Category: Macroeconomics

Book Review: Time Out For Happiness

Book Review: Time Out For Happiness

This is a different book for me to review, but as my wife once said to me, “Only you could see the economic angles of ‘Little House on the Prairie.'”? Guilty as charged.

Many people have read “Cheaper by the Dozen,” and “Belles on Their Toes.”? Indeed, I read them as a child, and to my children as an adult.? That era in America had huge families as families moved from the country to the cities, and primitive methods of birth control were temporarily forgotten, often amid economic success.? Many people wanted large families if they could afford them.? Affording them was the problem.? My grandparents were kids in large families.? Seemed to be the rule back then.

What makes “Time Out For Happiness” special is that it traces the lives of Frank & Lillian Gilbreth, the parents, and explains why they were so special, not as parents, but as intellectuals that changed our world.

Frank Gilbreth was an ambitious young man who was always looking for a better way to do things.? In learning bricklaying, as an amateur, he analyzed what experts did, looking for the best way to do it.? The experts were annoyed at the neophyte who wouldn’t simply imitate, but had to think it through.? The neophyte was markedly worse initially, but then discovered an idea: if you set up the work to minimize unnecessary motion, a worker can work faster, and with less effort.? Frank devised a way of putting all that a bricklayer would need within easy reach, and he became the fastest bricklayer around.? He then made money selling his system, but then he went on to do the same for many building tasks, raising productivity dramatically, without demanding that workers work harder.

This contrasts with the ideas of Frederick Winslow Taylor, whose disciples measured employees with stopwatches, and urged that all work faster.? Gilbreth assumed that most workers wanted to do a good job; how could he make doing a good job easier.

Politically, Gilbreth was a centrist; he wanted the growth in productivity to be shared by all; he worked mostly with those that would deliver part of the increase in profits back to workers. As such, Gilbreth’s ideas were often supported by unions, and Gilbreth himself supported unions, so long as they limited themselves to the welfare of workers, and did not create onerous work rules that unnecessarily harmed productivity.

Phrasing it differently, the Gilbreths wanted the increase in productivity to result in greater happiness for all.? After all, if we are saving time by being more productive, what will we do with all the extra time or goods produced?? We should use them to be happy, owners and workers alike.

One key thing that Frank Gilbreth did was do time & motion studies.? With film being a new thing, and expensive, he measured the way people moved at work an analyzed it closely.? He did this with the interests of owners and workers at heart.? This enabled them to come up with process improvements that other experts could not.

As his ideas gain more respect, and as his corporate profits grew, he and Lillian wrestled with the question, “Run a company, or teach ideas?”? They both concluded that being consultants for improving productivity was the most desirable goal, though it took some struggle to give up the immediate profitability of the construction business.? The early days weren’t easy, and its took a while before they got any business, because the disciples of Taylor did not respect him.

When WWI arose, Frank volunteered to help make the military more efficient, and as a Major did so for four months before he became very sick, and Lillian dropped everything in order to save him.? She succeeded, and Frank lived for six more years, building the business, and benefiting their home.? He died while talking to her on a pay phone, traveling to give a talk.

This left her in a financial lurch.? She survived by getting advances on Frank’s inheritance, and building the business Frank left behind, including starting a school for efficiency.? There was no inheritance from here side, because they concluded she needed none, being married to the prosperous Frank.

But as she continued to speak, write and teach, she gained enough? to support the family and send her kids through college.? She received many awards where she was the first woman to receive them.? Lillian was different from Frank because though she knew most of what he knew, and vice-versa, her strength was the employer/employee relationship.? How do you create good relationships that create productivity, and good companies?

Both Frank and Lillian were driven; they worked hard, and focused on the public good.? Frank died working.? Lillian worked into her mid-80s, with her children protesting her demanding schedule.? She gave her last talk at age 90, to honor the work of Frank at his Centennial.? She lived four years beyond that.

She had many famous friends, including many US Presidents, on whose committees she served, from Hoover to LBJ.? Much of it dealt with disability, which both she and Frank had worked on, because they had an interest in helping those who had it bad.? Frank devised ways to aid the disabled to dress, and more.? Lillian improved on that.

Do you want to get to know two quirky humanitarian people who changed our society?? They created the coffee break (rest helps productivity) and anticipated many later improvements in the workplace.

Don’t Buy This Book

This book is too scarce.? Don’t buy it.? Use interlibrary loan to borrow it.? But it is a very good book, and I haven’t told you the half of it.

Sorted Weekly Tweets

Sorted Weekly Tweets

Rest of the World

 

  • IMF: Canada could make case for more interest rate cuts http://t.co/Zd3zmMUH IMF peddles snake oil2Canada, lower rates would b a disaster $$ Feb 15, 2013
  • Why Venezuela’s Devaluation Is Biting http://t.co/LL54JRZ8 Corporations operating in Venezuela get hit b/c there is no good way 2 hedge $$ Feb 15, 2013
  • Soros Aide Wins Kudos for Japan Bets http://t.co/DoaYtYMJ Scott Bessent has his own investing ideas, freeing his boss 2 peddle bad ideas $$ Feb 15, 2013
  • Euro-Zone Economy Plunges http://t.co/JEQVfGep Eventually Germany is going to have to accept that debts they r owed must be written down $$ Feb 14, 2013
  • Tensions Mount as China Snatches Farms for Homes http://t.co/a8aIqqxR Only backward countries like China prohibit ownership of land $$ Feb 14, 2013
  • China’s Internet ‘Wall’ Hits Business http://t.co/Kh7zDD0E The Great Firewall of China hinders commerce. Also, harder to get VPNs now $$ Feb 14, 2013
  • No Shirakawa Eulogies as JGBs Look Beyond Weak BOJ http://t.co/9orwutaY The BOJ is still sterilizing, but they r buying long-dated JGBs $$ Feb 13, 2013
  • Japan Needs Weaker Yen; US Has No Right to Complain http://t.co/OG5tcNFS At least *someone* has2test resolve of US “Strong Dollar Policy” $$ Feb 13, 2013
  • Panasonic CEO Attacks Sprawl in Bid for Profit: Tech http://t.co/bfsbdZLO $PC is a tough turnaround, but maybe this guy could do it. $$ Feb 13, 2013
  • Irish Town Lives Up to Motto Amid Horse-Meat Scandal http://t.co/cMIQRtUd ?Be at the center,? is the motto of the Irish town of Ballybay. $$ Feb 13, 2013
  • G7 Nations Attempt to Avoid Currency War http://t.co/CJjCgjzr G-7 Roils Currency Markets With Split on Concern Over Yen http://t.co/xH2ro4tk Feb 13, 2013
  • The problems with Petrobras http://t.co/pgibXCf5 Rapid growth & large investment plans rarely work well; good growth is incremental $$ Feb 12, 2013
  • USD-JPY: False Start? http://t.co/kVWnFDH6 The Japanese r changing the currency game; the sterilization is gone. What central bank next? $$ Feb 12, 2013
  • Chinese Workers?in Greenland? – Businessweek http://t.co/nmzjpHaP China moves 2 monopolize rare earth metals, maybe, now mining Greenland $$ Feb 11, 2013
  • Canadian Mega Housing Bubble Part 2 – Impact on Canadian Economy http://t.co/WbS22E3Z On the bright side, Canadian Gov’t not overindebted $$ Feb 11, 2013
  • Canada is not immune of a global slowdown http://t.co/NDCdMHOY slower global economy -> slower increase in demand 4 crude oil $$ Feb 11, 2013
  • Chavez Risks Backlash as Venezuelan Deficit Prompts Devaluation http://t.co/V5RLwpMW Squanders well-being of nation for personal goals $$ Feb 09, 2013
  • An Insider’s Guide to Counterfeiting Wine – Businessweek http://t.co/SoVp0OrF 3 ways to counterfeit expensive wines & how to avoid them $$ Feb 09, 2013
  • Most Australian Wine Exports Ship in Giant Plastic Bladders http://t.co/jL1S9KLF ?We don?t ship glass around the world, we ship wine.? $$ Feb 09, 2013

US Politics

 

  • State Exchange Buildout Shifts Into High Gear http://t.co/mwSFxe9e When history deals w/what destroyed healthcare, will b a pic of Obama $$ Feb 15, 2013
  • James Bovard: Perform Criminal Background Checks at Your Peril http://t.co/y8kZYsq4 Another reason why most jobs aren’t advertised $$ Feb 15, 2013
  • A Chinese Hacker’s Identity Unmasked http://t.co/5BE5XgKe Details the means by which a significant Chinese hacker was exposed. $$ Feb 15, 2013
  • Republicans See Obama Second-Term Agenda as Dead in Water http://t.co/uR4sUMjI Worked in 2011-2012, will work in 2013-2014 $$ #justsayno Feb 14, 2013
  • Public Expenditures Austerity and SP500 addicted to QE http://t.co/TzTzL9VL We need to have a debate over whether QE helps real economy $$ Feb 14, 2013
  • How Not to Run a Pension http://t.co/MwNhzEdd John Mauldin on pensions mess we r in federal, state, & municipal. Blue states worst off $$ Feb 14, 2013
  • Central Banks Gone Wild: What Can Investors Do? http://t.co/wzL2xadd Gold, stocks, & the currency of the one that loosened last w/ a lag $$ Feb 13, 2013
  • Obama S&P Case Started When Toxic Debt Masqueraded as AAA http://t.co/V9umvcfN S&P shuld show how little $$ was lost on AAA securitized debt Feb 12, 2013
  • US Economy – Growth Still coming from Borrowing? http://t.co/MTRiKYNi Yes, a lot of current consumption stems from more consumer debt $$ Feb 12, 2013
  • Corn growers get two-thirds of record US crop insurance payout http://t.co/2D1wWc0E Farm lobby swilling @ trough, subsidies not needed $$ Feb 12, 2013
  • Central banking and bubbles: Scott Sumner is wrong | The Economist http://t.co/wDTZzEQ6 It’s not hard to measure total debt / GDP ratio $$ Feb 11, 2013
  • Biofuel Scandal Pushes Trading Firm Into Bankruptcy http://t.co/uETQyx0D firm accidentally sold $9 million worth of fake biofuel credits $$ Feb 11, 2013
  • Should the Fed pop bubbles by raising interest rates? http://t.co/IhKnbA80 Fed should avoid creating bubbles in the first place $$ Feb 11, 2013
  • Bipartisan Letter Seeks Answers on Open-Government Failures http://t.co/shFKY7PB Many people voted for change & got Bush-plus in return $$ Feb 09, 2013

 

Berkshire Hathaway & Heinz

 

  • Shopping Spree for Wall Street http://t.co/QNfGJ14E Premature I think. Yesterday was big4 M&A, but it could just b a fluke $$ $HNZ $AMR $LCC Feb 15, 2013
  • First Bud, Now Heinz, Brazilian Deal Maker Lemann Grabs Brands http://t.co/CxWLqjPH A glimpse at the guys *really* behind the $HNZ deal $$ Feb 15, 2013
  • Buffett?s Buffet: An All-American Meal at Warren?s Table http://t.co/WyjedMKb Can get a complete high-calorie meal at Warren’s restaurant $$ Feb 15, 2013
  • Three Billionaires Join Buffett for Heinz Deal http://t.co/avb4QtVb Meet real guys behind the $HNZ deal; Buffett is riding on their bus $$ Feb 14, 2013

 

Other

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  • Pope?s Culture Club Masks Conclave Packed With Benedict?s Clones http://t.co/0cv1g1T0 1st article I’ve seen that gets it. No major change $$ Feb 15, 2013
  • Home Schooling & working from home has odd fun moments like my 16yo asking, “Why is the NE legislature unicameral?” http://t.co/CefD1i4p $$ Feb 13, 2013
  • Uncork the Nose’s Secret Powers http://t.co/jKTvg3Ki There is an element of “use it or lose it” 4 ability to smell as we age $$ Feb 13, 2013
  • LightSquared?s Ghost Raised in Fight Over Talking Cars http://t.co/CGuxCIvh Maybe the Defense Dept could free up some spectrum it hoards $$ Feb 12, 2013
  • The World’s Top 10 Most Innovative Companies in Finance http://t.co/pzqzRJUr Mostly credit/transaction facilitators, some risk mgmt $$ Feb 12, 2013
  • Skin in Which Game? http://t.co/UV18ORq0 If I was going into an intellectual fight, I would bring @EpicureanDeal w/me rather than @nntaleb Feb 11, 2013
  • Blizzard Dumps Snow in Northeast, Knocks Out Power http://t.co/nji84Ub0 My sympathies. Remember 3 years ago getting 2 of those in a row $$ Feb 09, 2013
  • Are Polar Bears Really Disappearing? http://t.co/5Epxg666 Probably not, population is bigger than in 1965, but small than in 1990 $$ Feb 09, 2013
  • A ‘Bucket List’ for Better Diversification http://t.co/XqjjhklO from @jasonzweigwsj | Good strategy, similar to the Permanent Portfolio Feb 09, 2013

