the odds of deflation as being very low. What if China shrinks? $$ Oct 02, 2012
@TheStalwart Big installed base for LIBOR, easy to offer something better: even total up all US interbank lending 4a day, calc avg rate $$ Oct 02, 2012

Retweets

RT @ppearlman: RT @AlephBlog: Break up $AIG. I said it first here: http://t.co/MKsYqMYo then here: http://t.co/fZ6EW85e $$ Oct 02, 2012
Break up AIG $$ RT @ppearlman: RT @RonReuven @ppearlman no one understands all of $AIG’s assets or businesslines, including most of $AIG Oct 02, 2012

Sorted Weekly Tweets

Posted on 28 September 2012 by David Merkel

My week on twitter: 34 retweets received, 1 new listings, 33 new followers, 40 mentions. Via: http://t.co/SPrAWil0 Sep 27, 2012

Energy

Natural Gas Cars Are On The Road; Potholes Remain http://t.co/T9KxgbCa Optimistic that CNG & LNG will get enough distribution 2b viable $$ Sep 29, 2012
United Airlines will study Delta’s refinery bid http://t.co/iHEuWvfp This will not end well; fundamentally different businesses $$ $UA $DAL Sep 29, 2012

Rest of the World

Japan Data Show Recession Risk Growing http://t.co/UArgdWd4 “Find someone who is optimistic about the economy & ask them how they can b” Sep 29, 2012
Shanghai Bonded Copper Stocks May at Record, Survey Shows http://t.co/MMrqmsmi Glut of gluts, what will China do with a flat economy? $$ Sep 28, 2012
Toyota Unplugs Electric Car Hype http://t.co/s36gMkcZ Indeed it is hype, better 2 run cars on Natgas or gasoline $$ less waste 4 now Sep 28, 2012
China Bankrolling Chavez?s Re-Election Bid With Oil Loans http://t.co/y3tAN7WF China wants oil, Chavez wants $$ , a match made in… Sep 28, 2012
SNB Disputes S&P Estimate of Bond Purchases http://t.co/eC1AxRkc Well of course they would dispute it, harms their policy credibility $$ Sep 28, 2012
Spanish Bonds Slump as Marchers Plan Further Protests http://t.co/Sq3eiO1n Eurozone is a political construct, will agreement persist? $$ Sep 28, 2012
Why Asian Airlines Reign Supreme http://t.co/yNcjYfce It is amazing how great service drives the rankings $$ Sep 28, 2012
The real extent of China?s economic hard landing http://t.co/n6g2jBCP By one measure, China’s real GDP growth rate is 1.6% $$ Sep 24, 2012
Is China Burning? http://t.co/PxfPOebV China stirs up anti-Japanese hatred to divert attention away from the weakening economy $$ Sep 24, 2012
India Bids for ConocoPhillips Assets in Canada http://t.co/cIc6wlut Spidey sense says India will get the worse of it $$ FD: + $COP Sep 24, 2012
Aussie Debacle Flags China Hard Landing as Iron Market Melts http://t.co/8PKnupSl China sneezes, the Australians catch a cold $$ Sep 24, 2012
How weak must the Danish economy be, for them to do this? Are their banks in that bad of a shape? $$ http://t.co/vNR7Utt5 Sep 24, 2012

Credit Markets

Junk Bonds in US Poised for Biggest Retreat in 4 Months http://t.co/rIqU3rjt 2 early 4 a washout; no significant defaults on the radar $$ Sep 29, 2012
U.S. 30-Year Mortgage Rates Fall to Record Low of 3.4% http://t.co/EB2UZaic Those that r not inverted can refinance; tough 4 rest $$ Sep 28, 2012
Mortgage-Bond Spreads Cap Biggest Weekly Drop Since December ?08 http://t.co/cjGISver Anticipates Future Fed buying, doesn’t help much $$ Sep 22, 2012

Central Banking

Money For Nothing: Inside the Federal Reserve http://t.co/QoHuWfGb Independent, non-partisan, non-conspiracy-theorist documentary comingsoon Sep 29, 2012
Bernanke Put: Beware of Easy Money http://t.co/bPsdilQM The lure of free money brings out the worst in all of us. $$ Sep 28, 2012
Plosser Says QE3 Risks Fed Credibility, Won?t Boost Jobs http://t.co/ffkpU2Jh Right; once we r @ the zero bound the Fed is impotent $$ Sep 28, 2012
Fed Helps Lenders? Profit More Than Homebuyers http://t.co/CYz6O8r0 Offering 2buy RMBS benefits existing holders more than anyone else $$ Sep 28, 2012
Sean Fieler: Easy Money Is Punishing the Middle Class http://t.co/Lg2yzUCs Who gets benefits of productivity improvement? Ppl or Govt $$ Sep 28, 2012
A time of hoarding and inflation fears, 1930s edition http://t.co/wOkNf0Uj @izakaminska tells us about inflation worries in the 1930s $$ Sep 25, 2012
Signs Of The Gold Standard Are Emerging From Germany http://t.co/YPLrNcvz Not likely; would be interesting 2c Germany go Euro -> Gold $$ Sep 24, 2012
‘Free’ Checking Costs More http://t.co/QXxPaQCH Another casualty of Fed policy, which disproportionately hurts those less-well off $$ Sep 24, 2012

US Politics

U.S. Unease Over Drone Strikes http://t.co/Hlc2djCz This is yet another reason y much of the Muslim world hates the US $$ Sep 28, 2012
US Ties Libya Attack to ‘Powder Keg’ in Mali http://t.co/998UPNLd When did the Obama administration know this, y wasn’t it disclosed? $$ Sep 28, 2012
Ryan at the AARP http://t.co/ZgXiPrkr He didn’t trim his ideas and still won applause. AARP leaders more liberal than members $$ Sep 24, 2012

Market Dynamics

Where stock market will be in fall of 2016 http://t.co/AolvDXon Seiver’s model indicates a flat market for the next four years $$ Sep 29, 2012
Wrong: An Easy Strategy For Bulking Up On Yield http://t.co/HYbdXqzT Better to buy companies w/strong dividend capacity than high divs $$ Sep 28, 2012
New Wave of Workers Tries Novel Approach: Save More http://t.co/sE9pp03d Everything old is new again; save $$, do not rely on returns Sep 28, 2012
Ken Fisher: Bull Market Is Halfway Done http://t.co/xDEa0MXq I am a moderate bull now, but I find that large cap leadership could fail. $$ Sep 28, 2012
Are financial advisers worth their fee? http://t.co/HdRYJ3ak Gamma: value of protecting an individual from buying high & selling low $$ Sep 28, 2012
Prospects for Stock and Bond Returns Are Dim http://t.co/IYAVPFAU The performance difference will depend on inflation vs deflation $$ Sep 24, 2012
Pension Crisis Looms Despite Cuts http://t.co/9ZW8eUeR Eventually state constitutions will be amended 2 roll back existing benefits $$ Sep 22, 2012
Borrowing Against Yourself http://t.co/kB7IVuN2 Debt against investments is usually a bad idea unless ur a specialist in the business $$ Sep 22, 2012

