Tuesday, March 20, 2018

Selling My Vote ?

Imagine . . . a loved one has gone missing, when you hear a rumor they may still be alive.  Imagine that surge of hope and gratitude that floods your heart.  I'm feeling that way!  There is a rumor that Americans are suddenly indignant about their loss of privacy.  Is that too good to be true?

Personal data Goliath AKA Facebook just disclosed (involuntarily) that the personal information on as many as 50 MILLION of the users was taken by a subcontractor to target the users for political purposes.  An example, "they" would know where you live and would send you a series of emails whenever there is a political rally or demonstration in your area.  From reading your comments, "they" would slap a label on you, as a Democrat or Republican.  If "they" think you're a racist, then you will receive emails reinforcing that emotion.  Although not yet certain, it is thought this was the channel that Russia used to influence our last election.

But wait -- why would Americans be more infuriated about this, than the Equifax breach, when the personal data of 150 MILLION people was hacked?  We know anybody can be hacked, but we don't expect to be betrayed.

People using social media think they are clients.  Instead, they are the product.  Their personal information is sold to advertisers, who identify potential clients or buyers.

It has almost been fifty years ago since Joe McGinniss wrote his iconic The Selling of the President 1968, explaining that getting a person's vote is no different than selling a box of laundry detergent.  There is a seller with a product, and there is a buyer.  The object of advertising is getting them together.  We expect our political candidates to solicit our vote.  We don't expect Russians to solicit our vote for their candidate!

If the Russians will pay money to ask for my vote, what is the difference with them directly paying me $100 for my vote?  Can I walk down the street, holding a sign saying "vote for sale?"

The first step to maintaining any tiny piece of privacy is to get off social media.  Good luck with finding a second step!

I pray that I am not the last American who cares about privacy, but I do get lonely . . .

Saturday, March 17, 2018

Stockbrokers Win, Americans Lose

Historically, stockbrokers have been mere salesmen, pushing high commission or hidden commission products onto their unsuspecting clients.  Out of that swamp, Registered Investment Advisors emerged.  They embraced the Fiduciary Standard, which requires no hidden fees and full disclosure of any conflicts of interest.  Stockbrokers were held to a mere "suitability standard" which is virtually no standard at all.

Congress instructed the Securities and Exchange Commission (SEC) to develop a Fiduciary Standard for all investment advisors.  After a massive, years-long lobbying effort by stockbrokers, the SEC booted the project over to the Department of Labor, who finally produced such a standard, for application only to retirement accounts, mostly IRAs.

Then, along came the Trump Administration, who postponed implementation.  Now, the Fifth Circuit Court of Appeals has struck down the Fiduciary Standard.  Only the Supreme Court can save the Standard now.  Stockbrokers/salesmen are celebrating nationwide.

They are celebrating because their clients will not know the true cost of their accounts and because they can push products in their best interest, instead of their clients' best interest.  They still don't have to tell their clients about any conflicts of interest.

Sorry, America -- you lost!  You're sinking back into the swamp . . . 

Friday, March 16, 2018

Ten Year Facelift ?

It is hard to believe it has been ten years since the stock market began crashing into the worst recession since the Great Depression.  The key event was the collapse of Bear Stearns, a well-respected investment house.  In the aftermath, amidst cries of "Never Again," a well-intentioned Congress produced the Dodd-Frank legislation.

Like any complex legislation, it had bugs to work out.  Like any complex legislation, it needs to change with the times.  There is now a movement in Congress to update or curb some of the excesses.  They are right that the reporting requirements are too onerous.  Congressmen may be too zealous of raising the limit to $250 billion assets for firms to avoid excess supervision, instead of $100 billion. 

I would remind Congress that the primary tool to prevent another financial crisis is more capital.  The Republican House wants to increase the amount of leverage or debt that a bank may issue.  This is a mistake!  Reduce regulation, not capital.

Second, the Dodd-Frank Act was born before cyber-crime and desperately needs updating.