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Companies

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  • Cisco Won’t Spend Money In The US Until The Tax Code Is Changed http://t.co/mbB7Dwk3 Logical outcome of poorly designed corp tax policy $$ Feb 15, 2013
  • Buffett does all he can to make his 13F hard to drag into Excel $$ $BRK.B Feb 15, 2013
  • As I go through 13F filings, it’s interesting to see industry concentrations. Some like retail, others financials, tech, energy etc $$ Feb 15, 2013
  • Dodge & Cox http://t.co/zJzIEISU Maybe it shouldn’t make me feel better when I see a manager I like owning shares that I do, but it does $$ Feb 14, 2013
  • P&G Finds a ?Goldmine? in Analytics http://t.co/y0mnK8kH All large consumer businesses will realize detailed consumer knowledge is key $$ Feb 13, 2013
  • $AAPL at Cheapest Since 2000 Signals Buy to Gamco, Thornburg http://t.co/rllHxys5 Not simple; Big companies need bigger markets 2 grow $$ Feb 13, 2013
  • $FLEX raises $1B as a junk grade company for 7 & 10 years @ 4 5/8% & 5% & raises financial flexibility http://t.co/hOuCNEP7 FD: + $FLEX Feb 13, 2013
  • Assurant Gains as Fannie Mae Force-Placed Plan Stalls http://t.co/ELDqXD5O $AIZ soldiers on, w/rate decreases, but with a strong business $$ Feb 13, 2013

 

Market Impact

 

  • We still have renters to thank for healthier housing market http://t.co/apBD0gHD Which means 2many properties r in the hands of investors $$ Feb 15, 2013
  • Do Junk Bonds Still Live in the Best of Both Worlds? http://t.co/j2w2docJ Demand 4 income is unabated, but there r limits 2 how low yields go Feb 14, 2013
  • SP500 Futures – Warning Signs Flashing RED? http://t.co/4gDyn3Ap Compendium of a lot of bearish reasoning, FWIW $$ Feb 13, 2013
  • Bridgewater Bets on Stocks as Cash Moves Into Market http://t.co/GZTePjCz Dalio bets on reflation amid central banks fanning the flames $$ Feb 12, 2013
  • How banks could get blown away by bond bubble http://t.co/xVpBFWmH A bond market in rebellion could deliver a lot of MTM losses 2 banks $$ Feb 12, 2013
  • The Fed?s tricky QE3 escape http://t.co/mcQadLoh There is no escape; when bond market turns on the Fed, vacuous policies will b exposed $$ Feb 12, 2013
  • US High Yield Bonds: $HYG Disconnect with $SPY http://t.co/r0t4DASq S&P 500 strong while junk is weakening. Could b toxic for stocks $$ Feb 12, 2013
  • To Drown in OIL http://t.co/xVJlIwZj Cushing inventories are at records, even w/the Seaway Pipeline pumping crude to Houston $$ Feb 12, 2013
  • SP500 Futures- More Warning Signs? http://t.co/Uc9LNqQB Too much bullishness, credit feeling soggy $$ $SPY Feb 12, 2013
  • Buyout-Boom Shakeout Seen Leaving One in Four to Starve http://t.co/wPcBuebk Always best to invest when capital is scarce, not in glut $$ Feb 12, 2013
  • How Should an Investor Decide Whether to Dump a Mutual Fund That Has Been Doing Poorly? http://t.co/9c7lY4yI 12 opinions, mostly indexing $$ Feb 12, 2013
  • Nasdaq Talked With Carlyle About Going Private: Sources http://t.co/LoFBgXH3 Cheap $$ looking 4a home; question boils down 2 price $NSDQ $CG Feb 12, 2013
  • Why These 4 Refinery Stocks Boast Bolting RS Lines http://t.co/jlb6luXS Will have to sell a refiner soon; momo crowd creating overshoot $$ Feb 12, 2013
  • Dell Defends Deal: ?Offers an Attractive and Immediate Premium’ http://t.co/xrSaBCRs Objectors wud b convincing if they bot aggressively $$ Feb 11, 2013
  • The Dell Deal Is a Steal That May Die http://t.co/sVQj7aoe What amuses me is that largest complainer has been selling even as low as $10 $$ Feb 09, 2013

?

Wrong

  • Wrong: Buffett Cash Targets General Mills to Grainger http://t.co/TybErutX Many do articles like this; none of them ever prove correct $$ Feb 15, 2013
  • Wrong: Congress Starts Examining Changes to Charitable Tax Break http://t.co/cLSOeDUU There r much better ways to raise taxes or simplify $$ Feb 14, 2013
  • Wrong: Plans to Expand Preschool Unveiled http://t.co/VWDcxkAE It is better educationally to have young children @ home most of the time $$ Feb 14, 2013
  • Wrong: Wall Street Fading as Emerging-Market Banks Gain Share http://t.co/NLoYMLNy Too soon, the EM banks r immature w/risk control $$ Feb 12, 2013
  • Wrong: Next Pope to Face Calls for Renewal After Benedict Resisted http://t.co/LNQ30x5Q American media does not understand the Vatican $$ Feb 12, 2013
  • Wrong: An Aging Population May Be What the World Needs http://t.co/RBjuVRce Economies do not work well when # of workers shrinks $$ Feb 11, 2013

?

Replies and Retweets

  • .@joshuademasi Come on in it’s around the back, just a half a mile from the railroad track. U can get anything u want @ Warren’s restaurant Feb 15, 2013
  • @michellemalkin For the most part, I don’t tweet to engage; I use it to inform. Used 2do news blog posts, now I tweet good stuff 2 read $$ Feb 15, 2013
  • @richriker EDGAR is free. There are some pay services that make it simpler to get 13F data, or other data filed w/the SEC Feb 15, 2013
  • ‘ @richriker Depends what you mean. They are all available at EDGAR http://t.co/PjUFyetg I have the pgs for 77 mgrs bookmarked $$ Feb 15, 2013
  • @Nonrelatedsense They did, as did Legg Mason, Third Avenue & others that thought value investing was “buy it cheap,” not safety Feb 14, 2013
  • @PlanMaestro Thanks, btw, I like your new logo — cool Feb 14, 2013
  • @researchpuzzler Thanks for showing that to me; I expect most actuaries will yawn at it; academics doing theory when current methods work $$ Feb 14, 2013
  • Shocking revelation RT @EddyElfenbein: “I?m aggressive and annoying” – Paul Krugman http://t.co/9r8z51ke Feb 13, 2013
  • Bank shills $$ RT @davidmwessel: All 12 Fed bank presidents write FSOC asking for tougher rules on money market funds. http://t.co/0XhI4WXs Feb 12, 2013
  • U know it RT @historysquared: “TREASURY SECRETARY NOMINEE LEW:Says He Will Maintain a Strong Dollar Policy if Confirmed.” – do they all lie? Feb 13, 2013
  • ‘ @GaelicTorus I’m only human. Herod forgot that. http://t.co/iixVdgAN I haven’t. Thanks for the praise, though. Feb 13, 2013
  • I just left a comment in “Warren Buffett turns his eye to annuities – MarketWatch” http://t.co/kz7S0yVP Feb 13, 2013
  • On the tweet two previous: long $AIZ . one of the best insurance companies I have known Feb 13, 2013
  • @JamesMarsh79 My view is inbetween. There r regularities, but w/a lot of noise around them Feb 12, 2013
  • Dalio is like Gross, he plans intermediate term but adjusts frequently $$ RT @jckhewitt: Whatever happened to that beautiful deleveraging? Feb 12, 2013
  • @MarshallFraser I don’t disagree w/crop ins., just the subsidy most of which makes it into the pockets of Big Ag & insurers, not familyfarms Feb 12, 2013
  • $JNK & $RUT diverge significantly, uh oh $$ RT @DougKass: One of the scariest charts extant http://t.co/WeLlmyhu (Hat tip Divine Ms M!) Feb 12, 2013
  • “I was skeptical of Apple, but I only mentioned it in tweets, so I can’t take much credit?” ? David_Merkel http://t.co/L6p8D5Ic $AAPL $$ Feb 12, 2013
  • @joshuademasi Also, that every tightening cycle over the last 30 years ending with something blowing up; Fed rides to the rescue 2 soon $$ Feb 11, 2013
  • @joshuademasi I know that, but the ultimate proof over the last 30 years was the massive accumulation of debts from their ez $$ policy Feb 11, 2013
  • @ScottGalupo Totally disagree. BBA has been needed 4 40 years, and would have limited damage done in the present crisis. Debt is the problem Feb 10, 2013
  • @zringer21 Responded — hope you like it. Feb 10, 2013
  • @jasonzweigwsj I really admire your views, as you may surmise from my comments. Here is my piece on the topic: http://t.co/yPpCBfOM $$ Feb 10, 2013
  • @jasonzweigwsj I have written about this: http://t.co/yPpCBfOM Few want to follow sound ideas. Problem: If everyone did this gold wud soar Feb 10, 2013
  • @cate_long I am conservative in most ways, but Peter Wallison makes me nervous; I don’t usually trust his reasoning. Not enough real thought Feb 09, 2013
  • RT @EmanuelDerman: The EMH was economic jiu-jitsu to turn weakness into strength. “I can’t figure out how things work, so I’ll make that … Feb 09, 2013

 

FWIW

  • My week on twitter: 48 retweets received, 2 new listings, 74 new followers, 58 mentions. Via: http://t.co/SPrAWil0 Feb 14, 2013

 

The Education of a Mortgage Bond Manager, Part VIII

The Education of a Mortgage Bond Manager, Part VIII

I sat down this evening, thinking that I would finish the series this evening, and realized that I had left out some significant things.? As such, I expect this series to have two more parts after this one.

Traveling to Annapolis

When you are an actuary, and a good one, you have elements of being a jack-of-all-trades.? Knowing the math is not enough, you have to understand the business processes that the math summarizes.? That also requires some knowledge of the law.? From early in my career, I realized that the insurance company lawyers would not help me with reserving, investing, contract provisions, and other legal questions, so I had to go to the law library and answer the questions myself.? Not fun, but I ended up learning a lot.

While working on another project one day, I made a copy of the Maryland life insurance investment code.? I took it back with me, saying to myself: “It’s only eight pages, written in 1955.? Don’t you think you should know the details of what your local regulator allows?”

Dangerous question, and it led to the following: under a strict interpretation of the law, we were in violation of the law.? Here is the key question: are asset-backed securities bonds?? They trade like bonds, but by the old Maryland statute, they are not bonds — they don’t fit any categories of permitted investments, and as such could only be held if we had sufficient surplus, which we did not, and probably most life insurers in Maryland did not.

Thus the problem.? I discussed it with my boss, and we had a conference call with the legal department, who confirmed my view of things.? A few days later we had a chat with the Maryland regulators.? That was a tough call, because at minimum we wanted them to accept asset-backed securities as bonds, which the the law did not admit.? We suggested, “Why don’t we adopt the NAIC [National Association of Insurance Commissioners] Model Investment law?”? The response was curt, “Oh, you mean the Illinois Investment Law?”

True, Illinois was the only state that adopted it verbatim, but several other major states had adopted >90% of it.? I said, “Tell me what you’d like to take out of the Model Investment Law.”? The main thing the Maryland department wanted was to avoid speculation through derivatives.? So I happily cut that out of my proposed law; I thought that was a good idea.? There were a few other minor things that they wanted, and I trimmed/added those as well.

After a lot of work between the lawyers and me, we sent the proposed bill to the Department of Insurance.? Then the conference call — would they go for it?? As it was they went for it.? They found it reasonable, and it codified what insurers were doing, and provided structure, such that present practices were approved, but bad extensions beyond that were forbidden.

But then we asked, “Are you not opposing us, or are you supporting us?”? They replied, “We are supporting you.? We know we need to modernize, but this statute meets our needs and yours.? Well done.”