Miscellaneous

Auto-Insurance Cost to Rise 2.8% to $839, Group Says http://t.co/8XLCC4CE Insurance companies pass costs & reduced interest through $$ Sep 28, 2012
Scientific Reproducibility: Begley’s Six Rules http://t.co/8EkCDsMP Following the 6 rules would reduce the # of articles published $$ Sep 28, 2012
Gordon Moore’s journey http://t.co/PHYlU3Nq Long Q&A w/a founder of Intel; An accidental entrepreneur who knew his weaknesses $$ FD: + $INTC Sep 24, 2012
Bronte Capital?s short waves http://t.co/EHhxTO4j Do not underestimate John Hempton; bright guy. Very good @ spotting bad ideas/frauds $$ Sep 22, 2012
Yale Versus Norway http://t.co/aSF8PEZR Worth a read. My sympathies r w/Norway here, but I fear they r tooting their horn @ a bad time $$ Sep 22, 2012
Cheating Upwards http://t.co/UtDtRjSD Children r less ethical now than 35 years ago, who were less ethical than 35 years ago, who were… $$ Sep 22, 2012
Push to Let College Students Carry Guns Picks Up Steam http://t.co/ke6zM1Si Who is responsible for my protection? Me or the Govt? Me $$ Sep 22, 2012
How to Stop Hospitals From Killing Us http://t.co/QKOsAOpy Should b known: going 2a hospital can kill you. 6th leading cause of death $$ Sep 22, 2012

Responses

@AOverheard Could b a good move, would have to review the Stat statements. I sold my shares at a split-adjusted $290. Buying debt:no-brainer Sep 29, 2012
@historysquared In the process of raising 8 children (5 adopted) I have seen 1) those w/limited abilities expand them 2) those w/great + Sep 29, 2012
@historysquared abilities waste them. 3) those w/great abilities improve them, & 4) those w/limited abilities improve only a little Sep 29, 2012
@groditi Of all the companies that I own $SPLS worries me the most. Stronger than bricks & mortar competitors, but can they beat $AMZN? $$ Sep 28, 2012
@munilass I think both of those insights r correct; algorithms r only as good as the problems they r applied 2; most people don’t like logic Sep 28, 2012
RE: @bloombergview Well reasoned.? No arguments here. $$ http://t.co/ChJ9BDib Sep 26, 2012
RE: @bloombergview “Luck” happens when preparation meets opportunity, There are exceptions like Sixto in South Africa? http://t.co/JmFQSDFB Sep 26, 2012
@volatilitysmile All financials, or just depositary financials… would agree if it is the latter. Sep 25, 2012
@pjackson @LaurenLaCapra @_tpr @japhychron As an example, consider the tax reform act of 1986; almost all tax preferences lost. $$ Sep 25, 2012
@pjackson @LaurenLaCapra @_tpr @japhychron Or prepare for the day of the “grand bargain” where everyone’s ox is gored 4 the good of all $$ Sep 25, 2012
@pjackson @LaurenLaCapra @_tpr @japhychron I think you have to plan for the day of crisis, so that you can be ready to say, “Do this.” $$ Sep 25, 2012
@MerrittJennifer @LaurenLaCapra It would not be immediate, but housing prices would fall, & so would refinancing $$ Sep 25, 2012
@pjackson @LaurenLaCapra @_tpr @japhychron Lauren asked what we would do, not what was possible. Only a crisis will see actions taken $$ Sep 25, 2012
@japhychron @LaurenLaCapra @_tpr so that Medicare covers less: cheap fixes & palliative care; state rtees: deal to reduce all benefits $$ Sep 25, 2012
@LaurenLaCapra @_tpr @japhychron Hard to fit into a tweet; phase out GSEs & Int ded, shrink FHA, ag lending, scale back SS, redo Medicare + Sep 25, 2012
@LaurenLaCapra @_TPR @japhychron Ultimate Q is how many things we *can/should* subsidize, particularly w/GSEs, entitlements, state rtee bens Sep 25, 2012
RE: @bloombergview When the government or Fed buys the securities of companies, it plays favorites. We should make th? http://t.co/3ndyaApd Sep 24, 2012
@GregorMacdonald Re: gold, have u seen this? http://t.co/5rPvqfEz Re: solar, have u seen this? http://t.co/tZiaP5mV Wonder what it costs? Sep 22, 2012
@abnormalreturns Stocks r correlated w/inflation expectations. Gold is negatively correlated w/real rate of interest. Facts. $$ Sep 22, 2012
@etpxp Hard to do a real test. Sep 22, 2012

Retweets

In praise of all-cash compensation. RT @EpicureanDeal: Defending the Indefensible http://t.co/a7pGhqLr featuring @LaurenLaCapra Obvious $$ Sep 22, 2012
RT @volatilitysmile: “a failed president is running slightly ahead in the polls of a challenger who has a real CV but is so politically … Sep 24, 2012
At low OASs?! No $$ RT @PIMCO: Gross: How many Treasuries you own is not the question. How many 3 and 3.5% 30 year mtges is. Own mortgages Sep 24, 2012

