Tuesday, August 31, 2010

Mazi's Link O' the Day

We should all move to Belize.


http://finance.yahoo.com/news/How-to-Retire-Comfortably-for-usnews-2643852806.html?x=0

Monday, August 30, 2010

Saturday, August 28, 2010

Thursday, August 26, 2010

Mazi's Link O' the Day

The Congressional Budget Office makes a few blunders, and given these mistakes, makes you wonder if we should have done things (stimulus) differently.


http://www.realclearmarkets.com/articles/2010/08/26/cbo_the_cover-up_budget_office_98641.html

Monday, August 23, 2010

All Rich People are Evil

Now, for my trick of the day, I will come across as a giant dbag.

In today's New York Times, Paul Krugman has an opinion column titled "Now That's Rich" that deals with the impending expiration of the Bush tax cuts. Obviously, he is wholeheartedly for letting the tax cuts expire, and does his usual "shame on Republicans and rich people" schpeel. I'd like to clear a few things up.

What happens to the Bush tax cuts isn't on the Republicans. Bush passed the tax cuts with much smaller majorities in the House and Senate than what the Dems hold now, so whatever happens, happens because the Dems did or didn't do something. And of course, Obama has the power to veto an extension as well. Republicans may have started this, but Democrats, the end is on you.

Next, he describes the tax cuts as "cutting a check" to the richest portion of our society. Tax cuts do not cut checks to anyone, rather, they let people keep the money they earned. Believe what you will about whether or not those salaries and stock options are deserved, it is all the rich's money, and the government is taking that money away. If anything, we should be grateful that the top 1% of income earners make up a whopping 42% of the income tax. Furthermore, 47% of Americans pay no income tax. I'm betting that many of those who pay no income tax are now screaming about how tax cuts to the rich are unfair.

Here is a news flash for the world. Life isn't fair. Not only is it not fair, it is impossible to make it fair. In fact, the whole notion of what is "fair" and "just" is arbitrary. The only absolute surrounding those concepts is that there is no absolute. We take much more of the rich's money, but they need that money less. We can't determine what percent is the right percent, or who should pay what. So please, Democrats, stop calling Republicans corrupt for wanting to extend tax cuts, they aren't. They just see one side of the coin.

What do I think we should do about the issue? Well, I think that first the issue needs to stop being an issue of right and wrong and start being an issue of what economically makes sense. Right now, most economic data says we need the extra taxes to pay for the massive expansions of social programs. So, even though I don't support many of these programs, I believe we need to let the cuts expire for the solvency of our country.

Long run, we need to get our whole country together. We are undoubtedly a country to the right of Europe, and Americans in general are averse to seeing the expansion of social programs. We like less taxes and less government, and I personally believe a few things need to happen. We need to seriously trim everything down. Make the tax code simpler and more transparent, and cut down taxes. At the same time, make what happens in Congress more transparent and cut back the programs coming out of there.

Of course, once the people have the programs, it may be impossible to take them away. In which case, I resignedly say, just increase taxes while expanding government forever. We may have no choice.

Mazi's Link O' the Day

This might be a good book for all those prospective New-York-investment-bankers.


http://epicureandealmaker.blogspot.com/2010/08/four-gates-to-city.html

Sunday, August 22, 2010

Surviving the Swan

It is no shocking revelation to claim that the global economy is still in volatile times. Central banks around the world have reemphasized the fact that growth will be slow for some time still. Greece has managed to tighten its fiscal belt (since employing certain austerity measures, the government has reduced the budget deficit by 39.7%). However, this has led to rampant unemployment and unrest. Of course, the U.S. employment picture is still, relatively, grim. What this is all adding up to is a picture of market sentiment. Many small investors have fled the market, and risk remains high (gold continues to be popular).