Third, for all its faults, the Federal government saved the economy in 2008/9.  Well, actually it was the Fed and regulators who saved us.  Except for TARP, Congress was useless.  In the vein of shooting the survivors, the Dodd-Frank legislation reduced the flexibility of the Fed and regulators to ever save us again.  No matter the problem, the Dodd-Frank legislation has already pre-determined the response.  If we experience another financial crisis, the Fed and the regulators don't have the flexibility to be innovative. 

When Bear Stearns crashed ten years ago, the commercial bank of JPMorgan bought Bear Stearns with assistance from the Fed.  That was a crucial move and a smart move.  But, Dodd-Frank makes that impossible now.  That makes us less safe!

Thursday, March 15, 2018

Bravo, Mr. President

Yesterday, the President announced the appointment of his old friend, Larry Kudlow, as his new chief economic advisor.  I applaud this appointment!

Larry is not a traditional economist, lacking any graduate degrees in the subject.  But, he has been a serious student, especially of Supply-side economics and even worked for Arthur Laffer, the father of Supply-side economics.  Consequently, I doubt he has ever seen a tax cut that he didn't like, accepting increased national debt, certainly in the short run.  As a free-trader or globalist in a protectionist or nationalist White House, Larry will likely be quite lonely there. 

But, he brings non-academic qualities that are badly needed in the White House.  He has a remarkable ability to disagree without being disagreeable.  I have disagreed with his slavish devotion to any one particular school of economic thought, but I have always enjoyed listening to him.  He is a good, decent, and classy guy.  I expect he will be an excellent economic advisor for this particular President.

Congrats, Larry!

Wednesday, March 14, 2018


In 2011, Putin was running for "re-election" in Russia, when the American Secretary of State Hillary Clinton sparked mass demonstrations of Russians by her rhetoric against the phony election.  Putin was furious with Hillary for her interference in Russian elections.

In 2016, he returned the favor by interfering with American elections -- employing technology as never before.  While he undoubtedly favored Trump over Clinton, he was more interested in simply hurting Clinton.  He would probably have supported the Libertarian candidate, Gary Johnson, merely because he was a non-Clinton.  Revenge is sweet . . . and addictive.

Long before the evidence was examined, Republicans concluded there was no collusion between Russian interference and the Trump campaign.  Long before the evidence was examined, Democrats concluded there absolutely WAS collusion.  Neither of their conclusions matter!

Collusion is a smokescreen hiding the real problem!  Putin's interference in our election last year was successful beyond his wildest dreams.  Why would he stop?

But, what are we doing to stop him?

Trump understandably sees the Russian interference as a tarnish on his beautiful election.  So, just blame it all on Hilary, who started it, according to Putin.  Then, prevent it from happening again!  Please!

Tuesday, March 13, 2018

Shifting Gears

The stock market has moods.  Sometime, it is in a bad mood and frets excessively about everything, especially political antics.  Sometimes, it is in a good mood and ignores political antics.  I think the market is in a good mood.  It dropped temporarily last week when Gary Cohn resigned but barely moved today when Rex Tillerson was fired.  It was buoyant this morning when the National Federation of Independent Businesses released its report on Small Business Optimism.  It was very optimistic, indeed, posting the second highest in history, amid broad-based growth.  Their biggest problem is no longer taxes nor regulation but is finding employees.  This is all good!

So, we have good economic data, increasing corporate earnings, increasing business confidence, and less sensitivity to political drama . . . . What, me worry?

Remember what Warren Buffett said - be greedy when others are frightened, and be frightened when others are greedy.  It is fine to relax in the current market but not to sleep.  It will not change tomorrow, but it will change.  In the meantime, enjoy the ride!

Saturday, March 10, 2018

Same News, Different Reactions

The February "Jobs Report" showed the the U.S. economy produced more jobs than expected, and the stock market tanked.  Yesterday, the March report again showed the U.S. economy produced more jobs than expected, and the stock market soared.  Why the different reactions to the same report?