Sorted Weekly Tweets

Posted on 22 September 2012 by David Merkel

Federal Reserve Policy / Treasury Yields

Great Tips-pectations http://t.co/nHWsNAFf Future inflation expectations are rising. Twenty year TIPS are flat to expected CPI $$ Sep 22, 2012
‘Titanic battle’ over deflation about to sink long bonds: Gross http://t.co/trPfwKj3 Didn’t he say this in 2011 & lose? Try, try, again? $$ Sep 22, 2012
Lacy Hunt at Hoisington called the trajectory on Treasury yields years ahead of time. http://t.co/4e4Bu12W Sep 21, 2012
Former FDIC chairman Sheila Bair: TARP wasn?t necessary http://t.co/m4zJMkc5 Would have been better to let stockholders get wiped out $$ Sep 20, 2012
Fed?s Fisher Says U.S. Inflation Expectations Rising http://t.co/Qk4rUrNI Definitely: http://t.co/ZVA74EmF QEternal moved the TIPS $$ Sep 20, 2012
Stephen Roach: Fed?s Asset Purchases Are A ?Charade? http://t.co/nX4xh3zt QE is a theory that has no successes; Y does anyone believe it? $$ Sep 20, 2012
No Exit in Sight from Fed’s Bond Buying: Gundlach http://t.co/ULz27Bj8 It will be very difficult 4 the Fed 2 exit from their “stimulus” $$ Sep 20, 2012
The Road to Recovery http://t.co/P6Uz7CGP John B. Taylor is the man who should have been our Fed Chairman, unlike the pretender Bernanke $$ Sep 18, 2012
Fed’s ‘QE Infinity’: 4 Things That Could Go Wrong http://t.co/6CGNO5Yr Moral Hazard4Washington &Wall St, Hurting Confidence, May not work $$ Sep 16, 2012
Bernanke?s Battle for Jobs Eclipses Inflation Concerns http://t.co/bhRvXhZD How QE-inf will produce jobs is a mystery; OTOH stagflation $$ Sep 16, 2012
Mortgage-Bond Spreads Fall to Record Low as Fed Starts Buying http://t.co/LqcIYQhb Fed breaks agency RMBS mkt; some OASs drop to zero $$ Sep 16, 2012

Credit Markets

Credit rollovers & rally monkeys http://t.co/z4KH46ky Feels like 2005 in corporates, but w/easier money, & fewer securitizations $$ Sep 22, 2012
Company bond sales in US in Sept-12 total >$135.8B, fastest pace 4 any September & exceeds $124.6B sold in Sept-09 $$ http://t.co/EoKYwXrQ Sep 21, 2012
Private Debt Is Crippling the Economy http://t.co/km06r7TW Deleveraging has not taken place 2 the degree needed 2make the economy healthy $$ Sep 20, 2012
Risk Aversion Falls to Lowest Level in 2 Years http://t.co/ljJICAKM When risk measures r low, it is time to start being conservative. $$ Sep 18, 2012
Junk-Bond Yields Drop Below 7% for First Time, Index Data Shows http://t.co/VQBCbmq3 This is significant. Watch 4 leverage 2 grow $$ Sep 18, 2012
ETFs Overtaking Swaps for Junk-Bond Speculation http://t.co/DzTtYnKY If this continues, I suspect it will lead 2 ETF underperformance $$ Sep 17, 2012
Cheaper Student Loans. Who Knew? http://t.co/ZYnRjQDl About 2.6% of all borrowers?are using income-based repayment $$ 15%, 15 years Sep 17, 2012

Rest of the World

China Slowdown Seen Longer Than in Crisis by State Economist http://t.co/At79Hrfn Will take a while reconcile a decade of malinvestment $$ Sep 21, 2012
Japan launches QE8 as 20-year slump drags on http://t.co/J6hwv6rd Poster child 4 the efficacy of unlimited QE 4 economic stimulation $$ 🙁 Sep 20, 2012
In Spain, economic crisis fans Catalan separatism http://t.co/amLe8qwU Good for them & may they create their own currency & not the euro $$ Sep 20, 2012
Deposit Flight From Europe Banks Eroding Common Currency http://t.co/MwYRtlU3 Wouldn’t u withdraw deposits from Greek & Spanish banks? $$ Sep 20, 2012
Missed Chances Stoke Skepticism Over EU?s Crisis Fight http://t.co/rvBEndvm Works other way: earlier the break-up, smaller the damage $$ Sep 20, 2012
Sword-Bearing Islamist Signals Peril 4 Arab Democracies http://t.co/AXYYmzWn “Islam is a religion of peace” Overheard in a DC bar $$ Sep 20, 2012
EU Track Record Casts Doubt on Crisis Fight as Draghi Rally Ebbs http://t.co/rvBEndvm You can’t solve debt problems with more debt $$ Sep 19, 2012
Europe Takes On Gazprom at Last, Now Must Hang Tough http://t.co/tvFrJZ1k New delivery methods & supplies lessen need 4 Russian natgas $$ Sep 19, 2012
Europe Banks Fail to Cut as Draghi Loans Defer Deleverage http://t.co/fEQdByYH Same thing for the Fed. $$ policy inhibiting delevering Sep 19, 2012
Kaiser’s Postulate: Bringing Free Market Economics to South America http://t.co/61GS08I0 Brings an Austrian perspective 2 S. America $$ Sep 18, 2012
US military suspends combat patrols with Afghan forces http://t.co/BaKxm4Xn In this chess game, there are some pieces that r gray. $$ Sep 18, 2012
A little problem of maturity mismatch http://t.co/cBtSR1pC Many Chinese firms have financed long assets w/short debt. But how big is it? $$ Sep 18, 2012

Companies

The guys at LTCM weren’t that good w/math. Part of being an applied mathematician is knowing limitations of your models http://t.co/ice9Diju Sep 21, 2012
July 2012 severe enforcement actions; Capital One units pick up 3 http://t.co/ahdVPlpZ Interesting improving graph: http://t.co/jqwWxgCR $$ Sep 20, 2012
Microsoft, HP skirted taxes via offshore units: Senate panel http://t.co/tT2F453n What u get 4 creating a complex tax code. FD: + $HPQ $$ Sep 20, 2012
Bored? Consider this Total risk-taking value play http://t.co/Fioj9kEg FD: + $TOT very diversified geographically, seems cheap $$ Sep 20, 2012
Insurers are middlemen. They just pass the costs on. They have no need to do climate research. $$ http://t.co/pekiI2V8 Sep 20, 2012
Dow Corning Offers Workers Cold Showers w/Bugs to Build Sales http://t.co/u9lJIRPI Fascinating tales of voluntary adventures @ Dow Corning Sep 18, 2012