The Wall Street Journal ran an article today discussing the idea of the "Black Swan," a phrase popularized in 2007 by Nassim Nicholas Taleb. Essentially, the black swan is classified as a period of high volatility and unpredictability. These times are usually triggered by some external event (i.e- collapse of Lehman Brothers). I'll leave it to the Journal to explain all the different strategies people, and funds, are taking to deal with our current times of volatility. Although, on first glance, it may appear that those who are planning for black swans are always on the winning side, their strategies can have less than desirable consequences. In a bull market, most black swan plans do not generate large returns (the '90s). But this is a different era, and investors are seeking to profit from the current economic turmoil. I look at the flow of the market like a pendulum. As it swings upward towards a bull market, investors jump on, hoping to catch a ride to the top. Eventually, it peaks and starts its inevitable ride to the opposite side. As it moves back, perhaps to a bear market, perhaps just away from its peak, investors jump off one side and get on the other, hoping to profit from this new trajectory. Right now, we're seeing the herds flock to the pendulum, hoping to hitch a ride to pay dirt. Sooner or later, the pendulum will swing back to a bull market, or at least something more stable than our current situation. Till then, perhaps we should do as so many investors are doing, and try to enjoy the ride.

Mazi's Link O' the Day

A hedge fund giant, leaving the game (mostly)


http://dealbook.blogs.nytimes.com/2010/08/20/pellegrini-to-return-outside-capital-in-his-fund/

Thursday, August 19, 2010

I laughed out loud when I read this...

"An earthquake opens and underwater chasm, unleashing a swarm of ferocious man-eaters. The plot of 'Piranha 3D,' or a subtle allegory of the subprime mortgage crisis?" *



*Reprinted without permission from Crib Sheet by Henry Alford in today's NYT

Mazi's Link O' the Day

As the short article already says, discuss.


http://www.coordinationproblem.org/2010/08/unions-peaceful-picketing-and-coercion.html

19 Going on 10

Am I, as I progress in years, getting younger? Researchers (as well as NYT reporters, link in the title) can throw barrages of numbers at us that unequivocally show that kids are taking longer to grow up. To sum up the changes, I quote, "Sociologists traditionally define the “transition to adulthood” as marked by five milestones: completing school, leaving home, becoming financially independent, marrying and having a child. In 1960, 77 percent of women and 65 percent of men had, by the time they reached 30, passed all five milestones. Among 30-year-olds in 2000, according to data from the United States Census Bureau, fewer than half of the women and one-third of the men had done so." Sorry, long quote. But effective.

It is obvious that we are taking longer to grow up. It is also pretty evident why. I had a paragraph here giving examples of why, but decided that it took too long. So, we are taking longer to grow up because we are being coddled at heights never seen by previous generations. You'll have to take my word for it because previously, I used the word "disincentivize", which spell check tells me isn't a word, but google confirms. Therefore, I'm really smart.

General historical trends show that we have taken more and more care of our young as we mature as a species. In the Medieval Ages, good parenting for a noble was to have a child, send said child off to serve as a squire for a knight, cry at his funeral, then rinse and repeat. In our parent's generation, good parenting was to send a kid off to boarding school and not talk to them until vacation time, at which you informed them of your plans and shipped them off to summer camp. Nowadays, even shipping a kid off to boarding school means daily calls to check up, routine interactions with that kid's teachers, deans, advisors, hall residents, etc.

I posit that in the past, we got stronger as a race when we started taking more care of our children to protect them from physical dangers. Keeping a child safe from war is a good idea if you want him or her to procreate. However, we have got to the point at which we are taking too good care of our children. We coddle them to the point of no return, that is, they never become fully independent. Even in their thirties, many haven't completed the "Five Milestones". They are infants stuck in the bodies of adults. There is a visceral reaction to seeing a thirty year old eat breakfast prepared by his mother, and that reaction is ugly. Don't watch this increasingly common interaction unfold, it is terrifying. If you are so unlucky to hear the word "mommy" uttered by either party, immediately check yourself into a psychiatric ward for damage control. Coddling is BAD.

So parents, please let your children mess up their lives. A teenager learns a lot more from a mistake that they made than the lesson you preach to them right after you head off that mistake.