(Note: all quotes here are summaries of what was said.? Most of it was not exactly the way I wrote it here.)

So, we hired an expert attorney who was skilled in getting bills through Annapolis.? He told us what we would need to do to get the bill passed.

So, a few weeks later, we were there in Annapolis, before the Assembly Finance Committee.? I can’t remember why, but I was not at the table before the Assembly Committee.? I sat a few feet behind my boss, our internal lawyer and our expert attorney.

The Assembly Finance Committee had a hard time with the bill.? Part of it was that there was no one to oppose the bill.? Opposition sharpens the minds of legislators.? As a result, the Committee remanded the bill to a study session, so that they could better understand the implications of the bill.

A week or so later, we appeared before the Senate Finance Committee, and I was on the panel this time.? Instead of the disorganized questions of the assembly, they asked three “simple” questions:

  • How will this law prevent Procter & Gamble?
  • How will this law prevent Orange County?
  • How will this law prevent Long Term Capital Management?

This was the reverse of the Assembly, because I answered all of the questions, and my partners were silent.? I could not have expected that.

As it was, I explained that P&G could not happen because the statute forbids using derivatives for speculation.? With Orange County, I explained that existing law required cash flow testing, so that we can’t invest in volatile mortgage derivatives or else we will fail our asset-liability management tests.

As for LTCM, I explained that the risk-based capital regulations would never allow us to take on that degree of leverage, and that the forbade speculation through derivatives.

And then, after a mercifully brief session, they let us go.? (Note: I had to sit through a couple sessions where we might be called, but weren’t.? Dull, but I brought work to do.? Also, I learned that Johns Hopkins, my Alma Mater, owns the state of Maryland.? Anything they ask for, they get.)

That left one more hurdle.? So on one early morning we met with the Assembly Finance Committee.? It was just my boss and I, because they were trying to understand what the bill meant.? (Technical subjects are tough for many state legislators.)? We met with them for two hours, and finally we convinced the Chairman of the committee that this was a good and honest deal.? (We both did good work here,? and the absence of the lawyers was a plus.)

That left the final voting, which was unanimous in both chambers.? And then, two months later, the signing ceremony with the governor, dressed like a Mafia Don, with a dark suit, and black shirt with thin white stripes.

So what did I accomplish here?? I reshaped Maryland’s Life insurance investment laws to be among the best in the nation.? I did it while working with many parties that had different goals.? I calmed and instructed many legislators that it was a good bill.? Finally, I set the company that I served on firm legal ground.? What could be better?

Sorted Weekly Tweets

Sorted Weekly Tweets

Currency Wars

 

  • Battling the unknowns of currency devaluation | Reuters http://t.co/3kiN75eT A tough game to play, particularly w/changed policy in Japan $$ Feb 09, 2013
  • This is what a currency war looks like http://t.co/ibWgIZTg Japan is leading the #currencywar by no longer sterilizing monetary policy $$ Feb 08, 2013
  • The Dark Side of Japan’s Creating Inflation http://t.co/3O384dKU Risk is interest rates rise and Japan can’t finance itself. #tippingpoint Feb 07, 2013
  • Japan Inc.?s appreciation of the yen?s depreciation http://t.co/zdYFkcYR Japanese stocks rally as their exports get relatively cheaper $$ Feb 07, 2013
  • Falling yen set to spark renewed currency wars http://t.co/1QXtUFoA Japan has finally “thrown the hammer down.” No more sterilization $$ Feb 05, 2013

 

LBOs

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  • Dell?s largest outside shareholder thinks it?s worth $10 more a share – Quartz http://t.co/1gr8dTZb Let Southeastern et al bid 4 control $$ Feb 09, 2013
  • The Three Scariest Letters for Bondholders: L-B-O | Fox Business http://t.co/wEEHVJUR Note: junk bonds r protected from this, not invt grade Feb 09, 2013
  • New Worry for Bondholders: LBOs http://t.co/KumxFjws Company is cheap & has good Bal Sheet, it could LBO, harming current bondholders $$ Feb 04, 2013

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Pensions

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  • Danger Seen in Pension Fund Cuts on Abe Inflation http://t.co/wDu6fWjE Guess what? Inflation can harm pensioners. Sad 4 them. $$ Feb 07, 2013
  • Pension Funds Cut Back On Commodity Indexes http://t.co/ZSvFgIoG Hoarding not a panacea, also, can get clipped on the roll $$ Feb 07, 2013
  • The Asset Mix (Stocks-Bonds) will make the Difference – 2 many Bonds Mr Abe? http://t.co/AOHm6p5X On pension asset allocation globally $$ Feb 07, 2013
  • Baby Boomers Sicker Than Parents? Generation, Study Finds http://t.co/Xy7VIs0n Will live longer too; big reason to reshape Medicare $$ Feb 05, 2013
  • Americans Rip Up Retirement Plans http://t.co/s5UARuld Nearly 2/3rds of Those Between 45 & 60 Plan Delays, Steep Rise From 2 Yrs Ago $$ Feb 05, 2013
  • Low Rates Force Companies to Pour Cash Into Pensions http://t.co/32JNXekQ Low long rates push pension liabilities higher, req $$ payment Feb 04, 2013

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High Yield

 

  • US High Yield Bonds: HYG On the support http://t.co/Gcj35TAJ In order 4 HY 2 rally from here, need dumb buyers 2 apply leverage $$ Feb 08, 2013
  • Fed?s Stein: Signs of Overheating in Credit Markets http://t.co/TAT7QcwB Junk yields less than in June 2007. Replace CDO bid w/Fed $$ Feb 07, 2013
  • Two Things about High-Yield Bonds Investors Must Understand Today http://t.co/w3n4IODi Low yields & spread relatives & high $$ prices Feb 07, 2013
  • A Mad Rush Could Be Coming In The Corporate Credit Markets http://t.co/KFGkM3gQ Possible, but it depends on how levered investors are $$ Feb 05, 2013
  • No, there probably isn?t a bond bubble http://t.co/92p5SJBz Misses key question: how much debt is being issued to acquire other debts? $$ Feb 05, 2013
  • US Higher Yield Bonds: A Corrective Update http://t.co/RITd5UGl Corrections may be happening w/ both credit & high-quality long-duration $$ Feb 04, 2013

 

 

S&P Lawsuit

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  • State Lawsuits Could Add to S&P Exposure http://t.co/oQSwfYFR Attorneys General for states become profit centers; opportunistic thieves Feb 07, 2013
  • Wrong: Levitt Says McGraw-Hill ?Foolish? to Not Settle S&P Lawsuit http://t.co/dEL4g1ja There’s a good chance that S&P will win, y give up Feb 07, 2013
  • S&P Lawsuit Undermined by SEC Rules That Impede Competition http://t.co/GCUE01zz Will not be simple for the govt to win its case $$ #FTL Feb 07, 2013
  • S&P Lawsuit Portrays CDO Sellers as Duped Victims http://t.co/rAI69G1G Stretching truth; CDO sellers knew credit better than agencies $$ Feb 07, 2013
  • S&P feels Justice’s lash, but can law ever conquer greed? http://t.co/SVDZVZtG Diffcult 2 single out people/firms 2 prosecute in big crisis Feb 05, 2013

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Companies

 

  • Top NY court throws Travelers asbestos award into question http://t.co/GAujEmCH Case started in 1948, when USF&G insured Western Asbestos Feb 08, 2013
  • Buffett?s Son Says He?s Prepared Whole Life for Berkshire Role http://t.co/xYWVlMu8 As Chairman, Howard will be “cultural guardian.” $$ Feb 08, 2013
  • San Francisco Gasoline Rises as Tesoro Seen Cutting Rates http://t.co/4Rmvbcz1 It’s tough when state governments discourage refineries $$ Feb 07, 2013
  • Bond insurers aren’t the only winners in Rakoff’s Flagstar ruling http://t.co/6A2IICLD All can rely on reps & warranties of mtge origin8rs Feb 07, 2013
  • Berkshire-Insured Muni Sees Good Demand http://t.co/yKX1lGPy Nothing amazing; some $BRK.B businesses r part of the development borrowing Feb 07, 2013
  • Life Insurer CFOs Say Their Financial Models Fall Short: Survey http://t.co/zJ3f2DJc Surprising, another reason 2b bearish on life ins Feb 07, 2013
  • BlackRock Cautious as Sales End Dollar Bond Rally: China Credit http://t.co/4LZDSoMf Questions over credit quality, maybe 2 much supply $$ Feb 04, 2013
  • Herbalife Drops After Report of Law-Enforcement Probe http://t.co/zC0a9GGv $HLF rises today. $$ Worries over being named “pyramid scheme” Feb 04, 2013
  • Was the AIG Rescue Legal? http://t.co/LUTVHQa9 Of course not. Gov’t should not play favorites; emergencies b a DIP lender of last resort Feb 02, 2013

 

US Politics & Policy

 

  • House Speaker: Washington Has to Address Spending http://t.co/lZcQcinD Yes it does, but will the Senate and President ratify that? $$ Feb 07, 2013
  • Party Eyes ‘Red-State Model’ to Drive Republican Revival http://t.co/qrlp6Zn5 First balance budget on an accrual basis; no state does $$ Feb 05, 2013
  • House Leaders Weigh US Spending Bill Below $1T http://t.co/0nBcoURd Good luck w/Senate & President on that, you will need it $$ Feb 05, 2013
  • Study Says States Lose Billions in Offshore Tax Avoidance http://t.co/qTnlUpTX Just an effect of federal tax policy, which needs change $$ Feb 05, 2013
  • The Fed?s Worst Fear http://t.co/nanNt52c Losing control of long interest rates; the bond market will eventually trump the Fed $$ Feb 04, 2013

 

Market Impact

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  • Americans Are Tapping Into Home Equity Again http://t.co/gLLrlDEx Does this mean a return to the reckless equity withdrawals? Likely not $$ Feb 08, 2013
  • Banks Should Defer Bonuses for Up to 10 Years, Jenkins Says http://t.co/udabGhNT Better that banks become partnerships; creates caution Feb 08, 2013
  • Insiders now aggressively bearish http://t.co/vWogX2LF Last Fri: sell-to-buy ratio for NYSE-listed shares listed stood at 9.20-to-1 $$ Feb 08, 2013
  • SP500 Complacent Divergence – Risk Factors http://t.co/CPqaNYY4 Decelerating earnings growth threatens valuations. Econ surprises falling 2 Feb 08, 2013
  • Interdealer Brokers Emerge as Key Enablers in Libor Scandal http://t.co/bTgMtUOa & http://t.co/yBo7oxKJ Them & Rain Man Tom Hayes $$ Feb 08, 2013
  • Schwab Unveils Game-Changing Commission-Free ETF Platform http://t.co/yqCaunnJ Part of the ETF’s fees go to $SCHW . No free lunch here $$ Feb 07, 2013
  • H-P Aside, Corporate Splits Are Wholly Worth Investors? While http://t.co/e9dptR0E Managements gain new focus; Behemoths lack true mgmt $$ Feb 07, 2013
  • U.S. to Offer Floating-Rate Notes Within a Year http://t.co/eXCUd3Ni Money-market funds take heart; yield (w/spread duration risk!) $$ Feb 07, 2013
  • Small lenders ride US mortgage wave as big banks cut back http://t.co/KbACkvJk Interesting 2c little independent mortgage brokers return $$ Feb 04, 2013
  • America’s Baby Bust http://t.co/CaWPjZVU Heard on Radio C-SPAN yd http://t.co/Ow86Jsfs ?Economies don’t work well when popul shrinks $$ Feb 02, 2013