Politics

Welfare Reform as We Knew It http://t.co/E4VuZ1js Inside the Obama work waiver: It’s worse than Romney says. $$ Sep 20, 2012
Tortoises Manhandled for Solar Splits Environmentalists http://t.co/KyaQK3x0 Solar works well in sunny deserts: solar or tortoises $$ Sep 20, 2012
Why the Current Account Deficit Helps Explain the Economics of QE3 http://t.co/QlsAejh1 Explains similarities between CA deficit & QE-inf $$ Sep 19, 2012
Don?t Stick Taxpayers With Underfunded Corporate Pensions http://t.co/xj1VQMEn Against the liberalization of DB plan funding rules Sep 19, 2012
Snip, snip, snip. Cutting up AARP membership cards. The Baby boomers ask for too much through Social Security & Medicare. $$ snip, done Sep 19, 2012
Should the Eligibility Age for Medicare Be Raised? http://t.co/XlrNI3hR Yes, & by more than the suggestions in the article $$ Sep 19, 2012
Election Uncertainty Raises Odds Of Fiscal Cliff http://t.co/jFJ8jSsB Regardless of who wins, there will be gridlock. $$ Sep 18, 2012
Harry Reid Has a Glass-House Quandary on Taxes http://t.co/FbR1nlxl Let Congress begin doing detailed disclosure of their taxes $$ Sep 17, 2012

Economics

Gold shines http://t.co/Mm98E660 & http://t.co/xVg4N2MI $$ Sep 21, 2012
Big Data Upends the Way Workers Are Paid http://t.co/HzfrxhA6 Basic kindness & fairness goes a long way in retaining competent staff $$ Sep 20, 2012
Do New Job Tests Foster Bias? http://t.co/lBSpwygr Maybe, but it does prevent many good people from getting hired. Ppl >> algorithms $$ Sep 20, 2012
Harvard Losing Out to South Dakota in Graduate Pay http://t.co/UQcL5W1T Economics is relative; different things r valuable @ diff times $$ Sep 19, 2012

Finance

Farmer?s Daughter Haugerud Reaps Riches on Drought-Struck Corn http://t.co/CVFuX7kZ Know I’ve read about her b4, can’t remember where $$ Sep 20, 2012
For Superfast Stock Traders, a Way to Jump Ahead in Line http://t.co/hhJwKEdD This is important & may explain HFT & its profitability $$ Sep 19, 2012
Fidelity’s Abby Johnson faces challenges on many fronts http://t.co/5UTmmfbm Fidelity not just mutual funds but retirement plan services $$ Sep 17, 2012
When Playing It Safe Means Taking On More Risk http://t.co/6BtHsksh Safety is a function of price paid vs value & intrinsic solvency $$ Sep 16, 2012

Other

6 Reasons Why Evolution Isn’t A Sure Thing http://t.co/UQVZuzH0 7. Which evolution r u talking about? Many versions, low agreement btw them Sep 20, 2012
Heavy rain in Baltimore now; supporting efforts to ship it to the Midwest $$ Sep 18, 2012

Responses

RE: For areas where there is significant data, they do research. Lots of it.? The models are huge and complex. The e? http://t.co/M7L2ZbC6 Sep 21, 2012
.@OVVOFinancial Part of what I am saying is economists don’t understand macro well. Free lunches rarely emerge; hard2remove accommodation $$ Sep 21, 2012
@felixsalmon I give proportionate to income, so if I were in Romney’s situation, it is likely I would be giving more Sep 21, 2012
. @OVVOFinancial I’m a skeptic. Economists didn’t expect stagflation in ’70s; did not tag the great moderation properly, or call the bust $$ Sep 21, 2012
Why this doesn’t work: too many mortgages are inverted & there is too much supply that will appear as… http://t.co/iGzYEV6c Sep 21, 2012
@fundmyfund If you can infinitely defer income recognition, or reclassify income, the tax rates don’t matter much $$ Sep 21, 2012
“I want to clarify what I wrote on my your last post. It wasn’t one of my finer comments?” ? David_Merkel http://t.co/l620hATS $$ Sep 21, 2012
RE: @bloombergview This is another reason why the definition of income matters more than tax rates. Taxes deferred ar? http://t.co/Bkh3LGjT Sep 21, 2012
RE: @bloombergview How do you distinguish between Dworkin who lost to Flynt, Carol Burnett who beat the National Enqu? http://t.co/FPSNGIE5 Sep 21, 2012
@williamalden Interesting curiosity, but they don’t have much musical talent Sep 21, 2012
@ianbremmer Not too surprising, U would probably get the same result in Vallejo, Stockton, Jefferson County, AL, & other bankrupt places $$ Sep 21, 2012
“I hope they kill this one while it is little. Residential Rental Income ABS sounds like a disaster.” ? David_Merkel http://t.co/srTbHgyT $$ Sep 20, 2012
@e_d_sanders That wouldn’t surprise me, to me it is funny how we end up overriding law with administrative action Sep 20, 2012
“I’ve owned $CVX for a long time for clients. $BRKB is interesting; I really like what Buffett does?” ? David_Merkel http://t.co/l1GZGm3J $$ Sep 20, 2012
. @hassankhan Sometimes there is research, sometimes it is little better than a guess. And yes, new insurance biz has sometimes lost $$ Sep 20, 2012
. @hassankhan New coverages start with a guess. As claims emerge, pricing & terms adjust to reflect claim incidence & severity $$ Sep 20, 2012
@Fullcarry People want to lock in a smaller loss Sep 20, 2012
@dcarpenter14 Good point, thanks for making it Sep 19, 2012
@XQuickFixX investors that buy & hoard 4 DB plans, ETFs, commodity funds, etc, even the SPR, that speculation does affect prices Sep 19, 2012
@XQuickFixX Besides, prices r set at the margin — what it costs to get the next barrel. Last point, if speculators includes the commodity + Sep 19, 2012
@XQuickFixX But the evidence in the article is hearsay. The extraction cost of $11/bbl looks really low. It has 2b higher than that. Sep 19, 2012
@XQuickFixX 2 thoughts: 1) my reform for derivative markets is hedgers must initiate all trades. Speculators can’t trade with each other Sep 19, 2012
I don’t believe the oil market is manipulated. It’s too big;keep the bid price too high, they will sell you a lot of ? http://t.co/oKOTecFE Sep 19, 2012
@izakaminska Thanks, Izabella. My best to all at FT Alphaville. $$ Sep 19, 2012
@izakaminska I admire you all at ft alpha, you write about big things that many of us miss; I would work with u all if u wanted me $$ Sep 19, 2012
RE: Average people can’t invest well & can’t get longevity insurance at a fair price. DB plans r better than DC plans? http://t.co/ClMRmrUH Sep 18, 2012
RE: Sorry, public pensions are not included; their rules are weaker than this. Also, no PBGC for muni DB plans. $$ http://t.co/PHnzUlXi Sep 18, 2012
@moorehn The eyewitness accounts of the life of Jesus would have noted a wife; Peter had 1. http://t.co/TeIiDodQ Definitive scholarly book Sep 18, 2012
“I disagree, mostly. Value is often its own catalyst. People ignore many low P/E stocks just b/c?” ? David_Merkel http://t.co/spWdEhSn $$ Sep 18, 2012
@LDrogen low likelihood, high severity Sep 18, 2012
“”How long until a producer comes in yelling, ?wait?wait, he?s just a loud-mouth with a blog?” ? David_Merkel http://t.co/ww2r59BZ $$ Sep 18, 2012
@rcwhalen We had 3 & adopted 5. Used zone defense metaphor 2 explain it 2 guys. W/a zone u r rules-based; need more rules w/more kids. $$ Sep 18, 2012
@groditi The only thing that gives me pause is that my old friends from my bond manager days r still constructive on HY http://t.co/egOXLBWo Sep 18, 2012
“Exactly. I read the same piece, and for some reason I didn’t comment on their lack of understanding.” http://t.co/W2n3pwcQ $$ Sep 18, 2012
Exactly. Every asset they inflate, inflates liabilities for those who fund them.? Commodities rise due 2 financial re? http://t.co/0HL1L9cq Sep 18, 2012
@TheStalwart Pie charts provide the least information of any type of graph, I think that’s why the chart nerds like them less $$ Sep 18, 2012
@MikeLanter Yes, THE ELEPHANT! Sep 16, 2012
“Well said. My but the Fed has become an elephant in the agency RMBS market” ? David_Merkel http://t.co/FWZ5ngNu $$ Sep 16, 2012