Wednesday, August 18, 2010

Something Vague

I'm taking a break on this post from my usual news-ian analysis to bring to you some thoughts/feelings/ideas on some broader philosophical topics. No, I am not basing this in any ACTUAL philosophy (in the academic sense, at least).

I have delved deeper into the recesses of good literature this summer, and I find myself relishing in the stories of people like Charles Bukowski and Hunter S. Thompson, along with my musical favorite, Warren Zevon. Dare I say, for better or worse, I find these people to be more of my own heart than some the more upstanding characters in society today. So here's the issue. Here I am, your genial narrator in this economic and political landscape. I like to think I work hard and take my studies seriously, and I'm not a down and out. Then there's the other side of me that I just mentioned. If not attracted to the lifestyle, I'm at least interested in the philosophy and the attitude. Am I a paradox? I have aspirations of Wall Street and government and academic prestige. Could Lloyd Blankfein listen to heavy metal? Yes is the answer I've come to.

I'd hate to barrage you with platitudes and cliches like "be true to yourself," but that's what I'm getting to. Portraying all Wall Street bankers as aggressive, overly-ambitious, narcissists with no personalities is the same as assuming all art majors are fashionistas. What's worse is when we decide to adopt these generalities in order to be "more like" others of our ilk.

Really, the point is, platitudes and groupings are usually false. This applies equally to making assumptions about markets/economics/politics, as well as to your everyday life. The best research comes from when you dig a little deeper and find something unexpected. You're not going to become CEO of Goldman Sachs by adopting what you may think is the "appropriate" lifestyle. You're going to get the job if you're a smart, hard working SOB. I used to worry about some of these little inconsistencies between my hobbies and lifestyle and my academic/career goals. My advice to you: don't sweat it.

Mazi's Link O' the Day

The overall picture is important to remember in this article (Washington does not necessarily affect Wall Street). Also, the finer point (the tax cuts could expire without causing the Great Depression II), is something I agree with.


http://www.washingtonpost.com/wp-dyn/content/article/2010/08/17/AR2010081705638.html

Sunday, August 15, 2010

Mazi's Link O' the Day

Goldman's economists have released their thoughts on a double-dip. In summary: probably not, because it's hard to imagine things getting any worse than they are now.


http://voices.washingtonpost.com/political-economy/2010/08/goldman_sachs_economists_no_do.html?wprss=political-economy

Saturday, August 14, 2010

Mazi's Link O' the Day

Something of a conspiracy theory. However, I do think there is some truth in the statement, "the FDIC is intentionally keeping foreclosures down because it knows it does not have enough money to pay off depositors who are insured by the FDIC." Of course, the FDIC could easily raise the money, but recently I have thought that it is best to flush the system, instead of delaying what may be inevitable foreclosures.


http://globaleconomicanalysis.blogspot.com/2010/08/former-bank-regulator-william-black-us.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+MishsGlobalEconomicTrendAnalysis+(Mish's+Global+Economic+Trend+Analysis)

Friday, August 13, 2010

Mazi's Link O' the Day

This may be my favorite economics/finance blog, partly for the incredibly well written posts.... even if they have nothing to do with economics/finance, like this one:


http://epicureandealmaker.blogspot.com/2010/08/ooh-shiny.html

Thursday, August 12, 2010

Are We Overreacting?

Wednesday was a bad day. There was a grand, old sell-off in the stock market, fueled mostly by the chronic concerns over the U.S. recovery/deficit/etc and the news that China's production may be slowing down. (China explicitly stated it was trying to reel in some of its growth. Why the hell is everyone reacting like they were just blindsided by Mohammed Ali!?). In no way do I mean to belittle the problems at home, or the potential problems abroad, but slow growth does not a crisis make. An article on CNN caught my eye with its title, "Don't panic. Growth is still growth." I suppose that's true. However, there are, as always, two distinct poles in this debate. There are the folks who've decided that Wednesday's sell-off is the first day of the apocalypse, and then there is the CNN article. As a cool-headed but concerned individual, I'm going to opt for the middle path.