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Rest of the World

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  • Mind the Liquidity Gap – Credit Gap http://t.co/m2xTMEIs 3 factors: global monetary policy, global credit supply & global credit demand $$ Feb 08, 2013
  • German Hope French Despair and EU Rescue: PMIs http://t.co/qioLvblN Eurozone PMIs r rising, but economies r still contracting $$ #France Feb 07, 2013
  • Basel Seen Rotten in Denmark as Banks Bypassed http://t.co/HX9a6vOI Denmark has many covered mtge bonds; Basel doesn’t care much 4them $$ Feb 07, 2013
  • Shades of ’80s for Japan’s Stocks http://t.co/68rhfLmX What, Japanese stocks can go up after the demographic dividend has faded? Feb 07, 2013
  • Desperate Greeks scuffle at free food handout http://t.co/XpQUEBMM Total desperation. Democracy started there, and it may end there too $$ Feb 07, 2013
  • Canadians back2borrowing: avg consumer debt hits new hi http://t.co/wtSpy1pB overall debt low | cred: evergreen http://t.co/ndpBH0Ch Feb 07, 2013
  • Last tweet derives from this article http://t.co/wjSwNztf I believe in freedom, and small biz capitalism, with equality 4 all. $$ Feb 06, 2013
  • We need Obama/Hollande 2create economic barriers average people can’t surmount, so the clever rich can get richer. Cynical, but true $$ Feb 06, 2013
  • ECB Executive Board Member Asmussen: ‘German Interest Rates Will Rise Again’ http://t.co/oIJZtFtK Thinks *real* interest rates will rise $$ Feb 05, 2013
  • Top Iranians Trade Barbs in Rare Public Feud http://t.co/W1uR6M1p Corruption is endemic to Iran; rare 4 the mafiosi 2 fink on each other Feb 05, 2013

 

Other

 

  • An Insider’s Guide to Counterfeiting Wine – Businessweek http://t.co/SoVp0OrF 3 ways to counterfeit expensive wines & how to avoid them $$ Feb 09, 2013
  • Most Australian Wine Exports Ship in Giant Plastic Bladders http://t.co/jL1S9KLF ?We don?t ship glass around the world, we ship wine.? $$ Feb 09, 2013
  • Super Bowl Blackout Caused by Faulty Relay, Entergy Says http://t.co/GKd5619I That was what I guessed; weak spot in many power grids $$ Feb 08, 2013
  • Asteroid to Traverse Earth?s Satellite Zone, NASA Says http://t.co/ZnpmCxXD Interesting we only get one week’s notice on the near miss $$ Feb 08, 2013
  • What Abraham Lincoln Liked About Richard III http://t.co/oAp8PQjg Lincoln was Shakespeare buff; 1 controversial man’s thoughts on another Feb 08, 2013
  • Lease Surprise in Stuyvesant Town http://t.co/O7DQsILq “clause that allows landlord to increase the rent in the middle of the lease” $$ Feb 07, 2013
  • Nine Questions for Peter Levine, Andreessen Horowitz?s Enterprise Dude http://t.co/yiubWsqj How SDN commoditizes much special hardware $$ Feb 07, 2013
  • On Pins and Needles: Stylist Turns Ancient Hairdo Debate on Its Head http://t.co/RgrZqc80 Kinda of a quirky story, but interesting $$ Feb 07, 2013
  • ‘They Owe It to Me’: FBI Identifies Top Email Phrases Used by Fraudsters – Compliance Week http://t.co/9FtlTkEH Set up filters, compliance Feb 06, 2013
  • Legacy of Benjamin Graham: http://t.co/GztBNt53 via @youtube In last minute, BG anticipates the Efficient Markets Hypothesis years ahead $$ Feb 05, 2013
  • Legacy of Benjamin Graham: http://t.co/GztBNt53 via @youtube Fascinating video w/Buffett, Kahn (2), Schloss, & other students of his $$ Feb 05, 2013
  • US Construction Jobs – A very Constructive Story http://t.co/Gqy8YIU0 Construction jobs coming back, looks like a dead cat bounce $$ Feb 04, 2013
  • Sending electronic money to friends catching on http://t.co/zRBh8tkT Creating next great avenue 4 money laundering; cheap & convenient $$ Feb 04, 2013
  • Hitler Awakes in 2011 Berlin, Becomes YouTube Hero http://t.co/ore3XtWB Hard 4 me 2 believe. Does humor have any limits anymore? Funny $$ Feb 04, 2013

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Replies & Retweets

  • @dpinsen 16x deteriorating free cash flow @ $24/sh. There’s some bluster there. Wouldn’t want to be a bondholder here $DELL $$ Feb 08, 2013
  • Commented on StockTwits: Wait, I’m wrong. Didn’t look far enough — they have 8.5% of shares, but 7.5% of votes. Onl… http://t.co/18jIZ94S Feb 08, 2013
  • Commented on StockTwits: Here: http://t.co/a3SdyNFq http://t.co/4OBGCIp0 Feb 08, 2013
  • ‘ @ampressman Thanks, Aaron. Reading it now. http://t.co/aGpdRr8R Good stuff. SE recently bought more http://t.co/UGh12nkp $$ $DELL Feb 08, 2013 ?(This tweet was wrong, SE has been a seller of $DELL shares, and even recently?)
  • Owns 7.5%, what could they b thinking? $$ RT @BloombergNews: BREAKING: Dell holder Southeastern Asset plans ‘All Options’ to stop deal Feb 08, 2013
  • Worth the read RT @cate_long: Is the U.S. growing, or just issuing debt? – #MuniLand http://t.co/KLB1838k Feb 08, 2013
  • Seems reasonable to me $$ RT @TFMkts: @AlephBlog the high yield market is on cusp of some stop losses getting triggered Feb 08, 2013
  • @GaelicTorus Did not know that, thanks Feb 08, 2013
  • Small caps +7% http://t.co/ewRvffTb $$ RT @credittrader: Gentle Reminder Japan Nikkei 225 +0.75% YTD in USD http://t.co/cxxhjMoG Feb 07, 2013
  • @anatadmati Twitter is too small for this. Read: http://t.co/JDnLfhJ5 & http://t.co/yo7C05d0 Biggest problem isn’t capital, but liquidity $$ Feb 07, 2013
  • @Nonrelatedsense @credittrader Thanks, missed that Feb 07, 2013
  • @BlandDexter In a word, yes. Feb 07, 2013
  • @The_Analyst What floors me are professional investors that don’t read the prospectus the first time they analyze a new type of investment. Feb 07, 2013
  • @SapienQuis A lot of investment banks got pinned w/crud they could not sell whether due to secondary trading or origination Feb 07, 2013
  • @The_Analyst Yes, they did have staff. If u r a professional firm, you must independent vet out credit quality; ignore rating read writeup Feb 07, 2013
  • Well done! RT @jasonzweigwsj: 2 things about high-yield bonds investors should understand today, from @DavidSchawel http://t.co/EYo8KSEQ $$ Feb 07, 2013
  • @anatadmati A better idea would be double liability, where mgmt & directors lose their capital before shareholders do. Change incentives Feb 07, 2013
  • @anatadmati At current margins, banks could not earn their cost of capital w/30% E/A. Banks & credit would shrink a lot -> crisis Feb 07, 2013
  • @DavidSchawel Where will it be? Feb 06, 2013
  • Bondholders will get badly hurt $$ http://t.co/i7Fxa10p RT @DougKass: HPQ mulling a break up. $HPQ Feb 05, 2013
  • It’s starting $$ RT @LisaCNBC: The Japanese are going to overdo it and create an inflation problem. #Yen will spike in 2013. @PeterSchiff Feb 05, 2013
  • @TFMkts People made absurd predictions about capital mkts off of the experience 1982-2000, culmination ing tech bubble / lost decade $$ Feb 05, 2013
  • Mersenne Primes RT @motokorich: Largest Prime Number Discovered, and it’s 17,425,170 digits long. http://t.co/U8GzYFj1 via @sciam Feb 05, 2013
  • @TFMkts Would be interesting 2c a firm try that. The wind seems to still b blowing the wrong way there, w/discount rates so low. Feb 05, 2013
  • He was/is a bright guy $$ RT @munilass: Picking on S&P just isn’t as much fun without @EconOfContempt around. Feb 05, 2013
  • RT @LaurenLaCapra: “big exchanges therefore stand to gain tremendously from even a relatively small shift twd futures & away from sw … Feb 05, 2013
  • “I only want to add one thing: its not what pundits say that matters, it is what people rely on economically… http://t.co/zAPlxIHU $$ Feb 04, 2013
  • RT @moorehn: Pffft. MT @nycjim: Washington Post says it, too, was victim of hacking attack that appeared to originate in China. http://t … Feb 03, 2013
  • Good marketing kills bad ideas, people & products $$ RT @MattVATech: Marketing is never a substitute for substance. Feb 03, 2013
  • “Only if you think that by waiting a little while you might have higher yields to invest at. Can’t?” ? David_Merkel http://t.co/Vt16DKeU $$ Feb 02, 2013
  • “Hi, KD… my bond mandate is unconstrained, so I just aim for total returns. Right now I am pretty?” $$ David_Merkel http://t.co/4x41D4D2 Feb 02, 2013

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FWIW

  • My week on twitter: 77 retweets received, 4 new listings, 86 new followers, 81 mentions. Via: http://t.co/SPrAWil0 Feb 07, 2013

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Is High Yield Expensive?

Is High Yield Expensive?

Event

Date

AAA

AA

A

BBB

BB

B

CCC

CDO Trough

6/5/2007

5.62

5.68

5.90

6.21

6.74

7.34

9.12

Recent Trough

1/25/2013

2.09

2.09

2.47

3.34

4.51

5.64

9.57

Now

2/6/2013

2.10

2.12

2.50

3.42

4.73

6.10

9.80

Yes, I think high yield is expensive, and stocks as well.? We have replaced a set of maniacs who were creating CDOs, with a single maniac, the Federal Reserve.? The Federal Reserve has less effect on junk bonds because they directly affect Treasuries and Agency MBS.? Those are far more similar to AAAs than junk bonds.

When CDOs were bidding for every yieldy bond, they compressed relative yield spreads to unbelievable levels.? Today, those unbelievable yields come from the Fed.? They bid for MBS and Treasuries, leaving others to seek yield in riskier notes.

There is real risk here, and the Fed will get whacked when normal yield relationships, and real yields re-emerge.

Seven Notes on Blogging and the Markets

Seven Notes on Blogging and the Markets

I need to catch up on a few things, so bear with me.? This might ramble.

1) Should I live and continue to write until mid-October of 2013, I will reach 10 years of investment writing.? I started writing for RealMoney in October 2003, and that changed my life.? Thanks to Cramer, because he created an organization that revolutionized financial media.? Former TST news writers occupy a wide number of top spots in many places in the financial press — it is astounding how much better financial news is today.? I am grateful to know many of them, some of whom would call me for help on occasion.

2) In a few more weeks, Aleph Blog will hit its sixth blogoversary.? Seems like minutes to me, but I have a lot more grey to prove that the time has passed.? I do want to note that much as I wrote at RealMoney, I have written far more here.? I have a problem though.? It seems that RealMoney has lost its ability to recover old posts pre-2008.? I would love to get copies of my old posts that are listed here.? If any of you know how to do that, please let me know.

3) Saturday night’s second article was hate me or love me in terms of responses.? There are no other writers at this site; the same flawed man writes them all.? My main point is that you need someone who acts like a fiduciary (whether they are a fiduciary or not) to tend to your assets.? Investment banks do use retail to lay off exposures that they do not want.

In any significant transaction, you want to know who is with you and who is not.? (This was true in the housing bubble, where many parties teamed up against buyers.)? For my clients, they know that over 50% of my net worth is on the line in the same portfolio that they have. (At present, over 70%.)? I have a lot of confidence in my ideas.? I eat my own cooking.

You want to invest in situations where there is alignment of incentives.? Are there brokers who are noble?? Yes.? But to use one, he needs to jump through extra hoops, because he is not under obligation to be a fiduciary.

4) 4+ years ago I wrote a piece called: Inflation for Goods Prices, Attempted Inflation for Housing-Related Assets, but Sorry, No Inflation for Wages.? Probably one of my longest titles… but that still seems to be the case today.? Fed policy inflates housing-related assets, gives some price inflation, but because labor is not scarce globally, wages are flattish.

5) I wrote this piece summarizing my views on the rating agencies.? I stand by it.? The rating agencies are not the problem.? Regulators are the problem.? They create the conditions where ratings are needed.? Ratings by their nature are opinions, they are not guarantees.? They can’t be otherwise, or else the rating agencies will have to become financial guaranty insurers, and charge far higher fees that will destroy financing for so many.

That’s why I think the lawsuits against the rating agencies will fail, again.? This is not to say the rating agencies were blameless, but it is very difficult to estimate future losses on any class of securities that has not ever gone though a failure cycle.

6) I believe in the conservation of liquidity: it can’t be created or destroyed, but it can be shifted.? My first example is stock price increments.? I think that the tick size is arbitrary, and a small tick size will favor small investors who are looking to buy small positions.? A large tick size will favor larger institutions that wait patiently to buy and sell.