The February report showed that average hourly earnings were up 2.9% over the same month last year.  This suggested inflation was breaking out, which inevitably leads the Fed to increase interest rates more quickly.  The March report reported that figure was only up 2.6% year-over-year, reducing the pressure on the Fed to increase interest rates.

Another question is how did we produce 313 thousand new jobs last month without the rate of unemployment changing from 4.1%.  You would expect that rate to drop, wouldn't you?  The good news is that almost 800 thousand people returned to the workforce.  That is really good news! 

Republicans focus on the Labor Force Participation Rate (LFPR), which measures the percentage of the population that either has a job or is looking for a job.  It has risen to 63%, which is the highest since the global financial crisis of 2008/9, and Wall Street is heavily Republican.

Let's see -- fewer interest rate increases to dampen profits, plus a booming economy, plus rising corporate earnings, plus a highly stimulative fiscal policy, plus "peace talks" breaking out -- why wouldn't the stock market soar? 

Friday, March 9, 2018


For honest intellectual inquiry or for mere debate, it is vital that discussion be framed correctly.  I recently wrote about the problem of thinking about gun violence with a rifle approach instead of a shotgun approach.  In other words, there is no one action or "silver bullet" that will solve such a difficult problem like gun violence.  Just because one suggestion will not solve all problems, it can still be part of a package of solutions.  Discussion of gun violence needs a wide frame.

For a discussion of tariffs, we need a more narrow frame. Most every economist will cite the principal of comparative advantage and oppose tariffs.  That does not mean individual trade abuses cannot be addressed.  Clearly, China has cheated on certain trade agreements.  That should not be ignored and should be confronted.  But conflating that discussion with a NAFTA renegotiation is misleading and counter-productive.  They need to stand apart and to be discussed apart from each other.  Discussion of tariffs needs a more narrow frame.

For a discussion of North Korea, a narrow, rifle frame of the "they must de-nuclearize" is a waste of time.  An honest discussion must include how the Kim family stays in power, support for their huge but poor population, and how to verify everything they say.  The areas of disagreement are obvious.  Widening the frame of discussion could reveal more areas of agreement.

Thursday, March 8, 2018

Ready, Fire, Aim!

President Trump has been understandably concerned about our international trade deficit, which rose from $53.9 billion in December to $56.6 billion in January - the highest in almost ten years.  Indeed, it has been getting worse since Trump's election.

But, it is easy to attach too much significance to this.  The U.S. both imports and exports different types of oil.  In January, our imports rose more than expected, while our exports rose less than expected.  Big swings make this data point unreliable on a monthly basis.

Amid much disagreement, the Administration argues that tariffs will increase the costs of certain  imports, which will drive down demand for those imports, decreasing the deficit.  Of course, this conveniently ignores the impact of retaliatory actions by other nations.  Uncertainty is growing, which makes it difficult for multi-nationals to plan.

Meanwhile, two other things are working to reduce that trade deficit.  First, ignoring oil, demand for our exports is increasing as GDP growth increases worldwide.  As foreigners get more wealthy, they want more American goods.  Second, the dollar has been falling, which makes our exports cheaper for foreigners.  Unless the Fed gets more aggressive with increasing our interest rates, I don't expect much strength in the dollar in the near future, meaning our exports should rise at a faster rate.

The point is this:  There is more than one way to reduce the trade deficit than starting a trade war!

Sorry, Mom !

Teddy Roosevelt was the 29th President, serving from 1901 to 1909.  A Republican, he is widely regarded as one of the five best presidents in our history.  He was a war hero, as leader of the "Rough Riders" during the Spanish-American war in 1898,  He began construction of the Panama Canal.  He was a nature-lover and a conservative conservationist.  He was the first real "trust-buster" to end certain abusive corporate practices.  I think he was indeed one of our best presidents!