Retweets

If we don’t get stagflation RT @OVVOFinancial @Vermeer1097 Martingale works for Fed playing w/o table limits and unlimited balance sheet. $$ Sep 21, 2012
RT @SullyCNBC: Instead of being angry at individuals for paying the least amount in taxes they legally owe..be angry at Congress for our … Sep 21, 2012
Double down, BABY!! $$ RT @Vermeer1097: @AlephBlog Bubbles Bernank simply using a very old betting system: the Martingale. Sep 21, 2012
You can either think binary or not $$ RT @daveinbawlmer: @AlephBlog @ritholtz a sort of binary way of thinking about being binary Sep 21, 2012
There r only 10 types of people in the world, those get binary & the rest RT @ritholtz: Either you believe the world is binary or you don’t Sep 21, 2012
RT @researchpuzzler: RT @DDInvesting: An Open Letter to CFOs Across America http://t.co/78ubGzqL ~ must read, for investors as well as C … Sep 19, 2012
RT @prchovanec: When will Chinese authorities figure out that developing new financing vehicles does not change underlying asset quality? $$ Sep 19, 2012
Bigtime $$ RT @historysquared: Chinese banks are ?the nexus for? all of this credit-driven investment.” ~ Jim Chanos Sep 18, 2012
What reputation? Perpetuating a bad idea $$ RT @credittrader: Tuesday Humor – *JUNCKER SAYS GREECE EURO EXIT WOULD HARM EURO REPUTATION Sep 18, 2012
+1 RT @ReformedBroker: ?When we encounter pain, we are at an important juncture in our decision-making process.? http://t.co/x8hjUYB4 $$ Sep 18, 2012
RT @groditi: @AlephBlog i’d much rather hold some decent stocks w/ good FCF/Earnings yields and an overweight cash position the the same … Sep 18, 2012
Well-stated $$ RT @felixsalmon: #Romneyshambles: the conservative take is no less damning. http://t.co/H6H3etqh Sep 18, 2012
You said it $$ RT @BoydRoddy: You get the feeling that @John_Hempton is having fun with $FMCN a la a Cat and a stalked mouse? Yeah, me too. Sep 18, 2012
You betcha. BTW, @soberlook has posted http://t.co/pfSscLH1 good stuff RT @merrillmatter: not buying any MBS here $$ Sep 16, 2012

Sorted Weekly Tweets

Posted on 14 September 2012 by David Merkel

Financial Markets

State court ruling deals blow to U.S. bank mortgage system http://t.co/QilYZQJZ Washington State Supreme court allows MERS 2b sued &more $$ Sep 14, 2012
Partial explanation for flash crash and HFT http://t.co/ylpBj6Bm http://t.co/ABsvytw9 AP http://t.co/7xH09jMn http://t.co/hyznU44r $$ Sep 14, 2012
Violation: Prop Feeds #1 and #2 sent data to proprietary customers before NYSE sent data to the public feed. http://t.co/skh2CaUW ouch $$ Sep 14, 2012
Equity Firms Like Bain Are Depicted as Colluding http://t.co/8KMIo1xy This could be significant, but some of the legal issues r squishy $$ Sep 14, 2012
A Conversation with Ray Dalio http://t.co/clEaTy9C Full transcript, which I like, because watching video is slow $$ Sep 14, 2012
Jeff Gundlach’s Eye-Opening Presentation ‘Mirror, Mirror On The Wall’ http://t.co/QE6PHUoP Be prepared for lots of informative charts $$ Sep 13, 2012
Fink Belies Being Boring Telling Customers to Buy Stocks http://t.co/MYdrW95h A feature article on $BLK and Larry Fink; next Tsy Sec? $$ Sep 13, 2012
Oddly, what Dalio is saying here is very close to Harry Browne’s idea of the Permanent Portfolio. $$ http://t.co/C0x37B3Y Sep 13, 2012
Mortgage REITs’ leverage poses significant risks to the overall mortgage market http://t.co/Ifje6AxB Public markets r mismatched/limited $$ Sep 12, 2012
Bill Gross Sees Higher Long-Term Yields Amid Reflation http://t.co/eYPeRZlt If that were true, rates would be high already. $$ #youlose Sep 12, 2012
Is BlackRock Kissing Individual Bonds Goodbye? http://t.co/s2RywmL3 Mmmm…. converting transaction revenues into an annuity… yes… $$ Sep 12, 2012
361 Capital Weekly Research Briefing http://t.co/nd6akDbW Interesting briefing that makes a mostly bullish case $$ Sep 11, 2012
Is Everything We Know About Stock/Bond Allocations Wrong? http://t.co/85D2kUik Questions the wisdom of risk parity for asset allocation $$ Sep 11, 2012
Want to Buy a Private Stock? http://t.co/E3WojVi2 Listen to @jasonzweigwsj Do not buy private equity; you don’t have the expertise. $$ Sep 09, 2012