7)? I believe in the conservation of liquidity in bigger ways also.? The Fed does not create liquidity, at least not in the sterilized? way that they do it presently.? But they can shift liquidity; who do the QE programs help?? The US Government and the GSE-backed mortgage market.? Liquidity has been shifted there, and away from everyone else.

That’s all for now.

Redacted Version of the January 2013 Version of the FOMC Statement

Redacted Version of the January 2013 Version of the FOMC Statement

December 2012 January 2013 Comments
Information received since the Federal Open Market Committee met in October suggests that economic activity and employment have continued to expand at a moderate pace in recent months, apart from weather-related disruptions. Information received since the Federal Open Market Committee met in December suggests that growth in economic activity paused in recent months, in large part because of weather-related disruptions and other transitory factors. Shades GDP view down, finally.

Remember when the FOMC cited the Tsunami in Japan for economic weakness that would soon go away?? More grasping at straws.

Although the unemployment rate has declined somewhat since the summer, it remains elevated. Employment has continued to expand at a moderate pace but the unemployment rate remains elevated. No real change.

So long as discouraged workers increase, this is a meaningless statement.

Household spending has continued to advance, and the housing sector has shown further signs of improvement, but growth in business fixed investment has slowed. Household spending and business fixed investment advanced, and the housing sector has shown further improvement. Shades up their of business investment
Inflation has been running somewhat below the Committee?s longer-run objective, apart from temporary variations that largely reflect fluctuations in energy prices. Longer-term inflation expectations have remained stable. Inflation has been running somewhat below the Committee?s longer-run objective, apart from temporary variations that largely reflect fluctuations in energy prices. Longer-term inflation expectations have remained stable. No change.? TIPS are showing rising inflation expectations since the last meeting. 5y forward 5y inflation implied from TIPS is now at 2.86%.

The FOMC is wrong on inflation.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. No change. Any time they mention the ?statutory mandate,? it is to excuse bad policy.
The Committee remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions. The Committee expects that, with appropriate policy accommodation, economic growth will proceed at a moderate pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate.? Emphasizes that the FOMC will keep doing the same thing and expect a different result than before. Monetary policy is omnipotent on the asset side, right?
Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. Although strains in global financial markets have eased somewhat, the Committee continues to see downside risks to the economic outlook. Shades up their views of the financial markets.
The Committee also anticipates that inflation over the medium term likely will run at or below its 2 percent objective. The Committee also anticipates that inflation over the medium term likely will run at or below its 2 percent objective. No change. CPI is at 1.7% now, yoy, so that is quite a statement.
To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee will continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. 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 No change.

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

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

 

The Committee also will purchase longer-term Treasury securities after its program to extend the average maturity of its holdings of Treasury securities is completed at the end of the year, initially at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and, in January, will resume rolling over maturing Treasury securities at auction. and longer-term Treasury securities at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. No real change.? Operation Twist continues.? Additional absorption of long Treasuries commences.? Fed will make the empty ?monetary base? move from $3 to 4 Trillion by the end of 2013.
Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative. No change.
The Committee will closely monitor incoming information on economic and financial developments in coming months. The Committee will closely monitor incoming information on economic and financial developments in coming months. No change. Useless comment.
If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until such improvement is achieved in a context of price stability. If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until such improvement is achieved in a context of price stability. 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. No change.? 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 asset purchase program ends and the economic recovery strengthens. To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. No change.

Promises that they won?t change until the economy strengthens.? Good luck with that.

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

Just ran the calculation ? TIPS implied forward inflation one year forward for one year ? i.e., a rough forecast for 2014, is currently 2.41%.? Here?s the graph.? The FOMC has only 0.09% of margin in their calculation if they are being honest, which I doubt.

 

The Committee views these thresholds as consistent with its earlier date-based guidance.   The inaccurate sentence is deleted.
In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. New sentence.? Giving yourself an out clause on the hard-and-fast promises made above?
When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. No change.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; 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; James Bullard; Elizabeth A. Duke; Charles L. Evans; Jerome H. Powell; Sarah Bloom Raskin; Eric S. Rosengren; Jeremy C. Stein; Daniel K. Tarullo; and Janet L. Yellen. No change
Voting against the action was Jeffrey M. Lacker, who opposed the asset purchase program and the characterization of the conditions under which an exceptionally low range for the federal funds rate will be appropriate. Voting against the action was Esther L. George, who was concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations. Esther George takes up the thankless task of telling the FOMC that they are doing more harm than good.

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Comments

  • I really think the FOMC lives in a fantasy world.? The economy is not improving materially, and inflation is rising. Note that the CPI is close their 2.5% line in the sand.? TIPS-implied inflation 1X1 (one year ahead for one year) is 2.41%, and 5X5 is 2.86% annualized.
  • Current proposed policy is an exercise in wishful thinking.? Monetary policy does not work in reducing unemployment, and I think we should end the charade.
  • In my opinion, I don?t think holding down longer-term rates on the highest-quality debt will have any impact on lower quality debts, which is where most of the economy finances itself. When this policy doesn?t work, what will they do?
  • Also, the investment in Agency MBS should have limited impact because so many owners are inverted, or ineligible for financing backed by the GSEs, and implicitly the government, even with the recently announced refinancing changes.
  • The key variables on Fed Policy are capacity utilization, unemployment, inflation trends, and inflation expectations.? As a result, the FOMC ain?t moving rates up, absent increases in employment, or a US Dollar crisis.? Labor employment is the key metric.
  • GDP growth is not improving much if at all, and the unemployment rate improvement comes more from discouraged workers.

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

Sorted Weekly Tweets

Rest of the World

 

  • Cyprus?s now-certain default http://t.co/H7TO0rQy Cyprus is not substantial to the EU, but it does raise issues as to precedence $$ Jan 26, 2013
  • Jobs At Al Jazeera http://t.co/HzukJDoL Hiring in the USA! Join the Wahabist Ministry of Propaganda; certainly more talented than most! $$ Jan 24, 2013
  • Mali Exposes Flaws in West’s Security Plans http://t.co/yixTdjVP Lack of proper gear, or American assistance, hinder Mali efforts $$ Jan 24, 2013
  • Manpower Sees French Labor-Deal Boon Matching Skills to Jobs http://t.co/OdD7JaGG $MAN helps sclerotic French labor find flexibility $$ Jan 24, 2013
  • Peso Beating Rupee Threatens Call Center Growth http://t.co/EkiG1wBU Phillipines will continue w/loose $$; everyone being forced2 loose $$ Jan 24, 2013
  • Cairo Slum-Dwellers Despair of Mursi on Uprising Anniversary http://t.co/5TlSMPkA What did u expect? Muslim Brotherhood best organized $$ Jan 24, 2013
  • Chavez Ally?s Once-in-Century Debt Exposes Neglect http://t.co/qpZqu0rQ Dumb2lend @ 5% 4 10yrs 2a nation has expropriated 15 companies $$ Jan 24, 2013
  • Merkel hints at European deal for Cameron http://t.co/2ugJjTzA Ever-closer union gives way 2Europe a la carte $$ UK has better deal w/US? $$ Jan 24, 2013
  • Yahoo, Dell Swell Netherlands? $13 Trillion Tax Haven http://t.co/d78DxoHN Corporations scour the globe 4 tax advantages. Wouldn’t you? $$ Jan 24, 2013
  • Spain?s Lost Generation Spends Salad Days Toiling in UK http://t.co/dBMcRGGw High bad debts & unemployment, yes Mario the worst is past $$ Jan 24, 2013
  • Suicide of Minister Turns Focus on Crash Taking Toll in Ireland http://t.co/8uXbcdNK The more severe the recession, the more suicides $$ Jan 24, 2013
  • Draghi Says ?Darkest Clouds? Over Europe Have Subsided http://t.co/hUqda4z7 Tell that2 Slovenia! http://t.co/TJDdbTyT $$ #debtdeflation Jan 24, 2013
  • Spanish Bank Bad Loans: still tending upward http://t.co/LERSIed3 Calling Mario Draghi! Another fire to douse w/your unlimited liquidity $$ Jan 24, 2013

 

China

 

  • Feeding the Dragon: Why China?s Credit System Looks Vulnerable http://t.co/9aFA9Ivk GMO analyzes the mess that is credit in China $$ #danger Jan 25, 2013
  • China Overheating Risk Resurfaces, Ex-PBOC Adviser Says http://t.co/DcjkkslU Total debt levels comparable to dev nations prior 2 crisis $$ Jan 24, 2013
  • China’s Potential growth may slow later in decade- Older population shrinks its labor force http://t.co/Sr6zsqa8 China demographic articles Jan 24, 2013
  • In China, Widening Discontent Among Communist Party Faithful http://t.co/626NiBMR Small cracks emerge in Party loyalty #interestingtimes $$ Jan 21, 2013
  • EU remains a big external challenge to China’s economy http://t.co/YvV52N5n 5-yr plan 2 dom consumption will fail: based on transfer pmts $$ Jan 21, 2013
  • “Gehnen said most crucial for a lasting strengthening of China’s domestic demand…further development of basic systems of social security” Jan 21, 2013

 

Market Dynamics

 

  • ?Don?t work on financial crises, don?t work on contagion,? they said, according to Forbes. ?There?re not going to be anymore crises.? $$ Jan 26, 2013
  • The last tweet reflected the views of Kristin Forbes’ tenure advisors 10+ years ago http://t.co/X7MhwG9b Economists were complacent $$ Jan 26, 2013
  • The Temptation of Risk http://t.co/BLjgGwye Buying any risk asset @ this juncture feels like succumbing 2 the peer pressure of the market $$ Jan 25, 2013
  • ?The fundamental law is we can?t raise debt faster than income from now on,? Dalio said. http://t.co/rTAJfFhf Dalio Sees ?Game Changer? $$ Jan 25, 2013
  • “The worst investment decisions have generally been made when dumb money is chasing yield.” Edward Chancellor and Mike Monnelly at GMO $$ Jan 25, 2013
  • Investors See a Way Forward: Buybacks http://t.co/Q8JQHwgs Organic growth is best, but companies w/cheap stock should buyback shares $$ Jan 24, 2013
  • Visual History Of The S&P 500 http://t.co/17rWiDpw 20th birthday for $SPY — Watch how the top 10 companies have varied over last 33 yrs $$ Jan 22, 2013
  • Egan-Jones Faces 18-Month Ban on Sovereign, Asset-Backed Ratings http://t.co/FzPbV2zo Should have stuck w/their expertise in corporates $$ Jan 22, 2013
  • Calpers Buy-Hold Rule Recoups $95B Recession Loss http://t.co/R7Hc02Hm Still short $87B, only 74% funded, asks CA & struggling cities 4 $$ Jan 22, 2013
  • Investors Get a ?Perpetual? Headache http://t.co/IM5Y94IM It is usually dumb to give away your principal 4a fixed rate w/no upside $$ Jan 22, 2013
  • Wrong: Money Magic: Bonds Act Like Stocks http://t.co/RNGh92EV This is little different than buying the equity of CDOs & diversifying $$ Jan 22, 2013
  • More on having technical analysis taught in financial classes in academic circles @reformedbroker @ppearlman http://t.co/WCxBcfDo $$ Jan 21, 2013
  • We must fix the broken Western state model http://t.co/L6jxLYQm Liabs, deficits & policy uncertainty lead2 economic gridlock as DC wastes $$ Jan 21, 2013

 

Companies

 

  • It Pays to Own an Energy Pipeline. Thanks, Tax Code http://t.co/2UCSALOo Almost all are set up as MLPs, which pass income to partners $$ Jan 25, 2013
  • Financial Crisis Suit Suggests Bad Behavior @ Morgan Stanley http://t.co/OkML3jhh The buyers did not do due diligence, & were yield hogs $$ Jan 24, 2013
  • Explosive Charge: Morgan Stanley Peddled Security Its Own Employee Called ?Nuclear Holocaust? http://t.co/QTelsPmK Untold story: yield hogs Jan 24, 2013
  • Microsoft Risks Strain to PC Partnerships With Dell Investment http://t.co/5t0Eok5k All of $MSFT ‘s relationship’s r strained somewhat $$ Jan 24, 2013
  • Firms Keep Stockpiles of ‘Foreign’ Cash in US http://t.co/r2MAumPL You want they should keep it elsewhere? At least it is safe here $$ Jan 24, 2013
  • #SYMC offers capital allocation program, plans to initiate company’s first cash dividend http://t.co/51H0zECN FD: + $SYMC 2.5% div, nice $$ Jan 23, 2013
  • Western Digital Hits 15-Yr Peak on Talk of Buyout http://t.co/GRk0JucB FD: + $WDC | $WDC more cyclical than $DELL, harder 2take private $$ Jan 22, 2013
  • Loan start-up Prosper raises $20 million, led by Sequoia http://t.co/SJLnKHGa Peer-2-peer lending comes of age, Prosper attracts $$ Jan 22, 2013
  • Microsoft in Talks to Help Finance Dell Buyout http://t.co/xpbAntVf Odd, indicates that $MSFT has more $$ than they know what to do with Jan 22, 2013
  • Schools Hit by Morality of Wal-Mart Guns Funding Charity http://t.co/8KgGKSQe $WMT makes <1% of its profits from guns; >1% from tobacco $$ Jan 22, 2013
  • Inside H-P’s Missed Chance to Avoid a Disastrous Deal http://t.co/tqJ6xsEx Could have walked away after firing Apotheker for ~$100M $$ Jan 22, 2013

 

Other

 

  • Senate Changes Rule on Filibusters, Keeps Supermajority http://t.co/fHOlwYmw Modest good changes made, but the filibuster stands as is $$ Jan 25, 2013
  • Facebook Friends Fronting Debt Collectors Draw US Regulation http://t.co/wZkVpdTu Debt collection harassment goes social, for now $$ Jan 24, 2013
  • Fast-changing social media makes advisers scramble http://t.co/wlZ4Py1P Note to RIAs w/LinkedIn: u may need 2turn off recommendations $$ Jan 24, 2013
  • Who Can Outgrow or Recover From Autism http://t.co/D3H2MrPO Autism is an overused word. Some males take longer to develop $$ Jan 22, 2013

 

Benefits now, Payment with Interest Later

?