But, I think he was the only Republican president that my late mother didn't like.  To her, style and grace and manners actually mattered, but President Theodore Roosevelt was an egocentric egomaniac instead.  Indeed, his daughter wrote of him that "My father always wanted to be the corpse at every funeral, the bride at every wedding, and the baby at every christening."  (Ivanka could not have said it better.)  Some people think egocentric egomaniacs are funny.  My mother found them in bad taste, which was worse than illegal.

If an egocentric egomaniac like Teddy Roosevelt can be a great president, then there is hope for Donald Trump to be great also.  But, my beloved mother was wrong:  style and grace and manners actually don't matter!  Apparently!

Sunday, March 4, 2018

The Joy of Inflation

Remember inflation during the 1970's?  It was a scary time, with prices rising so much faster than income.  The Fed had to intentionally throw us into a nasty recession in 1980, before taming inflation with record high interest rates.  If you can remember that, your hair is now gray.  Yet, inflation teaches a lesson to be remembered.  Inflation can be crushed.

There are many ways to measure inflation:  the Consumer Price Index, the Producer Price Index, Personal Consumption Expenditures, "Median CPI" by the Cleveland Fed, "Sticky CPI" by the Atlanta Fed, and the Underlying Inflation Gauge" by the New York Fed, etc.  The differences mean little now, because all of them are indicating a pick-up in inflation -- not runaway inflation yet, but definitely something to watch.

Inflation is not all bad.  One good thing about inflation is that it is not deflation, which is much more difficult to control than inflation.  We know a good old-fashioned recession will fix inflation, while deflation is much more pernicious.  It was only five years ago that the Fed was genuinely worried about deflation, despite the most stimulative monetary policy in history.  Fortunately, the Fed kept prices from falling or deflating.  While it may sound like empty rhetoric, it is important that inflation is better than deflation.

Another benefit of inflation is managing our dangerous level of national debt.  Ignoring myriad underwriting details, the amount of mortgage debt you can handle is a direct function of your income.  For example, if your income is $100 thousand, your mortgage payment should not exceed 30% or $30 thousand annually.  However, if your income doubles, your debt service drops to a healthy 15%.  The same math works for the economy.

Most economists of the Austrian school believe there is a downward economic spiral that begins when national debt passes 100% of national income or GDP.  That ratio was 105.4% last year but is rising more rapidly now, due to the stimulative tax cut.  That is not the highest debt-to-GDP ratio in history - 118% - following World War II.  The joy of inflation is that GDP normally rises faster than the level of national debt.  This is known as "inflating the debt away."  The amount of debt doesn't go down, the income or GDP goes up.

Given the inability of our Congress to make painful decisions, our only solution to manage our national debt is to bring back inflation.  While it is a double-sided sword, it is the only sword we have.  We need inflation!  Interest rates are certainly going up but not enough to stop something we need so badly . . . Inflation!

Friday, March 2, 2018


President Trump's regulatory policy is that two regulations must be scraped anytime a Federal agency wants to issue one new regulation, and that is a great policy.  The benefits will slowly seep into the economy for a long time.  I applaud him!

However, he announced his policy yesterday on tariffs, particularly on imported steel and aluminum.  The stock of steel companies rose $2.2 billion, while the stock market fell over $350 billion.  That policy is bone-headed at best and border-line stupid at worst.  There are so many arguments against this decision.

The economic argument is that this violates the principle of comparative advantage and encourages nations to produce those goods that they produce inefficiently.  While there is always cheating to any trade policy, there are better, more targeted ways to deal with cheating than starting a trade war.  As they say . . . brain surgery with a meat ax.

The investment argument is that the market doesn't like to be surprised  or blind-sided.  Yesterday's 420 point in the Dow proves that!  How was this terrible decision made?  Why was it made now?  What is the problem it solved?  There are better ways to make a bad decision.

The sociological argument is that his base, as so well-described in Hillbilly Elegy, will not benefit from this action.  Globalization has hurt these people but only because politicians did not provide for the job training programs that were long predicted.  We received the benefits of globalization without paying for it.  Plus, this policy is inflationary, because products using imported steel or aluminum will cost more, which hurts his "base."