Federal Reserve

New round of quantitative easing biggest yet? http://t.co/ANA3MX2y Potentially. Problems will come as Fed corners low-rate GSE Resdl MBS $$ Sep 14, 2012
FOMC Central Tendencies: Target Fed Funds Rate at Year-End 2012-5, long-run 0.26 0.38 0.80 1.72 4.07 Chg: -0.04 -0.12 -0.30 NA -0.13 $$ Sep 13, 2012
FOMC Central Tendencies: Appropriate Timing of Policy Firming extends 7.6 months from June to 2.8 years Sep 13, 2012
FOMC Central Tendencies 2012-2015, long-run PCE inf 1.75 1.84 1.82 1.97 2.00 PCE inf 2012-2014 long-run +0.27 +0.08 +0.05 0.00 $$ Sep 13, 2012
FOMC Central Tendencies 2012-2015, long-run Unemp 8.11 7.70 6.98 6.38 5.60 Uemp change 2012-2014 long-run +0.01-0.01-0.30 0.00 $$ Sep 13, 2012
FOMC Central Tendencies 2012-2015, long-run GDP 1.84 2.78 3.4 3.39 2.44 GDP change 2012-2014 long-run -0.29 +0.210 +0.12, 0.00 $$ Sep 13, 2012
Budeeah, budeeah, budeeah, That’s all folks! Sep 13, 2012
Something happened around 2:30, but what? Sep 13, 2012
Press seems feistier than usual at the Bernanke Presser $$ Sep 13, 2012
Wow, a 2% move in gold qualifies as “explodes?” Wow #verbinflation http://t.co/8hodDxcp Sep 13, 2012
Extends low FF to mid-2015, ~9 months Sep 13, 2012
Fed’s web server is paralyzed, overwhelmed Sep 13, 2012
Ding! It’s SHOWTIME, Ben! $$ Sep 13, 2012
Bernanke Proves Like No Other Fed Chairman on Joblessness http://t.co/qHWtJv7W Bernanke imagines that he is fighting recession $$ Sep 12, 2012
Fed Stuck at Zero Into 2015 Seen in Swaps, QE Odds Reach 99% http://t.co/IM6HBDQR Given that fixed income mkts anticipate: no QE effect $$ Sep 10, 2012
An idea better kept in reserve http://t.co/ujKFy1Vc When u r playing around near the zero bound, all sorts crazy things could happen $$ Sep 10, 2012

US Politics and Economics

US Consumer Price Index Increases by Most Since 2009 http://t.co/6u2Di5r4 Given the unlimited QE, hard to see why prices should be weak $$ Sep 14, 2012
Airbrushed History and Dusted-Off Promises http://t.co/gMetXbgi Obama promised much more in 2008-9 than he is owning up to now. $$ Sep 13, 2012
Household Income Sinks to ’95 Level http://t.co/LA6pnEC3 R U better off than 4 years ago? Mean, yes. Median, no. $$ Sep 13, 2012
In Chicago, the Teachers’ Last Stand http://t.co/3uAcUJZT Bad news for the teachers, given underfunded DB plan, $$ struggles will worsen Sep 13, 2012
This is Illinois after all…corruption & bad mgmt r normal. Teachers fear 4 their unfunded pensions & high $$ jobs. http://t.co/KVWIURuV Sep 13, 2012
About Those Policies That Got Us Into This Mess http://t.co/cUDmsUJy Interesting: many of the critical laws were signed by Democrats $$ Sep 13, 2012
White House pushes back on claims from Woodward book http://t.co/IPpUUGXg The fiscal crisis was Obama’s fault as well as Congress’ fault $$ Sep 12, 2012
Strike Puts Spotlight on Teacher Evaluation, Pay http://t.co/MJ0A4pCt Break the union and hire non-union teachers who r motivated $$ Sep 12, 2012
Stagnant Incomes Signal Restraint in Spending by U.S. Consumers http://t.co/uiBxYBzM Y b aggressive spending when policy is uncertain $$ Sep 10, 2012
Why Health Care Matters and the Current Debt Does Not http://t.co/yw4MLv6o Because the healthcare unfunded liabilities r a LOT BIGGER $$ Sep 10, 2012

Other

#FF @TALENTEDBLONDE @prieur @rcwhalen @AmyResnick @AnnieLowrey @brucekrasting @derekhernquist @fundmyfund @ftalpha @BloombergNews $$ Sep 14, 2012
Children of Single Parents Much More Likely in Poverty http://t.co/PbaJuoGU “Dog Bites Man” Two parents r normally stronger than one $$ Sep 13, 2012
The Manhattan Project to End Fad Diets http://t.co/NvkkihYt Sounds promising, but there is 2 much $$ & wishful thinking w/fad diets Sep 13, 2012
Michael Pettis publishes! It’s a great night! $$ Sep 13, 2012
Charities Deceive Donors Unaware Money Goes to a Telemarketer http://t.co/vKXjfU7K Don’t ever give money to a charity over the phone $$ Sep 12, 2012
Medics Being All They Can Be Find Civilian Job Barriers http://t.co/p7gZbgNT Vets have to have a way to transist to civilian work $$ Sep 12, 2012
Is College a Lousy Investment? http://t.co/GoKcgrLB It depends. If u r in the top 20%, no. If u r in next 20%, maybe. Otherwise, yes $$ Sep 12, 2012
13 Tools To Tame Social Media Overload http://t.co/UYXZUMAt A variety of programs that can stiffen your resolve to avoid wasting time $$ Sep 11, 2012
Why the New Marketing-Driven Corporate Research Lab Needs the CIO http://t.co/d8wWCDJc Research, Development & Marketing belong together Sep 10, 2012
Letting Babies Cry a Bit Is OK http://t.co/UmqwwLbl Babies stop crying (leave aside pain/sickness) when crying does not get rewarded $$ Sep 10, 2012

Energy

Wind is intermittent, advances in batteries that can store energy are also needed. http://t.co/eBsqqW5y Sep 13, 2012
Asian Water Scarcity Risked as Coal-Fired Power Embraced http://t.co/C4QQXAQm The need for water is forcing tough choices in India $$ Sep 11, 2012
Gamechanging Natural Gas Tech Gets Green Light http://t.co/tiI2hiu2 Methane hydrates r recoverable; triples existing oil & NG reserves $$ Sep 10, 2012
Saudi Arabia Concerned About Rising Crude Prices http://t.co/f3eUmId0 High quality problem, but how much can the Saudis a4d 2cut back $$ Sep 10, 2012