  • Backs to the Future http://t.co/RuftcKsF by @agnestcrane | But as interest rates rise, asset values should fall; the gap should remain $$ Jan 24, 2013
  • Big Ben?s Big Bite Out of Corporate Pensions http://t.co/2Ez3PkUJ QE-infinity raises the costs of defined benefit pensions & other liabs $$ Jan 24, 2013
  • The RomneyCare Bill Comes Due http://t.co/eQ2wAqdn Coming soon to a nation (US) near you: pay more for health care or get less of it $$ Jan 24, 2013

 

Comments & Retweets

  • “I’ve always been skeptical of Bremmer & Roubini — too promotional.” ? David_Merkel http://t.co/FtmDU3Th $$ Also too bearish on the US. Jan 25, 2013
  • @JackHBarnes @finemrespice I would be surprised if a bunch of Hungarians have better insight than most. Jan 26, 2013
  • @finemrespice @The_Analyst I am proud to know the both of you virtually. To all my followers, please follow. #FF Jan 26, 2013
  • @finemrespice Many apologies, I get what u r going for. Clever. Jan 26, 2013
  • ‘ @finemrespice Personally, I would like 2b more perverse — they have 2 invest their wealth in companies which they have refused 2 favor $$ Jan 26, 2013
  • @jckhewitt as you will note from my last tweet, the economics profession believed in the early 2000s that we had banished financial crises Jan 26, 2013
  • An example of an ETF that buys companies that buy back stock on net $$ $TTFS RT @jvnash1: @AlephBlog $ttfs float shrink Jan 24, 2013
  • Another good example of shrinking shares outstanding $$ RT @dwk24: @AlephBlog $COH Jan 24, 2013
  • RT @DavidBCollum: @AlephBlog Indeed. They also forget the highly complex systems improve by evolution, not human fiat. FOMC suffers “Fat … Jan 24, 2013
  • @BarbarianCap I agree, though I think developed nations should try to co-ordinate tax policy, & suggest 2 tax havens NATO has other uses 😉 Jan 24, 2013
  • ‘ @DavidBCollum I think the Fed forgets that every liability is someone else’s asset, but that every asset isn’t someone else’s liability $$ Jan 24, 2013
  • @Skrisiloff You’re welcome, Scott. Keep up the good work! Jan 24, 2013
  • @flounder_MA @smartfootball It’s a valuation question. Price below 1.3x tangible book, buy back stock. Otherwise, special dividends $$ Jan 24, 2013
  • @JMucken @DanSWright I think that’s the only utility I let auto-tweet; nice utility that sums up what I did publicly on Twitter wed-to-wed Jan 24, 2013

?? @djoalpha11 This Dan Dorfman http://t.co/XlQQXj49 ? Or another one, because the famous one is dead… Jan 22, 2013

  • @GaelicTorus @danielckoontz They serve different needs. Main point: Use your specialized knowledge 2 choose ins 2 best serve yr likely needs Jan 21, 2013
  • @danielckoontz But no, I don’t have anything in the archives on LTC, except don’t buy the stock of those whose liabilities r a hi % LTC Jan 21, 2013
  • @GaelicTorus @danielckoontz LTC is for people of in-between health; likely to live but not be so healthy, eases the unpleasantness of aging Jan 21, 2013
  • @danielckoontz also look & compare all of the terms & conditions & compare different specimen policies. Get quotes from a wide # of writers Jan 21, 2013
  • @danielckoontz LTC is useful for someone who thinks they will need lots of care, but is likely to live a long time. Best bought when younger Jan 21, 2013
  • RT @ToddSullivan: RT @Convertbond: RT ?@finansakrobat: Milton Friedman (via Morgan Stanley): ?nothing is so permanent as a temporary go … Jan 21, 2013
  • “Difficulty: few people, even professionals, are good enough to go against the grain when the masses are panicking” http://t.co/MXrg8o06 $$ Jan 20, 2013

 

FWIW

?

  • My week on twitter: 40 retweets received, 6 new listings, 81 new followers, 58 mentions. Via: http://t.co/SPrAWil0 Jan 24, 2013

?

2012 Financial Report of the US Government

2012 Financial Report of the US Government

I have written about this overlooked report for about ten years now.? I feel like a lonely warrior defending a tough location, with little assistance. If I could give a subtitle here, I would call it “Lies of the Past, Present, and Future.”? If I were more poetic, I would call it, “The end of a once Great Nation, Bedeviled with Corruption.”

This report is so despised by the US Government, that they always release it at a time where it will be buried by the news cycle.? This year is no different; they released it near the inauguration.? As an aside, I have talked with a representative from the group that puts this together, and they like me because I publicize it.? They called me to ask for advice on how they can make it better.

I may not be much, but I get 2-3 calls per year from government agencies asking for advice.? I block out at least an hour for them; it’s the least I can do for my country.? The last one from the GAO thanked me profusely.? They said they talked to many other people, but few that made the issues so clear.

Let me give you the first graph:

Excluding the times when new social entitlements were added, or added to the report, the unfunded liability of the US Government tended to increase at a rate of 9%, because less was being contributed to the social insurance programs than was necessary to keep up with the liability.? We have cheated these programs since the beginning, as a political ruse to gain favor for them, and giving a huuge subsidy to all who came before the baby boomers… now the price tag is coming due, and it ain’t pretty.

In the graph above, I attempt to explain two scams of the US government.? They stem from the same source — PPACA (Obamacare).? First, the true cost of PPACA was a lie.? Taxes were front-ended.? Benefits were back-ended.? The net benefit is gone now, and we face the black hole of insufficient taxes to meet benefits.? Second, Medicare was raided by reducing reimbursements, which C0ngress then undoes. There is no true savings, and there can’t be; government almost never produces anything as efficiently as the private sector.? It is normal for government to downplay the initial cost so that the program will be approved.? Once approved, cost overruns are the norm.

As such I expect the liability to grow until it is broken, or until it breaks us.? I am not trying to be a Scrooge, I am just trying to point at what may break the system, and produce a greater heartache.? A broken government is worse than one that does less, but survives.? One who is heartless continues to add liabilities to a system that can’t afford them, e.g., Bush 43 and Obama, rather than doing the tough work of scaling back entitlements so the past promises and the system survives.

In the above graph, what I call alternative Medicare Scenario, is the alternative scenario in the report which is the more likely scenario, which assumes that Congress does not enforce lowered medicare reimbursement that PPACA required (a dishonest aspect of the bill).? The portion called “Obamacare and Redefinitions” is my estimate of assumption changes that reflect an effort to make things cost less that will be undone as the true costs emerge.? No one is trying to be honest here — those writing the report, and the actuaries at the Social Security Administration are doing their best, but the politicians that passed PPACA twisted the math to make it look like a win for the American people, and bit-by-bit, it will be revealed to be a loss.

One more note: I have added into my estimates the “Infinite Horizon Increment,” which adds in the present value of the net value of entitlements beyond 75 years from now.

Here’s my second graph:

Here is where the past gets cheated: as I did this graph, I noted that GDP figures had been revised down from past estimates.? This makes recent growth look better than before, which people care about today, and past growth look worse, which few care about much.? (Note: the adjusted ratio takes out the wishful thinking of the Obama Administration.)

Regardless, watch the upward march of liabilities versus GDP… this is the march of rising promises that will eventually be broken.? Maybe we need a Constitutional Convention to sort this out, because the politicians just keep adding to the problems, and we keep re-electing them.? The US was originally based on a concept of limited government, with most domestic powers granted to the states.? That has been overturned, and over the last 100 years, big government as the protector of little people who cannot fend for themselves has been the policy.

Maybe I should go back to my saying, “Bubbles are predominantly phenomena of finance.? They continue to exist until the asset in question yields less than the liability that carries it.”? We await the moment where the majority of assets no longer trust the US Dollar, which would have been sooner than this, but most major nations have compromised their currencies to satisfy politically important exporters, in this “beggar thy neighbor” world, importing asset bubbles in their wake.

Unsustainable policies are the rule of the day.? I don’t what what will come of them, whether it will inflation or deflation, higher taxes or reduction in spending.? But a day is coming where we will be forced to choose, and under conditions less favorable than if the choices were made now.

Sorted Weekly Tweets

Sorted Weekly Tweets

Central Banking

 

  • Records Show Fed Wavering in 2007 http://on.wsj.com/SgLPoG 4 all of their vaunted intelligence, the Fed was worried, but clueless in 2007 $$
  • Three Stages of Fed Grief: Key Quotes From 2007 http://t.co/X4ygwdqU Slowly realized the economy they overlevered was getting worse $$ Jan 18, 2013
  • Fed Concerned About Overheated Markets Amid Record Bond-Buying http://t.co/wDckfD77 The sourcerer’s apprentices note there is a problem $$ Jan 17, 2013
  • Paul Moreno: Gold, Greenbacks and Inflation: A History and a Warning http://t.co/75M1jNRo Ppl forget the degree the Fed has debased $$ Jan 17, 2013
  • Once you turn base money into short-term debt, can you go back? http://t.co/pG3gxBwA @interfluidity ideas getting deserved attention $$ Jan 16, 2013
  • First Shots Are Fired in Global ‘Currency War’ http://t.co/y6GJi0V5 Japan leads “race 2 the bottom.” Who will b first 2 stop sterilizing? $$ Jan 16, 2013
  • Currency Moves? & Central Bank Bravado http://t.co/zt7BI1As Posit that the yen is falling due to war risks & Japan biz risks in China $$ Jan 16, 2013
  • Abe Rocket-Start Lowers Sony Risk With Market Fuel http://t.co/J4cLgQKJ Loose monetary has spillover benefits 2 indebted corporations $$ Jan 16, 2013
  • I’ll grant this: the government always has some role in money, even commodity money like a gold standard… http://t.co/QtVI3oeC Jan 12, 2013

 

Rest of the World

 