The historical argument is that the Smoot-Hawley bill raised tariffs in 1930 and was designed to save the American economy from foreign competition, but it instead pushed it from a bad recession into the worst depression in modern history.  President Bush tried the same thing in 2002, costing over 200 thousand jobs.

The moral argument is that I find myself in agreement with Goldman Sachs, which I am loath to do.

President Trump tweeted . . . "Trade wars are good!"

The President is wrong, wrong, wrong!!

Monday, February 26, 2018

The Wisdom of Geeks

The American Economics Association (AEA) is populated by mostly academics and is consequently more theoretical.  I was a member exactly one year.  The National Association of Business Economics (NABE) is populated mostly by economists working in the real world.  NABE is NOT a bastion of liberal college professors, and I have been a member for many years.

NABE just released their latest survey of members, and here a few highlights:

1.  The majority think fiscal policy is "too stimulative," while monetary policy is about right.

2.  The Trump tax cut is good for the economy in the short run but bad in the long run.

3.  There is a low probability of infrastructure legislation this year.

4.  The President's executive actions on regulations are good for the economy.

5.  The President's executive actions on immigration are bad for the economy.

6.  86% believe debt will be a larger share of GDP in ten years.

All I can add is . . . AMEN!

Sunday, February 25, 2018

Rifle or Shotgun?

Listening to the endless debate over gun violence, I am reminded of the difference between rifles and shotguns.  A rifle fires one bullet at a time and is usually more accurate than a shotgun, which fires many small pellets.  Our debate seems to search for a single "silver bullet" that will fix the problem of gun violence.  There is no one solution to this complex problem.  Each solution will have some exceptions.  Discussion of any single solution is time wasted!

The Republican Florida governor, Rick Scott, has put together a package of non-perfect solutions, including raising the minimum age for all firearms to 21, strengthening background checks, one police officer in every school with a thousand students, as well as one mental health counselor, hardening schools with bullet proof glass, steel doors, etc.  Importantly, he wants to make it easier for others to request confiscation of a worrisome person's weapons, while respecting the worrisome person's Second Amendment rights.

Don't forget -- None of these individual suggestions is a fail-safe solution that will absolutely prevent all future gun violence.  There is no "silver bullet." However, taken as a package, it is a giant step forward, and the Governor should be applauded.

Saturday, February 24, 2018

Tesla = TSLA

It is important to know what you don't know, and I know that there is much I don't know about technology stocks.  As a result, I am slow to invest in technology companies that I don't understand.  I did not buy Apple or Amazon when they first offered stock to the public.  Maybe, that is because I have watched so many technology companies go public and then disappear.

However, one technology company is getting interesting to me - Tesla or TSLA.  The company was named after a Serbian engineer, who died in 1943, after greatly advancing our understanding of electricity.  The company is known as just another car company, that also happens to make electric cars, but that is misleading.  It is a battery company that also happens to make electric cars.  Those batteries are lithium-ion batteries that require little maintenance, weigh much less, and last much longer than the one in your car today.  (Yes, there is a fire problem, but that is a decreasing problem.)

An interesting anecdote is that when there was powerful storm that knocked out the power grid of South Australia in 2016, Tesla offered to fix the problem within 100 days or he would do it for free.  He did it only 60 days.  He set up solar panels that absorbed enough sun light to power the lithium-ion batteries that supplied energy to their power grid.  Amazing!

The analyst community is deeply divided on this stock.  Argus calls it a BUY, Reuters and The Street call it a HOLD, while Standard & Poor's calls it a SELL.  The primary concern seems to be the heavy debt load.  One worrisome problem is the iconic but mercurial CEO, Elon Musk.  How thin can he spread himself?  This founder of PayPal is also CEO of SpaceX, shooting rockets/satellites into orbit.