Rest of the World

Swiss Farmers Clash With Traders as Bubble Builds in Town of Zug http://t.co/EjPUX0Pa Another report from the Bubble caused by the SNB $$ Sep 13, 2012
Skip College Is Top Advice for World-Beating Koreans http://t.co/YQ9DKAZO Any strategy to improve your lot can be overused, even college $$ Sep 12, 2012
Less-Rosy Reality http://t.co/HfidgmGM This current round of euro-optimism will wear badly with time. Cash flows will dictate reality $$ Sep 11, 2012
Can Asia avoid the middle-income trap? http://t.co/PLB8ER7i How technology is killing the Asian growth miracle http://t.co/ue15U4sd $$ Sep 10, 2012
Hollande Challenges Unions on Labor Law as Stagnation Sets In http://t.co/xRBJdqdt Pretty tough to start fighting w/base w/low poll #s $$ Sep 10, 2012
Why Merkel Wants To Keep Greece in Euro Zone http://t.co/b3cTiHfq It is cheaper in the short run than bailing out the banks $$ Sep 10, 2012

Companies

Why Ruane Cunniff & Weitz Funds Like Valeant Pharmaceuticals (VRX) http://t.co/QBLd8SGV Combination of Pharma co, & asset-stripper $$ Sep 14, 2012
Andrew Ross Sorkin?s Bad Math on AIG http://t.co/pHdsYWRV Notes tax favors $AIG received, could have mentioned forgiven bailout terms $$ Sep 13, 2012
Legg Mason CEO to Leave Amid Pressure http://t.co/PB4ZxKCj $LM was better in the past, when they did not rely on fund mgmt as much $$ Sep 12, 2012
David Merkel: Why You Will Never Be Buffett http://t.co/iPfn9Gxo @reformedbroker features two of my articles on Buffett. Thanks, Josh $$ Sep 12, 2012
Ship Magnate Uses Gut in $11 Billion Bet Worst Since ?70s Ending http://t.co/f5BGyDoZ Long article on the gamblin’ head of $FRO & $SDRL $$ Sep 10, 2012

On Bailouts

Two notes on the bailouts: first, those saying the US Govt made $$ on the bailouts are not counting in Fannie & Freddie Sep 11, 2012
Second: they aren’t counting the cost of capital: had they invested $$ at the same time in a 50/50 mix stocks/bonds would’ve made much more Sep 11, 2012
So, aside from encouraging future moral hazard, the bailouts lost $$. Strictly on a moral basis, the govt should not play favorites. Sep 11, 2012

China

The Communist Party?s Big Problem? It?s Not Bo Xilai http://t.co/BXRshBNQ Publication of a long, critical commentary of CCP direction $$ Sep 13, 2012
Shadow Bankers Vanishing Leave China Victims Seeing Scams http://t.co/4RmbjG8d When bankers flee, go B/K, commit suicide: not good sign $$ Sep 13, 2012
China’s Revolution Risk http://t.co/lzs5k5ll One has to remember that not all risks are simple and economically rational. $$ Sep 12, 2012

Replies

@BarbarianCap @derekhernquist Thanks much. Don’t know what to say. 🙂 $$ Sep 15, 2012
@derekhernquist You’re welcome, Derek. I appreciate following you, & you following me. Why did I start the blog? To give something back $$ Sep 15, 2012
@moorehn Yeah, I know. I just Googled a few phrases from your show to see what would come up. Sorry that that did. Sep 15, 2012
@moorehn Rush Limbaugh also used “It’s like a sugar high.” 4 QE yesterday on his radio show http://t.co/BhS48hxN No, I don’t listen 2 him $$ Sep 15, 2012
@ritholtz Yes. First time but there are other cases in the works $$ Sep 14, 2012
@LaMonicaBuzz Definitely the latter. Full disclosure: long $SPLS $$ Sep 13, 2012
@JamesGRickards Confidence comes from a strong balance sheet & sustainable economic policies Sep 13, 2012
@XQuickFixX That figure is for average over a lifetime. Sep 13, 2012
@XQuickFixX “average BA college degree makes ($52,200)” Link? Sounds too high Sep 13, 2012
@wsquared58 Good for you Sep 13, 2012
@TheStalwart Cool, well, we will watch and see to the EOD Sep 13, 2012
@TheStalwart Are you forecasting the immediate move, say, 15 minutes, or to the end of the day? Sep 13, 2012
. @Nonrelatedsense Browne’s system is simple, like a VW bug. Bridgewater is like a Maserati in comparison. Both are elegant AA ideas $$ Sep 13, 2012
@waughkd I have been to SD once in my life; my brother lived on an Indian reservation there 4 years. The physics of wind power is tough $$ Sep 13, 2012
@XQuickFixX It used to be that that earned below median incomes; now they earn above median; it’s the pensions that r really high Sep 13, 2012
@munilass Thanks for tweeting that; I have had a lifelong interest in prime numbers, though the math here is beyond me. Sep 13, 2012
@GaelicTorus I’ve debated that; I sometimes do negative book reviews. More often it doesn’t get a review. Sep 13, 2012
@GaelicTorus Book isn’t out yet, not seeking a copy. Sometimes I get books I did not request, e.g., Hank Paulson’s book & didn’t review $$ Sep 13, 2012
@GaelicTorus former employee of $GS who left, purportedly because his ideals were shattered as $GS changed 2b more mercenary $$ Sep 13, 2012
@JacobWolinsky thanks 4 that data point. traded away most of my commodity stocks a while ago. Did not want to be a hog. $$ Sep 13, 2012
@JacobWolinsky If China’s growth materially reduces, many commodities will have a hard time. Sep 13, 2012
@groditi I could convert it to a PDF and send it to you just e-mail me at david.merkel@gmail.com Sep 13, 2012
Commented on StockTwits: I never use stops. Never. I just buy, hold, and sell after a few years. I you choose well,… http://t.co/HXgjGxic Sep 12, 2012
@TheStalwart Car chases go on a lot longer because other cars pull over for the police $$ Sep 12, 2012
@MarkDampier I’m skeptical too… $BLK is big enough to be able to get good executions for clients. They shouldn’t have to use ETFs $$ Sep 12, 2012
@BradErvin1 You can’t do that. The only thing you can rely on is that glutted sectors will always return less than non-glutted sectors. $$ Sep 12, 2012
.@BradErvin1 The crisis came from capital misallocation. The bailouts tossed more capital into sectors that were glutted already. Not C-P $$ Sep 11, 2012
@Oval54 comes back w/interest to special interests, not to the average person Sep 11, 2012
@EddyElfenbein Can’t be any other way. My first statistics professor told us on on day 1: “Statistics is a meeean profession.” $$ #malehumor Sep 11, 2012
@BoydRoddy @finemrespice Funny thing is that Federal Reserve did not talk publicly about the life cos, but sys risk during $AIG crisis $$ Sep 11, 2012
@finemrespice @BoydRoddy Agreed, it wasn’t the sole reason. Systemic effects of AIGFP, and do you hae a link on the FRC Basel issue? Sep 11, 2012
@finemrespice @BoydRoddy AIG’s Domestic Life companies lost all of their surplus when the AAA subprime RMBS underlying sec lending failed $$ Sep 11, 2012
@cabaum1 Quirk of Twitter, no #FM, #FT, #FW, #FTh, #FSa, or #FSu, only #FF for “Follow Friday,” & people typically only do #FF on Friday Sep 10, 2012