Yes, the U.S. economy is growing. Yes, it is not growing as fast as desired. The Fed's decided to keep interest rates low, and a lot of firms have recently released earnings reports, and, I have to ask, are we surprised at the results? The Fed was not going to increase the rate, especially after GDP was reported to grow by 2.4% in the second quarter, .3% slower than the previous quarter. That's what I can't seem to understand. I scour the news and data, looking for that sudden, terrifying, unexpected event that led to all this hubbub. It seems to me like this is more of the same type of news we've been getting all summer. HOWEVER, it's still not good news. This economy is not growing fast enough to make me comfortable about where we may be 3 or even 5 years down the road. We may be still struggling out of the pits of this recent crisis half a decade from now, and although the continued struggle may be commendable, it's certainly nothing to be happy about. 2.5% to 3% growth is not very impressive for a recovery period. As a paper from Rutgers University reported, "During the 1991–2001 expansion, the average annual real GDP growth rate was 4.3 percent... Forecasts for real GDP growth over the next several years are significantly lower (e.g., Global Insight projects an average annual real GDP growth rate of 2.8 percent from 2010 through 2014)." Wednesday's sell-off may not be the return of the crisis, but when a brand new recession appears down the road, I fear we may end up tumbling back down the rabbit hole to even darker depths.

Wednesday, August 11, 2010

Goodbye, Blockbuster

Yet another sign of the coming apocalypse, the internet takes another step into controlling out lives. I say old people (read: naysayers) be damned, let it control me.

Mazi's Link O' the Day

We haven't heard much from our old friends from the crisis of '08, A.I.G., in a while. But they've been working on paying back Uncle Sam for his aid.

http://dealbook.blogs.nytimes.com/2010/08/11/a-i-g-to-sell-consumer-finance-unit-to-fortress/

Wednesday, August 4, 2010

Some Brief Thoughts on Energy

In the midst of this summer's European near-crisis and the full-on crisis of the Gulf of Mexico, one usual hot topic fell a little by the wayside. With the exception of some sneaky scientists (you'll have to do your own reading if you don't know what I'm referencing), the world of global warming was somewhat removed from the public eye. I do not claim to be anything near an expert on the matter. In fact, I'm probably not that informed about it, generally speaking. However, I did read an interesting tidbit on the blog "Marginal Revolution." It seems, according to a Harvard study, "the world could cut global CO2 emissions by about 6 percent simply by scrapping price supports for fossil energy." That sounds like a pretty good deal to me. The point is that people are always clamoring for government subsidies to help industries gain a competitive edge in global markets. I tend to veer to the right on this debate and think that weathering the turbulence of foreign competition on one's own is good for almost any firm or industry. Regardless of whether that argument holds for all industries, I'm almost certain there is no real need to subsidize fuel. Sure, fossil fuel prices go up for a bit, politicians get angry, and somebody says it's the sign of the apocalypse. A lot of things are going to be more expensive... it's called inflation. I think we should let fuel prices follow their natural course to wherever that may be. It may hurt a bit in the beginning, but prices are after all a nominal value. The health of the world and its climate, well, that's a real variable.

Mazi's Link O' the Day

Going down, down, down, down....


http://www.marginalrevolution.com/marginalrevolution/2010/08/downward-revision-in-2nd-quarter-gdp.html

Tuesday, August 3, 2010

Mazi's Link O' the Day

I haven't read the book, but just for this quotation: "At The Dancers they get the sort of people that disillusion you about what a lot of golfing money can do for the personality," this is a worthwhile link.


http://epicureandealmaker.blogspot.com/2010/08/rich-are-different-than-you-and-me.html

Monday, August 2, 2010

Mazi's Link O' the Day

This is an interesting view on the current tax cut debate. The argument, summarized, is that when tax rates on the rich go up, instead of paying those higher taxes, they simply find more creative ways to avoid paying them. I'm not sure if I buy it, logically, but the writer provides some numbers to back it up.

http://online.wsj.com/article/SB10001424052748703977004575393882112674598.html?mod=WSJ_Opinion_LEADTop