Because it is selling for about $350/share now, I will continue to watch.  However, it dropped down to $311 when the market had a minor correction earlier this month.  I will revisit this question when the market re-tests the bottom, as I expect.

deju vu

It has been almost a year since I predicted that President Trump would be impeached.  That prediction was not made with any glee, as impeachments are painful for America and disturbing for the stock market.  However, like all predictions, it is framed by certain experiences.

First, at one time I was a division president in a huge real estate company, running the public syndication of properties.  I know the real estate industry has lots of hidden fees, markups, and conflicts of interest that are never disclosed.  (The fiduciary standard of registered investment advisors definitely does NOT apply.)  There are also lots of perfectly legal transactions that simply "smell funny."

Second, my late mother must have told me a thousand times that "if you can't say something nice about somebody else, then shut up."  Attacking people is no way to make friends you may need later.  You may have a wide selection of "friends," but most of those friendships will only be an inch deep.

Third, I could never understand how Kenneth Starr spent $80 million investigating a failed real estate venture in Arkansas before finally catching a man with a strident wife lying about a frivolous sex act.  Yet, when I met him in 2002, I found that Starr was a surprisingly decent, honorable man.

So,  how could any real estate developer with many supporters but few friends escape an indictment by a special investigator?

I don't care if Mueller finds Trump was involved to some sleazy real estate deals, as I just take that for granted.  The regular justice system should deal with that.  What I care about is any potential "special" relationship between Trump and Putin!  Any other findings are just as irrelevant to me as Clinton's sex life.

Mr Mueller, I'm confident, is also a decent honorable man, but I hope he can stay better focused than Mr Starr.  Answer the question:  Was there any collusion with Russians or other foreign nationals in the Trump campaign or not?  If not, go home!

Friday, February 23, 2018

Skinning A Cat

Unlike many who lost respect for investment banking giant Goldman Sachs during the global financial crisis, I did not.  Instead, I lost trust in them.  Except for their research department, my conclusion has not changed.

In their arrogance, I doubted they knew or cared about that loss of respect/trust.  To my surprise, they set aside $500 million to "burnish their image," primarily by lending to small businesses.  Over 2,200 of those small businesses congregated in Washington this week.  That's a noble purpose and should be applauded.

But wait -- why did Goldman Sachs do such a thing?  In the past, the firm could exercise clout in Washington by its rather continuous flow of Goldman Sachs executives into government.  Some even joked the Federal government should be called "Government Sachs."  However, as their reputation suffered, the flow of executives decreased, and their influence dropped.

So, what did the small business people do at their convention in Washington?  They fanned out across Congress to pigeon-hole politicians!  Obviously, there's "more than one way to skin a cat" or to maintain clout in Washington! 

Thursday, February 22, 2018

Another Over-Reaction

Nobody is smarter than the market . . . but sometimes the market is stupid.

Two days ago, Walmart stock had their worst daily drop in 30 years, dropping over 10%, based on an unexpected squeeze in profit margin and a disappointing increase in the growth of online sales, which has increased 50% for each of the three previous quarters but only 23% last quarter.  This is the only company that has a chance to compete with Amazon, and it stumbled slightly.  (Some buyers call it a cheap way to buy Amazon-like market opportunity.) 

FYI - online sales are only 4% of Walmart's revenue.  There is every reason to believe their online sales will continue to rise dramatically and faster than Amazon's sales when it started.  (WMT just announced they will begin offering furniture online.)  More importantly, their same-store brick & mortar sales are still rising better than 2% annually, which is considerably above trend for retail.

I'm not selling any Walmart stock.  The market did what it does best . . . it over-reacted!  And, that's stupid!

Only semi-related, I have two words for Amazon, which recently bought Whole Foods and just announced their entry into healthcare . . . those two words are General and Electric . . .

Wednesday, February 21, 2018

The Spook Spoke

I remember a long-forgotten professor saying to his class that "if you cannot argue both sides of an issue, then you don't really understand that issue."