Retweets

US Govt outsources a lot RT @paulvieira:Joe Biden Calls Outsourcing “Not Bad If You’re Running A Company” http://t.co/vB42Feia via @buzzfeed Sep 14, 2012
RE: @bloombergview Bernanke should do the right thing: admit that he is wrong, and resign. http://t.co/1R5mxQw9 Sep 13, 2012
RE: @bloombergview Doing the same thing again and again, and expecting a different result.? You back an insane moneta? http://t.co/73aZFlFI Sep 13, 2012
I’m in the stagflation camp too $$ RT @BubblesandBusts: @alephblog I’ll take the under on GDP and over on unemployment and inflation Sep 13, 2012
RT @KeithMcCullough: Maybe one of the saddest days in American economic history; history wont forget this Sep 13, 2012
RT @credittrader: THIS!! RT @PragCapitalist: Bernanke basically just described the theory that asset bubbles are good for the economy…. $$ Sep 13, 2012
I tend to agree $$ RT @Nonrelatedsense:I think any allocation model faces a challenge today. Those two face more than they have in the past. Sep 13, 2012
Creation of credit has never brought prosperity. U r deluded $$ RT @BloombergView: Bernanke, You have no excuse | http://t.co/KwoPTjCJ Sep 13, 2012
As my Dad would say, for “socks & underwear” too $$ RT @pdacosta: Fed Chairman Bernanke spotted at Wal-Mart. Shopping for kitchen sink. Sep 13, 2012
Best since Paulson, including Hank $$ RT @pegobry: Geithner: best Treasury Sec in decades? Sep 12, 2012
RT @wesbury: It’s the spending. It’s the spending. It’s the spending. It’s the spending. It’s the spending. It’s the spending. It’s the … Sep 12, 2012
Performance art, yes $$ RT @TheStalwart: I think I might like to attend this conference, merely as performance art. http://t.co/PO6fzBp6 Sep 11, 2012
RT @dwotapka: RT @AskMiles: My mother used to say I’d get bored with pizza if I had it every day. My mother was wrong. Sep 11, 2012
At least those that cite the labor force participation rate $$ RT @TheStalwart: U-6ers are the truthers of the economics profession. Sep 11, 2012
RE: @bloombergview Same is true of Obama.? We face gridlock regardless of who gets elected. http://t.co/jGXTXoLI Sep 11, 2012
RT @annasacca: “Anyone wanting to learn about private equity would benefit from The New Tycoons by @jasonkellynews” http://t.co/xaF7HhLf $$ Sep 11, 2012
RT @BoydRoddy: Sole reason for AIG rescue: Sec.Lending undisclosed scheme under Neuger imperiled largest Life co’s in the world. No Life … Sep 11, 2012
As a happy user for around 2 years, I salute you; to my readers, look into getting free Opendns. $$ RT @opendns: Thanks for the RT! Sep 10, 2012
RT @opendns: We’re hearing reports that OpenDNS #SmartCache is helping OpenDNS users get to sites otherwise down during @godaddy #outage … Sep 10, 2012

September 2012	October 2012	Comments
Information received since the Federal Open Market Committee met in August suggests that economic activity has continued to expand at a moderate pace in recent months.	Information received since the Federal Open Market Committee met in September suggests that economic activity has continued to expand at a moderate pace in recent months.	No change.
Growth in employment has been slow, and the unemployment rate remains elevated.	Growth in employment has been slow, and the unemployment rate remains elevated.	No change.
Household spending has continued to advance, but growth in business fixed investment appears to have slowed.? The housing sector has shown some further signs of improvement, albeit from a depressed level.	Household spending has advanced a bit more quickly, but growth in business fixed investment has slowed.? The housing sector has shown some further signs of improvement, albeit from a depressed level.	Shades up household spending.? Shades down business investment.
Inflation has been subdued, although the prices of some key commodities have increased recently. Longer-term inflation expectations have remained stable.	Inflation recently picked up somewhat, reflecting higher energy prices.? Longer-term inflation expectations have remained stable.	Shades up their view of inflation, blaming energy prices. TIPS are showing rising inflation expectations since the last meeting. (5y forward 5y inflation implied from TIPS.)
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 is concerned that, without further policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions.	The Committee remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions.	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.
Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook.	Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook.	No change.
The Committee also anticipates that inflation over the medium term likely would run at or below its 2 percent objective.	The Committee also anticipates that inflation over the medium term likely would 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 agreed today to increase policy accommodation by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month.? The Committee also will continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it 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.? These actions, which together will increase the Committee?s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.	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.? The Committee also will continue through the end of the year its program to extend the average maturity of its holdings of Treasury securities, and it 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.? These actions, which together will increase the Committee?s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.	No real 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?
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 agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability.	If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability.	No 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, as always, take appropriate account of the likely efficacy and costs of such purchases.	The FOMC promises what it cannot know or deliver.
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 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 economic recovery strengthens.	No change. Promises that they won?t change until the economy strengthens.? Good luck with that.
In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015.	In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015.	No change
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Jerome H. Powell; Sarah Bloom Raskin; Jeremy C. Stein; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen.	Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Jerome H. Powell; Sarah Bloom Raskin; Jeremy C. Stein; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen.	No change
Voting against the action was Jeffrey M. Lacker, who opposed additional asset purchases and preferred to omit the description of the time period over which exceptionally low levels for the federal funds rate are likely to be warranted.	Voting against the action was Jeffrey M. Lacker, who opposed additional asset purchases and disagreed with the description of the time period over which a highly accommodative stance of monetary policy will remain appropriate and exceptionally low levels for the federal funds rate are likely to be warranted.	Lacker sharpens his hopeless dissent against a flock of doves.