  • Pressure Rises on China to Scrap One-Child Policy http://t.co/iDfZ0Ssl No better way 2 have a demographic crisis; change long overdue $$ Jan 18, 2013
  • Default Alarm Rings as Trust Loans Jump Sevenfold http://t.co/2tr1vFnq China is so messed up that it makes the Eurozone look good $$ Jan 17, 2013
  • Singapore Curbs Industrial Property Sales to Avert Bubble http://t.co/vZQhsdya Increases bid-ask spread; can’t fight fundamentals $$ Jan 17, 2013
  • Mongolia?s Erdenes TT Halts Coal Exports to Biggest Buyer China http://t.co/hoTHAxxZ Probably either gross malfeasance or bribery $$ Jan 17, 2013
  • European Dividends Tumble to Four-Year Low as CEOs Hoard http://t.co/D6YdzVqD Favor European Exporters over their Domestic companies $$ Jan 17, 2013
  • Euro at 10-Month High Poses Economic Threat, Juncker Says http://t.co/bk0FsVEE The #currencywars continue. Rule: Beggar thy neighbor $$ Jan 17, 2013
  • Russia Says World Is Nearing Currency War as Europe Joins http://t.co/OvVu0ZMH Accept export slowdown? Monetize debt? Stupid QE-like stuf? Jan 17, 2013
  • Rio Tinto CEO Steps Down http://t.co/lqWyRPES Every CEO should have etched on his wall: “Paying up 4 scale acquisitions is dumb” $$ $RIO Jan 17, 2013
  • China Capital Flow: Foreign Direct Dis-Investment http://t.co/V8erkuxL Foreign inv’t inflows falling, domestic inv’t outflows rising $$ Jan 17, 2013
  • China Starts Losing Edge as World’s Factory Floor http://t.co/pG7uOFqX SE Asia benefits as China becomes more expensive 2 operate in $$ Jan 16, 2013
  • Norway Sees Deeper European Job Pain as Default Fears Recede http://t.co/ztbfvp0H Rising NOK makes exports less competitive &fewer jobs $$ Jan 16, 2013
  • Often when FX vols spike it means something might break, like the SNB not able continue its EUR peg. But if… http://t.co/fydAlRSX Jan 16, 2013
  • HSBC needs 2 end its Ping An silence with simple answers http://t.co/8xVAWiHD much alleged insider deal information has been circulating $$ Jan 14, 2013
  • Mainland alchemists turn damaged zinc into solid gold http://t.co/W4zu69k7 An example of how Chinese banking system papers over bad debts $$ Jan 14, 2013
  • Rumor: large backlog of Chinese companies want to IPO, but having hard time slowing the required 2 years of rising earnings $$ Jan 14, 2013
  • Neighbors Grow More Wary of China http://t.co/aYMUvLs2 Ex-pat Chinese moving in, looking a little graspy w/respect to resources, etc $$ Jan 14, 2013
  • Mineworker Debt Mounts as South African Lending Booms http://t.co/hTkXyCTc There are few places in the world without debt overages $$ Jan 14, 2013

 

Market Impact

 

  • Deutsche Bank Derivative Helped Monte Paschi Mask Losses http://t.co/PeqTdPBT Bad investing led to losses 2 hide. Enter Deutsche Bank $$ Jan 17, 2013
  • reaching for yield http://t.co/zFaWCA7h @researchpuzzler notes tight junk spreads, but + Ed Meigs & Dan Fuss r ?naysayers on junk credit $$ Jan 17, 2013
  • Short-term Debt and Financial Crises: What we can learn from US Treasury Supply http://t.co/UG1RvuHm Qty issue ST fin’l sector debt->crisis Jan 17, 2013
  • 22 Insights From The Most Successful Investors In History http://t.co/4u3QVRJL Very nice assemblage of quotes from the best investors $$ Jan 16, 2013
  • [Will] the Bond Bubble Finally Burst? http://t.co/1c7hOX4W Synthesis of a variety of views: Yes, but not in the short-run… $$ Jan 16, 2013
  • FINRA to brokers: know your high-yield securities http://t.co/DJHC5NvT Intelligent words from FINRA; b able2show clients all possibilities Jan 16, 2013
  • The High Yield Market is “Completely Out of Control.” http://t.co/GBUfGOa9 Watch risky debt buyers; c if they need things 2go right2survive Jan 16, 2013
  • Gold Forecasters Splitting on Peak for Bull Market http://t.co/EIEgk2Al Most-accurate gold forecasters>price will probably peak in 2013 $$ Jan 16, 2013
  • Whatever Happened 2 Good, Old-Fashioned Accountants? http://t.co/aFofQ4Mv @retheauditors explains y basic blocking&tackling go a long way $$ Jan 17, 2013
  • Yale May Buy More Hedge Fund Assets After Favoring Cash http://t.co/D0cP9LDV Timing feels wrong here w/credit spreads tight & vol low $$ Jan 16, 2013
  • Baupost Group Sitting On 116% Return From Madoff Claims http://t.co/u4MYuhJI Bankruptcy judge said ?seller?s remorse,? denied his effort $$ Jan 16, 2013
  • Leeway on Repo Rules Is Cut Back http://t.co/B16EXZfR “…we’re basically saying all repos should be accounted for as borrowings,” $$ Jan 16, 2013
  • Inside the Self-Driving Index Funds That Finish First http://t.co/XPEfHyE4 @jasonzweigwsj $BLK low fees, shares sec lending revenue $$ Jan 15, 2013
  • How2use Twitter & Facebook 2 make $$ from shares http://t.co/lXXw321E Just watch: this causes the next ‘flash crash’ h/t: @abnormalreturns Jan 14, 2013
  • KRS Spin Machine Is Smearing The Truth Again http://t.co/VGGSkxHX Kentucky Retirement Systems does not use RFPs -> “pay to play” @ KRS $$ Jan 14, 2013
  • US Not So High Yield Bonds : “It’s Starting To Feel A Lot Like 2007” http://t.co/QUGhAMqC Will supply grow, or will misfinancing start? $$ Jan 14, 2013
  • SP500 Revisited – Testing 1484/1500 zone and reversal after? http://t.co/8TMktTjD Argues for a correction in stocks in the near term $$ Jan 14, 2013
  • Hedge-Fund Leverage Rises to Most Since 2004 in New Year http://t.co/rwFVhRmz H0: flexible $$ overallocated to stocks now> correction due Jan 14, 2013
  • 39% of Fund Managers Beat the S&P in 2012 http://t.co/xRx3Juik It was a growth year & not a value year. 48% would b the 10-yr average $$ Jan 13, 2013

 

Billionaires

 

  • I suppose Bloomberg could write a book about hidden billionaires, and call it “The Billionaire Next Door.” http://bloom.bg/WN9Jo8 ?#yeah $$
  • Erie Billionaire Hagen Revealed as Car Premiums Surge http://t.co/BsMEp8gu $ERIE interesting company w/a unique asset-lite biz model $$ Jan 17, 2013
  • Hidden Billionaire Milking Saudi Dairy Fortune in Desert http://t.co/XAoRKBRp Bloomberg likes ‘outing’ obscure billionaires like this $$ Jan 14, 2013

 

Personal Finance

 

  • Why you can?t avoid dumb 401(k) mistakes http://t.co/fffPsn0k Plan sponsors chase hot managers & avoid passive options $$ Jan 16, 2013
  • Behind the indexed annuity curtain http://t.co/Qo7RdSX9 Avoid. Surrender charges r long & high 2pay commission; opaque int crediting $$ Jan 16, 2013
  • One in four savers has 401(k) ?leakage? http://t.co/TRBsFfwx Retirement seems far away, but $$ needs r near, so ppl tap their 401(k)s Jan 16, 2013
  • Seven Resolutions to Get Your Nest Egg in Shape http://t.co/cqNqpxJF Good basic advice 4 ordinary people taking care of the nest egg $$ Jan 16, 2013
  • E-Filing and the Explosion in Tax-Return Fraud http://t.co/9SAE6oPL Identity theft; 1 reason y I do it myself & file on paper $$ Jan 14, 2013
  • Housing Problems: Where To Get Help http://t.co/3hrCyQFy @retheauditors gives advice to those having issues with foreclosures $$ #goodstuff Jan 13, 2013

 

Banks and Investment Banks

 

  • More Ideological Excuse Making for Bad Banks http://t.co/0wjkQq3n It takes two to tango; it takes two to make a loan. Both deserve blame $$ Jan 17, 2013
  • A tempest in a spreadsheet http://t.co/W2mwYeHO A reason y having robust “smell tests” r needed when mathematical models get complex $$ Jan 17, 2013
  • Mortgage Nanny Added to Lender Job Description http://t.co/nRRonPBL Caveat Emptor:May make probs worse by creating illusion of safety $$ Jan 17, 2013
  • Wells Fargo to Start Jet-Leasing Venture http://t.co/a0FwgcNn FD: + $WFC | I like the fact that theyr starting small #organicgrowth $$ Jan 17, 2013
  • Jefferies Sets Table in Pay Clash http://t.co/s6utAuEy Or, they could jump 2 $JEF soon 2b $LUK. $$ motivates better, but conflicts occur Jan 16, 2013
  • Bankers Get IOUs Instead of Bonus Cash http://t.co/fKrpWXZL Will tie employees more tightly, unless they jump to related industries $$ Jan 16, 2013
  • Report of $JPM Management Task Force Regarding 2012 CIO Losses http://t.co/i7x0Ifi4 [132pp PDF] If interested in $JPM, summary in 17 pgs $$ Jan 16, 2013
  • Municipalities Should Ditch Wall Street Derivatives Deals http://t.co/Jqmgjllk If Wall St is on other side of table, watch your wallet $$ Jan 16, 2013
  • Banks say new agency’s oversight is slow, costly http://t.co/aHIGFRUh Banks pine away over the regulatory laxity they had 6-10 years ago $$ Jan 16, 2013
  • Goldman?s ?Secret? Team Shows Volcker?s Folly http://t.co/fovIyDRf Difficult to stop prop trading, better 2 remake I-banks partnerships $$ Jan 14, 2013
  • Bank Deal Ends Flawed Reviews of Foreclosures http://t.co/7DoTN8yA absurd, $$ will b distributed w/little regard 2 who was actually harmed Jan 13, 2013

 

Economic Policy

 

  • Portfolio Manager Creates Dazzlingly Deep Presentation On What’s Really Going On With The US Economy http://t.co/vcRHWwEe Long but good $$ Jan 17, 2013
  • Obama Finds Path to Congress Deals Goes Through McConnell http://t.co/B763HV1u Give him his due; has a nose that can sniff out deals $$ Jan 16, 2013
  • The Next Tax Increase http://t.co/7beI2QUO What the US Govt has belongs 2 the US Govt. What belongs 2u is subject 2 negotiation $$ Jan 16, 2013
  • Swap the Debt Ceiling for a Rule That Makes Sense http://t.co/NVYjvTD8 Maybe limit total liabilities of US Gov’t to 2x GDP? Way past that Jan 16, 2013
  • Why U.S. might be ?a nation of deadbeats? http://t.co/UuOHrKlt Consumers have been paying down debt, but walking away from more $$ Jan 16, 2013
  • A Credit Downgrade Warning Both Sides Should Listen To http://t.co/TbB3Gbdn Rating agencies r more honest than US Govt. Fitch may d/g US $$ Jan 16, 2013
  • Treasury Bill Rate Curve Inverts Amid Debt-Ceiling Showdown http://t.co/0KOQqC7A Bill curve showing some inversion due 2 debt ceiling $$ Jan 16, 2013
  • Money-Printing Will Lead to an Inflation in Another Guise http://t.co/erqP71P7 Debt overload & slack capacity short circuit credit growth $$ Jan 16, 2013
  • Two Warning Signs for Treasuries http://t.co/BdAcNkHE “yield curve btw 2&10 years is starting to steepen” Resistance 2 neg real rates up $$ Jan 16, 2013
  • TIPS Implied Inflation 4 2018-22 rose over 2012; flat now http://t.co/R28O77bX 2014 Inflation rising http://t.co/VCfupYLT $$ Fed target 2.5% Jan 16, 2013
  • US states flirt with major tax changes http://t.co/EnZmtggx Red states moving toward sales & away from personal/corporate income taxes $$ Jan 14, 2013

 

States & Municipalities

 

  • California, Unsaved, Speeds Toward a Wall of Debt http://t.co/pyrObgbr Constants in life that r not comforting: gimmicks in CA budget $$ Jan 17, 2013
  • California Could Be the Next Shale Boom State http://t.co/r0QChYDh Energy could flow from the Land of Squandered Advantages $$ Jan 16, 2013
  • Pension Funding Gap Widens for Big Cities http://t.co/a76JAJT0 Expect 2c many fights where bens cut 4 new, active & retired employees $$ Jan 16, 2013

 

Companies

 