Last night, I had the pleasure of listening to John Brennan, the former head of the CIA, as he spoke to the Norfolk Forum.  Having served six presidents (three Republican and three Democrat), he discussed his conscientious effort to remain independent of partisanship.  After all, it is critically important that the president receive unbiased advice, and I suspect Brennan did the best possible job.  While he made clear that bellicose behavior was definitely the wrong strategy for handling the North Korea behavior, he didn't really attack or defend other Trump issues.  (Without mentioning Trump's name, he did comment that inexperienced leaders tend toward authoritarian regimes, to huge applause from the audience.)

The most interesting observation was that, due to their demographic problems of an aging population and their economic dependence on energy exports, Russia thinks tactically, while China thinks strategically.  Short-term tactics such as election interference suits Russia, whereas China is better suited to long-term thinking, such as building islands in the South China Sea.  Interesting . . .

The most heartfelt comments concerned Trump's continuing criticism of the U.S. intelligence services and Department of Justice.  Good and decent people are impacted by this, Brennan said, as well as hampering their ability to recruit future "spooks" or secret agents, especially among those addicted to one particular news universe.  I doubt even Brennan is dispassionate enough to argue both sides of this issue, and that's OK!

Tuesday, February 20, 2018

What! No Santa?

There has never been a time in my life that the massive conglomerate of General Electric was not one of the most respected companies in America.  Sadly, since the stock hit $53 per share in 2000, it has repeatedly lurched downward and is only $15 per share today.  The total market capitalization from dropped from nearly $600 billion to barely $130 billion now.  Sad!

Many analysts believe the decline was predetermined by the rapid expansion of an excellent industrial company into many unrelated industries.  After all, what does a company in both aviation and healthcare know about show-business or financing giant parcels of commercial real estate?  The obvious answer is "not enough."

Some believe it is time to break apart the company.  Probably, the aviation and health care divisions would be more valuable as separate companies than mired under GE's myriad problems.  However, that will be difficult.  As an example, GE used its cash to pay dividends and work out of problems but neglected to make the required contributions to its generous pension plan -- to the tune of $31 billion.

After losing half of its value over the past year, some bulls think the relatively cheap PE ratio of 15 and dividend yield of 3.2% make it attractive.  Maybe . . . but the ultimate indignity would be for this stock to be thrown out of the Dow.  What!  No GE?

Warren Buffett warns you should never fall in love with a stock - any stock.

But you can still be nostalgic!

Monday, February 19, 2018

Intellectual PTSD?

Most people think existentialism is a dark, dour, and depressing philosophy, but I have always found its emphasis on absurdity and self-determination to be refreshing.  Because I read most of the classic books on this subject years ago, I no longer look for additional books.  However, I find myself reading Left Bank by Agnes Poirier about "Art, Passion, and the Rebirth of Paris 1940-50."

Paris was the birthplace of existentialism, parented by Jean-Paul Sartre and Simone de Beauvoir.  The book described their life before the German invasion, during the occupation, and following liberation of the "city of lights."  While their suffering during occupation is trivial compared to the soldiers on both sides, there was a different type of suffering - a type of suffering unique to intellectuals, who tend to be overly-sensitive and self-involved.  War does different things to different people.

The darkness of existentialism and its preoccupation with death should not be surprising, maybe a form of intellectual PTSD.  One comment by Simone de Beauvoir seemed to say it best, comparing their memory of war to holding a rotting corpse in their arms.  Of course, all other concerns seem absurd, compared to that memory.  And, self-determination does permit a person to drop the corpse and move on with their own life.

While I appreciate the author's effort, because it does capture so much detail about the development of existentialism, I do not recommend the book to normal people, as it is a fountain of irrelevant names and details.  Sadly, she also missed the opportunity to discuss post-war Paris as the birthplace of the "free love" movement.

Normal, healthy people should stick with reading textbooks on economics . . .