  • Suitors Interested in H-P’s Autonomy, EDS Units http://t.co/AXdvxjei Wouldn’t put 2 much into this; $HPQ won’t get good prices $$ Jan 16, 2013
  • Genworth Shares Soar Amid Plan for Mortgage Insurer http://t.co/Jqmgjllk $GNW moves deck chairs on the Titanic; rewarded for now $$ Jan 16, 2013
  • Chevron Signs Deal for More Oil Exploration Acres Off China http://t.co/Yqb7yY7g FD: + $CVX smiles as it rides the tiger $$ #risks Jan 16, 2013
  • My Favorite Tobacco Stock Is Intel? http://t.co/Wupvh1qk @CharlesSizemore explains y it should deliver returns, amid hatred $$ FD: + $INTC Jan 16, 2013
  • TNT Left at Altar Gets No Immediate FedEx Deal http://t.co/QSdDHarC “FedEx in a good position to wait this out & let TNT come to them.” $$ Jan 16, 2013
  • Latest IPOs Arrive In The Form of New MLPs http://t.co/cq7XuIKv All of the new MLPs r energy-related $$ Jan 14, 2013
  • ARM CEO East Says Phooey to the ?Transistor Cliff? http://t.co/wfiIeQau Cost, speed, & power use r the key factors 4 logic chips $$ Jan 14, 2013

 

Miscellaneous

 

  • Davos Pitch for Dynamism Rams Into End-of-Growth Debate http://t.co/1bNvkwD7 I don’t think growth is ended, but bad finances interfere $$ Jan 17, 2013
  • Global Piracy @ 5-Yr Low http://t.co/YgJlRQSh 2012: Pirates boarded 174 ships globally v 439 in 2011, people taken hostage 585<-802 $$ Jan 16, 2013
  • NRA Labels Obama Hypocrite on Guns for Child Protection http://t.co/DqIsubsA Administration doesn’t like the argument; hits close 2home $$ Jan 16, 2013
  • Kidnap insurers eye sales as euro crisis bites http://t.co/w5CfiwOe Stable rates: More competition, & armed guards 4 sea transport $$ Jan 16, 2013
  • Mathematicians coming of age to become the most sought after professionals http://t.co/thXJdgsS Nerds of the world unite! Big data 2analyze! Jan 16, 2013
  • The Margin Debate http://t.co/zE6p5oO1 Labor share of US GDP has fallen because growth in the global capitalist labor force, wages fall $$ Jan 13, 2013

 

Financial Blogging

 

  • Your guide 2the financial blogosphere http://t.co/9mkoln2n Comprehensive list of finance bloggers. I’m listed under “Trading & Investing” $$ Jan 14, 2013
  • What are the 100 Top (Anglo-Saxon) Finance Blogs? A Pseudo-Scientific Study http://t.co/I9UU32zP I ranked higher than I expected 🙂 $$ Jan 14, 2013
  • The purpose of this site http://t.co/Bp4sqw5o @reformedbroker ‘s excellent piece on how his blogging helps him think & invest better $$ Jan 14, 2013

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Painting Kate Middleton

 

  • @judehere Perhaps this then? http://t.co/hstcUqPq Jan 16, 2013
  • @judehere That’s okay. You say he painted the Queen? That’s interesting. Is there an image of that out on the web? Jan 16, 2013
  • ‘ @judehere She seems to be a nice lady, so I wouldn’t be a fan of that. But Freud died in 2011, so the possibility is not there. Jan 16, 2013
  • But this portrait of Kate Middleton is worse in my opinion http://t.co/LBMKplpo No wonder only 19% like it. (2/2) $$ Jan 16, 2013
  • Learning to draw, I copied a photo of a friend w/pencil. Another friend said “You took a very pretty girl, & turned her in2 pretty girl” 1/2 Jan 16, 2013

 

 

Michael Pettis

 

  • Pettis: What I will watch in 2013: 10 things: hard commodity prices, trade numbers, Spanish Bonds, Target 2, & Japan (2/2) $$ Jan 14, 2013
  • Pettis: What I will watch in 2013: 10 things: China growth, Debt trajectory, financial scandals, bank activities, inflation (1/2) $$ Jan 14, 2013
  • Pettis: Imbalances can continue for many years, I argue, but at some point they become unsustainable & the world must adjust by reversing $$ Jan 14, 2013
  • Pettis: Policymakers do this by shortening their time horizons &managing from crisis2crisis, rather than sorting out the underlying problems Jan 14, 2013
  • Pettis: policymakers… taking steps that protect them from the consequences of the crisis but that also make the crisis worse. $$ Jan 14, 2013
  • Pettis: It is interesting that policymakers are so pleased by an end (temporarily, I assume) to the financing crisis. $$ Jan 14, 2013
  • Pettis:We ended 2012 in a burst of optimism for Europe, w/everyone cheering Mario Draghi 4having ?saved? the euro, but I am deeply skeptical Jan 14, 2013

 

Wrong

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  • Wrong: How to Find a Fund Manager Who Can Beat the Market http://t.co/2Nq1Z9b2 Doesn’t understand difference btw correlation & beta $$ Jan 15, 2013
  • Wrong: US Budget : Federal finances continue to improve http://t.co/HKzv6pLK It is a *spending* problem that started w/Bush 43, not revenue Jan 15, 2013
  • Wrong: Municipal Bonds May Not Be Safe From Income Taxes http://t.co/MnIQIdor Would be a big shift, hit blue states hard. Won’t happen $$ Jan 14, 2013
  • Wrong: Chris Hayes’ Brilliant Explanation Of Money Is One Of The Best Things We’ve Ever Seen On TV http://t.co/e0kxN5oZ #goldstandard $$ Jan 13, 2013

 

Comments and Retweets

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  • Good night. Blessings to all. Jan 18, 2013
  • @cogent_rambling Think of judges in a court. No one will forgive a man for doing wrong in one area, because he has done good in others Jan 18, 2013
  • @cogent_rambling It’s not a question of weakness but wrong. Divorce your wife for no good reason, cheat at your craft, all amounts 2 wrong Jan 18, 2013
  • @cogent_rambling Good question. God created Lance with a weakness. If Lance had trusted God, he could have overcome it, but he didn’t. Jan 18, 2013
  • @cogent_rambling Not those that are God-given. Mt 5:48: “Therefore you shall be perfect, just as your Father in heaven is perfect.” Jan 18, 2013
  • @cogent_rambling One last point: in the view of Jesus is there is no balancing. The least amount of evil poisons any good. Jan 18, 2013
  • @cogent_rambling Read some of the writings of Kahneman & Tversky. Bad things have 3 times the force of good things. Good doesn’t erase bad Jan 18, 2013
  • @cogent_rambling Okay, I get it. But doing good things does not erase bad things. Doing things that are notably bad tarnishes anything good. Jan 18, 2013
  • @cogent_rambling I have heard the word as a part of popular culture, but have no idea what it is beyond a phrase. Jan 18, 2013
  • @cogent_rambling Okay, I’ll bite. His charitable endeavors, but what else? Jan 18, 2013
  • @sallyeastman1 Well said Jan 18, 2013
  • My view: Lance Armstrong is best ignored. Close the browser window, change the channel on the TV, he will go away. I don’t care about him $$ Jan 18, 2013
  • @AboveAvgOdds Off to meet w/u & Chris Mayer in downtown Baltimore Jan 17, 2013
  • Endorse. I have read over half of these $$ RT @TheStalwart: The 22 books that Dylan Grice says you must read. http://t.co/QSOWvuBc Jan 17, 2013
  • @graemehein good point, but most simple models have obv intuition. Complex models have more potential 4 error b/c of 2nd+ order effects $$ Jan 17, 2013
  • @cate_long Others that did the same in 1994: Piper Jaffray’s Institutional Gov’t Income & FPA’s Fundamental US Gov’t Strategic Income funds Jan 17, 2013
  • @cate_long Combined w/levering them, and not having the mathematical savvy to price them right http://t.co/5vkUxgO6 Story near the bottom Jan 17, 2013
  • @cate_long Cate, you’re right, I’m wrong. At the time, David Askin & those like him were notable. W/Citron it was mostly structured notes Jan 17, 2013
  • @kirstensalyer Sorry, that honor belongs to the first quantitative hedge fund manager, Ben Graham, who was doing that in the 1920s Jan 17, 2013
  • @cate_long Also used complex RMBS. There was kind of a contest 2c how much negative convexity one could absorb in exchange 4 yield Jan 17, 2013
  • RT @maxrudolph: #unintendedconsequences when pension regs set up EA designation cut off practitioners from ALM development. Still catchi … Jan 17, 2013
  • Well done $$ RT @LaurenLaCapra: Jim Chanos talks to @Reuters about Herbalife & whether Ackman or Loeb will win out: http://t.co/sV7B604o Jan 17, 2013
  • @finsovet @prieur @vitaliyk Honored 2b included in such a group Jan 17, 2013
  • Think this analysis is correct, but uncertain $$ RT @mickwe: 3D printing is a lot of hype and it’ll never go mainstream http://t.co/8wkr5oxp Jan 17, 2013
  • I just left a comment in “7 gut checks before the stock market?s opening bell” http://t.co/MrSqVXZF Jan 17, 2013
  • @niubi If so, good for him. He revolutionized my economic thinking with his last book. Looking forward to the next one. Review copy coming Jan 17, 2013
  • +1 RT @dpinsen: Paging @TomFriedman: comment on How a ‘model’ employee got away with outsourcing his work to China http://t.co/wukYAV8T $$ Jan 17, 2013
  • +2, scrap IFRS RT @Alea_: +1 Britain should scrap IFRS accounting standards, MPs told http://t.co/woWmyC2v Jan 16, 2013
  • @oddballstocks very different mindsets; marketing and operations r different from finance, which is still different from investing Jan 16, 2013
  • @oddballstocks I did that as well from 1992-1998. Tried very hard to select non-name-brand mgrs w/durable competitive advantages Jan 16, 2013
  • ‘ @ClayNickel It depends on how equitylike the bonds r, & the financing composition of the holders. If the bonds r financed w/sig debt.. $$ Jan 16, 2013
  • RT @Matthew_C_Klein: The big deal about the German gold story isn’t that they’re taking some of it out of NY but that they’re moving *al … Jan 16, 2013
  • RT @Matthew_C_Klein: @izakaminska has a thoughtful take on the base money debate between @interfluidity and @NYTimeskrugman http://t.co/ … Jan 16, 2013
  • ‘ @joshuademasi Good point. After all, most nations would love to swap for Norway’s economic situation. $$ Jan 16, 2013
  • @earwulf Good insights both. We live in “interesting times” in the full meaning of the Chinese curse Jan 16, 2013
  • @ReformedBroker Rieder is a bright guy, as is my friend Ed Meigs at First Eagle; HY is okay for the short run, but 2 years out… $$ #Boom! Jan 16, 2013
  • @earwulf Yes Jan 16, 2013
  • @earwulf No, I don’t really find them persuasive. I do think that some Central Bank will stop sterilizing asset purchases, start new phase Jan 16, 2013
  • @JacPatterson I thought about that too, & think he really meant “English Language” Finance Blogs Jan 15, 2013
  • “But that also means you have to keep more $$ around if the puts get exercised, which Buffett had & many don’t.” http://t.co/uEIRn5i3 Jan 15, 2013
  • @joelight @spbaines the paragraph that starts ‘To screen out such “closet indexers,”‘ is factually wrong, does not understand statistics Jan 15, 2013
  • @joelight @spbaines I’m not arguing w/R2 as a proxy for active share, though there r better measures; article says correlation, means beta Jan 15, 2013
  • +10 Mmmmm… RT @dpinsen: Bresaola, lemon, olive oil, Parmesan, and basil joining forces for a great sandwich. http://t.co/pMMVmoI5 Jan 14, 2013
  • @abnormalreturns I’ve run into a *lot* of people trying to do this. Some are cleverer; not sure how it will work out… Jan 14, 2013
  • @JayLeonard but gold does control inflation and limits the government’s ability to use monetary policy for its own ends Jan 13, 2013
  • @JayLeonard Much of the difficulty is not gold vs not gold, but how banks were regulated — short liabs carrying long assets Jan 13, 2013
  • @GuldbergPeter Thanks, though I have heard that Canada *may* have issues. Jan 12, 2013
  • RT @GuldbergPeter: “@AlephBlog: Is there anyplace in the world that hasn’t overlent on real estate? Sweden, Canada and actually to some … Jan 12, 2013

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FWIW

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  • My week on twitter: 40 retweets received, 1 new listings, 67 new followers, 65 mentions. Via: http://t.co/SPrAWil0 Jan 17, 2013
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