Sunday, February 18, 2018

More Than Half Full

Economists often joke that a president gets more credit than he deserves for good economic times and more blame than he deserves in bad economic times.  This reflects the fact that long term trends affect things more than any one occupant of the White House.  Consider this:

1.  Thirty years ago, the homicide rate in the U.S. was 8.5 per 100,000.  Today, it is only 5.3.

2.  Thirty years ago, the poverty rate was 11%, compared to only 3% today, even after adjusting for inflation.

3.  In 1988, there were 23 wars or conflicts killing 3.4 out of 100,000, compared to 12 wars today killing 1.2 people per 100 thousand.

4.  In the early 19th century, average life expectancy was a mere 30 years.  Today, it is 81 years in the developed world, reflecting a huge decrease in childhood deaths.

5.  Literacy worldwide has increased from 12% to 85% since the early 19th century.

6.  At the beginning of the 20th century, women could vote in only ONE country.  Today, they can vote in almost every country.

7.  Life is a lot less dreary for Americans who now work 22 fewer hours per week and 43 fewer hours doing housework each month.

Enough already! 

The first question is which one U.S. president deserves credit for all this? 

The second question is why do we habitually think everything is so bad?

Saturday, February 17, 2018

Crystal Clear

It was July 18th of 2015 when I took the measure of Donald Trump . . . as a man.  That was the day he needlessly  attacked and trashed a personal hero of mine, i.e., John McCain.  It doesn't matter to me what the Mueller investigation eventually concludes, as I already know all I need to know about Trump . . . as a man.  What I don't know is Trump . . . as a President.  I pray he is a good President.  If he rises to combat the Russian attack on our electoral process, he will be a better President than he is a man.  If not, he should be impeached.

Friday, February 16, 2018

Thumbnail of Economic History

In the beginning, there was the Austrian school of economics, which argued that government tax revenues must equal government expenses every year.  The problem was that Austrian economics is "pro-cyclical," i.e., it makes cycle highs higher and cycle lows lower.  The only time the government can increase its spending is when revenues are rising, which is when the economy is already improving.  Conversely, when the economy is weakening, government tax revenues decrease, driving the cycle low lower.  Originally adopted by the Republicans, it has been abandoned to the Libertarians.

During the Great Depression, Lord Maynard Keynes developed his theory that governments should engage in deficit spending to stimulate a weak  economy when tax revenues are also falling.  The Democrats have largely adopted this theory of economics.  Actually, Democrats adopted half of Keynesian theory, because Keynes argued that deficits are acceptable during weak economic times but that debt should be reduced during strong economic times, and that has not happened since the Clinton presidency.

Arthur Laffer called Keynesian economics "demand-side," because it focused on economic demand from spending, and he argued that a "supply-side" approach was superior.  Cutting taxes would allow the economy to produce more, driving up the economy.  Since Ronald Reagan, Republicans have largely adopted this theory.  Unfortunately, they only adopted the easy part.  Laffer never argued that a tax cut was appropriate at all times.  (Google the "Laffer Curve.")

One thing that both Keynes and Laffer agreed on -- was that budgeting should be planned for each economic cycle, not each year.

Wednesday, February 14, 2018

The Needed Non-NRA

I like guns.  I like the way they feel.  I marvel at the engineering of them.  I appreciate the fine milling and the workmanship.  I respect the power they constrain.  I like guns and own plenty of them.

But, I hate and loathe the National Rifle Association.  They don't understand me, and they don't represent me.  They are traitors to the Second Amendment!

The world is not simply "black & white."  Intelligent people can understand the lame "slippery-slope" of gun regulation.  Not all gun regulation is an affront on the Second Amendment.  The NRA is no longer the protector of the Second Amendment but is instead the greatest threat to the Second Amendment.  As a former member, I think the NRA is now simply crazy and will doom gun enthusiasts.  Their unyielding, unreasonable attitude will cause an eventual over-reaction by sane Americans.

It is not enough to merely abandon the NRA.  There must be a non-NRA organization for responsible gun-owners, but I haven't found it yet.  I want to make a donation . . . but to whom?